Over the long weekend Mr. SFF and I went for a great bike ride enjoying the beautiful weather, time together and the extra day off. While riding around we went down some roads I haven’t been down in ages and there were all of these new developments going up. I mean, a lot of them. Some of the houses seemed reasonably sized while others seems pretty big. And as I passed all these houses I started wondering if I could ever go back to a “normal” life where I would desire one of these houses. And the answer is I am really not sure I could.
First of all, even well before starting this FI journey, we were never on a path to have the grand home with the shiny stainless steel appliances and new cars in the driveway. We have always lived modestly and well below our means. But I am going to try to pretend and envision what things could be like if we went back to the “normal” path.
I’m usually good at envisioning different scenarios and what they might look like but I will admit that this one is harder for me. I hopped on some real estate websites to see if maybe I could search for a home, pretending we were selling our two duplexes and moving into a single family home. When I had this thought yesterday it sounded reasonable but while searching this morning, I found it surprisingly difficult. I couldn’t even pretend to shop for a house because I really don’t want one. I am actually surprised at how hard this was for me.
So instead of showing you a potential home that is currently for sale that we could buy if we went back to normal life I am just going to pretend I actually found one. Let’s say this house costs $350,000, which in town would likely mean a house that was in decent shape, maybe around 1600-2000 square feet, but certainly not like one of the ones we drove by (yes, real estate is pricey here). It may not have all of the fancy amenities but with our own touches we could make it feel like home. Based on the amount of equity in our current properties including some closing fees we would need to take out a mortgage of roughly $135,000, which is not all that bad. Based on my bank’s current rates for a 30 year mortgage our payments would be $615 per month plus probably another $5,500 annually in property taxes for a total of $1073 per month.
As we have a new home we would “need” to fill it with new stuff. After all in order to keep up with the Joneses we couldn’t use our current furniture for this new home. Maybe some new furniture (we have very few new pieces in our home) plus all of the nick knacks to personalize it. Let’s say we spend $5,000.
Our wardrobes would also likely need to be updated as we really don’t buy much these days. I have been using the same purses for years and they are starting to look a little worn and I am sure I could use a couple of pairs of shoes. Let’s say we spend an average of $200 per month on our new wardrobe. Based on what we used to spend this may be a reasonable estimate.
Now add on the second car because Mr. SFF hasn’t had one in years. Today’s version of us would not finance a car but as we are in pretend mode let’s say we bought a new car with a $250 per month payment. (Gosh, it is painful to even pretend this stuff.) Add in extra gas, insurance and maintenance for another $50 per month (probably a low estimate but as this pretend car is new hopefully maintenance would be low.)
Vacations are something we do currently spend money on but let’s say we do a nice vacation every year instead of treating ourselves every few years. There’s another $3,000 gone.
Dining out: once our biggest weakness so this could easily be thrown back in and is one unfortunately I could actually envision. So let’s add in another $5,000 per year. Based on our 2014 food costs as I explored in my annual review at this beginning of this year this is actually possible for us. Sad, I know…
So What Does Our Pretend Life Cost?
If I add up all of these expenses and annualized them here is what I come up with.
Mortgage and taxes: $12,876
New car: $3,600
Dining out: $5,000
Ack! Nowadays I can’t even fathom spending that much more! But I guess this exercise does go to show how easy it can be to live up to ones income as they try to keep up with the Joneses or just the average spendy American down the road.
So could I ever go back to this way of life? Not likely! Maybe someday we will sell our investment properties and just have our own single family home but I really can’t fathom living like that. So those nice homes that are being built left and right? They are certainly not for us!