The Path Not Taken

Andrew Forsythe

IN AN EARLIER article, I wrote about a catastrophic stock market loss that taught me—the hard way—about the benefits of diversification and the importance of managing my own investments. That loss derailed our plans to build a large and expensive home in the hills overlooking Austin, Texas.

We were heartbroken at the time. This had been our dream for several years. But it’s funny how life works out sometimes—and it may have been the best thing that ever happened to us.

As we planned our dream home, I knew it was going to involve taking on a huge mortgage, but that gave me no pause. I was young, ambitious and already accustomed to long, stressful hours at my job. It never dawned on me that I was putting myself on a path that I’d likely feel compelled to stay on indefinitely, or at least until that big mortgage was finally paid off.

And the mortgage was only part of it. A big expensive house also costs more to maintain, the property taxes can be a huge burden and it can propel you into a more expensive overall lifestyle. That last factor is worth special consideration. When you buy or build a home, you aren’t just acquiring a place to live. Rather, you’re becoming part of a neighborhood, a school district, and a group of friends and neighbors.

When that’s all on the upper end of the wealth scale, your finances will be affected in myriad ways. Even if you can resist the peer pressure, you’ll feel it through your kids, who will be much more susceptible. You’re basically locking yourself into a way of life. Consoling yourself with the thought that you can always change trajectory by selling the house? That’s much easier said than done, especially when the kids are at local schools and have neighborhood friends.

Ironically, when we were clobbered by the stock crash and our dream home went up in smoke, it may have been a blessing in disguise. We had been living temporarily in a more modest home, but one we had come to love. It was spacious, in a great school district, sat on a wooded acre with beautiful views and was close to a lake where our kids liked to swim. Although it was far from the city, meaning a significant commute for my wife and me, that also made it affordable. Not long after the stock crash, our landlords—fortuitously for us, but not them—went bankrupt. We had the chance to buy the home from the bank at a terrific discount and we jumped at the opportunity.

Looking back from almost 30 years later, we’re thankful this twist of fate kept us in the house. Our lifestyle hasn’t been fancy, but it has been comfortable. Our costs of homeownership have remained modest year after year. That enabled us to save and invest more, and we’re now happily retired with a healthy nest egg. The path we chose—or rather fate chose for us—has meant a sense of freedom, of not being held hostage by that huge mortgage and elite lifestyle we thought we wanted. My wife says that if we’d gone in the original direction, I’d likely be dead by now, the victim of a heart attack or some other stress-related malady.

Everyone’s different and there are many deep-seated psychological reasons for the choices we make. For some, the expensive dream home, with all its attendant joys and burdens, may be the right choice. Still, with the benefit of hindsight, I’d suggest thinking carefully about what you’re getting into.

Andrew Forsythe retired in 2017 after almost four decades of practicing criminal law, first as a prosecutor and then as a defense attorney. Along with his wonderful wife, kids and grandkids, he loves dogs and collecting pocketknives. His previous article was Saved by a Crash.

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Ira Rosenberg
Ira Rosenberg
1 year ago

Excellent points made which I can relate to directly. When we are young, ambitious and energetic we don’t think that we or our priorities will change over time. Slow and steady does win the race.

Roboticus Aquarius
Roboticus Aquarius
1 year ago

Great post. Expensive homes and cars are the biggest impediments to building wealth, imho.

1 year ago

I have a somewhat similar story. In the mid-00s, we were living in a modest but comfortable home with our two daughters. Our housing costs were low. But I inherited some money in 2005, and we thought about moving up to something bigger and more upscale. We looked around for months and made a couple of offers. We were outbid on the house we really wanted—this was in the hot housing market in 2007. We ended up staying put.

Of course, the next year the housing market crashed, and we would have bought at the very top of the bubble, plus all the expenses you mentioned of moving to a bigger, nicer house. Our kids left the nest in the following years. In 2019 we finally sold our modest home for a $500,000 profit after owning it for nearly 21 years and downsized to a lovely brand-new condo. Even after making a substantial down payment and buying all new furnishings, we have a nice chunk of cash left over, and that feels good in a pandemic. Because we didn’t dramatically increase our housing expenses, we’ve been able to fully fund our retirement accounts and put our kids through college along with enjoying great travel and plenty of fun.

I’ve often thought about how our lives would be different if we’d gotten that house in 2007. Saved from ourselves, I’d say.

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