“Beware of little expenses. A small leak will sink a great ship.” 

 ~ Benjamin Franklin

It’s human nature to want the finest home possible. Add to that a dose of “keeping up with the Jones’,” and a false belief that a home is an investment, may lead to a house-buying decision that can work against you. So, here’s the way I break it down.

#1. Your home is NOT an investment. It’s a place to live. Even when it’s paid for, your house does not produce income. It consumes income with taxes, insurance, repairs, utilities, and possible subdivision fees. In addition, there are 2nd tier expenses that may surface. The nicer the home, the greater the pressure to have expensive furniture, drive expensive vehicles, entertain more lavishly, and the list goes on. Finally, the larger the home, the more upkeep it most likely will bring (cleaning and lawn care) which will require more of your time (a non-renewable resource). 

#2. All of this money could be deployed into investments. Low fee index funds or a simple single family rental are only two possible options. Those investments can both protect and help provide for you and your family. Ask your accountant on this one. If they disagree, you may need a new accountant.

I’m not suggesting you live in the slums, far from it. Your home should be a place you enjoy and look forward to spending time in. What I’m suggesting is that you examine the ‘bigger is better’ or the ‘I want the best home on the block’ mentality. Recognize these decisions have a significant impact on the date you arrive at financial freedom and achieve time freedom. Everything in life is a trade-off. What I’m suggesting is to step back, think about what you really care about, and make the decisions that are in your best interest. When it comes to good decision-making, don’t be afraid to swim against the tide.

“Many men go fishing all their lives without knowing it is not fish they are after.”  ~ Henry David Thoreau