Based on the title of this post, you might think that I’m delving into politics or the federal budget, but I’m not. Instead, I’ll start off with three little stories about Sarah and our family.
1. When Sarah and I were shopping for a house in 2007, we looked at a lot of them. We went to open houses, we scheduled visits to practically every house for sale within anything close to our price range in the area, and we even looked at houses somewhat outside of the area we wanted to live in.
Anyway, we found this perfect house. We both loved it. We were planning on having three kids and it had these wonderful bedrooms for three children. The master bedroom was just perfect in size and had a shower tall enough for me (I’m six foot five and a half). The basement was unfinished and completely open, as well as having a ceiling plenty tall for me to stand up in. The kitchen was wonderful and had an island and plenty of cupboard space for cooking supplies. It was in an area that wasn’t heavily populated, but we observed a couple houses nearby that had young children living there.
In other words, it was pretty close to exactly our dream house.
The drawback? It was a significant amount more than we were planning to spend – about $60,000 more. Another factor is that the square footage, if we finished the basement, would have been around 4,000 square feet.
My wife had spent time cleaning houses for others and she knew quite well that the time and cost invested in maintaining a home is almost directly proportional to the square footage of it. We also knew that property taxes were also highly related to the livable square footage of the house in that area, thanks to the assessor’s website.
In other words, we’d be spending many hours a week just on household maintenance and cleaning for this house, and our property taxes would end up being pretty high, too. We would be continually paying, with our time and energy and our money, for every square foot that we bought.
With that in mind, we began to re-evaluate the purchase. Did we need these three roomy bedrooms for our children, when at the time we only had one (and another on the way)? Did we really need all of this space in the basement? Could we really afford those property taxes? More importantly, did we want to constantly invest that much time into cleaning and maintaining a house of that size?
We went with a different house, one with less than half the square footage. We may someday own a larger house than this one, but that house was too much house for our lives at the time. Maintenance has a cost.
2. A friend of ours recently installed a home security system. Naturally, the first few weeks with it have been interesting, with forgotten passwords and at least one accidental trigger.
When I asked my friend why he went through with the expense and the annoyance, the reason mostly revolved around all of the expensive stuff they had in their home. They had to protect the beautiful couch, the 60″ flat panel television, the state-of-the-art Alienware laptop, the multiple Macs in the house, and so on.
After hearing that, I quickly realized I wouldn’t want enough valuable stuff that I had to pay for such a security system. If someone breaks into our house thinking they’re going to make off with a jackpot, they’re going to be sorely disappointed by the old computers and so on. They do their job, though, and they keep our life nice and simple.
3. A few weeks ago, I had a conversation with an older fellow who had retired. He asked me how I was saving for retirement and I mentioned my Roth IRA and my older 403(b) account. He then told me that he had saved for retirement without those accounts and that today he lived off the interest.
“In fact, I give most of the interest away. It’s more than I can live on,” he told me.
I told him that such a move was pretty impressive. “Not really,” he said. “If I kept building up money, I’d eventually have a lot in the bank. People would start bugging me all the time for money and I’d have to give more and more to Uncle Sam. I’d probably have to hire an accountant or something. Instead, I can just give money to groups around here that need it and keep myself from having all of those problems.”
He had a pretty good point.
A big challenge of money and time management are the ideas of defense and maintenance. If you own a lot of stuff, you have to invest a lot of your time and at least some of your money into defending it (having a big house, having security for that house, having insurance, paying property taxes, handling people who want some of your money or things, etc.) and into maintenance (taking care of the items, taking care of the place where you keep those items, etc.).
In other words, simple accumulation creates its own problems. The more you have, the more of your time and money and energy goes into protecting and maintaining what you have.
There are a few very easy solutions to this problem.
First, live simply. Don’t accumulate things unless you actually have a real use for them. The more stuff you have, the more you have to work to maintain and protect it and the more you demonstrate to other people that you have money, meaning that they’ll look to you as a potential source for that money.
Second, be giving. You take nothing with you when you leave this world. It’s powerful to save for future goals, but eventually those goals arrive and that means it’s time to spend that money. If you find yourself continuing to accumulate without a goal, look around you at the many people who are in situations where they’re unable to even reach such a point, whether due to physical constraints, intense poverty, or other causes.
Finally, do it yourself. Don’t hand over the management of what you have to someone else. Handle as much of it as you can by yourself without help. The more self-sufficiency you have, the less expense you have and the less time you have to spend managing the people who are supposed to be helping you.
Cut the costs of maintenance and defense. Live simply. Be giving. Do it yourself.