One thing I love about my neighborhood is all the dogs. As anyone with a heart and soul knows, good “boys” and “girls” can make a good neighborhood. Sometimes in the evening, when I and many of my neighbors walk our dogs for the last time of the day, I feel pangs of envy. Each dog performs a similar dance, ambling from one smell to the next wagging its tail like windshield wipers in a downpour. How happy they are. It makes me think how easier life would be to live like dogs with a one-track mind — to simply act out of love or hunger or basic bodily needs.
But, alas, humans are left to juggle many considerations, both in the present and the future, especially as they relate to money.
I apologize, this piece is not about dogs, but rather the choices we make.
Three years ago, my wife and I made a decision that would only be a good decision if things in the future worked out just right. We chose to buy a home that would take a substantial bite out of our budget. Now that I work from home, I have had a lot of time to sit, literally, with that decision.
What I’ve come to realize is that there are rarely perfect choices. At least, there is no right way to decide if the future that has come to pass is any better or worse than any other possible future. Although we want to make optimal decisions, optimal in most instances is a mirage.
That can be a comforting feeling. As Salvador Dali said,
“Have no fear of perfection, you’ll never reach it.”
This is true of financial decisions, as we try to balance what we can afford and what we want most. It is the friction between cost and sentimentality.
From a purely financial perspective, all that matters are the numbers. But, of course, we don’t always do what the numbers say. The reason isn’t only because we’re not hardwired to think in probabilities or absolute logical terms. Numbers, even those with dollar signs, just aren’t the only thing that matters. What provides joy in life is not always financially rational.
Essentially, our financial decisions fall on a spectrum with numbers on one end and emotions on the other. For example, a stock is an intangible thing. I will never hold it or look at it or admire it. I invest my money and then one day take it back out. I will never stand inside a stock or watch my family grow alongside it. So, when deciding what stocks to buy, I care mainly about the price of those stocks and not my emotional attachment to them.
A house is a whole different matter, which brings us back to my neighborhood and my four-legged neighbors. To better express this relationship between cost and sentimentality, let me use my house as an example.
We wanted a house with more space in a better neighborhood with a better school system. We found that home, but with the catch that it was beyond our preferred budget. To move into this home would be financially risky as we waited for our children to graduate nursery school, freeing up some extra dollars, and we worked to increase our income. It would have made much more financial sense to stay in our old house or move to another house somewhere else.
But the home met so many of our desires. When we first viewed the house, our imaginations filled instantly with the memories that could be created there. In the end, we made the decision primarily out of sentimentality rather than cost.
Was it the right decision?
Since we moved into a home that is not only larger, but also located in a more affluent city with much higher property taxes, we saw our mortgage payment jump around 50%. Plus, as a larger home, our utility costs rose, too.
Then there is the pool, an in-ground 40,000-gallon money sucker. After skimming the surface, buying gallon after gallon of chlorine and running the filter 9 hours a night, I can sympathize with those homeowners who choose to say screw it and fill their pools in.
Making a choice to increase one’s expenses is certainly not considered ideal.
But wait, there’s more. Let’s talk about the condition of the home.
The Japanese military was pummeling American forces in the Pacific, causing General Dougals MacArthur to flee, while thousands of miles to the east our home was being built. That makes our home nearly 80 years old. Although the bones are in good shape, it has needed some major improvements. We updated the kitchen, remodeled the living room and improved the landscaping. (To my dying day I vow to never remove shrubs by hand ever again.)
Our cost savings have come from doing 95% of the work ourselves. Still, we’ve paid for the supplies and spent our time and energy.
As any homeowner knows, there is no rest for the weary. A home is never finished. Homeowners commiserate in the phrase, “there’s always something!” Time takes its toll. Part of choosing to buy a home is not only what you can reasonably afford, but also how much home you want to handle. Again, cost vs. sentimentality.
All told, I can play endless mind games with all these costs. That money could have been invested instead to build wealth. It could have been put toward travel or a new car.
So, is this home worth that missed opportunity cost?
On the last day of school in June, the sun had just rubbed sleep out of its own eyes when my oldest son hit me with a deep question while we waited for a car to pass: “Who’d win in a foot race, The Flash or Superman?”
We live in what is called a walkable school district. That means children can reasonably reach their respective schools on their own two feet or by bike. There are no school buses. One of the greatest joys of my day is to walk my kids to and from school — the irreverent banter, the hello and goodbye from the crossing guard, the chance to meet my sons’ friends, the quality time spent together starting and ending our days.
I would argue a choice that lets you grow closer to those you love and build relationships with the people around you is beyond pricing.
But space is also important. Space is good for getting people together to create memories, such as holiday dinners in a spacious dining room with bottles of wine (so much wine!).
And, after living in a ranch home, with the bedrooms on the same level as the kitchen, I’ve come to feel a great sense of gratitude for the space to grind some beans and make a cup of fresh coffee without waking the whole house. I can sit at my desk and watch people outside running and biking by. This is an active community, which can be infectious in a way that improves our own quality of life.
In the spring and summer, our home blooms like a flower. We open the doors and windows and uncover the pool. A pool with young children is a source of constant entertainment. It is a place to make lasting memories — the things I can actually take with me to my death bed. I won’t forget the day I watched nervously as my boys removed their floaties and plunged into the pool, sinking like rocks until they popped back up and started to swim–swim without help for the first time–like drunken walruses.
Actually, that’s not just a memory, it is an imprint of what this home means to me. I don’t know what the value of all of this is, if it indeed can ever be valued. But I do know that it is worth something. Some of the greatest joys you just cannot assign a number.
Sure, there are limits. The heartbreak would be that it all slips away. You cannot ignore the financial possibilities of what you could have done differently. That is the friction between cost and sentimentality.
Our house could be on the precipice of one of the worst financial decisions we’ve made and one of the best experiences we will ever share as a family.
Sentimentality can’t make you rich, but it can make you feel happy in ways money never will.
One is not necessarily better than the other. You are fortunate if you even have the ability to make a financial decision between the two.
What matters most is that you make the decision for all the right reasons. Ask yourself, am I making a choice for only cost or sentimentality reasons? What is more important to me? Rarely, the choice is perfectly balanced. Perfection is subjective anyway. Personal finance is an art, not because it is hard or tricky, but because it is subjective.
Some may call it a foolish financial decision. We call it home.