The Perils of Keeping Up

Mr. Sam and I live in an eclectic historic small city.  Our 1920s era home is large for the era, 2200 square feet, plus we have a detached two car garage/carriage house which provides additional space.  For our neighborhood, our home is on the larger end of the scale and, on our street, our home is probably the second largest (by square footage).  Moreover, our home is quite nice, it has renovated baths (2) and kitchen.  Mr. Sam also does a great job with the yard and landscaping.  But, our house is not "perfect", we still have storage projects to undertake (adding clothing and storage closets), we plan to add plantation shutters and we plan to add a bar at some point.  We also have less sexy projects in mind, like a new A/C system.

We live in what would probably be described by an outsider as an up and coming hipster type area.  We are close to the beach and within walking distance to parks, the library, and a downtown area with shops and bars.  The socio-economic mix of our neighborhood is varied, we have lots of retired folks, young families, some snow-birds/seasonal, several gay couples, and some professional families.  Overall, in our neighborhood, except for our friends living directly on the water, I suspect that we are on the higher end of the income distributions (two working professionals).

This past weekend, I was with a good friend at her house warming party. This friend, let's call her Jane, and her husband both work in the same profession as me.  They are a hard working, dual income, professional couple with three small children.  I assume they are both pulling in strong incomes.  They recently took advantage of the down real estate market in South Florida and bought a home (built in 2000) that is close to 8000 square feet, with an acre of land, pool, etc.

The home cost them $700,000+ and they have a $600,000+ mortgage on the home.  The house is beautiful, but even so they spent 6 weeks renovating the home, painting, installing hard wood floors upstairs, landscaping, minor renovations in the kitchen, minor renovations to downstairs bath and laundry.  They spent in the low 5 figures on the renovations.

Six months after they moved in, the house looks show room ready, meaning matching and appropriately nice furniture in each room, large flat screen TVs in several rooms, perfect window treatment, art hung on each wall, etc.  You would never know that they just moved into their home.

Jane is a good enough friend that she mentioned, when we were on the house tour, several tid-bits regarding the cost to furnish the home, to paint the home, the increase cost for the lawn service (since they have an acre of land), the increase cost for their house cleaning service (since the home is double the size of their old home), the cost of the pool service, the increase energy costs, etc.

I'm very happy for Jane and her family, they got a great deal on a great house that has the space they think they need as their children grow up.  But, I find that these check ins with my peers just reinforces my desire to live small.  First, I would hate to live 40 minutes west of the ocean.  Second, I would hate to live in a McMansionville community.  I like the variety of people  that I interact with in my community and neighborhood.  I also think I would find myself trying to keep up with the perfect furniture, the house keeper, the fancy, leased cars, etc. that my neighbors all would have.  In my neighborhood, we are generally at the top of the expenditure cascade so I don't often find myself keeping up with my neighbors.  Our home, while nice still has an empty room, mis-matched furniture and plastic blinds in several rooms (we are saving for plantation shutters as we speak).  Third, Jane's level of debt scares me.  Yes, we have $570,000+ in mortgage debt ourselves, but $310,000 of that debt is investment properties and the mortgages are being paid by our tenants.  Fourth, Jane and her husband have just engaged in major lifestyle inflation, they have increased their monthly costs (putting aside the mortgage) for utilities, taxes, insurance, up-keep, etc.