Living More with Less. Rent, Buy or Build?

When I was a young urban professional of the Baby Boomer generation (AKA a “Yuppy”), the American dream of owning your own home was still very much alive. All the popular money and financial advice magazines at the time were making the argument that owning your home was the best investment you could make in your future, building equity in an appreciating asset. There was no way to lose, we were told, and the arguments made sense to me, and millions of others in my generation.

So, shortly after marriage, being a newly registered architect, I took on some small projects after hours that my architectural firm did not want and within a year of being married, we had enough money in the bank for a down payment on our first home.  Our first home was a small fixer-upper built in the forties near where I grew up in Homewood, AL. First HouseAfter living there for five years, and welcoming our first and only child, we sold it for a nice profit and moved further out in the suburbs in a rapidly growing area that also had great schools, houses of the size we needed that we could afford and the promise of forever appreciation and gains. (We all know how that turned out, more on that in a future installment).

Being a long-term thinker, I had planned this huge financial commitment such that our house would be paid for about the same time I thought we would be ready to retire. This plan was maintained, even when we refinanced for a lower rate (by going for a shorter term), and it is working out that way now. I think that was probably the best financial decision I ever made, as I will now have more options as I plan for retirement, knowing that at a minimum, I can stay where I am with only property taxes and maintenance to pay for.

However, as I have written about in prior installments, the current house still has high expenses that we can afford, but no longer need to incur and would like to reduce. These include high property taxes to fund a school system we no longer need, more square footage to heat, cool, and maintain than we need for just the two of us and a large yard that requires constant maintenance and associated expenses. (This is known as “rightsizing”).

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To realize this goal of reduced living expenses, (and reduce required for maintenance) we need to either move to a smaller place or take in boarders (the latter being against local zoning codes in our city, and running a bed and breakfast is not my dream, though it might be yours)!

Having the house paid for will be a huge monthly saving and buys us some time to make this move while putting more money into the sock drawer. We still have some work to do to the house to get it ready for sale, need to de-clutter and get rid of stuff we no longer need, and Angela still needs space for her business until she can wind that down. (You would not believe how many toys she has accumulated for her work with hearing impaired children)!

So, regarding our next home, we need to consider what is the best option for us and our desired, less encumbered lifestyle? Do we rent, buy existing or build a custom place? In the next series of blog posts, I will be exploring all three of these options, exploring the pros and cons of each, how to weigh those values, and throw in some research into trends and other ideas.  Stay tuned!

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