Updated on 05.29.07

A Reader Has Interesting Reasons For Upgrading A Home

Trent Hamm

A reader (let’s call him Martin) wrote to me with an interesting scenario about his decision to upgrade his home:

I am in my late 40’s and bought a home 8 years ago in a modest neighborhood and will have it completely paid off in about 10 years. My mortgage payments are around $470/month. I live by myself as my daughter is married. However, since I bought the house, I graduated from law school and am now working as an attorney. Consequently, my income has increased drastically and will continue to do so in the future. I’m tempted to stay in the house since the mortgage payments are so small and put away more money towards retirement, travel, and other things I enjoy. However, as an attorney working for a small-to-mid-size law firm, I’m supposed to market the firm and my own services, and my current neighborhood probably won’t generate much, if any, new clients. It’s blue-collar and most of my neighbors would have little use for an attorney. I’m wondering if it would be better for my career if I moved into a more upscale neighborhood that would help to develop a client database of white-collar individuals and/or businesses.

I know it’s a weird problem and the frugal part of me says to stay in the house I’m in now. So that’s why I’m emailing – to see if there would ever be justification for moving up in value when there’s no actual need for space.

So, let’s look at the important factors here:

A major boost in income Martin’s income is much higher than it used to be, which makes his monthly mortgage payments quite easy to make. It also means that he could easily handle higher mortgage payments.

A change in career – and thus new associates Martin is now associating with a different crowd of people and also trying to cultivate them as clients. His current neighborhood doesn’t facilitate such client growth, so there is some degree of a career advantage in moving to a new neighborhood.

A frugal desire to stay in the current house Martin’s current income enables him to do a lot of enjoyable things – and the low mortgage payment makes these possible. Moving would cut down on these options.

If I were Martin, I would ask myself two questions:

How important is success at my career to my life and values? The email mentions both an enjoyment of traveling and other things that are enjoyed, but obviously he made a mid-life choice to become a lawyer, which indicates some serious interest in cultivating that as a career. Which is truly the top value? Obviously, it doesn’t mean that you should abandon the other stuff, but one or the other should have the top importance.

How much house can you afford? Obviously, living alone means you don’t need a monstrous home, but if you move into a white collar neighborhood, your home will be much more costly than where you’re at now. You’ll probably be looking for a relatively smaller home in an upscale neighborhood, so I would target a few neighborhoods and see what the prices are on target homes in that area. Given the current housing market, it may be a good time to actually move up with so many people moving down.

The real key, though, is where your values lie: do you want to turbo-charge your career or do you want to enjoy other aspects of life more? That alone will tell you whether you should be moving or not.

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  1. paula says:

    The question doesn’t address an important aspect of why we live where we live: Does the reader otherwise like where he lives? Has he had an interest in other neighborhoods? Or is he thinking about his home in isolation from the community?

    I understand the reader’s position, since my husband also got a law degree in midlife. We loved our neighborhood but didn’t like the house, so we found another gorgeous home in a nearby neighborhood. I miss the old neighborhood, but there were other tradeoffs, but we live close by, in the same community, and are much happier overall.

    Pick a community for what it is and what you like about it. Find the right house in that community. And if it’s just financial connections you want, join some clubs or something, and stay where you are. I would be turned off by a new neighbor who moved in order to sell his services to me.

  2. martijn says:

    there are plenty of possibilities to bring in new clients without moving. You can join business or network clubs, take up an upscale hobby (golf?) or lunch at high class restaurants where you can meet new people.
    I think the return of investment of the cost of moving and the clients you may attract in your new neighbourhood are not really good.

  3. D says:

    Should this be my situation, I would remain in my current neighborhood and utilize my larger cash flow to increase my retirement funds followed by stepping up my life.

    I would join a country club that would let me rub elbows and I would go to restaurants and shows (opera, orchestra, musicals, etc) that would also place me in a “seeing” position. Attend frequently, with my increased wages and low expenses this should be a breeze. All the while increasing my exposure to the ones, I want to, and living frugally today, building my future.

  4. Ted Valentine says:

    I don’t see the connection. Is he supposed to go door to door asking for business? By this line of thinking, he should move next to the prison. That way, he knows ALL of his neighbors need legal assistance. He’ll probably get the added benefit of a less expensive house.

  5. plonkee says:

    I also don’t truly see the connection between living in a posh neighbourhood and getting the said posh people as clients. Business opportunities may indeed come his way as a result of socialising with wealthier individuals, but that doesn’t require the outlay that moving into an expensive neighbourhood does.

    Cultivating the air of being in the right class is a lot less expensive than commonly perceived.

  6. IRA says:

    I understand the pressure to live in the right neighborhood. Most of the partners in the law firm where I worked lived in the northern suburbs of Chicago. If you could afford to live there, it meant that you were ‘successful’. But that’s precisely the premise of the book, The Millionaire Next Door. Professionals will never become wealthy because their sucess is so closely tied to outward appearances. That being said, I agree with the comments above. If you’re primarily interested in making the right ‘connections’, then join a club or even better, join a service league. Many wealthy individuals sit on the boards of nonprofit organizations.

  7. Laura S says:

    I was missing the logic too. Maybe it’s just me, but I don’t think moving to a new house automatically means socializing with the new neighbors. I have lived in my place for 2 1/2 years and never spoken to the neighbours except to fight with the jacka$$ people across the street who use our (paid-for) parking space without asking and regularly steal our newspapers. And we like it that way, I go home to relax and get away from the socializing and networking I have to do all day at the office. You’re bound to have at least a few neighbours who don’t want to become best buddies when you move in. I think your best bet is to join a country club or take up group activities where you’d meet others in the upscale demographic, it’s a far more targeted way of meeting the right people.

  8. Trent Hamm Trent says:

    The big thing I thought of was dinner parties, actually. It is difficult to have elegant dinner parties with white collar guests in a blue collar neighborhood, and dinner parties are one of the best ways to build lasting relationships that may grow into business for your firm.

  9. GeekMan says:

    Trent, this is a great question. There are many times when moving to a new home in a more affluent neighborhood would make more sense than staying put. For example; if the original questioner lived in a particularly bad part of town, or lived in an area that, when seen on resumes or business cards, would mean lost business due to the perceptions of potential clients, moving to a new neighborhood would make perfect sense. Just imagine if you hired an attorney and then found out that he or she lived in a part of town that “everyone knew” was bad or poor. How would you feel about that attorney’s advice and services? Now reverse that scenario and ask yourself, if your salary suddenly went from a $32K a year to over $130K a year in a very short time then would living in the same neighborhood as you did before make sense? Living next door to people whose income is 1/4 of yours might not only be socially unacceptable to your potential clients, but also downright dangerous for you due to resentment from your neighbors. Not to put too fine a point on it, but how many people earning over $100K a year live in the bad or poor neighborhoods of your area? How many millionaires live in trailer parks? Although living in these areas might be financially advantageous for those making large incomes, I doubt many people earning that kind of money would find living in a trailer park socially acceptable for their clients, to those around them or even safe for them to wander at night.

    To make this as simple and direct as I can, no matter how frugal one might wish to be, there are some careers that DEMAND a certain level of outwardly noticeable trappings of success. Without those trappings the careers themselves would fail to be worth the investments made and so, by staying put one might be seen as being penny wise but pound foolish.

    In this case, assuming that the questioner lives in a very modest neighborhood where his new income would be far above that of his neighbors, I would recommend purchasing as affordable a home as possible in an area where the median income is closer to your new salary.

  10. Chryssa says:

    I agree with the others that getting involved with certain types of organizations is likely to bear a higher yield in terms of future business relationships than relying on relationships with one’s neighbors. As Laura S pointed out, this is particularly true given how un-neighborly (or at least indifferent) most people are these days.

    Yes, dinner parties can be a good way to build relationships and Trent has a point about the problems with mixing people from one socio-economic group with the environs of another. However, in this day and age, especially given Martin’s status as a single male, he could accomplish much the same goal by organizing and hosting meals at a nice restaurant. Certainly not a cheap proposition, but ultimately cheaper than an upscale mortgage and all the expenses (furnishings, decor, other expected status symbols) that accompany such a setting.

    If he’s comfortable in his home, stay there. Put the money into building retirement and savings, enjoying life (travel! the world’s best non-investment investment) and adding a bit of extra polish to his work-day persona (clothing, accessories) if he feels this is necessary.

    Lastly, congratulations on the mid-life career change.


  11. PiggyBank Raider says:

    Your last question–turbo charge career or enjoy other parts of life–says it all for me. Of course, everyone has different goals. But no one ever lies on their death bed and thinks “I wish I had turbo charged my career.” Just my two cents.

  12. k says:

    In my workplace, dinner parties don’t happen in partners’ homes. Potential clients are wooed with nice dinners out, boxes at sporting events, tickets to plays, concerts, or similar events, or at educational symposia put on by the business. The at-home dinner party may be the traditional idea of how to build personal relationships with current or potential clients, but I’ve not seen that borne out in practice. At any rate, there are lots of effective, relatively pleasant ways to network and develop social and business relationships, many of which do not need to happen in someone’s personal residence. Even if some lawyers at his firm choose to develop business like that, it’s certainly not the only way to do it. And moreover, if other lawyers at his firm host dinner parties, it seems it would be more efficient for him to drum up business another way that might be more appealing to potential clients who are not currently “biting” on the dinner party angle.

  13. Kristina says:

    I’m a lawyer at a national law firm in DC, and based on my experience, it’s absurd to move to a house that’s bigger than you need and more money than you need to be spending just in the name of getting clients. That’s not how you get clients. You get clients by being “out there” as much as possible networking and meeting people – join professional associations, go to ABA events, join other community organizations and actually attend events and meet people. You also get new clients by doing good work for the ones you have and then asking for referrals. Yes, it’s nice to throw dinner parties at one’s house. But, it’s equally easy to entertain by using a private function room at a restaurant or reserving a section of a nice bar for your guests.

    And then you can use the money you’ll save on a ridiculous mortgage to have more money to “get out there”, to travel, and to have a stable financial life later.

  14. Kevin says:

    You are more likely to interact with folks by joining your Chamber of Commerce, many local business people are involved in similar organizations to have their voice heard.

  15. Josh says:

    From the sounds of it his vision is really not yet defined. He’s sort of mixed between the two “priorities”. My .02 worth is; pay the house off quickly, how about 3 or 4 years vs. 10? That does two things. Free’s him up financially, builds equity etc. and buys time to figure out what truly is needed to succeed in his new role. 4 years from now life will have answered these questions for him, he’ll be in a very stress free financial situation, and his close friends and family will appreciate his moderate “ramp-up” to a new lifestyle instead of a supercharged one.

  16. Sharon says:

    I wonder if Martin could keep his house but spend a bit more money on a cabin near a lake for picnics or fishing trips with his clients. It wouldn’t be networking as much as building a relationship with his clients without inviting them into his personal home. I think that the interest factor in something like that might work for him without the same amount of money spent for a new house and furniture etc.


  17. Martin says:

    I’m the “Martin” mentioned here and I appreciate everyone’s comments. I am going to stick with the pseudonym but did want to mention that I am actually female (thanks, Trent, for the disguise). :) Here’s a few responses to some questions above: First, I do like my house – it’s an older (1946) Cape-Cod type brick home and is well kept up. The neighborhood is very diverse and I really love it, but its name does have a somewhat negative connotation in the city, mainly from an area about 8 blocks away. The neighborhood has gained new respect, however, since I moved in 8 years ago and my home has appreciated from around $68,000 to over $100,000.

    The reasons for questioning my neighborhood stem from the attorneys I work with. I don’t mean that they are pressuring me to move – far from it (although I do get some teasing about my “ragamuffin” neighborhood). However, I see the business they generate from people that they run into in their neighborhoods, I can’t tell you how many clients we have who “live down the street” or “around the corner” from our attorneys.

    None of the attorneys aggressively market in their neighborhoods – its just that the city I live in is a very friendly close city and people who live near each other tend to gravitate towards each other. In my own neighborhood, I go out to dinner with my next door neighbor on occasion, we have the occasional block party, and I’m on friendly terms with just about everyone there.

    Another reason is that, being female, it’s just plain harder to market myself. Men are naturals at this – they get together for beers and golf and the talk turns to business. Women – not so much. I was hoping that making a move might give me an edge here.

    At any rate, you all have given me lots to think about – I like the idea of looking at smaller places in more affluent neighborhoods and maybe waiting a couple of years. I also like the idea of joining a country club. I do network quite a bit – I belong to 2 local bar associations and am on several committees – but can always do more. Thanks for all your advice – and thanks, Trent, for posting this here!

  18. paula says:

    Hi, Martin,

    It’s great to hear your story directly! As the wife of a “new” lawyer (in his 40’s), who lived in a lovely and close-knit neighborhood, I can tell you that the word will get out by word of mouth through your neighbors. My husband works for a business litigation firm and hence doesn’t need the connections you need for your work, but he is frequently approached by people for referrals when they hear he is a lawyer.

    Stay where you are and enjoy your close-knit community. If it’s been “coming up,” it isn’t hurting you financially to stay either.

    I also recommend networking with other women lawyers, and women judges too. I know a lot of women lawyers through the local Bar Auxiliary (not just wives of lawyers), and through my local political party’s Lawyer’s Club. My husband likes this connection in particular.

    Also, keep up your ties to colleagues in your previous line of work. My husband has done piecework for a couple of former coworkers, outside of his usual practice, as a favor. He enjoyed that a lot. It might not make him a lasting client, but the good will is always a plus.


  19. alsowhitesheep says:

    For some reason, it struck me as a female’s story – maybe it was about the daughter. Congrats on your new career!

    Another option is a smaller condo/townhouse/apartment in the heart of the city’s nicer neighborhoods. Closer commute, no maintenance as you age and access to diverse scene.

    hth :)

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