Smart Reasons to Save, Use and Invest Money

Why We Didn’t Buy The Most House We Could Afford

Today, I decided to give my story on why we decided to build the house that we currently have.

My Upbringing:

I come from a family were both my grandparents and parents either paid off their mortgages early or never had a mortgage.  Both never liked being in debt long, at least not consumer debt.

When we bought our house, we didn’t buy the most expensive house that we could afford.  Instead we build one that we could get by with comfortably on just my salary.  This enabled my wife to become a SAHM (Stay at home mom).

Today, my wife and kids have a strong bond, they do many great things together, including homework and special fun trips.  That stability in the life of my kids is something that was missing for both my wife and I when we were growing up.

It Came With A Price!

With only me working a paying job, it drastically slowed our wealth accumulation.  Oh sure, I still pumped a bit of  money into my 401k, the kid’s 529 plans and into a few investments in my regular brokerage account, it was still small amounts.  Based on our frugal ways and if my wife were to have continued to work instead of becoming a SAHM, we would have been millionaires by now.  But instead we decided to raise my kids this way to maximize their development to the fullest.  To date, we have been very successful with the path, and I’m very happy with the way our kids are turning out.

The key that enabled me to accomplish all three tasks at the same time (mortgage accelerated payment plan, 401K contributions, and 529 college plan contributions), was that fact that we bought an affordable house and lived frugally.  We could have bought a house that could have been closer to a Mc Mansion, but we picked the path that we thought would be best for our kids.

So to conclude, why we didn’t buy the most house we could afford to, was because we didn’t want to be house rich but cash poor.  This in turn enabled my wife to be a SAHM and for us to have some flexibility in raising our kids the way we think is best.


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30 Responses to Why We Didn’t Buy The Most House We Could Afford

  1. I agree with your choice Hun! It is never good to sacrifice you Life for the living standards set by others. 😉 Frugality allowed you to raise wonderful nurtured children and a close family bond. That is Priceless!

    When the kids get older you still have plenty of time to seek and invest in other diverse income streams, not just savings.
    More families should follow your lead and live within their means while being selective about their priorities & Enjoying Life in the process. 😉

    FB: RetiringEarly

  2. Hi MR – our circumstances are about the same, underbought in car and vehicles, and SAHM. I’ve seen former neighbors trade up in both, and wonder how well or bad they’ve done in the downturn.

  3. We have similar stories and I did the a house based on one salary. Thank god I did because then we bought babci’s house and we needed 2.

    I want to let you know that you wouldn’t be leaps and bounds further ahead if your wife worked. We have to pay a small fortune in daycare, so a good chunk of her salary would be eaten up right off the top, plus drycleaning, having to buy work clothes, etc. We also pay a crazy amount in taxes every year. My taxes last year were more than my first year’s salary out of school.

    We are better off than we would be if I weren’t working (mostly retirement), but we’re not close to being millionaires despite our frugal and do it yourself ways. Plus, it’s impossible to be as frugal as your wife probably is now. I’m not home enough to always cook from scratch. We eat out more than we would, we buy convenience foods, we don’t have as much time to shop around for deals.

    I do the best I can but sometimes, you just pay the extra to get through a crazy week.

    • Good point on all the extra costs!

      We do race around a lot it seem like anymore. Our kids are in everything, or at least it seems so to me…

      Overall, it sounds like you are doing great!

    • Our friends told us to buy the most expensive house that we could afford. The premise being that our salaries would increase so that it wouldn’t be a problem. My salary did increase, but I didn’t want to be house rich and cash poor.

      It has worked out well for us though…

  4. I don’t have any children but when I do, I’m pretty sure that I want to be there to see them grow up. I’d probably be a stay at home mum too, although you never know what the future holds. Besides, pretty much every house valuation is telling me that I’m not moving anywhere for the time being.

    I probably wouldn’t go for properties at the top of my budget either. It’s always good to have something left over.

  5. We did the same thing. There were some very lean years when I first started staying home, but it was absolutely worth it.

    We would have a lot more money if I worked full time this whole time, and also if we didn’t send the kids to private school. But, we are not poor (yet 🙂 ), and we have a pretty happy family. I am very happy with the decisions we have made.

    • We actually started out making double payments on the house, but scaled back once my son was born. It wasn’t a surprise though since we had it all in a spreadsheet.

      We’re actually pretty content too. I definitely human nature to look at the neighbor’s green lawn a block or so over…

  6. I thinks that’s awesome. Being a teacher, there is a difference between kids who have a parent at home doing activities with them compared to those kids that spend their whole day in day care. I know that for some people, they have no choice and they do the best they can. Buy if a parent can be home with them after school and help them with homework or projects or take them to the museum or park, it makes a huge difference!

    • I think it has made a big difference too. The participation in sport has molded them a different way than when I was a kid too.

      I think they are going very well. We could be living larger (without debt even), but our way is still good enough…

  7. It is all about choices! When our children were small, my wife worked part time and there were only 2 hours a week that one of us was not there. It makes a huge difference in their overall development. Our children are now successful adults and attribute seeing our behavior as role models as the critical factor. That can only happen if you are with your children.

    • Sounded like it was a great system you and your wife had!

      A co-worker works the 3rd shift so that his wife can work full time. So in the day, he’s mister mom, then at night once his wife is home, he goes to work.

      I’ve always been impressed. I’ve asked him if it’s hard and he says not really. After doing it for years, he’s adapted.

  8. My parents both worked and my sister and I turned out incredibly successful. DH and his siblings the same (though DH is the only one with an Ivy league PhD so far… the others have masters from flagship state schools).

    I also notice a behavioral difference on the playground between daycare kids and kids with SAHP, but it’s probably not the same one that other commenters are mentioning.

    I understand it’s a priority for many people to stay at home, and I respect that choice, but honestly it’s more for the parents than for the kids. Kids turn out great whether they have a SAHP or they go to daycare. What’s important is that they’re safe and loved and get to spend quality time with the family and if there’s a daycare it is a high quality daycare.

    Families should do what is best for them and what stresses them out the least. There’s no halo for being a SAHP (though it is a difficult job), it is a personal choice. Just like traveling or buying a range rover or whatever it is you choose to do with your time and money.

    Maybe some kids are better off with a SAHP but if that’s true then there are also kids who would be better off with both parents working and a bit more outside care. For the vast majority it doesn’t make a lick of difference in child quality, especially once they’re old enough to start making their own choices.

    • It’s funny I enjoyed all of the comments, but my point really was “So to conclude, why we didn’t buy the most house we could afford to, was because we didn’t want to be house rich but cash poor.

      As for the choice between daycare vs a SAHM… I guess it really would depend on the finances of the individuals involved, and the quality of the job that they could perform in the role.

      My wife does a great job, but me, not so much. My kids probably would have went to daycare if I were the one that had the opportunity to be the SAHP…

      As for your statement “For the vast majority it doesn’t make a lick of difference in child quality, especially once they’re old enough to start making their own choices.”, I beg to differ. During the formative period of a child’s life, I think guidance from parents help mold their character and beliefs. But again, it really depends on the parents…

      Being a SAHP, isn’t the best solution in very household. I know I stated this already, but I would not make a good SAHP… I lack the patience, and I’m smart enough to realize this flaw that I have…

      • I’ll give one more counterpoint MR. My daycare lady has been raising kids for 30 years and has 11 siblings. She has WAY WAY more experience than I ever will.

        I arrogantly thought the same that “guidance from parents was the most important thing too” and felt guilty about daycare until I realized she’s WAY BETTER at it than me (routines, set nap time, manners, etc). She put my kids on a routine after 1 day when I couldn’t do it for the 12 weeks I was on maternity leave.

        Like you said, it depends on the parents and it sounds like you’re wife is a mommy superstar, but I’ll gladly admit that my home daycare person is a mentor. She has taught me a lot about parenting and I’m extremely grateful for that, especially with kid #1 when everything was so new.

        • Great point.

          My wife is a superstar mom. She has a lot of experience with kids, via experiences babysitting, as a bible school teacher, stuff she’s read in books, etc.

          You just made me realize that it comes down to the daycare worker too. Not all daycare workers care as much as your daycare lady. Some just view it as a job…

          I do think that even if the daycare workers don’t care much, there are some great benefit in having a fixed routine for a child. That would be a definite positive.

          Hmm, I think I’ll do a post about this, thanks for the input, I love conversations like this that make me think!

  9. Part of me wishes I had gone the route of the smaller home and did a 15 year mortgage instead…but hey, lifestyle inflation! Personal finance blogger or not, I have things to work on.

    • It’s all relative!

      I now wish I had a larger house with a bigger yard. I wish I could convince my wife and kids to more to a bigger house… But at the time when we purchased the house we are in, it was the best move.

  10. We paid too much for our housing… It’s a small place, but we paid for location.
    If we ever have any financial problem, this place is going up for sale and we’ll move into one of our rental home.

    • Wow, I never thought about that! If I had a rental house and a large house I could short sale the house we lived in and move into a rental (if we had one). Interesting! I never thought of that route!

    • I’m a bit less frugal than my wife, so I wish my yard was bigger or I lived somewhere by a beach…

      Still, it’s not bad as I make it… at least it’s paid off.

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