During the phase of my life where I was wooing my wife to marry me, several of my friends were already in the family-building phase. When your first child comes along there’s an incredible sense of excitement, anticipation, and discovery. I saw it in their lives firsthand, and now that I have a couple of kids myself I can definitely relate. You only want what’s best for your kids, and your thoughts are constantly turning to them. You want to provide a great future for them, and for your family.
But those friends of mine who were having kids somehow made a decision that still baffles me to this day. They went out and bought ::gasp:: brand new minivans.
Now, I can appreciate the desire to plan for the future. I understand that you can visualize yourself toting 3 or 4 kids, along with some friends to a soccer game when they are 5 to 7 years old. I can also understand buying something that’s going to be discontinued, because you love what’s out there right now and don’t think you’ll ever find another one like it. Shoes, for instance… or a baseball card…
But I don’t understand how you come to the decision to buy a minivan 5 years in advance of a day that may never come!
That Huge House
OK, so buying a minivan isn’t the worst decision anyone has ever made. And this post isn’t really about my friends, it’s about me. A couple of weeks back I wrote a post about my house-buying decisions over the years, and how it took several purchases (not very well thought-through) for my wife and I to understand that what we really wanted was less house, not more. We made the minivan mistake by upgrading our house size, neighborhood, and mortgage in anticipation of our child growing up.
Like our friends, we were planning to have kids, so when we found out we were pregnant with our first we decided to move. Currently our kids are ages 2 and 4, and we’d love to have a 3rd, but that one isn’t here just yet. So, if you do the math, that’s 5 years (so far) of inflated mortgage payments we have been paying for some extra space for two toddlers! And no, they don’t take up that much room in the grand scheme of things.
What kind of money could you save in 5 years if you didn’t jump into that over-sized income-eating house so quickly? What if you had waited until you were actually running out of space? I ask myself that question quite a bit.
When my wife and I were first married, our mortgage payment was $650 on a $95k place. We liked it there. It was a 1250 square foot house with a large great room, at the end of a cul-de-sac, and had a very grassy back yard with a creek running at the back of the property. In hindsight, it was exactly what we needed. But we moved into a much larger, older home with 2000 square feet of space and an $1150 mortgage.
Our kids were both born in that house (we lived there for 4 years) but we moved out the summer that my son was born. When we left, we had paid an additional $24k on our mortgage (that we could have used to pay down the smaller one from the house before), and we also reduced the principle on the house by $30k as we aggressively attempted to get out from under the second mortgage. If you take those dollars and add in the $20k that we spent on attempting to renovate some of the older features of the house, you’re talking about a whopping $75,000 that we could have put to other uses in our smaller house. And that’s over a 4-year time frame!
The Best Laid Plans
5 years is a long time. If you’ve not yet lived that long, well… great job on your reading skills. But also let me tell you, life can change a ton in 5 years. Jobs change, markets change, families change, kids change. Dreams change! There are so many variables in life that it doesn’t make sense to “prepare for the future” by wasting your hard-earned money in the meantime, if you can live comfortably in your smaller place until then.
Now if you’re already planning to move houses that’s one thing. You might be moving for a job-change and you think “I don’t want to have to move again in 5 years, I’ll just get a slightly larger house now”. I can understand that logic (though I would advise that you pay close attention to how much your housing choice affects your entire lifestyle) because moving is a time consuming, expensive process! But please don’t move just for the sake of moving, when your current home will suffice. Find a way to put that hard-earned money to work and enjoy what you’ve got!
Have you upgraded your house only to regret it when you look back? Did YOU buy that minivan?!