As an avid personal finance blog reader, I have read many blog posts about aspects of personal finance both big and small. Big financial decisions are the major decisions that most of us make in life that can have a huge impact on the bottom line. A couple of examples of big life decisions that can have a huge impact on your bottom line are things like: Do you buy or rent a home? If you buy, how much house do you purchase?
When the hubs and I purchased our current home, we purposely sought out a smaller home in an ok but not as nice neighborhood as we had previously lived in (which was in a different state). The reasons for this were many. To begin with, we were not certain how long we would stay in this new city and did not want to be stuck with a big home that we couldn’t sell or rent out.
We also wanted to begin accumulating rental properties and we knew that we would get a better mortgage interest rate if we lived in this home first than if we purchased it as a rental from the get-go. We also decided that we just did not need as much room as we’d had in our previous home. So even though it was kind of a downer to move from our bigger newer home (with skylights- oh how I miss those) across seven states into a smaller older home, financially it has got to be one of the best decisions we’ve ever made.
How to Let Your Neighbors Save You Money
Our current home has smaller mortgage payments, and the property taxes are smaller. The utility bills are smaller (although we did have to replace the furnace about two minutes after we moved in- so we certainly acknowledge that one of the drawbacks of an older home is that more stuff is worn out or needs replacing). Our current home is in an older neighborhood that does not have a homeowner’s association- so no HOA fees, unlike the previous home.
But Wait There’s More
But the biggest benefit of living in a less-fabulous neighborhood? The neighbors. Don’t get me wrong, we had nice neighbors in our previous home and we have nice neighbors in our current one. But when you purchase a home in a more upscale neighborhood, the odds are good that your neighbors will be driving newer and nicer cars, taking vacations to the Caribbean, sending their children to private school, etc.
In a more nondescript neighborhood the odds are greater that the neighborhood children will be attending public school while their parents drive pre-owned Detroit-made vehicles. In other words, one of the hidden costs of living in a “nicer” neighborhood is the social pressure to keep up with the Joneses. And the Joneses in nicer neighborhoods typically have more expensive “stuff,” which of course costs more money. We have not ever been ones to be terribly bothered by what our neighbors think of us, but occasionally we felt a little out of place in the former neighborhood because some of our choices in regard to “stuff” were so obviously different from those of our neighbors.
These days it doesn’t cost much for us to fit in with our neighbors. The well-used cars that Mr. CMF and I drive are not out of place here, and no one bats an eyelash when they see us walking back and forth to the grocery store (which is only two blocks away- it is completely awesome). When we needed to fence in the backyard for our dogs, we spent zero time worrying about whether our neighbors would think the plain grey chain link fence was gaudy- heck, that’s what our two closest neighbors have! In contrast, the HOA covenant at our former home did not even allow chain link fences.
The major irony here is that Mr. CMF and I actually both got raises when we moved and took new jobs. We probably could have afforded more house than we bought. In fact, I think we surprised a lot of our friends and family by purchasing the home that we did. I think they expected us to buy a nicer home in a nicer neighborhood to match our nicer salaries.
Needless to say, we are able to save much more money now than we did in our former home. We have been able to pay off some debts that had lingered while we lived at the previous home, and we get to become investors and work on finding ways to help our money grow. By making more money and spending less on living expenses, we are working hard toward our goal of reaching financial independence sooner.
Suggested Reading: Want to learn more about ways to contain your cost of living? Check out one of my favorite personal finance books, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. This awesome book uncovers dozens of secrets of wealthy individuals. Hint: Cost of living is a MAJOR factor contributing to their success!!
What do you think? Have you ever made a financial decision that led to weird looks or uncomfortable encounters with family or friends?
Note: This post contains affiliate links.