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Financial success is driven by good savings habits—and for that we need low fixed living costs.
I spent 20 years in a house that was far less expensive than I could afford. This isn’t a strategy I recommend, because I never much liked the house. Still, it came with a huge silver lining: The modest monthly house payments allowed me to save great gobs of money.
My sense is that most folks aren’t naturally inclined to save. But even if they are, they may find it impossible to sock away a healthy sum each month if they’re hemmed in by high fixed living costs, such as mortgage or rent, car payments, property taxes, insurance premiums, student-loan payments and so on.
My advice: Think long and hard before taking on any recurring monthly or annual expense, no matter how small. Such expenses not only crimp our ability to save, but also they could cause stress, because we’ll have less financial breathing room.
Jonathan is still giving great advice. Simple an to the point too.
We always bought homes we could afford, but only if we really liked them. We spend so much time in our homes, there’s no way we would settle for less. Of course not everyone is in a position to afford the house they want. As retirees, we are in a home much larger than what 2 people need, but it is what we want. Downsizing to a smaller home to reduce expenses and upkeep would make our everyday experiences less enjoyable.
God Bless Jonathan and his wonderful Family. For sure Jonathan helped so many people. Thank you.
Except for a couple of years renting a house from a friend after a cross continent move, we’ve always had newly constructed houses to our specifications and getting exactly what we wanted. Frequently moving because of the military meant we never accumulated much equity, but that was a “price” worth paying. And with a 2 1/8% mortgage on our retirement home, life’s good.
For my wife and I, our house payment rule was that we always wanted to be able to make our payment on one income. It meant that we bought less house than we could afford, but it also meant that we never experienced the real threat of a forced sale that too many families have had to face. It also allowed us to pay ahead on our mortgage, which saved money and meant our house was paid for when we retired.
In 2000 my husband and I bought our first home – a cute 2 bdr duplex in an historic neighborhood in Memphis. It was a little more than I wanted to pay, but knew we could swing it and the house was in a great neighborhood and super convenient. He was a medical resident and I was working full time. Perfect first home. We loved it but figured we’d move up in a few years. 2006 rolls around and I’m looking at houses and we couldn’t afford anything in an area we wanted to live. Why could a doctor and librarian not afford a reasonable house? Well 2008 rolls arrives and we all figure out why.
Incidentally the Great Recession spurred us to return to our home state of NC. My husband took a job halfway between our parents residences an hour away in either direction. He stumbled upon the job listing at the right time as it had been advertised earlier. Several other physicians had turned them down because they were stuck in houses they couldn’t unload in their current cities and move to NC. We however had a small mortgage in Memphis and could easily swing two mortgage payments until we could sell the home when residents began their new residencies in May. And that is exactly what happened. Staying in that smaller, medical resident home allowed us to make the move. The home we bought in NC was a cute home, plenty big for our needs, in a great neighborhood, super convenient, but a little more than I wanted to pay. Sound familiar? Well, almost 20 years later, we are still in it and no plans to move. Frankly I plan on leaving in a pine box. But both homes we have loved. Convenience and great neighborhood are two things wouldn’t compromise on.
What started as a successful strategy was likely maintained after it was no longer optimal. A fault of many super savers. There comes a point where one can easily afford a better (house, car,….), but get stuck in super saver mode. Like the old couple that waits until retirement to order drinks at a restaurant.
I’ve done both sides of this. We spent nearly 21 years in a “medium” home—not the worst, not the best. Over time, we considered “moving up,” but long story short, we never did, and ended up clearing over a half-million dollars when we finally sold it. That profit helped us buy our “downsizing” condo, and then we flipped that into the home we live in now.
On the other hand, with our recent purchase, we’ve taken on a larger housing expense than we’ve ever had…in our 60s. But as I wrote in my little mini-series on our move this spring, we had our reasons.
I do not regret hanging in there with our “medium” house. I didn’t hate it, but it had its limitations. Staying there helped us a lot financially.
We are still in our “starter home” for 20 years! Yes, the 1500 square ft did feel cramped during a period when all the kids were home and husband was working from home.. but we stuck it out. The best part and reason I cannot imagine moving? My neighbors!
Jonathan spent 20 years in a house he never much liked.
We spend 75% of our lives at home. That’s 15 years of his life in the wrong house.
Everyone makes their own choices, but I would never, ever have purchased a domicile I didn’t love. I’m in my fifth and probably final home now, and I’ve been crazy about all of them. Some were financially unwise purchases, but to me the warm, happy feeling I had walking in the door or just hanging out in the place was, and remains, worth more than money.
By the way, size never mattered. It was all about the water. View was my #1 priority. Still is.
I spent over 30 years in a house that was smaller than I could have afforded when I bought it. Fortunately, I really liked the house, which was a new build. Now I am spending the savings on a large apartment in a CCRC. (I am still driving a 2007 Camry hybrid, but that’s partly because I hate car shopping.)
I couldn’t agree more. We’ve likewise lived for decades in a house which we love and which is very comfortable, but is less imposing that what we could’ve had. We were once tempted to go in the other direction, but the heavy hand of fate intervened and I’m glad it did.
We’ve been richly rewarded for keeping our fixed costs low in this way—everything from less paid in property taxes and maintenance to having more surplus to invest.
My wife and I did not have expensive habits and were generally conservative in our spending. One area that we did spend on in retirement was travel. We took some great trips and thoroughly enjoyed them. We both kept our cars for a very long time. I am on my 4th Toyota Camry since 1992. Judy preferred bigger cars with lots of features. She bought a used 2007 Toyota Avalon in 2010 with about 30k miles. The engine blew in 2022 with almost 200k miles. There were few new or used cars available in 2022, and she wanted another Avalon. We found a 2019 Avalon Limited with all the features she liked. We bought it and she was very happy.
I have lived in the same house for 54 years. We considered moving after I retired, but we decided to remodel our house instead. Judy passed in 2025, so I am selling the house and looking for a new home, most likely in a CCRC.
Another area we have spent on is family. We assisted with college expenses for 2 of our granddaughters and provided assistance to our 2 children when needed. We also tithed at our church and contribute to worthwhile charities. I feel blessed to be able to do that.
Assuming you live in a non community property state and the title to your half century + years owned home was joint with right of survivorship with your wife you may want to consider getting a formal, qualified retrospective home appraisal to document your wife’s half interest of the property’s fair market value as of the date of your wife’s death (which became 1/2 of your home’s tax basis at that date). If you expect a large taxable gain upon sale such a qualified appraisal may help avoid protracted arguments about your home’s changed tax basis with state and federal taxing authorities that you will report for the year when you sell your home.
You may want to note in your planning that as you did not sell the home in 2025 the $500K MFJ IRC 121 maximum exclusion of sale of your residence changed to the lower single $250K maximum exclusion in 2026.
A third thing to consider in your tax planning is that when you sell if you do have a large taxable gain that as a person on Medicare parts B & D that gain may trigger additional IRMAA premiums in the second year after the gain occurs.
I have considered establishing a revocable living trust (RLT) to transfer our home’s title to but it currently seems likely that we or the surviving spouse will sell our home during life. If we change our planning and we agree that the survivor will live in our home through the end of life then a transfer to a RLT during life where our heirs (our children) should get a DOD step-up to the full 100% FMV and completely avoid any taxable gain on our home sale. We will make our final decision about a RLT in the next few years.
I hope my thoughts help.
Best, Bill
Since I graduated from college in 1980 I have had four pickup trucks, all but the last one (bought in 2020) were bare bones 2WD. The 2020 is 4WD (so I no longer need to load cinder blocks into the back for traction in snow) and all the bells and whistles. It will be my last. Thus an average “keepage”of 10+ years each.
I call myself frugal, but in truth I’m quite ready to spend money when the urge hits. My wife and I ordered a custom table and chair set for the breakfast area yesterday, for a price above what my wife thought we would spend. But after getting an idea of the price, my calculation included the years of enjoyment that I knew my wife would have by owning and using the furniture. It looked like a great value to me.
But that worry-free spending would not have been possible for us without our previous years of saving money by getting by with less when we would have preferred better, along with a reluctance to make those little purchases that add up to big totals over time. Add to that the absence of debt and other current money drains that Jonathan lists above.
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