Is Your Home Your ‘Biggest Investment?’
I purposely stirred up a hornet’s nest yesterday on Twitter (I’m posting there daily and if you like this newsletter, I think you’ll like my quick-hit takes on Twitter) with the following tweet:
“My home is my biggest investment,” said no wealthy person ever.
If the home you live in is your biggest investment, you’re doing investing wrong.”
Many responses got caught up in anecdotes of “but wait, my house went up this much!” and while true, that completely misses the point.
As JL Collins wrote in this essential piece, your house is a terrible investment.
But that doesn’t make owning a home a bad decision! On the contrary, it’s the right psychological decision for tens of millions of people.
And it certainly doesn’t mean owning rental real estate is a bad investment.
It means simply, the home you live in should not be “your biggest investment” as much of society believes.
Most people don’t save money, so this forced savings through monthly principal payments amounts to the only real source of wealth for many.
In the FI Community, we operate from a position of strength where we save money every month and continually add to our investment portfolio month after month, decade after decade.
50 years from now, no person saving every month and investing it will have more wealth in the home they live in than their investments. Period.
Worthwhile Spurges: Part 2
Last week in the FI Weekly, I talked about ‘worthwhile splurges’ — areas where you can spend a small amount extra and get outsized returns in terms of value.
What if we look for ways to spend small amounts of money and get outsized returns of hours of your life saved?
One I found recently was paying $0.75 per pound to throw all my shredding in a bin at my local Postnet store instead of manually shredding it all in the shredder we have here at home.
I’m somewhat fanatical about shredding all our sensitive mail, documents, etc.
I collect it all for months and then it takes me a few hours to shred it in our medium-capacity shredder.
For the low cost of $7, I was able to take that bag and dump it in a locked bin to be shredded securely and it saved me hours of my time.
Where can you spend a little bit of money to save time?
ChooseFI Community Taking Action This Week
- Tim said, “My 15+ year old dryer suddenly stopped producing heat on Monday. We were just hit with an unexpected car repair so I was not about to get hit with another big expense. We also have family staying with us for the next couple weeks so the pressure was on to take action. After searching on YouTube for a few minutes, I found two videos that took me step by step on how to dismantle the dryer and diagnose the issue. Within 20 minutes, I found 3 parts that needed replacing, bought them on Amazon for $40 total and had them delivered the next day. Today I am happy to report the dryer is fixed and working better than it ever has since we bought our house.”
- Michelle said, “This week I signed up for Trim, the service which evaluates your bills to see if they can negotiate savings on your behalf. After many years of fighting with my internet provider who loves to continually raise their rates to astronomical proportions, Trim was able to save me over $300/year or %25 on our monthly bill. Many thanks to ChooseFI for introducing me to Trim….this service is amazing and definitely worth looking into!”
- Dylan said, “My 1% better is taking the steps to get a Salesforce Admin certification. I listened to the podcast episodes it was discussed, as well as the TalentStacker episodes, and decided to do it. My current role entails many nights and weekends August-May on top of the normal 9-5 M-F. My career path in this role is also limited. After listening to an episode about negotiating salary, I asked my boss what I can specifically do to receive more than the standard annual cost of living raise. He essentially said that would never happen. So, I decided it’s time to look into something else to spend more time with my wife, earn more income, and be on a quicker path to FI.”
- Elyse said, “Last week I listened to the episode #338, 10 Ways to Increase Your Income. I had already been thinking about asking for a raise prior to listening to that episode, and Alan’s first way to increase your income is, well, ask for a raise. So, I did it, emphasizing my value to the company & highlighting recent achievements. My boss gave me a raise, AND a bonus check! My boyfriend and I are on the Choose FI journey together, so after I got my raise, he decided to do the same. Today he asked and was granted a raise at his job. It feels awesome that we both took that step together and increased our income! Our other big step this summer: we plan to get married next year, so we both got Chase Sapphire Preferred cards earlier this year, and we’ll be saving our ultimate rewards points (from those big sign-up bonuses) for our honeymoon.
- Rachel said, “My 1% better is making a budget! I’ve always said no to traveling because I couldn’t justify taking money from my savings. Now, I am inspired to budget money every month towards an awesome trip to Argentina to hike Patagonia. This is a trip I never would have considered without the help of this podcast. Not only am I getting more financially confident, but I am pushing myself to enjoy my life, and stop living by the rules of a small 9-5 box!”
- Erik said, “Here’s how I put a little $$ back in my pocket this week. I had attempted to policy shop for auto insurance for several years, but no one could touch my numbers. However, today, I got a quote for ALL of our insurance (home, rental, car, umbrella, jewelry) together, and, although the car insurance was essentially the same, my wife and I ended up saving $373 per year from all of the other policies by bundling. Yes!!”