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Would you rather live in a decent home or have a big savings?

Lets say you can't have both, which one would you rather have?
By decent, I don't mean anything fancy, but a nice little place where everything is clean and works, and preferably on a few acres.
I'm getting middle aged, single, and have never lived in a place I would call nice.
I've piddled around in the last year or so and looked at a few places that I could have payed cash for, but always back off.
 
Balance is a key to contentment in life, in my opinion. One can die with millions in the bank, and it does nothing for them at that point. One can be held captive by an overwhelming mortgage, having nothing left for other enjoyable things in life. I have chosen to own a decent home that meets my needs, but one that is affordable. Would I enjoy a nicer home, with its own study and perhaps more land? Absolutely. But I prefer to have an emergency fund in the bank, funds to treat my wife and kids once in with while, and something left over to give to my church and other organizations. It is a balanced life.

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If you're saying I have a choice between a lot of cash coupled with a hovel (drafty, leaky, potentially lethal) or not a lot of cushion, but a place I can sit down and feel secure, I'll go with the latter. I've been with and without money. It solves some problems and creates others. A good dwelling is a home. When I go home at night I'm generally grateful for what I've got and feel secure, happy and relaxed in my domicile.
 
I reject your assertion that you can't have both. You can. It just takes time, hard work, and proper budgeting. Dave Ramsey is a fantastic place to start.
 
I just went through a similar process when purchasing my first home. My wife and I looked about two years ago and determined we couldn't have the home we wanted and maintain the lifestyle we wanted. Two years later, we are able to have it all. I purchased a nice home in our desired area within our budget, and that leaves enough savings for emergencies and discretionary spending.

It's not about choosing one over the other, it's all about timing.
 
which one would you rather have?

I'd rather have the money. There are deals to be had in the housing market if you have the patience to find them. You can sit for months or even years until a "dump with potential" pops up in your price range, and then jump on it. Worst case, you can just spend all your money on fixing up the dumpy house into a nice one.

The other way around, you don't have the flexibility. If you invest everything in a nice house, you can't just pull money out of the house when you want it for other purposes (HELOCs don't count... that's not your money, you owe it back to the bank).
 
Not carrying too much debt is THE key to financial stability. Too many people buy what the banks tell them they can afford, which can often be VERY different than what they can really afford. It's better to have a modest place that you can hope to pay off than a wonderful new house that sucks every penny you have. If you can't even afford a modest place, then it is better to rent a modest apartment and save some $ towards a downpayment, than it is to rent a fancy place and just barely keep your head above water.
 
I have lived in everything from a rented room and an Army barracks to a big home. And my preference is a condo of modest size in a neighborhood which is safe. Don't need to impress anyone, and don't want to mow the lawn. So, let's call it middle ground, affordable. It does not have to be either/or.
 
Balance is a key to contentment in life, in my opinion. One can die with millions in the bank, and it does nothing for them at that point. One can be held captive by an overwhelming mortgage, having nothing left for other enjoyable things in life. I have chosen to own a decent home that meets my needs, but one that is affordable. Would I enjoy a nicer home, with its own study and perhaps more land? Absolutely. But I prefer to have an emergency fund in the bank, funds to treat my wife and kids once in with while, and something left over to give to my church and other organizations. It is a balanced life.

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I don't have to say anything, I am 75 years old and lightcs1776 said it all.

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Small house here......totally remodeled interior (90 percent of labor done by yours truly) and I have 7 more payments till the deed is mine. Own 2 cars with a third financed at 2.4%.

Working to be totally debt free in 5 years when I retire.
Not looking to impress anyone but myself.

Years salary (net) in savings plus investments.

Every payment that puts me closer to the debt free goal makes me sleep better and better. On paper, I'm in the black now but junior goes off to college soon so we will see.

Works for me.
 
For me a decent home. Its my castle even though the queen rules it with fierce nagging. Its a place where my children will be born to and grow with many memories. Its a place where I can come and feel safe, have comfort and relax.
 
I grew up in a frugal family; my parents both lived through the Great Depression.

Some basic rules I learned, which seem good to me even today.

(1) Always give some of what you have to those less fortunate

(2) There's no free lunch

(3) Spend beneath your means.
(a) Save for a rainy day; it will arrive sooner or later

(4) Be thankful for what you have. "The hardest arithmetic to master is that which enables us to count our
blessings".
(a) You can never get enough of you don't really need to make you happy
 
With mortgage rates still historically it might be better to borrow even though you have the cash. Investing much of the remaining cash into other places. Providing more financial flexibility. I might hesitate buying in your situation with a long term outlook. At every phase of life, ones "ideal" home changes at least a little. If you decided to get married, a new job, retire in a different place, experience physical injury, etc then the home might start to become a burden.

In any case it is a very personal decision. You will have not gained or loss much financial wealth since the home should have roughly the same value. The only thing you "lose" by buying is the transaction costs involved in the buying (or during future resale), lack of liquid access to your wealth, and opportunity costs of what that cash could have otherwise been invested in. In return you get benefits that you otherwise seek.
 
With mortgage rates still historically it might be better to borrow even though you have the cash. Investing much of the remaining cash into other places. Providing more financial flexibility.

This is a common thought process, but it misses on two things. It may be arithmetically "correct," but risk isn't taken into account, and the psychological reality of personal finance is that mismanaging a giant pile of money is much easier than mismanaging an illiquid asset.

Regarding risk, which would you rather do, take a bunch of your principal out of the market during a low swing because you lost your job in an economic downturn, or leave your more modest investments alone during the low swing because you don't have a house payment to worry about while you're trying to line up a new job.
 
This is a common thought process, but it misses on two things. It may be arithmetically "correct," but risk isn't taken into account, and the psychological reality of personal finance is that mismanaging a giant pile of money is much easier than mismanaging an illiquid asset.

Regarding risk, which would you rather do, take a bunch of your principal out of the market during a low swing because you lost your job in an economic downturn, or leave your more modest investments alone during the low swing because you don't have a house payment to worry about while you're trying to line up a new job.
I agree with your comments but the opposite is also true to a lesser extent. In that if a person has nearly all their net worth tied up in their home it makes it harder to deal with big events. That depending on location it can be difficult to quickly sale a property, more so if home prices are flat or declining. For example the population of North Carolina is increasing as a whole, but it is concentrated in a few of the larger urban areas were home prices continue to rise in a fairly predictable way; while at the same time there has been a net migration out of small towns keeping prices down in rural areas.

After one has gotten themselves out of all debt and starts having a positive net worth, I think balancing investments between different asset classes is good for longer term financial health. A home is considered an investment by many people but it is really a non-performing asset or expense (with never ending maintenance, insurance, taxes, etc). But is really in a special class of its own since it is necessary for survival and has emotion attached to it.:001_smile Over long periods of time its value increases at roughly the rate of inflation so the purchase price is not lost. Besides the "permanence" of having a place to call home the benefit to owning is not having to pay rent. :001_cool:
 
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