Saving Strategy: Avoid Upgrading Your Housing

This is a lesson that I'm in the process of learning.  If you plan on living a frugal life, it's much harder when building/buying a brand new house or upgrading your housing in general.  

The Building Process

We had every intention to keeping our house simple and even hoping to keep our expenses below the builder allowances.  That didn't happen. 

Why?  It's because in our heads, we were spending so much money already, why not spend a few more dollars and get the upgrades done NOW instead of later.  The convenience factor is big for us, and getting the upgrades done initially meant that our lives wouldn't be disrupted later.

Not only are the upgrades killer on the wallet, new furniture is needed for the bigger home.  No more sitting on empty beer boxes, now nice furniture is needed to go along with those new hardwood floors.  Nice new furniture = not cheap. 

The Maintenance

As we moved into a fairly nice neighborhood, the curb appeal of the homes in the area are expected to be kept at a certain level.  I guess it depends on what you consider nice, but keeping nice plants/grass/yard requires work and money.  I guess it's time to figure out some frugal ways to keep a nice yard.  Any ideas? 

The Jones factor 

Living in a nicer neighborhood means having neighbors with money.  Even though I intentionally try not to compete with people with regards to material items, it's hard to avoid some influence when their walls are 10 feet away.

Our old neighborhood was much more conservative with mostly blue collar workers who work hard for their money.  To be honest, I really liked my old neighbors and their conservative views on money.  

The Bills

Along with the upgrades and the bigger house comes higher energy costs and property tax. We expect our energy costs to be twice as much as our old place.  Along with higher energy costs, if we decide to get a LCD/Plasma TV, we'll have to upgrade to the High Definition cable package to take advantage of the new technology.

Final Thoughts 

In hindsight, staying in our old neighborhood would have saved us a TON of money.  However, the new spot is a better place for the kids(s) to grow up. It's a trade off between money and quality of life.  I guess I've found a weakness in my frugal armor.

The main point is that if you decide to take the leap and buy a brand new home or upgrade your housing, be prepared.  It may cost more than you think. 

photo credit: nancy hugo 

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FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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12 years ago

[…] that index funds outperform other mutual funds; Frugal Trader at Million Dollar Journey argues against upgrading your home; and Five Cent Nickel has an awesome discussion of managing asset allocation across a number of […]

13 years ago

We moved into a new house five years ago this summer. Here are my ways to save money while living in a new subdivision:

– forget about outside and landscaping for a few years. Let the ground settle down before digging it up again.
– enjoy the trees in your backyard planted by your neighbors, while keeping your lawn clear, and working on the master plan for a properly organized landscape in a few years. By that time you’ll have a better idea of what you really want to enjoy you personal outdoors, and will avoid mistakes some of your neighbors will make.
– remember that quite a few of the Jones are there just for a few years to do a flip. Their goal is not to upgrade to enjoy, but to upgrade to sell it for more money. Some of their cheap but flashy upgrades won’t last more than a few seasons.
– in a couple of years paint garage door, and decorative trims into colours of your choice using quality paint. For under $100 you’ll have a house that will look nicely among all the neighbors who still have boring default colour schemes. Remember your garage door must use less prominent colour than the entrance door to keep a nice welcoming balance of colours.
– upgrade with builder only what will be extremely expensive to change later (i.e. oak staircase, pickets, cabinets, rough-in in the basement, 6ft-wide vs 5ft-wide patio door). Everything else can be done for much less money at a later point
– buy your outdoor fertilizer and tools in the Fall fo the next year. Fertilizer can be bought for as little as $1 per bag versus $7 – $15 in the Spring.
– use Home Depot card to save 10% and free-finance your initial high costs for period of six months to a year (frequent promotions)
– check out Costco for cheap moderate-quality indoor furniture sales at the end of every Winter season
– $35/monthly for StarChoice is a good deal (free HD, and good selection of channels with time-shifts)
– don’t sign up for fixed-rate gas supply, variable rate is proven to be cheaper
– combine your home and car insurance
– don’t get suckered into long and expensive home alarm contract by your builder
– make sure to bother your builder right away whenever problems arise with your newly-constructed home
– custom window covering will cost over $3,000 for the whole house, so pay attention to promotions, and possibility of using pre-made blinds or draperies
– don’t do driveway sealing by yourself – you’ll save a measly $20 and will have to spend two days to do it properly. It’s better to pay $70 – $100 bucks to have it done professionally.
– avoid small bulb halogen lighting – my kitchen fixture, while it is cheap and looks nice, sucks 300 Watts of power
– buy and install a quieter belt-driven garage door opener. Prices have fallen by 30% in the last decade. You can do the installation yourself in under 5 hours with no experience

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13 years ago

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13 years ago

If you’re one of the first families in that subdivision, or one of the first families with that model of home, then you can help set the “neighborhood standard!”

13 years ago

What a great post. I’ve found myself to be in the same shoes. I recently moved out of my parent’s house about three years ago and up until now I was able to save a lot of money.

I then moved into a semi-decent condo, it’s a lot nicer than my older apartment. It seems like we all have it in us when it comes to the better quality of living. Some people I think just like to over step their bounds and spend EVERY paycheck on their living expenses, this is where it’s trouble.

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[…] Saving Strategy: Avoid Upgrading Your Housing Million Dollar Journey explained why it’s hard to live a frugal life when buying a new house or upgrading your current housing. […]