Dwelling situation?

[Tyler]

That's over 3% in property taxes!!!

It's Illinois, dude! Ground zero for corrupt, ineffective, tax-and-waste, promise-and-underfund liberal dominance in the midwest. I think we had two current or former governors in prison the last time I was living there.

Ha.  My property taxes in a suburb north of Dallas in conservative dominant Texas were over 3% several years ago.  In Austin, they're currently 2.6%.  At least in Texas we have no income tax and reasonable state government.  But I've had my eye on Colorado for the sub-1% property tax rates (and beautiful outdoors, of course) for a while now, especially once we stop making as much income. 

I've been very aggressively paying down my 15-year mortgage for the past year, and am planning to pay it off completely this year as part of a PP rebalance to coincide with a shift away from money accumulation for a while.  Even with an excellent 2.875% interest rate, the overall home value is only 20% of our net worth.  So having the peace of mind of no debt is more valuable to me today than whatever interest rate arbitrage games I could play for money I don't really need. 

[moda0306]

I am almost to the point where I want to openly assert that buying a home you don't need and aren't super handy with (4 bedroom when it's you, a love interest, and no kids) is far more likely to be an awful financial decision than buying a sweet car that you don't need.

I am going to do some calculations on this, but the more I see how much time and money goes into a home, and the risks involved of getting a "lemon," and furnishing the damn things, the more disgusted I am with it.

[moda0306]

Part of my position lies in NO handy/maintenance motivations whatsoever.

[above the herd]

Just sold my house in May and am now renting and COMPLETELY out of debt!

[WiseOne]

I'm paying a mortgage, and I suppose I'm feeling lucky that property taxes are only about 1% here in Indiana.

For those that are also paying mortgages, I'd be interested to know if they are pre-paying them as well.  This is something I struggle with on a continual basis.  I am currently pre-paying my 30-year mortgage at a rate that will have it paid off in 15 years (I'm big on flexibility of cash flow so did not want to commit to a 15-year mortgage).  Everyone has different circumstances and priorities so there is no "right" answer but I'm always interested to hear people's thoughts on this.

Some would make the case that you can do better investing than prepaying the mortgage.  But prepaying is way better for peace of mind and I think is also in the spirit of HB's Rules.  If I save money to invest while holding a mortgage, I'm essentially investing on margin.  I prepaid every month right from day one, then two years ago I cashed out my remaining PRPFX shares and used the proceeds to refinance into a 15 year loan with a monthly payment about the same as the original 30 year mortgage.  I took that option because the interest rate was a full percentage point lower than the 30 year.  Cash flow is a bit tighter than I would like, but it feels good to see that mortgage balance melting away.

re property taxes...3% is just shocking!  Even an NYC coop comes out a lot better than that.

[Pointedstick]

I am almost to the point where I want to openly assert that buying a home you don't need and aren't super handy with (4 bedroom when it's you, a love interest, and no kids) is far more likely to be an awful financial decision than buying a sweet car that you don't need.

I am going to do some calculations on this, but the more I see how much time and money goes into a home, and the risks involved of getting a "lemon," and furnishing the damn things, the more disgusted I am with it.

I agree with this 100%. Part of this may lie with my very recent experiences advising non-handy family members in their recent real estate forays or purchases. To get to what TennPaGa said, it really is very difficult to assess a house's technical details unless you practically become an amateur home inspector or building scientist. In addition, there's always at least something wrong with every house, guaranteed, no matter how pretty or expensive it is.

[barrett]

One of the three percenters here. Our property taxes were about 2% of the value of our home when we bought it at the end of 2007. Prices crashed, the town did a reassessment and just upped the mill rate so as not to have any less tax money coming in. Very painful.

[Pointedstick]

One of the three percenters here. Our property taxes were about 2% of the value of our home when we bought it at the end of 2007. Prices crashed, the town did a reassessment and just upped the mill rate so as not to have any less tax money coming in. Very painful.

Don't worry, I'm sure they'll lower it once prices rise again. 

[moda0306]

I'm paying a mortgage, and I suppose I'm feeling lucky that property taxes are only about 1% here in Indiana.

For those that are also paying mortgages, I'd be interested to know if they are pre-paying them as well.  This is something I struggle with on a continual basis.  I am currently pre-paying my 30-year mortgage at a rate that will have it paid off in 15 years (I'm big on flexibility of cash flow so did not want to commit to a 15-year mortgage).  Everyone has different circumstances and priorities so there is no "right" answer but I'm always interested to hear people's thoughts on this.

Some would make the case that you can do better investing than prepaying the mortgage.  But prepaying is way better for peace of mind and I think is also in the spirit of HB's Rules.  If I save money to invest while holding a mortgage, I'm essentially investing on margin.  I prepaid every month right from day one, then two years ago I cashed out my remaining PRPFX shares and used the proceeds to refinance into a 15 year loan with a monthly payment about the same as the original 30 year mortgage.  I took that option because the interest rate was a full percentage point lower than the 30 year.  Cash flow is a bit tighter than I would like, but it feels good to see that mortgage balance melting away.

re property taxes...3% is just shocking!  Even an NYC coop comes out a lot better than that.

I don't understand why pre-paying is better for peace of mind.  Even if you lose 1% in the spread, let's say.  If you compare two people... One pays $2,000 extra down per year (let's say that's one extra payment) on a 4% 30 year mortgage, and the other invests at 3%, and they both end up @ year 15... one has more home equity... the other one has more cash... both have PLENTY more years of payments... but let's look at amounts.

$2,000 per year @ 4% for 15 years is $40,000 of additional home equity (less debt).

$2,000 per year @ 3% for 15 years is $37,200 of additional bonds/cash/cd's in your portfolio (assumed).  If this was additional into a Roth, it was all non-taxable, and most of it is liquid.


The person with $40,000 of additional home equity can get at it... IF they have solid financial footing, and take the time, energy, and cost to take out a  home equity LOC.  That is a huge IF.  The person with $40,000 of additional home equity still has to make a mortgage payment every month, but has $37,000 less money to do it with if something were to come up than they otherwise would have.

The person with more home equity is actually MORE attractive for a bank to come after if they can't make the payments. 

But the person with $37,200 in additional liquid-ish savings has 1.5 years in mortgage payments saved up.



It took me a while to come to this state of mind on established mortgage debt, but why on earth would the "serial debt destroyer" have any more peace of mind than the person who saved the difference in nominally guaranteed places.

And before you say "well the FDIC could collapse" or "your AAA or treasury ST bond fund could get hammered with default," I'd say you're right.  These things COULD happen.  But in that macro-economic environment, do you think having paid DOWN more debt on your mortgage is actually going to HELP you when you've got another 10 years or so still left on it?  Could you imagine the utter financial clusterf*ck we'd have to be in for that to happen? 

I really can't make up many scenarios where I'd feel more comfortable with $40k less mortgage debt vs $37,000 more safe money with which to handle a crisis.


I mean this very politely.  I just have tossed these contingencies around in my head a lot, and after reading this article...

http://www.forbes.com/sites/deborahljac ... -received/


I was so annoyed by the arguments made in it that I've been kind of a grumpy advocate for LIQUIDITY being a MUCH more important tool in delivering financial flexibility than having a little bit higher net worth as a result of less debt (at a higher rate).

You can always achieve nearly the same debt-result by paying off a bunch of debt with acquired liquidity.  In many cases, you can't achieve anywhere NEAR the same liquidity result by begging for a home equity loan when your wife is sick with cancer.



Now this isn't to say that there aren't a TON of people that haven't felt great about paying off their debt, or that there isn't a very high correlation between those who pay off debt assertively and financial success, but correlation doesn't equal causation on this, IMO.  It's the fact that you were driving expenses to be much lower than income that brought you financial health... not "paying down debt," as one alternative of how to increase net-worth. 

[stuper1]

The key thing is to be disciplined and actually invest the money that was saved by not paying down debt, instead of spending it on a new car or nice vacation.  Some of us have trouble with that, and so we may be better off paying down the debt.

[moda0306]

I am almost to the point where I want to openly assert that buying a home you don't need and aren't super handy with (4 bedroom when it's you, a love interest, and no kids) is far more likely to be an awful financial decision than buying a sweet car that you don't need.

I am going to do some calculations on this, but the more I see how much time and money goes into a home, and the risks involved of getting a "lemon," and furnishing the damn things, the more disgusted I am with it.

I agree with this 100%. Part of this may lie with my very recent experiences advising non-handy family members in their recent real estate forays or purchases. To get to what TennPaGa said, it really is very difficult to assess a house's technical details unless you practically become an amateur home inspector or building scientist. In addition, there's always at least something wrong with every house, guaranteed, no matter how pretty or expensive it is.

Well if you are going from something more like an apartment to a SFH, you're removing inflating rents from your income statement, adding level Principle & Interest, but also adding increased utilities (more electric, gas, water, sewer, garbage, and recycling), increased insurance, about 1-3% of the value of the property in maintenance, and 1% (or apparently as high as 3%) of taxes.  A lot of times, when making that big of a jump, those ancillary expenses aren't too horribly far off from the rent you were just paying.

You also have significant acquisition time/cost/stress, lots of personal projects trying to keep maintenance from being in the hands of potentially expensive handymen, and if you have to or want to sell your house, you have to pay 6.5% of the sales price to a realtor.

Further, the wealth that you put in on the front end, as well as continue to put in via principal pay-downs, is illiquid, unless you can secure a home equity loan or LOC, and those accesses to your money come with certain terms, including potentially undesirable interest rates, appraisals, loan fees, and payback terms.

And those maintenance fees don't come on a nice, steady monthly basis.  If you own a home, you have to maintain a much healthier reserve account to have similar financial health and flexibility.

Sorry, I've just been to all the corners of home ownership and renting and cohabitating and I think there's a lot of BS floating around out there about it.  I certainly hope I'm not discouraging home-owners.  The best is to find out the TRUE cost of owning the home you want vs whatever your most reasonably modest alternative is (obviously tough if you're a father of 4 or something!), and ask yourself "is it worth it?" Rather than keeping your head in the sand.

[moda0306]

The key thing is to be disciplined and actually invest the money that was saved by not paying down debt, instead of spending it on a new car or nice vacation.  Some of us have trouble with that, and so we may be better off paying down the debt.

Stuper,

I think that is really the giant asterisk.  Basically I have come to think of it as the negative value of liquidity.

Intuitively, liquidity is good... but we all know that comes with behavioral considerations.  However, I would rather see someone increase their 401(k) contributions into a bond fund rather than do an extra payment on their mortgage, with at least a chance of either loans or taking the hit of distribution, rather than PAYING DOWN a mortgage.  I don't have a problem with paying it off, really, as at least that eliminates the payment.  I think for a TON of people out there, though, a Roth IRA is a pretty awesome compromise... enough liquidity to offer you REAL options in an opportunity or emergency, but enough limit to quick access to affect behavior in positive ways.

But overall, I think the most important part is understanding cash flow and budgeting.  I really, truly believe that it's really going to screw you up somewhere down the line if you replace a modest understanding of budgeting and how to build effective controls around cash flow with blindly making illiquid transfers to a loan.

And to back the logic up a bit... if I am a person who DOES have an issue with budgeting and cash-flow controls (as in I have a very obvious weakness here), I think one of the WORST things you can be doing is going into home-ownership.  Home-ownership takes every flaw you have in budgeting and exacerbates the consequences of it (it's hard enough to budget for static expenses like cable... now you've added a new roof!!). 

Now, a lot of people already own a home or already have families that essentially require one... but that lends even MORE weight to my argument...

Nothing exacerbates the negative impact of avoiding learning about proper cash-flow & budgeting like having little eating, shitting, in-trouble-getting maniacs running around looking for ways to make you less rich .  Not to mention, leading and teaching them valuable principles of money and budgeting can be one of the best gifts you ever give them (and eventually, when they are 30, one of the best gifts you've given yourself!!!).

Budgeting and cash-flow controls... IMO any attempt to avoid it is simply papering over a fundamental problem of understanding how money works, and this is going to make tons of things more difficult throughout life that wouldn't have been.

[Pointedstick]

Well if you are going from something more like an apartment to a SFH, you're removing inflating rents from your income statement, adding level Principle & Interest, but also adding increased utilities (more electric, gas, water, sewer, garbage, and recycling), increased insurance, about 1-3% of the value of the property in maintenance, and 1% (or apparently as high as 3%) of taxes.  A lot of times, when making that big of a jump, those ancillary expenses aren't too horribly far off from the rent you were just paying.

Aren't those expenses just included in the rent, though? It's not like landlords and property managers are taking a loss on insurance, taxes, maintenance, landscaping, any utilities you don't pay for, etc. They're passing those costs right onto you! So you pay for those things anyway, but you lose any opportunity to make decisions about how the money is spent aside from up and leaving.

I actually have lower utility bills in my house in New Mexico (extreme temperatures) than I had in central California (mild temperatures) because of the apartment managers' bone-headed decision to use electric radiant baseboards for heat and an ancient A/C unit for cooling, and keep the entire apartment complex uninsulated with single-pane windows. As a homeowner, I could fix those problems. As a renter, I had to live with them.

There's a whole world of drama you avoid when you stop renting, too. Arbitrary, unevenly-enforced rules, getting your car stuck in its parking space due to unscheduled work in the parking lot, not being able to have a pet, constantly-rising rents, lack of privacy, frequent loss of electricity/water due to maintenance, etc. It's largely a matter of swapping the renting hassles for the owning hassles, IMHO. You just have to choose which hassles you can live with!

[moda0306]

PS,

Those costs are included in rent.  That's kind of the point.  You have to now include them in the financial analysis of homeownership as a separate expense.  The reason home ownership tends to be more is that most of those aspects are far more when you own a home.  It really depends on running the numbers, which I've done for the MN market, and once you include everything at a reasonable level, I've come to certain loose rules of thumb...

If you're comparing a one-bedroom apartment to a single family home, renting > buying. (obviously this doesn't account for quality very efficiently, but I believe I've been fair)

If you're comparing to renting a one-bedroom apartment to buying a one-bedroom condo, buying > renting.  Same with any apples-apples comparison.

If you're comparing to a 3,000 sq ft SFH for $300,000, and a 4,000 sq ft SFH for $400,000, smaller > bigger.


I don't expect you to trust my analysis, and I know I'm not giving much info here, but I was very deliberate to be fair.  This is looking at these decisions purely on a financial level with (I believe) a 6% opportunity cost on money, and 3% inflation on appropriate items (rents, utilities, taxes).  Obviously, if you're living anywhere, finding a place that matches your priorities is pretty important.  For me, it was more about quality service than super new kitchens, and found a place that was a great apartment complex with a tad outdated appliances and older carpet, but GREAT grounds and very well kept, with good tenants.


I put about 1/10 the effort into finding a good management company to avoid most renting hassles as I put into finding a home with few home-ownership hassles, and while there is obviously a trade, renting came with considerably fewer man-hours (and degrees of stress) of hassle (and I love my house, comparatively to most homes of my friends).  I was very deliberate on that point, and lived in the place (apartment) for 2 years, and almost regret leaving.

I think a lot of people find owning hassles to be less annoying because at least they have autonomy, and don't have to put up with annoyances that can be directly attributed to the fault of other people, but instead just general home-ownership issues.  Since absorbing more of HB philosophy, I tend to have a pretty agnostic feeling towards the SOURCE of my annoyance (person vs nature).  Combined with not being very handy and having little issue with telling a management company how I expect something to be done (squeakiest wheel!!), I have a lot more fond feeling towards renting, or at least giving up some autonomy if it will save me some money and/or hassle (living in a condo or townhome vs a 4BR 2BA SFH).

[WiseOne]

Intuitively, liquidity is good... but we all know that comes with behavioral considerations.  However, I would rather see someone increase their 401(k) contributions into a bond fund rather than do an extra payment on their mortgage, with at least a chance of either loans or taking the hit of distribution, rather than PAYING DOWN a mortgage.

Agreed on the importance of having liquid savings, especially as a homeowner.  If the savings are truly liquid and not at risk then stashing it somewhere with an earmark that says "to be saved to pay off the mortgage" might make sense although it's hard to imagine a completely safe investment with a return greater than your mortgage rate, after tax especially.  The "peace of mind" is about being out of debt.  It means a lot to some people (e.g. me), even if the math might work out better to do things your way.

regarding rent vs ownership....I did a comparison for my situation, and ownership has in fact been a big win financially.  This is largely due to 3 factors: 1) the many tax benefits of being a homeowner, 2) the fact that a large chunk of your housing cost is actually money that you get to keep (equity), and 3) rent inevitably goes up faster than maintenance.

But then I'm in a coop, where maintenance is much more predictable.  Perhaps that's a good solution for you.  I don't have a garage or backyard, but I don't have to worry about anything on the other side of my walls.  I have less control over my place than I would as a single family homeowner, though...for example just planning to redo my kitchen countertops requires a good deal of stealth to slip past the managing agency and their $500 "renovation" fee.

[dualstow]

The other thing I realize, having bought two cars and a house within a 3 year period, is how little information one really can obtain about a house.  Well, at least that's how I perceive it in retrospect.  For a car, it is far easier to get information about repair records, general durability of the model, etc.  But buying a house, I felt I was flying blind.

Over the years, I only found things out when they had to be torn out and replaced. The home inspection was just the tip of the "scheißeberg." The roof, the ducts...only when the house was gutted did we learn everything. : - )

[Pointedstick]

Over the years, I only found things out when they had to be torn out and replaced. The home inspection was just the tip of the "scheißeberg." The roof, the ducts...only when the house was gutted did we learn everything. : - )

I should answer my own question for when I asked a year or two what the major unexpected problems and expenses of home ownership were. Here's what I've found/done in my own house so far:

Septic system kaput ($4,500 to have professionally re-done)

Gas plumbing illegal and unsafe ($1,800 to have professionally re-done)

Garage door missing ($800)

Laundry room plumbing el busto ($200 + DIY labor)

Swamp cooler no worky ($500 + DIY labor)

Windows are terrible ($2,500 + DIY labor)

Everything in the bathroom leaking ($50 + DIY labor)

Ceiling fan broken ($50 + DIY labor)

Carpet looks like somebody dragged a body across it ($2,500 to replace with hardwood; DIY)

Stucco needs to be re-done (TBD; likely to be shockingly expensive; I'm doing as much as I can)


I'm hoping that once the projects of this size are taken care of, in future years there will be much less to do.

[moda0306]

WiseOne,

I can understand peace of mind... I really can understand the feelings of different financial situations.  But I also want my peace of mind not to be a false indicator.  If I have peace of mind, I want it to be because I actually SHOULD have peace of mind in the face of financial uncertainty in front of me. After seeing how people with little/no debt are all-too confident in their financial stability in the face of too-few assets or insurance to meet cash-flow or risk needs, I see it more and more as a very false indicator of financial security.  Debt can tend to be a lightning rod of financial attention, and getting it to go away an ends in itself, rather than a means to an end of overall financial balance and a strong net worth that can drive income.  That's just me though... I think my math is right, but I could be missing something.


How similar were your rent vs buy options in terms of style and amenities?  I have found, like I mentioned, that around here, buying is better than renting if you compare apples to apples.

However, what I see from a lot of my friends and some clients (many with no kids) is that they have poor-ish spending habits, realize that they aren't obtaining financial success, so they decide that it's because they're "throwing their money away on rent," and that owning a SFH will be a better decision.  They then go from a 1 or 2 BR apartment and barely ANY ancillary costs, to a 4 BR SFH, decent-sized yard, much more utilities, $2-$3k in taxes, 1%-3% in maintenance expenses (that they would have to accrue separately for but are too busy spending money on upgrades and furnishings), and another $1k in insurance (all of which is going up every year with inflation).  Then, after years of that not getting them anywhere, they come to the epiphany that it is their MORTGAGE that is their evil financial companion (not to mention that the evil government (gasp) raises taxes every year with inflation... like we should have expected), and they have to PAY OFF that evil mortgage because it's debt destabilizing their balance sheet... or so they think

The problem is that they go from cherry-picked analysis to cherry-picked analysis, all in lieu of simply learning how to budget and control cash flow.

- Cut up the credit cards.
- Limit discretionary spending by pre-setting cash-flow into discretionary spending account(s)
- Properly accrue into off-site savings account for expected periodic expenses like vacations, home & auto maintenance, medical, etc.

I know this isn't the story of many people in here, but replacing the actual recipe for success (living within your means, not taking on obligations that will hamstring your cash-flow, etc) with a relatively incidental aspect of it (accelerating pay-down of debt to "own your home" or even owning a home in the first place).

What is incidental for one person (paying down debt vs investing in bonds... buying an affordable home vs living in an affordable apartment) in the context of living within their means can be toxic and disastrous for another person who needs to be accruing for periodic expenses that WILL occur, and they'll have not a dime when that happens. 

I guess I'm just saying that I really don't think there's any replacement for understanding and controlling cash-flow (static, discretionary and periodic).  Debt almost CAN'T get onto your balance sheet without imbalanced cash-flow management.  Debt seems like the "cause," but it's just a natural balance-sheet result of over-spending, or leveraged investments. If it is the latter, then that leveraged position was either correct and prudent, in which case paying down the very debt you deemed prudent seems at best a wash and at worst NOT prudent, or it was imprudent, in which case it shouldn't have been taken on in the first place.

IDK I just think there is way too much brain power and money flows going to try to avoid measuring and implementing cash-flows around some cherry-picked financial priorities for that specific topic at that specific time, rather than recognizing reality and operating on that premise... that cash-flow HAS to be understood and controlled. 

Keep in mind, I'm saying this more as a user of the bad processes I pointed out than the good ones.  I've just vastly changed my opinion on this stuff based on what the last 10 years have brought me and people I see.  We have to work on a set of universal premises of what we want our money to do for us that stay relatively permanent and grounded... not ones that change every time we encounter a new "problem" (that we should have expected), or feeling that envelopes us in the moment.

[dualstow]

Over the years, I only found things out when they had to be torn out and replaced. The home inspection was just the tip of the "scheißeberg." The roof, the ducts...only when the house was gutted did we learn everything. : - )

I should answer my own question for when I asked a year or two what the major unexpected problems and expenses of home ownership were. Here's what I've found/done in my own house so far:
...
Carpet looks like somebody dragged a body across it ($2,500 to replace with hardwood; DIY)
...

I was just telling my wife how I'm going to miss our filthy carpeted stairs. We have hardwood floors now, including the stairs, which means
1) I'll have to be careful not to spill beverages on their way up to the home office and
2) no more running up and down the stairs in socks. I guess I'll have to get a pair of those toe shoes, or whatever one calls the weird barefoot-like running shoes. or, you know, stay barefoot.

[Tyler]

I was just telling my wife how I'm going to miss our filthy carpeted stairs. We have hardwood floors now, including the stairs, which means
1) I'll have to be careful not to spill beverages on their way up to the home office and
2) no more running up and down the stairs in socks. I guess I'll have to get a pair of those toe shoes, or whatever one calls the weird barefoot-like running shoes. or, you know, stay barefoot.

Problem solved.

[img width=300]http://www.chicagostairliftdeals.com/oldman.jpg[/img]

[dualstow]

LOL! Hopefully still decades away from that. We'll barely be able to get furniture up those new stairs as it is, without a stairlift.
Damn building codes.

[WiseOne]

Dualstow - please put in some of those rubber stair treads!  Just thinking about your running down uncarpeted stairs makes my teeth itch.  We need you to stick around just a bit longer :-)

Moda I'm not entirely sure what we are arguing about.  I was comparing coop ownership with an amount halfway between what my apartment would rent for right now, and what I was paying at the time that I bought.  The important figure to me is how much money gets thrown out the window each month.  If I had an endless train of unpleasant surprises to fix like P.S. did, though, the math might change. 

Note that cash flow and living frugally to me is an important but separate topic.  Certainly if you can't assure yourself of a good sized emergency fund or you are so squeezed you can't set aside money to prepay the mortgage, you've probably bought too much house.  To be honest I wish I'd bought in a cheaper neighborhood, because my place is borderline "too much".  And it does NOT have a second bedroom!

[Pointedstick]

If I had an endless train of unpleasant surprises to fix like P.S. did, though, the math might change. 

While some of the individual things were surprises, at least I was prepared. I knew that in a fixer-upper, I'd be doing a lot of, er, fixing 'er up! And some things were obvious from the start, like the huge sheets of plywood instead of a garage door.

[Mark Leavy]

I'm a huge fan of airBnB.

(and yes, I'm the guy that voted "Permanent Nomad")

Clearly not for everyone.  But... if you can arrange your situation to where your income is location independent, then I think it is a hell of a way to go.

There is something very freeing in thinking about your location/shelter as just the best option for today - in much the same way as "where is the best place to buy toilet paper?"

Due to the way that most income is tied to jobs, and our dwelling to our net worth... we tend to optimize our dwellings around our sources of income.  That is pretty reasonable and is clearly optimal for most people.  Separating the two, though, allows you to think in a different way.

I'm very much in favor of thinking in different ways.

[dualstow]

Certainly if you can't assure yourself of a good sized emergency fund or you are so squeezed you can't set aside money to prepay the mortgage, you've probably bought too much house.  To be honest I wish I'd bought in a cheaper neighborhood, because my place is borderline "too much".  And it does NOT have a second bedroom!

A benefit of not having too many bedrooms is that you don't have to host people too often. Our place is tiny. We're happy to have visitors, but they tend to spring for a hotel, especially if they have kids. Works for me.