The “Forever Home”: A Path to Financial Stagnation.

This is something that has come up often in my circle of friends – the concept of the “forever home”. So what exactly is a “forever home”? Basically, it’s a home that you intend to stay in…forever. Or at least 10 years. Depends on who you ask.

I’m starting to notice that the new trend in home purchases tends to be people going after large 2800+ sq/ft, 3-5 bedroom/2-3 bathroom homes as their first home. While “impressive” may be the word that comes to mind, we need to think about this more critically.

Forever Home Mistake 1: It’s expensive

Let’s imagine that you are starting out in their career. Maybe you’re newly married and thinking of having children. I’m sure emotions are running high at this time, and it’s easy to have your head in the clouds. The one critical problem with such a large home is the massive expense. Just imagine the normal house-hold expenses:

  • Down-payment
  • Mortgage
  • Taxes
  • Home Owner’s Insurance
  • Maintenance
  • Repairs

Then, increase them all.

Now as we said in our hypothetical scenario, you are just starting out in your career. Your earnings are not what they will be in a couple of years. In the mean time, affording such a large structure will be challenging. That money that could go towards investing, vacations, or just simply affording nicer things in life goes right towards your housing expenses. The problem with this is that housing expenses are very inflexible. You can’t “cut back” on your mortgage, taxes, etc. without repercussions.

Forever Home Mistake 2: It hurts your ability to afford other things and invest

The "Forever Home": A Path to Financial Stagnation.

Saddling yourself with massive expenses early in your career is a surefire way to shoot yourself in the foot in terms of investing and enjoying life. If your goal is to work towards financial independence, finding ways to trim down expenses is important. However, this makes all of your goals less achievable (if not impossible) if almost all of your income is spent to afford a larger than necessary home.

Forever Home Mistake 3: You need to work harder to afford it

A home is meant to be enjoyed. It’s hard to enjoy it when you need to pick up a second (or third) job to afford it. It seems counter-intuitive to me and makes me think of this article: American homes are not $1,100 storage units.

If you want to try to progress financially, you’ll need to work more. This means more time out of the house – working.

Working all the time to have a fancy place to put all of your items seems short-sighted.  Your lifespan is finite. Do you really want to spend the best years of your life toiling away to afford something you’ll never get to enjoy?

Forever Home Mistake 4: Big house, big furnishings

Naturally, after you buy a large home – you can’t just leave it unfurnished. What fun is that?! So, the house needs to be updated: new furniture, new curtains, updated man cave, new (insert item here).

All of that adds additional expenses on top of all the other larger expenses, further compounding the problems listed in the previous paragraphs.

Forever Home Mistake 5: More than you actually need

This is another one that my wife reminds me about – people raised large families in houses that were 1500 sq/ft or less many years ago. There is no need to have a 4000 sq/ft house when you have 3 people living there.

It is simply too much room. If you can afford all of this comfortably, then by all means continue.

If you are stressing your finances and yourself to the max to afford this piece of the American dream, give it a rest.

Make life easier on yourself, and purchase a home that is more manageable, cheaper, and probably more satisfying (because you’ll actually get to spend some time in it!).

In the end, the choice is yours: freedom or stagnation?

People will do what they want to do at the end of the day. Perhaps, they get lost in the fantasy that they have of the big home/big car/big life that they don’t realize that all of these things have a cost.

If your goal is to work forever and gather the maximum amount of material achievements, good. Buy the large home.

If you want to enjoy your time and live within your means, consider buying a house fit closer to your needs.

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9 thoughts on “The “Forever Home”: A Path to Financial Stagnation.

  1. I totally agree Dave. Unless of course, you’re a millionaire already. From my understanding, a lot of the wealthier people buy and sell real estate, which can make some great money if done correctly.
    Thank you for sharing. – Paul

  2. Dave, I believe all first time homeowners need to read this article. Way too many people get in over their heads at an early age these days. Even though its not as easy to do as it was prior to the big crash, it’s still very real and happens way to often.

  3. I think it make sense for your first home not to be your home forever. It’s like you have to get used to it. It might not be the right size or neighborhood or many other reasons why you wouldn’t stay there forever. Is it affordable? There’s a lot of things that could make it not a home forever. But I guess it’s your own personal choice, right?

  4. Nicely put. Being a minimalist, I am a firm believer in less is more. And you’re definitely correct about all the added expenses that such a lifestyle requires. And as you said, if you can afford it, hats off. But owning such a big investment is lifechanging no need to make it stressful as well.

    1. I am a minimalist as well so I know what you mean. The burden of caring for all of that additional “stuff” is just not worth it at a certain point.

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