Convincing_wife_to_upgrade_homes_is_hard
00:00:00.000 | Hello everybody, it's Sam and Cindy from the Financial Samurai podcast and in this episode
00:00:05.320 | I want to try to argue with my wife as to why we should upgrade homes at this point in our lives and
00:00:12.860 | She will argue against why we should upgrade homes. So Cindy I
00:00:18.760 | Have seen this home on the market for the past year and a month
00:00:23.860 | It was listed at a certain price last year to me
00:00:27.280 | It was my dream home because that a huge lot huge front yard huge backyard totally remodeled one more
00:00:34.060 | Bedroom two more bathrooms more areas to play and no stress that if we let the kids outside
00:00:41.360 | they won't run on the street because it's an enclosed front yard and
00:00:45.840 | I really wanted to buy this home. I'm glad I didn't because you know the tech market
00:00:51.720 | Started collapsing and you know, San Francisco barrier was like not too hot in 2022, but things are coming back and I have another
00:00:59.280 | opportunity to buy this house
00:01:02.320 | so
00:01:04.280 | We're in our mid 40s. Now. Our kids are three and a half and six years old
00:01:08.720 | They are gonna be with us for the next
00:01:11.760 | 12 to 15 years and then that's it and I've written in the past that the best time to own the nicest house you can
00:01:20.480 | Afford is when we have the most number of heartbeats at home, which in this case are our children
00:01:26.860 | Afterwards, we don't need a bigger house. We don't need a nicer house
00:01:31.200 | We probably will just keep our same house or downgrade because it'll just be the two of us and hopefully them visiting
00:01:37.760 | Multiple times a year. So please tell me and listeners. Why?
00:01:43.320 | Shouldn't we upgrade homes? We've been in this home for the past three years now. It's done well for us
00:01:50.560 | But we have this opportunity at a lower price
00:01:53.280 | Well, first of all, it's just not necessary
00:01:57.000 | Yeah, I mean there's there's real estate opportunities all the time right and they don't have to be physical
00:02:06.240 | real estate properties right you talk about real estate crowdfunding opportunities all the time and
00:02:12.960 | there's different ways to invest in real estate and
00:02:16.720 | I just don't feel that it's necessary. We have a home that's more than big enough for our family
00:02:23.800 | It's a great layout. It's in a location that we like it's got a nice view
00:02:29.800 | It's it's very comfortable and it works really well for us right now
00:02:35.560 | So I don't feel that we need anything more. I'm also pretty easy to please I don't
00:02:43.520 | need
00:02:45.760 | the latest fanciest
00:02:47.760 | construction
00:02:49.920 | materials and you know
00:02:51.960 | The fanciest faucet or whatever I actually don't like things that are too fancy because they break easier
00:02:59.040 | they're much harder to replace and
00:03:01.760 | There's different stresses that come along with it and you're giving me a look
00:03:06.560 | Like you're frustrated
00:03:09.840 | So that's you know, just my first little spiel
00:03:15.240 | You know, I
00:03:17.240 | there's just a
00:03:19.200 | lot of logistics that also go into moving and
00:03:22.760 | Yeah, we can hire people to pack our stuff and move for us. That's just not my style and
00:03:29.000 | I just feel
00:03:31.800 | Happy with where we are. So I'm really content. So for me, I
00:03:41.160 | Am NOT in a rush and and yes
00:03:43.560 | I understand what you're saying about living in the best house that you can afford when you have kids living at home
00:03:49.640 | I I don't disagree with that
00:03:51.640 | But I feel like our current home
00:03:55.040 | Meets it checks all of my boxes
00:03:58.340 | yeah, and I feel like this particular house that you are very interested in as
00:04:04.840 | some boxes
00:04:08.920 | Sorry is missing some boxes that our current home has yeah, you know we have you know
00:04:15.080 | you know disagreement on some of them, but
00:04:18.320 | you know things that are more important to you to me than me and vice versa, but I
00:04:24.320 | Don't feel like this other house is significantly better than what we already have
00:04:32.400 | I feel like your argument because you've thrown out so many points got diluted
00:04:39.440 | Diluted with all these points about I'm happy. I'm comfortable
00:04:42.440 | Doesn't check all the boxes
00:04:45.440 | Etc, etc
00:04:48.080 | In my maybe you just feel that I'm arguing a very good case. No like your side is
00:04:53.880 | So so let me let me just one point the argument of not wanting to move
00:04:59.040 | To me the idea of not wanting to move in pack boxes. Yes you because I'm the one that's always done
00:05:06.600 | All of the packing and the logistics and hiring the movers and you know, that's my stress
00:05:13.320 | That's your stress. I know how stressful and how long it is. I don't like hiring people to pack
00:05:20.000 | Okay, that's just I just don't like to do that
00:05:22.640 | Some people are comfortable and more than happy to do that, but that's not how I work very well
00:05:28.860 | I understand that I hear your point
00:05:30.860 | But let me add I
00:05:35.000 | Contributed to the moving as well from our other house to this house
00:05:38.360 | I think I drove like 40 times and I filled up our car with stuff and moved myself
00:05:43.320 | and I was more than willing to do it and I took the attitude of
00:05:46.600 | We're gonna move to this new house for the betterment of our family
00:05:50.920 | and I'm willing to pack up the car the boxes and load them up and
00:05:55.520 | On low offload them as a form of exercise as well
00:05:58.840 | It gave me a purpose to do every single day for maybe a couple months
00:06:04.080 | and I felt really good about it and as
00:06:06.880 | The father of the household I feel it's my responsibility to provide it as best and most comfortable and safe environment as
00:06:15.800 | Possible. So would you agree or disagree that moving to this house? We currently live in was the right move in 2020
00:06:23.900 | Yes, and it was a different situation because we were also moving out of a construction zone and
00:06:33.840 | When did the house that we were living in prior to here?
00:06:37.000 | It wasn't as we didn't have as much space because the construction wasn't completed. So it's not apples to apples
00:06:44.360 | Right. It's not apples to apples, but I made a decision in
00:06:48.800 | 2020 after
00:06:51.560 | How many months of living in our other owning our house for about a year and doing some construction that?
00:06:56.480 | You know what this remodeled house that we currently live in would provide a better life for our family
00:07:02.680 | during an especially uncertain time and
00:07:05.400 | It was a very risky move to take on debt to buy this more expensive house while also having our other house
00:07:13.620 | under construction which cost money
00:07:15.960 | But three years later, I think this was one of the best lifestyle decisions we ever made
00:07:24.120 | To have these levels to have the view
00:07:31.200 | Best best lifestyle decision. There you go. There's no need to
00:07:35.040 | compare to
00:07:37.840 | Owning the other house
00:07:39.840 | But that's the thing. Nobody needs to do anything
00:07:42.480 | You know, we can just eat
00:07:45.120 | cereal and water every single day
00:07:48.040 | Not, you know pursue promotions and raises
00:07:52.440 | Well, that's I'm saying you don't need anything else you just
00:07:57.680 | Well, some people are lactose intolerant. Okay, let's
00:08:01.000 | Let's let's be thoughtful for those people. What I'm saying is that none of us need to do anything
00:08:06.520 | we don't need to buy one more pair of pants or another t-shirt or
00:08:12.000 | Get anything fancy. We can just sit static
00:08:16.440 | for the rest of our lives or
00:08:19.160 | We can identify opportunities which I have seen and identified with this home, which is now lower in price
00:08:26.680 | So it's more affordable yet. The stock market has recovered by over 12% year-to-date in
00:08:32.760 | 2023 and it's up over 20% since October 12 2022, which means that our investments are also up
00:08:39.800 | so there's a double benefit financially here of
00:08:42.840 | increased investments a rebound at least and
00:08:46.360 | also a decline in the price of
00:08:49.000 | This forever home, but you're leaving out all the all of the rental properties, right?
00:08:56.480 | if we're going to move we haven't discussed anything about
00:09:00.440 | Decreasing the number of rental properties that we have. Well, that's gonna happen in due time because I do agree
00:09:07.480 | Managing three rentals in San Francisco is my limit. So I don't want to manage for that's just it sounds disastrous
00:09:13.520 | Really? Maybe I hire a property manager to manage it, but then I have to manage the manager
00:09:19.040 | however, I
00:09:21.720 | have realized that I'm actually a good landlord or
00:09:25.320 | Someone who underprices the rental properties because we haven't had a rental property vacancy in years
00:09:32.120 | I think five six years now
00:09:34.120 | When I was trying to figure out how to cobble together money to pay cash for this target forever home
00:09:41.200 | I was thinking myself. Well, obviously we should sell one rental property and then use the proceeds
00:09:47.040 | to buy this house
00:09:49.640 | But every single rental property that I reviewed has had a tenant for one two, three five six years
00:09:56.960 | And I don't know when they're gonna leave but eventually one of the tenants will leave
00:10:02.000 | Over the next three years and we can sell one of these properties. I
00:10:05.960 | Just feel like it's it's over complicating things. I mean life is complicated
00:10:12.000 | But you've taught you've written about how as we age
00:10:16.400 | We need to make our lives less complicated
00:10:19.600 | right
00:10:21.840 | but you know, I I totally agree with what I've written you should and I do believe in
00:10:27.580 | Minimalism and retirement they go hand in hand because if you're a parent and you have aging parents to take care of
00:10:34.080 | Whoo, there's a lot of complications in life. Yeah, I'm dealing with a lot right now with with my own
00:10:42.360 | Yeah, I hear you but one of the responsibilities of being a thoughtful good parent
00:10:49.720 | Is not thinking about ourselves. It's thinking about our children. Oh, come on our children are
00:10:56.600 | Happy in this house. What are you talking about? What are you trying to?
00:11:00.200 | what I'm saying is we as
00:11:04.080 | Adults have the ability to invest for our children's future today. Our kids are three and a half and six
00:11:11.680 | they have no idea about investing saving the struggles of life the difficulties of
00:11:17.520 | globalization and all that stuff
00:11:20.520 | Just imagine when you were three years old or six years old if you had parents
00:11:24.920 | Who foresaw the future and who thought about your future a little bit more carefully and invested for them?
00:11:31.600 | How much better you'd be?
00:11:34.200 | Well, that's a whole nother
00:11:36.720 | Discussion that you know, we don't want to get sidetracked on right now
00:11:41.000 | But I think people can argue it the other way if you grow up without a lot
00:11:46.800 | It strikes fear in you, you know, I I grew up with a lot of fear
00:11:52.760 | I'm not having money as my own money as an adult because I knew I couldn't count on my parents
00:11:56.960 | So it motivated me to work hard if I knew that my parents were very well off and that they would take care of me
00:12:04.240 | I probably would have taken
00:12:07.840 | More risks in college and not gone a very practical route that I knew
00:12:13.000 | Would get me to a reliable career path that would generate enough income for me to you know
00:12:20.080 | be financially independent, so
00:12:22.080 | we
00:12:23.840 | For getting such no, we're not getting sidetracked because everything is a line when we
00:12:29.040 | Purchase property or anything we have to think about ourselves
00:12:33.200 | But more importantly our children you already have you already have you already have investment properties for our children
00:12:40.960 | We don't need we don't need anything. This is the thing. We don't need anything
00:12:47.080 | Nobody needs nothing
00:12:49.880 | Well, here's the thing if you want to talk about decumulation
00:12:55.040 | The best way to decumulate income and assets is to buy an expensive home
00:13:00.800 | There's all these property taxes fees maintenance
00:13:04.240 | You know, you got to spend your money to buy that home. The easiest way to spend money is actually to buy a home
00:13:10.200 | but but going back to
00:13:12.200 | Spoiling our children is what you're thinking
00:13:14.960 | It's not for them. It's an insurance policy for them. Okay, it's not like hey guys
00:13:21.460 | There's rental property in a stock portfolio. It's all for you. Once you graduate high school or college
00:13:27.880 | Don't have to worry about your future. Nope. It's not that way at all that it's not that's not your intention
00:13:34.680 | No, it doesn't mean that they won't
00:13:36.680 | Think Oh one day when mom and dad died
00:13:39.760 | Let's say we die
00:13:42.880 | We can't prevent them from thinking but they're logical to conclude that when we're 85 years old, okay
00:13:49.180 | I don't want to put a number because it's kind of depressing
00:13:51.360 | They're gonna be you know 50s and 60s. Are you gonna?
00:13:55.720 | screw your whole life for a
00:13:57.720 | Inheritance that may or may not come at the age of 50 55 or 60. No, of course not. I don't know
00:14:04.480 | We don't know the future
00:14:06.480 | But I think our kids are probably if if they see that we have all these different houses
00:14:12.360 | They're probably gonna think that they're gonna
00:14:14.560 | Come out with something
00:14:17.480 | Yeah, maybe maybe not. I'm gonna keep on making them pull the weeds
00:14:22.840 | Do the landscaping, you know figure out where the mysterious fire alarm is coming from
00:14:29.200 | Which was within the walls within the walls. I
00:14:33.200 | Have an interesting analogy about buying a nice house and not regretting it
00:14:39.440 | So in my 20s and in my 30s, I was car obsessed
00:14:45.160 | But then I finally, you know came to my senses and said, you know
00:14:48.420 | I better invest that money instead of buy a nice car. And so instead of buying a nice car
00:14:54.080 | I had used cars very inexpensive
00:14:56.940 | until
00:14:59.540 | 2016 December 2016 when we bought the Range Rover Sport for
00:15:03.460 | $58,000 and about $60,000 after tax and this was the most amount of money I spent on a car
00:15:10.540 | since I was
00:15:13.460 | 25 years old. I went crazy and bought a g500 at 25 years old because
00:15:19.340 | Mercedes-Benz had dropped the price of the g500 by 50%
00:15:22.780 | because this one
00:15:25.580 | Distribution company in Santa Fe, New Mexico was bought out and they didn't have a monopoly anymore. Anyway
00:15:32.020 | My point of this story is that I bought the car in December
00:15:35.940 | 2016 and now it's in 2023 and I don't regret a
00:15:40.540 | single penny
00:15:42.780 | That I bought this car
00:15:44.780 | It's an expensive car, but I don't regret it at all for the past seven years almost seven years
00:15:49.900 | we've been driving a nice car that I felt has been safe and reliable and
00:15:54.340 | so when it comes to a home where we live and create memories and
00:16:00.340 | Experiences. Why are you laughing? I'm laughing because you don't regret buying this home
00:16:09.060 | No, what I'm saying is we can buy this nicer home with more memories we can invite more people over we can have it
00:16:16.380 | Actually have a bouncy house in our front yard and have you know, just more socialization and friends
00:16:22.480 | I think it would be so much more fun. And so I don't think we're gonna regret buying this home 12 years from now
00:16:29.020 | After our kids go away. I think we're like wow, we were able to maximize our
00:16:35.900 | Lifestyles with the income and wealth that we accumulated during the most important times of our lives
00:16:42.460 | I just don't think we'll regret it
00:16:44.980 | I have been to so many open houses over the past 20 years in San Francisco
00:16:49.940 | I've seen more expensive homes in fancier neighborhoods
00:16:53.420 | I have not seen a home this nice at this price point for this value
00:16:59.540 | Ever it almost feels like destiny that this home is still available
00:17:04.660 | I was so close to borrowing money from a friend to try to buy this home in May 2022 and
00:17:11.420 | They wouldn't accept our offer and then imagine a year later with the market
00:17:18.100 | Rebounding well the market you go down and then rebounding and then the price cut and then them saying hey
00:17:25.500 | You know what? Maybe we will entertain your offer
00:17:29.260 | That just seems like we're destined to own this home
00:17:33.980 | I'm not saying that it's not a good opportunity
00:17:36.740 | From an investment point of view and a lifestyle more importantly a lifestyle. I don't think there's a significant difference in lifestyle
00:17:45.500 | Then why do people buy bigger nicer homes?
00:17:48.460 | FOMO or just feeling like they have to keep up with the Joneses. I don't know
00:17:54.740 | I've to me I don't feel that there will be a significant difference in lifestyle quality at this other house
00:18:01.820 | Well, let me make this argument here
00:18:03.980 | I do believe there will be a significant increase because for me as a father
00:18:09.100 | I fear our children running on the streets and getting hit by cars out front
00:18:16.060 | We live in a big city
00:18:16.940 | So this home has a gated front yard where they can play for hours and hours with no fear
00:18:22.940 | Okay, if that's your biggest fear, then there's an alternative
00:18:28.940 | Moving we can
00:18:30.940 | Alter the front of this house
00:18:33.180 | Install a gate. No, we can't remember the city like made us take down planter boxes on our property because it's public right away
00:18:41.220 | I know this city is
00:18:43.220 | You we cannot install anything in front of our house. I'm getting frustrated
00:18:48.300 | Well, I I hear your frustration and I'm sorry to make you frustrated. It's really the city. We should be frustrated
00:18:55.900 | Because the city has nothing else better to do than to tell people to take down their planter boxes and to tell people that those
00:19:02.940 | free library
00:19:05.220 | Hutch's that they have outside their house or
00:19:07.940 | Yeah illegal just all kinds of ridiculous stuff. All right. Well, we've had I think a
00:19:16.500 | Productive but maybe not so productive discussion. I don't seem to be able to get you to budge
00:19:23.940 | I'm not I'm not saying it's it's a bad house when you look at it for what it is
00:19:30.180 | It's a nice property. It was remodeled very well. They used really high quality materials
00:19:35.980 | They obviously spent a lot of time and money doing it. And so I understand why this cellar is
00:19:41.980 | Stubborn, but yeah, the cellar does seem quite stubborn
00:19:46.220 | And it has you know a lot of emotion tied up into the property
00:19:53.580 | I just you know, it sounds
00:19:56.620 | Maybe silly to say but I don't want to lose the ocean view that we have at this house
00:20:02.220 | It's it means a lot to me
00:20:04.480 | And it's something that I really really enjoy
00:20:08.900 | Every day throughout the whole day that this other house doesn't have it has other things like the yard
00:20:16.740 | Valley view I
00:20:20.100 | Don't know it's just
00:20:23.060 | There's no perfect house. I will say that no house checks every single box that you want unless you build it from scratch
00:20:29.580 | But even if you build it from scratch, there's no guarantee that there won't be things that go wrong. We've had that happen to friends
00:20:36.420 | Sure. I think this might this argument might be a reflection of something bigger
00:20:43.540 | one of
00:20:46.180 | Person me being a risk taker and
00:20:50.180 | one of you
00:20:53.020 | being
00:20:54.220 | Not a risk taker and I think over time
00:20:57.260 | Risk taking has enabled us to live
00:21:00.980 | the lifestyles that we currently have if we didn't take risks
00:21:06.180 | For example, if I didn't leave my job in 2012 if you didn't negotiate a service in 2015
00:21:12.660 | We would have different lifestyles. I don't know if it'd be worse or better. It would just be different
00:21:18.140 | I think our lifestyles currently are great and that's because we took risks now
00:21:23.940 | Sometimes risks don't pay off. Sometimes we lose a lot of money. Sometimes we might upgrade homes and I wrote in this article
00:21:30.660 | there are some things that we might not expect such as maybe bad neighbors or
00:21:35.620 | more traffic than expected or
00:21:38.820 | Really noisy dog that barks all day long, right? You just don't really know until you actually live in the house for a while
00:21:47.900 | 24/7 for weeks on end and yes
00:21:50.940 | Maybe the economy and the stock market and the real estate market go back down again in the second half of 2023 or 2024
00:21:58.300 | Because we've had 10 rate hikes and maybe there'll be another one and it takes
00:22:03.380 | Six months to a year for rate hikes to slow down the economy
00:22:07.360 | It sure seems like all the data is pointing towards lower inflation and a slowdown
00:22:13.700 | But we don't really know the extent of a potential downturn in the future and on the flip side
00:22:19.700 | things could continue to rebound as
00:22:22.580 | AI and corporate profits drive stock prices and the economy higher. So let me ask you Sydney what?
00:22:30.540 | Would make you change your mind about us buying this new house?
00:22:36.060 | What is the compromise it's hard like
00:22:43.340 | One of the biggest things that is is like I said, I don't want to lose the ocean view and that's not something that you
00:22:49.300 | can
00:22:50.300 | Add. Oh, yeah, you won't lose the ocean view. You know why?
00:22:53.740 | Because we'll keep owning this house
00:22:56.460 | But that's not the same. It's not the same
00:22:59.380 | That's true. We can always go for a walk or a drive to the other side of the hill to see the ocean
00:23:07.200 | Okay
00:23:11.500 | You're saying your argument is
00:23:13.500 | That if we can find a nice house with an ocean view then you'll be more amenable
00:23:19.540 | Potentially, but there's a lot of other things that have to have to gel like what?
00:23:26.340 | Come on the layout the location, you know
00:23:31.980 | The cost obviously is a huge one. Yeah, the the
00:23:39.940 | Front yard backyard if there is one, you know, whether it's
00:23:43.700 | Touching the neighbor's house or if there's I forgot what it's called, you know if there's
00:23:49.740 | Stand-alone stand-alone, you know, there's just there's so many things I guess imagine
00:23:55.140 | Imagine you're in this new house
00:23:58.580 | Well, you mean this house right? No new house the target new house if you were in this new house
00:24:05.300 | Do you think you would be unhappy?
00:24:09.100 | There's us I'm not saying I would be unhappy, but I'm definitely not unhappy now
00:24:15.780 | All right, folks, I'm sorry, but I think we've reached an impasse here
00:24:26.620 | If you are having this big dilemma with your significant other on whether to upgrade homes
00:24:33.840 | I highly suggest you read my post on the risks of upgrading homes
00:24:37.860 | Nobody thinks about also another post called the top 10 warning signs before buying a house or the top 10 red flags
00:24:45.080 | I'll put it in the show notes buying a home really is taking a leap of faith
00:24:49.960 | Especially if you need to take out mortgage debt
00:24:52.720 | Especially if you don't know for sure where you want to live five years from now or how much you're gonna be making
00:24:59.920 | Even the next year or two years from now many many things to consider
00:25:04.200 | I highly recommend you follow my 30 33 to 5 rule for home buying it's
00:25:09.560 | very
00:25:11.040 | very healthy way to look at things because the last thing you want to do is buy a home and then
00:25:14.940 | Not be able to sleep well at night because you're always stressed out about the payments and the future of the economy and the stock
00:25:21.000 | market and the real estate market
00:25:22.640 | based on my experience
00:25:24.120 | there's another metric that I like to use when buying a home and
00:25:27.320 | That's to try to keep the value of the home to no more than 30% of your net worth now
00:25:34.120 | It's gonna be hard if you're buying your first home or you're upgrading homes
00:25:37.240 | But once you get your primary residence to 30% or less
00:25:41.800 | You will feel more at peace less stressed out
00:25:46.280 | Thanks so much everyone for listening. We hope you enjoyed our arguments of this back and forth
00:25:52.720 | I I feel I've made a little bit of a difference
00:25:55.980 | But maybe not please rate review subscribe share keeps us motivated
00:26:01.000 | We don't have any sponsors and please subscribe to our newsletter at financial samurai comm forward slash news. Take care
00:26:08.480 | Bye.