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The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

It happened again.  I fell for click-bait.  The title on the link was ‘Buy the biggest house on the block’.  My first reaction was “What idiot thought this up?”  Buying too much house is one of the biggest problems people have in managing their finances and here is someone saying buy the biggest.  The link was to a brief video interview with an economist.  As it turns out, she is preaching the same principles as most do when it comes to personal finance.

The interview starts out with her saying the best piece of financial advice she every received was from an older colleague when she was starting out.  She had asked for advice on whether she should buy a car or not.  Her colleague informed her that there are two sides to the interest equation, the paying side and the receiving side.  Her colleague said you always want to be on the receiving side.  That simple principle has guided her thinking ever since.

I would say that in a perfect world, I would be debt free, but I don’t live in a perfect world.  I have accepted a certain amount of debt in my life.  My mortgage falls into that accepted amount.  I would love to be mortgage free, but I am not willing to make the sacrifices necessary to be completely debt free.  The same goes for my car loan.  I try to minimize this debt by only having one car loan at a time and by only buying as much car as I need.  This is why one of the cars I currently have is 14 years old and I plan on driving it for another 2 years.  Sure, a new car would be nice, but I don’t need one.  I would rather spend my money on something else rather than a second car payment.


The economist then discusses her views on consumption.  Her basic premise is to surround yourself with people who make less money than you.  This way, you won’t be tempted to ‘Keep up with the Jones’.  This is where the ‘Buy the biggest house on the block’ title comes from.  If your house is the best on the block, you won’t be tempted to compete with anyone else.

In looking at my on situation, I’m not sure I have followed this advice.  I have what I would consider one of the nicer houses on my block, but I wouldn’t say it’s the nicest.  When I bought it, I simply bought the house we needed.  At the time, I’m sure we would have been approved for a higher mortgage and could have bought a bigger house, but we didn’t need it.  I would also say that a majority of my friends earn more money than me.  That is because either both spouses work or the earner in that family has advanced farther up the corporate ladder than me.

I will say that I do admire some of the things my friends are able to do or buy, but I am not tempted to replicate it.  My wife and I have consciously decided that she would stay home with the kids, knowing that we would be foregoing the extra income.  I have also reached a point in my career where career advancement does not hold much appeal.  The extra income that I could earn by advancing up the corporate ladder is not worth the lifestyle trade-off that would come with advancement.  I think the motivation to keep my debt levels low is what prevents me from trying to keep up with my friends.

The advice is what anyone learns when reading about personal finance, reduce debt and buy what you need.  I do the best I can to balance this with all the wants the world has to offer, but I am also a patient guy.  I tend to take a longer term view of things and plan for my future.  How about you?  Did you buy the biggest house on the block?  Are you the wealthiest in your circle of friends?