A house with no furniture

The art of finding money for travel while being under immense debt.

The other day a colleague of mine, a delightful middle aged woman, was shocked to hear that I didn’t own a living room sofa set, a TV or a guest bed.

Instead of spending all your money traveling to all those places, you could buy the basic necessities for comfortable living!

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That was her first comment. Then she went on a rant about how “today’s generation” did not know anything about financial management.

And that made me upset. I was upset because I felt sorry that she will never get it!

Debt doesn’t mean you cannot enjoy life

Let me tell you the background story. Last winter while I was walking in downtown Toronto my eyes caught a glimpse of the CN tower peeping behind a tall building. It was one of those simple moments that trigger an emotional reaction and for the first time Toronto felt like it was my home, and a place I wanted to live. Soon after that my partner and I discovered that if we redirected the amount we paid in rent to paying off a mortgage, we could easily own a house. So few months later we bought a house in Toronto’s Parkdale neighbourhood.

Owning a house is a great feeling but it takes lot of work and financial management to keep it going. Every time I look at my financial statement, I see a six digit number in red showing my debt. Coming from a culture where it is very uncommon to have credit cards or debt, this negative bank statement always makes me anxious. Questions – like What if I lose my job? What if the interest rate doubles? What if the roof falls down? – often pop up but I’ve come to the conclusion that it’s merely a psychological response. For an amount slightly more than what we would be paying as rent, now we have a long-term investment in a city that’s growing. With some wise planning, there is no reason for distress at all.

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Doing things that make you happy

Before buying, we made a list of priorities and developed a multi-year budget. Since both of us love travelling and exploring outdoors, top on our list was adequate vacation time per year. We also had some other debts and financial commitments. From this exercise, it was clear that we needed a large financial wriggle room each year.

So find the wriggle room

Choosing a house is a frustrating affair that left me wishing I had a rich old relative who just died and left me a fortune. There is always the struggle of having to choose between a house with everything you want for the approved loan amount v/s a house that cost lesser but (obviously) had lesser features. I strongly suggest NOT going for the maximum you can afford (regardless of what bankers or real estate agents tell you) and here’s why:

  • Firstly, the maximum limit that the banks give you has lots of inherent risks which many people are not made aware of. The main short term risks being rising interest rates, rising inflation, renovations, insufficient contingency, etc. Long term risks include not providing for factors like real estate fluctuations, income stability, house upgrades, change in the size of family, etc.
  • Secondly, the mortgage approval is a bare-bones limit which assumes that you do not have a life outside of your house and your job. People spend thousands of dollars each year on activities such as charity, supporting family, gifts, volunteer work or, as in our case, travel.

2012-09-05
↑ Lets travel to new and interesting places. (That sofa set can wait)

…but then the tomatoes got more expensive!

Even with that financial flexibility, you will be perennially short on cash, at least during the initial few years of mortgage. Rising bill payments, increasing prices of groceries or a broken faucet; there is always something (annoying) happening around. Plus you need to have a contingency fund because a mouse will somehow find a plastic water pipe, start chewing it and make your basement drippy. That was last year. :-(

In few months it was clear that we had a choice of (a) investing savings in buying furniture (“for comfortable living” as my colleague commented above), (b) renovating the house to make it more beautiful and spacious, (c) paying down high interest debt and (d) travelling.
We chose a hybrid c+d model.

Travelling is the best way to spend money!

Ofcourse I am biased towards things that I am passionate about! NOW is the right time to travel. I feel like I’m on this constant quest to see more places, meet more people, eat different foods, experience the beauty of nature and take pictures of human genius around the world. I’m not going to discuss the fabulous reasons everyone ought to travel since google is full of articles on that topic.

Not everyone loves travelling. People invest in other activities like hobbies and charities. In short, life is not restricted to a work-and-home model.

Sadly, this is something many people do not get. I hear about Mexico not being safe or India being a disease stricken place, mostly from people who have never stepped outside their comfort zone. I also hear statements like ‘I cannot live without a TV.’ Really?? Sure you can, have you tried it?

2012-09-05b
↑ Power of choice: Material fulfillment v/s Emotional or Spiritual fulfillment.

Let’s buy a flat-screen TV… but next year.

I told my colleague that we may not have a fully equipped guest room but we do not compromise on hospitality. I told her that a TV wasn’t crucial since I watch everything on the internet or go cycling outside. I don’t have a leather couch but I have a nice backyard to sit in.

She didn’t find any of those answers satisfactory. Man is a social animal and people often do various things to improve one’s social status or make an impression on others. Nothing wrong with that, but showing off or living in an immaculately decorated house ranks very low on our priorities. At the end of the day my mission in life is to be happy. Material possessions may make us happy for a while but once the initial honeymoon period wears off, or there is a newer version in the market, we become unhappy again.

For both of us, travelling is an indispensable part of our lives and we want to travel for a month or two every year. That means taking pay cuts or saving zealously but at the end of the day it makes us content about life. I’m sure some day we’ll have a fully equipped house (between all the travelling, who knows!) but until then we may be living with minimal furniture, …and we are proud of that choice.

21 thoughts on “A house with no furniture

  1. Ah yes, the set-down-the-roots type of expectations. Unfortunately, as you said, these people won’t get it, as they only have one mindset, their own. I don’t have a sofa of my own either, I am just renting an apartment, but then I am not disappointed with my choices either. I am doing what I want with respect to work, I am traveling as much as I can, and life is good.

    People make different investments. For me, I investment my time and effort on higher education. It’s whatever rocks one’s boat. What I don’t get is when people are so narrow-minded that they judge others who didn’t make the same decisions they did.

    • Hi Jeruen,
      As more and more people chart a non-traditional approach to life, hopefully people won’t be as dogmatic. Imagine being a rebel 200 years ago!

  2. I completely get what you are saying. Buying a house is a huge investment and it comes with cutting down a lot of things. I have already started the process and it is not very pleasant.
    But, yes, you will always save to do things you love to do. For me its books, movies, travelling (nowhere as much as you) and my protein shake (its very expensive). I had to buy table lamps, shades and a painting for my living room, but that unfortunately have to wait.

    • Hey Amit, I feel like between the point of our first job and the point of a huge investment (like buying a house), our budgets get quite inflated. Bachelor’s life, lot of disposable income and itching for things to do. sigh..

  3. Hey, you get such ladies in Canada too?
    I have always made my own choices and get such remarks from all our relatives and friends, and all I can say is that “They just don’t understand”
    :)

    • Hi Mukul,
      Yes, we have bossy Indian aunties here as well and they classify everything into right v/s wrong, good culture v/s bad (i.e. not Indian) culture, and so on. Their ignorance is kinda entertaining once I stopped listening. :)

  4. We are on the same page! I’m lucky to have no debts, mostly because I completed my university degree in France where I actually got a small scholarship instead of paying high tuition fees. But we aren’t materialistic people either. Sure, it would be nice to have a deck, new furniture, a bigger place, two cars… but you know what–I don’t care. We aren’t living like broke students, we do spend money on healthy food but we cook most of our meals. We are happy to live in a small place (by Canadian standards!) and to give each other rides.

    I don’t feel frugal. This is normal to me.

  5. Why did you even have to justify the importance of furniture over your passion? :)

    It is a massive decision to buy your own home, but the only thing that worries me is how you categorize a liability as an investment. I think you have seen enough of your financial statements to know by now that the purchase of the home is really a liability & you will be spending much more on it as you go ahead for minor & major overhauls. Contrary to popular opinion that ‘real estate prices always go up’, I think it is always best to build financial security other than the home you live in. I guess that’s why you have that buffer of cash then (financial wriggle room).

    But having your own home is truly a different kind of experience, extremely satisfying.

    • Hi Raunak,
      Excellent argument! Aren’t all investments really liabilities with different risk profiles? We have designed all these tools to manufacture money on paper and there are ingenious accounting tricks to show a different reality. :D As per accounting principles, on a balance sheet a house would be classified as an “asset” since it has value. In addition, my balance sheet will be positive as long as Toronto is doing well, and it IS doing quite good. On an income statement however, a house results in ‘cash out’ i.e. a liability. Positive or negative cash flow would make the asset a good investment or a bad investment respectively but in neither case will the asset turn into a liability. The house still has value and can be sold for whatever the market determines it to be worth. You also have to consider the opportunity cost – what if your mortgage payments are lesser than the rent and you don’t have to forego the savings!

      Let me not get caught up in technical details because I get the spirit of your comment. I am certainly taking other steps to protect myself from the risk of home ownership. At the end of the day, the feeling of having your own nest is truly special.

  6. He he I read your blog.The lady was not wrong Priyank ,she had a her set of thinking and you have your own.Both are right in their place.Plus since you wrote” she may not get it”, is your thoughts.She may have not known what you experienced. Instead of writing her off , take time and look at her perspective and sell your own.Travel may be your highest priority and hers a sofa to entertain guests.
    Why am I writing this, for I have been in your shoes for long..

    • Hello Saagarica, welcome to my blog and thanks for your comment! I think we are talking about the same things. I agree about the two different perspectives and I respect her for the her views as well. I am, however, highly critical of people judging others to live life in a way they see fit, hence my comment about her not getting it. I did not critize her lifestyle or judge her spending decisions and never will but I expect the same of her. :)

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  9. Cool man ! So u got ur better someone to be fiscally responsible….just like i did , we discussed it a while back…

    I second u … it is indeed a very practical way to live

  10. Ya priyank you have rightly said “(That sofa set can wait)”…as we need not have to carry the sofa set while travelling….at old age when we will need sofa to sit ..we can buy a new one at that time ….

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