Why You’re So Damn Poor: Housing “Upgrades”
There are a lot of bottomless pits for our money in our lives. As we have discussed up to this point, most of the time it is in the financial margins. ANNNNNND sometimes it is in the constant “upgrading” that we do in our lives. There is nothing quite like having a house for 4 years after having it built for you, only to turn around and have that company SELL that house for you AND build a new house of your dreams.
We are making a lot of assumptions here… We are assuming that there is not some HUGE financial gain to be made in these margins. (Having built in an upcoming market and “flipping” the house for a handsome profit etc.) Considering the way traditional mortgages work where the vast majority of your payments for the first 5 years go almost entirely towards the interest of the loan, the assumption we can make is that the principal of the loan is likely similar to what it was when the loan originated. Assuming it was a 30 year loan AND they sold the house for what they purchased it for, AT BEST they are probably making $10,000 or so of their equity back in the sale, which COULD be considered profit if it wasn’t for the fact they paid that amount or more in INTEREST while getting the loan down during that period of time. MOREOVER, in having another house built under contract and loan, have started the 30 year suckhole of interest and debt all over again. Our guess is that this this cycle will only continue… As it does for most Americans throughout their lives.
We’re glad we aren’t in that boat. Kristen and her mom spent a week this summer painstakingly scraping and painting our house. (Thanks Mom!) We don’t know what the future holds, but for financial reasons alone, we doubt we will EVER “upgrade” regardless of our life situation. Truth be told, even if we become millionaires, our house will probably look like this from time to time and people will assume we are the poorest people in the neighborhood…
That’s why you’re so damn poor! Damn “upgrades” of housing!