Happy with What You Have

Do you know that Warren Buffet lives in the same house in Omaha that he bought in 1958 for $31,500. He hasn’t upgraded to a bigger, better house. Course, it became a more expensive house over time because of the real estate market: it’s estimated to be worth some $700,000 today. But the guy’s worth billions and “good enough” is good enough for him.

So what is it with people who don’t have Buffet’s money – or his brains – and think that they should be living in a home that eats up all their cash flow?

Are marble floor and granite counter-tops so important to our definition of ourselves that we’re prepared to spend money we haven’t yet earned to have them? What the hell are we thinking?

The Financial Post did an article earlier this year called “The New Face of Debt” where they profiled a retired couple living in B.C. who thought it was fine to go into debt to the tune of almost $70,000 – twice their retirement income of $37,000 – to repaint, put in new kitchen counters and custom French doors, along with “other elegances”.  Are we so shallow and uncertain of what’s important that we would risk our long-term security for some nice doors? Whazzup with that?

And now, having paid too much in renovations, even downsizing would leave this silly couple holding the bag. And they’re not alone. All over the place, people are consolidating consumer debt into their homes and hiding it from themselves. They’re using credit to put in gardens, pave driveways and replace their sinks and bathtubs. They’re piling on the debt even to the point of moving into retirement with a bag-full.

Recent studies show an alarming trend. More and more people retiring are doing so with debt. One study by Investors Group found that 62% of people plan to retire in debt.  The Royal Bank found that one in four people begin retirement with a mortgage on their homes. Is this new trend to indebtedness in retirement a measure of our inability to stop spending or our unwillingness to live within our means? And regardless of whether we’re driven by some unseen force to take on debt or willingly walk into Debt Hell, do we actually imagine things will be easier once we’re living on a fixed – often significantly reduced – income?

As if it isn’t bad enough that we bought too much house to begin with – our eyes were bigger than your budgets – we’ve chosen to throw money at consumer goods, travel and stuff before prioritizing becoming debt-free by retirement.

It isn’t your income that’s getting in the way of a safe and secure future. And it isn’t your expenses. It’s your attitude. If you’re tired of being in debt, if you don’t want to be hauling a wheelbarrowful of the stuff into retirement with you, then you have to decide that Debt-Free is the target. And every time you see someone’s shiny new car or someone else’s sparkling new kitchen with the granite counter-tops, know that below much of that  dazzle is rot. That’s what debt is: rot. And you know what rot does? It spreads. Little by little it takes over the healthy parts of your financial life until everything just collapses in on itself.

The trick is to do what Warren Buffet does and see what you do have instead of what you don’t. Become sure of what you really want and then good enough will be good enough for you too.

74 Responses to “Happy with What You Have”

  1. Wow…. The tone of your post is one I’m not used to reading from you Gail. but, I agree 100%.

    Funny thing is, you don’t need to spend a lot to make a space look like it came from a magazine. Depending on the budget, it can take some real patients and planning. I’ve made spaces look beautiful with things I pulled from a curbside, re-use store (habitat for humanity), yard sale or off a clearance rack. Then again, I love the activity of working within the constraints of a nice tight budget. (and making a room look like something that big dough was spent on). The “fluff” doesn’t always have to break the bank. You won’t have the trendiest most expensive finishes, you just have to be clever with colour and texture. But some of the people want the trendy, and want to spend the dough for the bragging rights….

    It boggles my mind some of the couples I saw on till debt. A house isn’t beautiful if there’s a good chance you’re going to lose it. I wonder what kind of property I’ll find once the interest rates have gone up, and people need to renegotiate (with high % and tighter lending rules). There will be many people who are actually surprised to find that they have no choice but to sell their home after they’ve used it to absorb so much debt. (even though it’s in the news, and we have all this warning). I’m chugging along saving what I can, and waiting for my opportunity.

    Along the same vein,
    my biggest beef with homes, and why I’d rather be the one to do the fixing myself.. People get so wrapped up in the finishes. They’ll leave shoddy wireing if it means new potlights. Leave rotting plumbling if they can score granite. Ignore rot and cheap insulation if the choice is between fixing that and travertine. You don’t see any of that “boring” stuff anyway. So sometimes those pretty finishes are both literally and figuratively built on ROT. (and are really worse then worthless). It’s shocking how many people value pretty over actual substance.

  2. You are so right! I think people have to set their priorities strait and think outside of what to buy next just to impress the people around them. We have 7 more extra payments and in May the house is paid off (in less than 8 years). There are at least 15 -20 more years till retirement and we definetelly don’t plan to buy a bigger house. This is our home and we want to live here. Our main Christmas present, this past holidays season, was to make two additional mortgage payments in December and that the balances on the credit cards on Dec 31st were all zero. Would be nice to do some renovations, absolutelly, is it necessary to go in debt for it, absolutelly not.

    “True happiness comes when you learn to be content with what you already have”.

  3. And like the saying goes – ‘You can’t take it with you’ [when you die]….but you can leave your executors with your debt if you’re not careful.

    We have been married almost 25 yrs and still have much of the 3rd hand furniture we scratched together when we were first married. We use the $ we make to focus on paying for our kids’ university education and paying off our mortgage.

    It’s interesting to see the differences in people’s lifestyles. My husband and I were raised in the 60’s before internet, cell phones, colour TVs, etc. Before ‘the Jones’ ‘stuff’ were regularly paraded in front of us 24 / 7. We rent out our basement apt and usually have 20 somethings rent it for a year or two. ALL these 20 somethings end up buying tons and tons of new furniture – all on credit. Their way of spending and our way of spending – well, let’s just say are very different approaches.

  4. I couldn’t agree more! My husband and I are still renting an apartment right now, but when we talk about buying a house, it’s always based on how much we would be willing to pay, NOT what the house looks like or the neighborhood it’s in. We have our basic must-haves: a nice kitchen (as we both love to cook and eat in – saving us money!), enough of a back yard for a dog, and preferably two toilets. Other than that, everything is negotiable.

    We also have furniture that I brought into the marriage from when I was in high school, as well as a dining room table that belonged to my mother’s grandparents. Nothing fancy, just good craftmanship that has continued to wear well and work for us. We do plan on buying a new couch in the future, but it will be after much research and only when we can buy it without paying over several months. Same with a new mattress/boxsprings. Neither one of us sees the sense in paying interest on a purchase that isn’t an “emergency”.

  5. When my wifre and I are ready to buy a house we will be looking for a place that will last us till we pass away. The place we buy will be sold by the heirs of our estate, Not by us. If we have a mortgage when we buy a place our first priority will be to dumnp that mortgage as quickly as possible.

    Going into debt for upgrades is just stupid. Retiring with debt is not an option for us. I’d perfer to retire with millions in the bank not oweing the bank a single red cent.



  6. avatar Psychsarah Says:
    February 11, 2011 at 8:00 am

    I like my modest home (and the reasonable mortgage payments and property taxes that go along with it!) Many friends and colleagues have prettier and bigger homes, and occasionally I see my digs as a tad shabby in comparison, but then I look at our growing emergency fund and retirement savings and I remember why my perfectly wonderful house suits us just fine!

  7. Love, love, love this post!! Right on Gail!!

  8. I’m now with Ann on other people’s fixer-uppers. We bought our house four years ago. The house wasn’t really the selling feature, though it ‘appeared nice’. We really liked the location and 10 acres. However, fixing this guy’s crap is totally frustrating. Every window and door frame was put up with just primer and black nails… it’s driving me nuts – painting them one by one. And I hate painting!

  9. A question then.
    Is it ever feasible to use some of the equity of your house to do renovations. We have old pipes starting to leak and other plumbing issues. We don’t have the $15,000 needed to complete this type of renovation. We have about 59,000 equity if we use mpac as house value. The increase in our mortgage payment would be about 150 a month more than easily managed in our budget. We do have emerg savings happening but only have about 2 months of expenses so far.
    Is it okay in this situation to use the equity to fix it? I’m not asking for granite counter tops just something that works.

  10. I agree 100% with this post! The building we live in is 36 years old, and our kitchen had a modest upgrade (new cabinet doors and flooring) before we moved in 7 years ago… could it use another update? Sure it could… the 70’s backsplash and counter top have definitely seen better days, but will it get done tomorrow? NOPE… because we haven’t saved the money to do it. My Mom mentions the upgrades on occasion, and my answer’s always the same… “when we’ve saved the money, we’ll get it done”.

  11. We are also dealing with the Mickey Mouse who did some “renovations” of his own on our house 30 years go. It is frustrating but we love the low mortgage payments and university fund for our kids.

    “our unwillingness to live within our means” Gail, you’ve hit the nail on the head. For some reason we feel inferior if we don’t have the whatever everyone else has. We need to feel proud of ourselves because of our strong characters, not because we have marble floors.

  12. Love it! Great post!
    We built a house 6 years ago on our property. We had more than one “friend” comment the first time they visited that it was nice and “functional”. Yes, it’s a box and it’s not fancy but we LOVE it and it will be paid off LONG before we retire in it 🙂 Keep up the amazing work Gail! My husband says I have a bit of a Gail fetish 🙂

  13. Johanna;…it does indeed make sense to use your homes equity for “need” repairs…especially if you don’t have your emerg fund bulked up yet…a home equity line of credit is something that makes sense when you need to do a renovation (not just want a reno but NEED it like Johanna does with old leaky pipes)…you can fast track payments on it and the interest rate is low…and you can always use it again should the need arise (not for consumerism…i.e. a winter vacation or new wardrobe)…you should talk to your banker…yes, I said banker…there ARE indeed some good ones out there…like me!…LOL…cheers y’all

  14. p.s….my husband and I decided that this year we are just going to be satisfied with our house and not do any upgrades…maybe we’ll even extend that statisfaction for the next couple of years…it will be a good challenge:)

  15. Another great post! Our house is just over 1,100 sq ft and for the 4 of us it is just fine. I hate cleaning and even though a bigger house would be nice – I’d be the one cleaning it and it’s hard enough here – let alone a larger house. We live in the country on one acre, and have deer coming into our yard (which I’m watching now), and our girls love getting outside for walks. I see those huge homes on tiny postage stamp lots and wonder, “Why?” We have been doing some fixing up ourselves here, and we enjoy it. We will move closer to my hometown within the next 5 years or so, but it won’t be to a huge home. It will be to a nice small home that we can retire in. I don’t want to retire with debt either!

  16. Mo D.- if they bother her she should send you along a gift 🙂

    I do agree with what Gail is saying, but I have been in the situation where I had to put debt on the equity that was in the house…based on the house being worth that much more. It was depressing to do, but for sanity’s sake it needed to be. We were on our way to paying off all our debt on our own but as some of you know life can really throw you a curve ball.
    We really feel like we are in a home now that suits our lifestyle and is a place that we can feel completely content. It’s not the house it’s the location in the woods. Our first home was a row house in the city, since we needed to be close to family for babysitting, shared car, and not being financially ready for what we really wanted out of life. I was prepared to rent even though we had a reasonable downpayment saved up, but by husband (boyfriend at the time) wanted to buy. We got into debt because of the conflicting attitudes and unpreparedness for real life we were 23.
    My goals are to stay out of debt, live where we can enjoy nature, put the kids education first, and have our home paid off before we are 50. We could live uncomfortably and pay off our mortgage sooner, but I am not willing to. A few years ago I wiped the slate clean and pretended that all the money mistakes before our car accident didn’t happen. I am not going to beat ourselves up over it, no regrets either.

  17. Over the past few years I have begun to learn to be happy with what I have. If it is functioning why replace it? Of course I did just buy my first house, and yes, the bathrooms are functioning, but not in too good of shape. But I am diligently saving up the money for these renovations, not getting myself into debt for them!

  18. Do you ever see those televisions shows where young couples purchase their first homes? And these so called first home have all of these luxuries must haves i.e. marble counter tops, walk in closests, huge master bedroom suites. What’s that all about? Our first home was a fixer upper bungalow. Why do all the “perks” have to be present for a first home? What shocks me more, are these couples and families who purchase a second home in some tropical location. For example, what does a semi retired couple need a vacation home 3000+ square foot home for? I just don’t get it?

  19. […] This post was mentioned on Twitter by Mortgages4women.ca, Brian Persaud, Eric Putnam, Gail Vaz-Oxlade, Mortgages For Women and others. Mortgages For Women said: Here's something you should be doing everyday! Reading @GailVazOxlade 's blog http://bit.ly/dKLTZp […]

  20. I agree with you, Gail, for the most part.

    BUT, there are some of us who are going to retire with a mortgage simply because there’s no choice. My self-employed income is so small that I can just barely keep the roof over my head. I am a non-consumer, and have been for a very long time. My car is 11 yrs old; my small, heritage house 156 yrs (could use some help, but livable). I’m only 3 yrs away from retirement (I’ll keep working, of course). The one consolation is that I have life insurance which will pay off the mortgage when I die, so my family will inherit debt-free.

  21. I am, unfortunately fighting this battle myself. You go into the store for maintenance work for your house (we need new windows) and the sales guys start talking about “well, since we have to take the kitchen apart to do some wall repair, this would be the perfect time for a new kitchen.”

    I can see their point. It is harder work to carefully remove and return our existing cabinets. It would be easier for them to rip them apart and put in new ones. I would be easier for them to replace the floor than try not to damage it during construction. And my kitchen is 50+ years old. It will need some work fairly soon.

    I also know I can’t afford that right now. However, after visiting several window places and being given the hard sell at each of them, I am having to work hard at remembering that.

    I can honestly see it happening that the couple in the article started a minor home project and got sucked in to more work than they had planned. Add to the fact that I have had several companies just flat out refuse to take on a small project like mine. If I had seen them first, after 3 or 4 people tell me my project isn’t worth their time, it would been really easy to start planning a bigger project just to get the necessary repair work done before my wall falls apart.

    My house is a 1960 bungalow, less than 1000 sq feet and was a rental before we got it. We knew what we were getting into, and we are finally (after 10 years) crossing the line from repairs to maintenance. AND we are still on budget. It hasn’t been easy.

  22. @ Traci – re buying a house – “how much we would be willing to pay, NOT what the house looks like or the neighborhood it’s in”

    Please, please, please consider the neighbourhood it’s in. That will affect the value of your investment more than any other decision. A cheap house in a bad neighbourhood is worse investment than the most expensive house in a great neighbourhood.

  23. My retired parents now have $70k+ on a LoC however it wasn’t their choice as it meant living in their condo or losing their life savings.

    The condo they bought 7 years ago in BC was labeled a leaky condo 2 years ago and the whole building needed to be renovated. There wasn’t enough money in the strata’s contingency fund to cover the repairs so every condo owner had to come up with $90k to cover the repairs and with it being a leaky condo, my parents couldn’t sell the place and get anything near to what the value of other condo’s in their community. If any unit owner could not come up with the money, the condo corp could put a lien on the property so my parents had their backs against a wall. It was very and still is a stressful time for my parents which I think has contributed to rapid decline of their health and having this hanging over their heads is not something they ever wanted to be in.

    I understand completely with what Gail has said and I am one of her biggest disciples however in some circumstances it was not the person(s) choice.

  24. Well said, Gail, and long overdue to be said. Our focus on instant gratification has gotten us into big trouble.

  25. Johanna,
    I would ask you – how close are you to retirement? Will the extra $150/mth impact your retirement goals? Can the repairs afford to wait until you have padded the emergency fund a bit more? That way, once the emergency fund is padded, if you then choose to use your equity for repairs, perhaps you could use the funds you had been putting monthly into the emergency fund to a new fund for home repairs. If these repairs are necessary to avoid further expense & damage to the house, you may not be able to afford NOT to take advantage of the equity.
    ( High fives to Sparky!! – I’m a banker too – we’re not evil beings!)

    I have no intentions of carrying debt into retirement. I’m 35 and plan to have my home paid for well before retiremwent. When we recently sold & bought, we bought a home that has had a lot of upgrades done to it. In the next 3-4 years we will need to replace the siding and possibly a few windows, but I have set up a savings plan to cover those expenses.
    The house we bought was more expensive than our pervious home, but the difference between what we sold & bought for would have been less than what it would have cost us to upgrade & finish the old bungalow to have the same amount of living space. We didn’t buy a McMansion by any means, but it’s avery comfortage split-entry with lots of potention. There is a large loft above the garage that would make an awesome party room – but we would never get the use out of that for what it would cost us. Instead, we are considering coverting it to an apartment for rental income. If we do go that route, we will borrow to complete it, but every cent of rental income will go back on the loan. No more than 20-30K, or it simply wouldn’t be worth it.
    I must admit, it feels wonderful to have a home that is right for us and we feel content in. I love NOT looking around wishing I could have a bigger kitchen or a nicer bathroom etc. Mind you I move 100KM away to afford this home & lifestyle and I feel happier than ever.

  26. Great post. I have a really hard time understanding why people put themselves in those situations. I do get it when there are unusual circumstances (like some posters have mentioned here), but when it’s simply a matter of greed and entitlement? I don’t get it.

    Saskatoon city council has just cooked up a plan to “help” middle income earners ($45,000 – $70,000 per year) get out of renting and into buying by loaning them the 5% down payment. Seriously? If they can’t save 5%, what makes the city think they’ll be able to handle mortgage payments, loan payment (the 5%), and the expenses associated with home ownership? I think it’s a colossally bad idea and not something they should be getting involved in.

    We live in an average house in an average neighbourhood. We fast-tracked getting rid of all of our debt, including our mortgage, and achieved it right on schedule (I’m 38 and my husband is 40). We opted to put less (not none) into our son’s RESP and our retirement savings, but did manage to max-out on our TFSA savings. Now that our mortgage is paid off, we can use that money to bump up our monthly contributions for our future and can save up for some renos we would like to do.

    What a great feeling to have taken control of our own destinies!

  27. I agree completely with Gail. I paid off my mortgage in my early forties. I would never have considered carrying it into retirement. I’ve done kitchen and bathroom renovations but had saved up all the needed funds before starting. I have only 1500 square feet but it’s plenty to clean and take care of. No granite countertops, but that’s okay.
    If you have a good home maintenance fund built up you will have the money if something like a plumbing or heating “emergency” occurs. Borrowing on your home is not a good idea.
    If you can’t pay off your mortgage by the time you retire then it would seem that you bought too much house and were indeed living beyond your means.
    Like JenniferM, I am amazed by the first time buyers who moan that the appliances aren’t stainless steel, there’s no granite, the closet isn’t a walk-in, and the bathroom doesn’t have double sinks. How about a starter home that you can afford?

  28. Johanna:
    The EF is for loss of job or medical emergency (life basic needs). If you only have two-month’s worth, leave it alone.
    You need to build another account for home maintenance. If your budget can do that, then it is better balanced.
    If you borrow for a necessary maintenance cost (fixing plumbing too late can be very expensive), then make sure that you can repay the loan in a reasonable amount of time AND that you can build an house maintenance fund (for the next house problem because no more borrowing next time… right?). When you are done repaying your loan, put that money towards home maintenance to build it up faster. Question to Gail: What is a reasonable length of time to repay a loan for house maintenance? 3 years like consumer debt or longer?

  29. […] Gail Vaz-Oxdale – Happy with What you Have? More and more people retiring with debt! And why are people living in homes that are eating up all their cash flow? […]

  30. I inherited a bit of money, which I used as a 25% down payment on my house. My house is old, but very livable. It needs some cosmetic upgrades. I am very fortunate in that we are able to do the labour ourselves, which leaves only the cost of materials. We are putting a deck on our house this year, which is paid for by Air Miles redeemed in the form of Rona gift certificates and gift certificates for Home Depot we got for our wedding. We’ve done a fair bit to our house without spending much–my husband built me an island for the kitchen when he was given a free chunk of corian countertop! And our kitchen cabinetry is not all that great, it doesn’t match, but some of it was given to us when my in-laws moved out of their house. My MIL donated to us most of our furniture, too 🙂 My house isn’t all that pretty on the outside–it looks like a tall Kleenex box. But it’s home, and I really like it. I don’t see us ever moving into a bigger home. We are talking about having a baby in the near future, but I think our house will accommodate 3 quite comfortably! The mortgage is reasonable, and the house is in an area that is transitioning to a vibrant arts community. It’ll take a bit of time, but I think it was a good investment–time will tell, i guess.

  31. @ melaniesd and @ Sparky

    Thank you for answering my question.
    melaniesd we are just hitting 40 so a ways yet to retirement and plan to have all debt paid off well before that time. We are putting away just over 25% of our net income into retirement, emerg and other savings so the extra 150 is very manageable. The repairs have been waiting for over 3 years now (we have only gotten on our feet financially the last two years which is why savings are so low yet) and I don’t think it should wait any longer or we might be faced with a flood from a burst pipe on top of everything else. I will go in and talk to the bank. I had been hesitating just because it’s so discouraging to see the debt go back up after working so hard to get it down.
    Thanks so much

  32. @ Marie

    Just read your comment after I posted my reply to Sparky and melaniesd.
    I have already started the house repair fund there’s just not enough there for this bathroom plumbing issue. I do hate the thought of more debt but I’m a bit afraid to leave it much longer.
    I was thinking of adding it into the mortgage but will discuss with the bank having some kind of loan we could pay off in about 4 or 5 years? I don’t think we could pay off 15,000 in 3 years that would be too difficult on the budget.

  33. BTW just a piece of advise for those house hunting. Location location location.
    I love my house. Absolutely love it but I HATE where it is. We will eventually be moving once we are in a better financial position and all necessary renovations have been done. So look, really look at where you are buying. What’s across the street from you really matters and while a 24 hour convenience store might sound well convenient it really isn’t when teenagers are hanging out there and burning rubber as they sequel out of the parking lot.

  34. @Johanna, your cheapest interest rate most likely will be using the equity in your home…if you get a home equity line of credit you can “fix” the portion you use into a term loan thus being able to take advantage of the mortgage rates which are lower than the unsecured loan rates…anyway, get your banker to explain it all and show you the pros and cons of all the lending options available and then you can make an informed decision that is right for you:)

    p.s. high five back to you Melanised!!!…we are indeed good people:)

  35. I love you Gail! and to everyone else who’s posted and does so frequently, I learn something new every day. Thank you!

  36. Johanna:
    If HELOC rates are higher than mortgage rate, check if your mortgage agreement allows you to increase your payments and/or add a lump sum every year. Some do without penalty. Then you can figure out how much extra to pay to equate a loan repayment with a shorter time line than your mortgage.
    $15000 at $150/mo is 100 months for the principal alone. So take your current mortgage payment, add the $150 and that will be payment you want to make even if the bank shows you a smaller number.

  37. This was my favourite post in some time. This message needs to be shouted from the hills!

  38. Good post Gail and right on the money as always. I enjoy watching the home reno shows, but am boggled by the expectations of these young first-time home buyers. Especially when you see them saying that they are looking in the $400K to $500K range for their first homes. Hello!!!

    I know for a fact that most of these new homes will be furnished with furniture bought on credit or even not furnished at all because they are spending so much on the mortgage they have no money left for anything else. I used to live in Fort McMurray, and so many people were going out and buying the fanciest houses they could as soon as they got jobs with the oil companies – it was like a rite of passage. If you worked for the oil company you needed an expensive house! But I also went into several of them to visit and found huge living rooms with a couple of bean bag chairs and not much else, or fancy kitchens with granite counter tops and cheap dinette sets from the Brick in them.

    My husband and I have our retirement home completely paid for and are currently renting an apartment in another province until we retire in a few more years. Our retirement home has been in the family for almost 30 years now, we bought it off my parents. It is an older (1970’s) 12 wide house trailer on a lake lot. We are beach front, and have the best location on the lake. We have upgraded the trailer over the years and added a new deck and new roof last year. We have done all the work ourselves and paid for it all with Airmiles (Rona gift cards) and savings.

    It is beautiful and cozy and all our friends spend tons of time there with us every summer because we have such a great place. We don’t owe anyone anything and it feels so good and liberating. We can retire without having to worry if we are going to be homeless if the markets fall again or interest rates go up.


  39. Thanks for the reminder. Despite having a good size, comfortable family home, I experience house envy. Though when we needed the funds to make major unexpected repairs, I was thankful we’d saved money in our emergency fund
    rather than purchasing fancy furniture and extravagant home decor. I find that my house envy is fueled by watching home improvement shows and/or reading those types of magazines. The easiest remedy has been avoidance – don’t read/watch them.

  40. I love this post… I wish you would just post more about consumerism and stupidity more often. I was there, I am in Debt Rot right now. I am so over it though and pulling up my boot straps every single day. Nothing looks good to me anymore to buy. I get queazy tummy just thinking about the cash and cost of things now.

    I am satisifed that where I live will be good’nuff until I am debt free or until selling it will help me achieve that goal!

    Great post!

  41. Precisely why we’re not buying until we had our downpayment, 3 months income & a proper maintenance fund in the bank. Seen too many friends house poor and miserable. I curb my spending by remembering the “rather factor” as in would I rather have lunch out every day or save that money towards our goal of home ownership. Stops the need for instant gratification pretty fast when you put it in perspective.

  42. We live in the same house that we bought 20 years ago. I am not interested in up sizing. I grew up in the same size of house and my husband grew up in one smaller and at one point on one floor only (4 kids in one room).

    We do need to make some changes, a few more windows to be replaced and insulation. I do want to renovate some areas of my house, but I can wait until my consumer debt is paid off in less than 3 years. In the meantime I am trying to squirrel away money for each room I want to do something with. I am also lucky in the fact that my husband has a carpentry certificate on top of what he does now for a living. He has also helped a few people with their renos and they are the type who would gladly give back.

    I am learning to appreciate and use what I have, not what I want. Last weekend when I was alone for 12 hours (no one home with me-heaven), I started cleaning out one room that is my nightmare room. All I could think of was holy cow you need to use up stuff or give it away. I took some before shots and am going to take some later for myself.

    I like watching the reno shows with my hubby because he just shakes his head at some people’s extravagence. Heck, I’m okay with a laminate countertop thanks.

  43. We do our renovations in small chunks, and never on credit. It’s part of our planned spending account. ((( The drawback is that sometimes the price changes drastically from when you got the initial estimate (lets say for drywall) and 4 years later when you have the money saved up, the labour costs TRIPLE (yes this happend to us)! We end up doing more ourselves than originally planned and DIY projects usually lead to fighting in this house…. sad but true.)))

    But, if everything stays on track, we will be mortgage-free before 50, and even before the kids leave home. With that goal in mind, we are planning to then bump up our savings by the amount of the mortgage payment until retirement (at least 15 years after that) I know we won’t have the magic of compound interest working like it would if we could put the money away now, but that’s impossible because we have to keep the roof over our heads, and kids to feed at this point.

    Now if only the lure of the hobby farm would leave us alone….. we should be content with our modest suburban dwelling for another decade or so.

  44. Do with what you’ve got! However, aren’t we suppose to spend between 3-5% of the value of our homes on maintenance? I have an ancient home that was my Grandparents — Homesteader house moved off the prairies (AB) to town. Been added onto 3 times & it seems that the maintenance doesn’t end — I keep plugging away at it. I could spend mega $$ on renovations but it works for me & “Don’t fix what isn’t broken”! I am debt & mortgage free & can’t see going into debt for this old house. However, I will save up $$ to upgrade exterior that will be more energy efficient thus saving $$ in the future!!!

  45. avatar Mountain Girl Says:
    February 11, 2011 at 3:38 pm

    I read somewhere that the average Canadian family moves every five years? And that something like 80% of first-time home-buyers did the high-risk mortgages (ie, 0/40s and 5/35s). So not only are we seeing people buying beyond their means, but this strange discontent and restlessness has them jumping into new digs pretty frequently. Most would have almost no equity after five years, as they’ve been paying off mostly interest. Yet they go on and on about what a great investment a house is. I’m not sure which is more shocking – the avarice and self-entitlement, or the ignorance.

  46. avatar Gail Says... Says:
    February 11, 2011 at 4:24 pm

    Y’know, I just love all you guys. So many smart people in one place. Wow!

  47. avatar Tennis Fan Says:
    February 11, 2011 at 5:29 pm

    I love my 1940s bungalow in a great neighbor hood. I lived with my parents for a few years to save for a down payment on my house (I didn’t think I would ever have one for awhile). After the market tanked I got my house for a steal. My problems were mostly cosmetic. I did the initial work to move in and since then I do a bit here and a bit there. I still don’t have a yard or laundry set up but that will come with time. Right now I am trying to get a car fund together. I haven’t had a car payment in about 9 years and would prefer to keep it that way. So after that it is just a question of weather I would like to do laundry at home or have a pretty place to hang out in. I pay cash for all of my projects while I whittle away at my mortgage. The best thing about my house is when one of my neighbor/coworkers breaks even on their house mine will have doubled in value. My plan is to never move.

  48. Is it wrong to say that I love that kitchen? 🙂
    Being a bit silly, as I 1000% agree with the post… but I do still love a nice kitchen!!! That said, I’ve got a “kitchen fund” bank account where I’m saving the funds to renovate. We will ONLY reneovate when we have the $$ to pay for it.
    I’m in my 30s but growing up, I saw my family making stupid decisions where they bought on credit assuming their high income would continue. When it didn’t, we had problems.

    I will only feel good about that new kitchen if I can pay for it with cash – DEFINATELY not credit !!!

  49. Ah, yes…the great existential question! Are we just a sum of the “things” we own?
    And it doesn’t matter how much money you earn, if you spend it all and save nothing for a rainy day, you’re just as poor as if you never had it. (Although I do enjoy the memories of how it got spent!)

  50. We are in the midst of several home renovations…brought on by “situations” like a leak during a rain storm. 🙂
    When we bought our 30 year old house we were happy that all the windows and roof had been replaced within 2 years prior to our purchase and the house was solid. Two years after that we found a leak during a storm which prompted a siding re-do. That project is still underway almost 1 year later as my hubby and a friend are doing the work themselves and this soggy BC weather just isn’t co-operating. Also, while it is expensive we were able to use connections to get the concrete siding at a huge discount and some nice faux bricks for the front for free! Yep, free! which is good cause we’ll have to pay someone to install those.
    Anyhoo, good neighborhood, bad house layout for a young family, solid home but far from extravagant. I think we’ll be here a while…and that’s ok even without a kitchen reno. (Which by the way, my hubbywants way more than me even though I’m the one who spends all the time in it! Go figure)
    Now, to get the debt off our back and excelerate those mortgage payments and rrsp/tfsa $$$$.

  51. I’m getting scared. Even with you, Gail and our friends here, the message still doesn’t seem to be getting through to 80% (maybe more)of the population. I wonder what will happen in the next 20 -30 years with all these idiots! Will we as a society ever ‘get it’ ? Or will this always be the norm? I suppose time will tell…

  52. “We”, or rather, DH, does all of our renos himself; darn lucky I married someone good-looking, nice AND handy 🙂
    Since we’ve bought our small 1100 square foot home, we added cupboards to our kitchen, did a complete bathroom make-over, finished our basement, redid our porch, put in a woodstove, built a decent sized shed, replaced flooring in the bedrooms and living room, and a play structure for the kids. Last summer we put in an interlock walkway using my parents’ neighbors’ discarded bricks. Our renos were paid for in cash, or within a couple of months… Our problem has been that when DH has the time, it often means that he’s not working and bringing in an income, but, without the projects to keep him busy, he would go stir-crazy, so we’d budget accordingly and somehow survive. I am sure many people figured we must have huge debts, but in reality, it’s likely that theirs were much higher, cause as I said, our debts would be paid in a couple of months, even while unemployed.

  53. avatar Mountain Girl Says:
    February 11, 2011 at 9:16 pm

    Phoebe, not to be a doom-and-gloomer, but I think the people on this forum are in the vast minority. Statistics are showing us that the Canadian debtload is staggering. We’re in worse shape than the average American before their housing market crashed (ie, when they were living the high life on cheap credit). What makes me really really mad is that our banks take on no risk when they approve high risk loans. Our CMHC puts all the risk squarely on the Canadian taxpayer. So yes, the savers will have to pay for the spenders if we see interest rates rise and overstretched households start to default on their mortgages. That does not sit well with me.
    As for wondering if this will always be the norm, I don’t think it can be, personally. Our planet is already suffering from our overconsumption of resources. It’s not healthy or sustainable.

  54. I should have read this post earlier today… totally slipped up and bought some stuff I didn’t really need… argh, I hate it when I fall off the debt wagon.

    On the housing note, I took one of those ‘scary mortgages’ (5% down and 35 years) that frequently get mentioned here. Let me explain why it made sense for me:
    1) The total amount I pay towards my house (MTG + taxes + utilities) is the same as an apartment would cost me. Thus even though I pay a lot of interest, it still makes sense in terms of the budget;
    2) Neighborhood really began to matter a great deal to me when I found myself a single parent of two young children! The areas with cheap apartments that might work out to saving about $200/month as compared to what I spend now for the MTG etc are not places I want to raise my children for any amount of time; and
    3) I got the MTG at 25 years of age which gives me enough time to step up my game on payments once I am not paying $2000/month towards childcare.
    I just wanted to point out that taken in context, these mortgages are not totally evil but allow someone like me (a sole-support parent) to provide a safe environment with good schools for my children — all for the same amount of money I would spend for an ok apartment in an unpleasant neighborhood.

  55. I wonder what Mrs. Warren Buffet’s kitchen looks like?

  56. I am a new homeowner (September 2010). My house is old: !935. It has been rewired, and inspected by the Power Authority, the main and basement are all renovated. So that leaves the upstairs, and just the bedrooms at that. The only thing that needs to be done there, new floors and they are all crazy original hardwood. But I can wait. I have my list of things that need to be fixed, minor stuff: 3 tiles need to be grouted in the dining room. A little mooter on the outside wall and tidying up my backyard and putting in gutter covers.

  57. I totally love Gail’s message here and I wish more people would take heed. Sometimes I feel like we’re doing something wrong when I look around and see all the extravagant spending going on around me… There’s NO WAY we can afford to spend like that AND save for our future needs! My best guess is that neither can these big-time spenders. I’m thankful for shows like TDDUP, that take the secrecy out of personal finances, so we can see how others who “appear” to have it all really have “nothing”.

  58. Spot on (like always) : I was just trying to convince my BF today that moving to a bigger house will not solve the ”having more space” problem. We need to work in some other areas 🙂

    On the other hand I just wanted to ask all the specialists over here (Gail inlcuded) what do you guys think about http://WWW.Mint.com – I was very happy to see that they opened a site for Canadians and since I know that it,s very popular in US I was wondering if you guys have some advice about it?

  59. I was at a friend’s home last night, one of the largest, most expensive homes in our city. Top notch everything, from the grand piano to the full gym, to the 70 inch televisions. It was lovely but it did not spark any envy in me. She is wealthy and I am am middle-income earner. That is her lifestyle and I have mine.

    I think that one of the key things we all need to do is understand who we are and how we got to where we are. We actually grew up exactly the same, she chose med school and I chose an Arts degree and computer science. So now, as we just hit 40, based on the choices I made, how can I be envious of her?

  60. @Geoff:
    Oh my gosh, yes, we will definitely be looking at the neighborhood, too! Didn’t mean to sound like it would only be about the cost of the house – sorry about that. I’ve seen some really cute houses (or at least ones with potential), but the area they were in was scary indeed. Would never feel safe, and yes, home values wouldn’t be good, either.

    Just thought I should make that clear. 🙂

  61. Pisces,
    I have been using the Mint for almost a year and it is wonderful. You start out on a page with a complete summary of all your accounts and current monthly budget. Then you can go onto multiple tabs with more details. It also is set up for setting goals. You can set it up to be digital jars. One of the best things about it….it’s free.

  62. I am mortgage free – living in the same small townhouse for the last 25+ years. My father encouraged me to buy instead of renting – building up equity. Over the past 5 years I’ve done a couple of major renos [kitchen financed by part of the money left to me after my parents died] and last year I put in new windows and doors [paid in part from the ‘inheritance’ and in part from my reno/maintenance fund. This year I need to replace the hot water heater and figure I may as well do have new toilet and faucets installed in my bathroom. I’m also debating replacing the carpet on the main floor with hardwood or laminate. 5 years ago I went into a panic mode where I was looking for a bungalow style townhouse [worried that I might get injured and not be able to do the stairs always [bedrooms and bathroom are on the 2nd floor] I got over my panic attack in part due to my real estate agent who was more interested in looking at what I wanted out of a place and my unwillingness to take on a big mortgage. Now I’m getting worried again after several people I work with have had major health issues – I love the location, my renos, my backyard and the fact that I can have a pet but wonder if I should be spending money on renos or saving it in case I might need to move in the future.

  63. @Fern….it sounds like this really is a place you love…you may be able to have a lift installed on your stairs going up to the second floor should the stairs become difficult…something to consider saving for in your maintenance fund…then you can continue living in the place you love in comfort:)

  64. @ Nicole S Can you take the stuff back?!

    Anyone have any ideas for a frugal Valentines Day?

    I think I am going to bake a pie for my husband and daughter.

  65. @Tennis Fan : Thanks so much for your feedback – I’ll give it a try – I’m just a little paranoid about handing out all my passwords/accounts etc. but if it keeps me on track it’s all worth it 🙂 Thanks again

  66. Truer words were never written. Last year we moved back to Canada after 3 years of living in abroad. My hubby and I were both shocked at how messed up priorities are on this side of the pond. Everyone is obsessed with what other people have, and buying “stuff” better than what others have. Perverse. We have a small house, but it is big enough for us, and we have cash in the bank. Many of our friends and family have lovely big houses but not much else. We have two incomes and live quite confortably on just one of the incomes. We still enjoy life and are able to take nice vacations because we are not caught up in having the best of everything. We are content with what we have. Wish our friends and family could find that peace before it is too late and our economy crumbles under the pressure.
    Love that you are putting the message out there. “Stuff’ does not happiness make!!

  67. Three years ago my Husband and I and our first born lived in a smallish condo town-house (about 1200 sq ft including the basement). Then we got pregnant again and I “needed” a bigger house.

    Sure, now I (we) have a lovely single family home which is not all that huge but our debt sure is.

    The worst part is I “had” to have a separate formal living room and family room. Well, I’m sure you can guess which room NEVER gets used.

    Sadly, hindsight as always is 20/20…

  68. @Sparky – thanks for your suggestion, it is something I’ve considered. On a lower scale I’ve decided to turn the 2nd bedroom into a den – someplace to spend a day if I’m not feeling well. I guess things are going really well in the present when I need to obsess about what might go wrong in the future. I do know that any upgrades that I do will be paid for without using credit. It is such a good feeling to know that [in a large way thanks to Gail] I’ve learned the value of saving for the things I want. One of things that I’ve learned is that SAVINGS is a long term – not planned spending ‘savings’ or emergency ‘savings’ – that was a lesson that took numerous episodes of life and “til debt do up part’ to learn

  69. Wow, you are so right Gail. I too live meagerly. I am happy with what I have, and do not spend much to upgrade or renovate. But it’s extremely hard to stay in this mindframe because most of the people around me, the coworkers, family members and everyone on TV seem to upgrade, renovate and spend spend HUGE doing it. Even Oprah encourages making your home your sanctuary. I personally don’t need granite countertops or shiny new cupboards to feel good about my surroundings or myself.

    Sometimes it is better this way. Case in point, I recently had a break and enter, and the poor thieves couldn’t find anything worth stealing!! ha on them.

  70. We live in a 1000 sqft house with 3 kids, ranging from newborn to 11 years old. The guy who own the house before us had 8 kids.

    Why do people think that 1000 sqft is small? People give you that funny/pity look when they find out we live in “small” house with 3 kids.

    Why should we have to apologize/justify for having a house that’s “only” 1000 sqft? It’s enough for us.

  71. Hey , Gail I m i dad so bad and I fill so bad with 2 kids and I m asking for help plezz help ..

  72. avatar Beth in the USA Says:
    February 14, 2011 at 2:02 pm

    As someone who lives south of your border, I really appreciate your helpful blogs and the insightful comments by your readers.

    It’s taken me YEARS to be happy with what I have. I don’t know why, but I was always envious of others. With siblings who had not just one home, but 2 (sometimes 3), and fancy cars and suv’s, it was discouraging at times to be around them.

    Now that I am older, and wiser, I am happy with what I have, even though it’s old and dilapatated. The grass is not always greener on the other side. And basically, I like my weeds.

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