Resisting the Urge to Step Up in House

The other day I was talking with an old friend who I hadn’t seen in a few years. He shared with me that while things were going pretty well, he regretted the decision to buy a new house early last year.

I was puzzled too, because not long ago I remembered them buying a home, which at the time (maybe three or four years ago) was a major step up for them. It was a very nice home, and one that offered the space they needed for their growing family. I just assumed they would be there for years – maybe decades.

Somewhere along the way my friend got a promotion and his wife returned to work. They had some new-found cash flow, and felt some temptation to step up in house again. Rates were nearing an all-time low, and prices had been knocked down a bit in their area (though not quite as bad as in other parts of the country).

They decided to, in his words, “stretch a bit” to buy a much larger home (around 1,000 square feet larger), with a bigger lot and many more high-end features. They considered it a smart investment.

Fortunately, they sold their old house relatively quickly, and for the first couple of months they were tickled with the new place. Unfortunately, it didn’t last.

They soon realized that the new home came with larger bills. I guess they always knew that would be true, but now they were feeling it. They were paying more in utilities each month. Their payment was significantly higher thanks to higher taxes (they now owed city and county taxes since they moved closer to town).

My friend’s wife saw her hours cut at work, which was a mixed blessing since she missed spending more time at home with their kids. On the other hand, they counted on her earnings to help cover the mortgage. He said they were starting to feel “squeezed.” Looking back, he confesses, it would have made more sense for them to just stay put and find something else to “invest” in.

Finding Contentment

I can relate to what my friends are experiencing, and his story was a timely one for me. My wife and I often wish we could relocate to a different area. Houses in the area we desire are significantly more expensive than what we owe on our current home.

We feel like a move there would mean depleting our cash for a down payment on a larger debt. At the end of that trade we wind up owning less (savings) and owing more debt. That just doesn’t fit with our financial goals.

Since becoming debt free but the house our goal has been to acquire assets – things that go up in value, or add value to our lives, or create a passive income. While you could make the argument that real estate meets these qualifications, I don’t necessarily want to put all my eggs in my primary residence. I’d rather buy rental property, or land, or invest in REITs for real estate exposure. My home is my shelter; it’s not an investment.

When I start feeling a little house fever, I remind myself that all the granite countertops, square footage and stainless steel appliances in the world can’t change my fundamental feeling about new debt.

I don’t want to take on more debt. I want to pay off the remaining debt I have (the mortgage), and be free from debt altogether.

I don’t want to buy something that will cost me more to maintain, draining more money from future earnings.

I don’t want to buy a fancier roof over my head if I think one day I may not be able to pay for that roof, a roof that keeps the rain and the wind and the cold away from my family.

So for me, curing house fever is relatively easy. I take a walk around the outside of my home and think of the blessings I have inside, beginning with my family. Everything else is just stuff. And I don’t need a bigger box just to hold more stuff.

If I lost everything inside that house, but still had my wife and kids, I’d still be a blessed man. Anything else is just gravy.

As for my friend, he said they are looking to downsize, but are now having trouble selling their home – one of the larger ones in his neighborhood and significantly more expensive than the short sales happening around him.

As he put it, “We may never find someone dumb enough to take this house off our hands.” I told him to be positive, because after all, the previous owners did.


  1. Think about how few years you will have a house full of kids… and then think that you will be wanting to downsize, mainly for maintenance reasons, when the kids fly the coop. You will want less to take care of. Try to enjoy what you have now, stretch it creatively or make do, and then you are set up and ready for retirement 🙂 One extra bedroom is always nice, but after that, it’s cheaper to buy someone a motel room when visiting than to have extra house expenses all year round… 🙂

  2. We are empty nesters. Last summer, we sold our mortgaged house. We paid cash for a condo in an area within walking distance to numerous restaurants, gym, clubs, shops, etc. It has been an incredible experience to be debt free AND we can clean our condo in literally 2 hours. Downsizing was an experience in and of itself but it has allowed me to max out my retirement contributions for the first time in my life. Friends have made statements trying to figure out why we “had” to give up the house. I keep assuring them that it was the best decision we ever made.

  3. Thanks for this! My wife and I are debt free except for our house. The rates and prices around us are super low. The itch has been coming and going resulting in late nights running numbers in excel. Long story short, we too, go back to our couch and look at everything around us and sigh in relief. Hopefully only 28 months left in the mortgage. We bought the house in 2006. I know! =)

    • Russell, you are making great progress towards a debt free life. I would urge you to ignore the itch, hold the line on your plan for debt freedom and keep doing what you are doing. In 28 months, once you’ve paid off your current home, you could begin saving for a “new house fund” to step up with cash.

  4. I’m thankful that sixteen years ago, when we could afford it, we didn’t buy a larger home. We’d be overwhelmed with too much house now and wouldn’t be debt free. I’d like to go smaller but it’s difficult to find a home (we managed apartments for over fifteen years so don’t care for another condo/apt at this time) in a decent neighborhood that’s under 1200 square feet.

  5. I agree with you totally. We have made improvements to our house only when it was needed. When the bathtub got a rust hole we redid the bathroom with my husband doing all the tile work.

    The best advice in my opinion, is to use just one income as the basis for a mortgage. That way if one person loses their job, the mortgage can still be paid. Not everyone can do that of course. Buying less house than a lender says you can afford is the next best thing. Just don’t “stretch” to afford a house.

    Just my 2 cents worth.

  6. My husband and I raised our family and still live in the same home that we purchased in 1984. While our colleagues were “moving on up” and taking on ever more debt, we hung in there and retired mortgage free and debt free by the time we turned sixty. Our daughter often bemoaned our frugality, and lack of “coolness.” Yet, when she and her wonderful husband purchased their first home, they both demonstrated amazing, and refreshing financial common sense!

    We have the freedom at this time in our lives to explore our interests, be with friends and family, and volunteer our time for what we believe in.

    We got to this point by thumbing our noses at keeping up with the Jones’s!

  7. Never mind the costs of real estate agents, taxes and fees. Buy your last house first. That’s the easiest and cheapest way to do it.

    In Canada at least you’re looking at 5% of selling price for the house you’re leaving and then another 5% of the house your buying in costs.

    I’ll pass thanks. True, I’ve seen houses that I say “Maybe we should/could, make a move” But it’s a fleeting feeling.

  8. I really cannot imagine thinking of a “home” as an investment, unless it is paying for itself, or producing enough income to help pay its own way (as in operating a home business, farm, or has rental income). If not, the expenses have to be so low, that no matter what is happening with the economy, our family can afford it.

  9. Great! This is just what we wanted to hear. We are looking at the idea of buying a house but are bothered by the idea of the burden of a mortgage.

    We are planning on sticking with what we NEED to minimize our time in debt.

    The blessing is within the house–that is, family!

    Great post Jason!

  10. Really enjoyed this post. It’s a good reminder not to get caught up in the hype and to keep your values front and center. My favorite quote from your post was, “My home is my shelter; it’s not an investment.” Glad to see you posting like this again. The infographics are interesting but I miss your opinion/situation being shared in posts 🙂

  11. Some sayings just stand the test of time, “The grass appears greener on the other side, until you have to mow it!”

    Your friend should have realized that a house is a long-term asset and played his financial hand accordingly.

    Also, your friend should have factored in the moving/switching costs into the equation inclusive of closing costs, incremental taxes, higher utilities, and such. He would have soon realized that it was cheaper to stay put, keep the house, and invest his money elsewhere.

    The 2008 housing debacle should have taught us that bigger homes aren’t necessarily better homes.

  12. Very interesting. It is crazy to see how the house market has turned. I was watching the news about people were just having to straight leaves their payments and take the hits; because they couldn’t lose more money on a house that was worse less than they owe. I am “new house” itch free.

  13. This is a very timely post for us as we just lost a round of biding for our move up house to a cash buyer (!?). While we really do need to move at some point for school district issues and b/c we are 4 people in a tiny condo, this post made me realize that maybe losing this house was a blessing in disguise. We have some more time to save and maybe the next house we fall in love with will be a little smaller and less expensive than the one we were just interested in. Thanks!

  14. my husband and I are 29 and 30 – and just refinanced our house. Our goal is to have it paid off in 15 years. It is so hard to resist the urge to buy something bigger, better, newer, ect – BUT your post was such an encouragement that we are on the right track! We may have to tighten the belt a little bit right now, but i know in the long run it will be worth it. Our kids are 2 and 6 months – how awesome not to have a mortgage before they start college!!

  15. I don’t think the issue is that they stepped up. It is that they decided to increase their debt burden to do it. You don’t need to increase your mortgage payment, you can always save up and pay down principal with a down payment. It takes at least as much discipline to stretch save up front than stretch a higher mortgage payment into your budget.

  16. This is great! I almost constantly fight the battle to want to “step up” in house. For many reasons. Mostly, because people can’t believe how small our house is. It’s 2BR, 1 BA, no garage, 1146 sf. And I’m not sure I know anyone anywhere with a smaller house. They just can’t believe it.

    And some of my friends have traded up too. And there are things I’d like to change about my house. Like get an extra 1/2 bath. And more storage.

    What I try to do is just remind myself that I just need less stuff, not more house (hard with a 5 year old whose toys seem to multiply by the hour). And also: we’re almost underwater, having bought in 2004. I can’t bring myself to sell our house and then buy a bigger one, and have to come up with $170,000 down payment again. Ouch.

    Unless I make it big on company stock, then all bets are off.

  17. I don’t really see my home as an investment. I have a rental that brings in a few hundred dollars every month , that is an investment. The reason I don’t see my home as an investment is that I have to live somewhere, if not here then I would need to buy or rent something else.

  18. I just found your website, as I have been perusing the webosphere for answers. While it is easy to see the failed logic of “stepping up,” how do you feel about “stepping in?” I have loved your various comments on “lifestyle creep” and feel that my family is at a critical time in our financial future without the resources to make great decisions. We have over 130,000 in student debt. Mine is paid off and we have no CC debt. However, my husband is about to land his first real job, and I have been working part-time. Initially I started working to save for a down-payment. Slowly, that savings turned into a necessity to pay back student loans. My husbands current salary is only $50,000 during a fellowship year, and we are on the brink of a better paying job. We have 2 kids and I am about to jump out of our rented upper apartment. However, the more I want it, the more it doesn’t make sense. Why spend spend spend all the additional money we will get on a house when we could be paying off debt? Then, I think. We will be renting forever, and I just want a place for my family to grow.

    Long story short, I feel like I am all alone in my life position. A young family, just starting out, with a debt as large a mortgage over our heads. Should we keep renting? Renting a house big enough for our family may be pricey…but at least it will be a fixed cost…I just don’t know.

    Have you posted on this before? What would you do? I want more than anything to feel less of this financial burden.

    Thanks in advance,