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Prioritize Your Spending

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housing expense view

The view is nice even on rainy days

The cardinal rule of personal finance is to spend less than you make. However, where you spend your money is also important. You should figure out what’s important to you and prioritize your spending accordingly. You can cut down on less important areas that don’t bring as much happiness into your life. For example, if you love Starbucks coffee and can’t live without it, then go ahead and support Starbucks. You can cut down on shoes or find something else to eliminate. For us, it’s housing where we spend a lot of money.

As I detailed in the Monthly Nut post, we spend $2,100 on housing/month and that works out to be about 60% of our expenses. This is a big % and it’s not even a big place. On the other hand, our 1,000 square feet condo is in a great location and we have an awesome view from every room. I thought I’d write a bit on why we choose to spend this much on a small place and why it is important to us.

The location is important because we can take public transportation and walk to many places. I’m taking a long vacation and trying out the whole stay at home dad thing. Now that the weather is nice, we’ve been going to nearby parks twice a day. Baby RB40 can walk pretty well now and he has a great time in the parks. It’s much more fun to run around outside than being cooped up inside. We also went to the library for story time and walked around in the mall when it was raining. In July, there will be many more outdoor concerts nearby and we plan to go see as many of them as we can. The location enables us to share one car and minimize driving as well. I drive about once a week to go grocery shopping while I’m off.

The view is also very important to me because we live in the Pacific Northwest where it is gloomy and rainy for 9 months out of the year. When we lived in a house in the suburb, we had more space, but the grayness really got to me. The view from indoors consists of a few trees, the fence, and gray sky. The lack of light is depressing and seasonal affective disorder is a big issue here. In our condo, we have a great view and even on rainy days I don’t feel the oppressive gloom. The condo is a bit higher up than ground level and that makes the view much more expansive and it makes a huge difference in my mood. This is the main reason why I don’t mind paying more for a great view.

We love city living, but it is more expensive than living in a comparable condo in the burbs. On the other hand, many of my friends go for much bigger homes in the suburbs and they are paying a comparable amount (or more) for housing. It all depends on your priorities and what make you happy. I’d rather cut down spending in other areas than move back to a house in the suburbs. If we move to a sunnier location, then I wouldn’t mind living in a single family home again.

What about you? Is there something that you don’t mind spending more money on? 

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{ 40 comments… add one }

  • Kurt @ Money Counselor June 11, 2012, 6:39 am

    We share your weather, and also paid a premium for a view from our home. It’s something we appreciate every day, so I think worth it.

    I agree–each of us has different priorities and desires. If something is important to me, I find a way to pay for it, whether it means cutting back elsewhere or finding a way to earn more money. I once stopped drinking alcohol for several months to help pay for a somewhat extravagant train trip (Empire Builder roundtrip between Minneapolis and Glacier Park). I didn’t miss the booze, and the trip was great!

    • retirebyforty June 11, 2012, 4:34 pm

      The view makes a huge difference when the weather is gloomy. Thanks for sharing your thought. 🙂

  • Daisy @ Add Vodka June 11, 2012, 7:12 am

    I paid for a view before (of the ocean) and we lived in a 500 sq foot apartment for a LOT of money. Not worth it for us. I guess in housing, my priority would be space.

    • retirebyforty June 11, 2012, 4:36 pm

      Everyone has different priority. 🙂 I can see that.

  • Mr. Everyday Dollar June 11, 2012, 9:00 am

    I think one of the most important ways to save money is living a low impact lifestyle. And that means living in a small energy efficient space like both you and I do and also living in an urban setting. The space costs less to heat, less to cool – and is easier to clean – and by living in an urban area one doesn’t have to jump in a car all the time to get the groceries or run errands. I have so many goods and services in my neighborhood that I don’t have a need to drive a car. Yes, it typically costs more to live in these areas rather than the burbs but the long term savings are there.

    Mr. Everyday Dollar

    • retirebyforty June 11, 2012, 4:38 pm

      That’s great! We also don’t buy much stuff because we don’t have much space. 🙂
      I like city living a lot more, but it may just be Portland.

  • Eric J. Nisall - DollarVersity June 11, 2012, 9:00 am

    When I was looking at condos, my first thought was to go to Ft. Lauderdale beach and check out the towers that were fairly new. The prices were actually pretty reasonable. That was until you factor in monthly maintenance and HOA costs of at least $550/month. That made me rethink my whole strategy, and I went inland, with no view but more space, a much smaller price tag and significantly less in dues. I just didn’t want to spend that kind of money for something that I wasn’t going to use all that much at the time.

    My big thing is food. I will definitely spend money on a good quality cut of steak or a nice chunk of ahi tuna rather than opt for the cheap alternatives at the market. I like cooking and eating, so I want to be able to treat myself and others whenever I feel like. Making the cheaper housing choice enables me to do just that.

    • retirebyforty June 11, 2012, 4:39 pm

      I love good food too, but I tend to cheap out a bit there. We buy really nice stuff once in a while, but not everyday. 🙂

  • Tie the Money Knot June 11, 2012, 9:34 am

    I would say location is important to me, in terms of spending on housing. Personally, while I have a strong affinity for newer spaces, I think that as I older, I’m valuing time and convenience more. Thus, spending a bit more for location that accommodates a reasonable commute is important.

    Also, I might be more willing than some to spend on food I like. I know many people aren’t like this, but so much of our health is based on the quality of food we take in. Plus, I just really like food (including some that’s not always perfectly healthy)!

    • retirebyforty June 12, 2012, 12:05 am

      I like newer spaces too. I don’t want to spend a lot of time to maintain the place. We are always so busy as is.

  • Jeff @ Sustainable Life Blog June 11, 2012, 9:53 am

    I think you made some great points here joe. Like you, I dont mind spending more on a place to live if that means being able to walk or bike to work. That way, I’ll enjoy my commute a lot more and i’ll save money on gas in the longer term.

    • retirebyforty June 12, 2012, 12:06 am

      I don’t like the long commute either. It’s a good thing I don’t live in CA. 🙂

  • Kathleen @ Frugal Portland June 11, 2012, 9:57 am

    Lead with a city skyline pic, and of course I’m reading! 🙂 I’d pay a premium to live close-in, too. In fact, I do. The thing that I realized was important to understand was how much money it would save me to live in the suburbs. Then, I was able to ask, “is my happiness worth $300 a month?” Yes, yes, and yes.

    • retirebyforty June 12, 2012, 12:07 am

      Yes! That’s the key for me too. It cost more, but we can afford it so why not. I can save in other area instead.

  • John @ Married (with Debt) June 11, 2012, 10:04 am

    We love our childcare provider so much that we pay her for a few months in the summer where we don’t use her. That’s so she isn’t forced to fill our spot. The extra money is worth having a sitter we can trust, and one who lives literally right next to my wife’s work. Priceless (almost).

    • retirebyforty June 12, 2012, 12:08 am

      Wow, that must be a lot of money, but I know a good childcare provider is so difficult to find.

  • Paul N June 11, 2012, 11:07 am

    Sorry I like the burbs. I think it gets a bad rap from a lot of people. I particulary find it humorous when a person living downtown accuses us of destroying greenspace. I live in the GTA. I like to visit downtown but to live there – you have to be kidding…

    You say you have all these savings. I disagree. You just shuffle your costs into high a maint. fee and a high mortgage for a few hundered square ft and other costs. To me these little condos are like little prison cells or a fish bowl with big windows with a nice view. You even seem to limit yourself to spending the majoity of your time within walking distance of your condo. Kind of like the prison yard?

    Lets talk about waiting for elevators, freezing your ass off, getting sick in the winter waiting for a bus. Sorry I don’t want to pack myself in a crowded subway car. The GF does that, she has some kind of fight just about every day on the subway. Just for looking at the person near or across from her. She has been punched and pushed. I’ll take a little traffic over that and a few extra $. In Toronto I don’t think a day goes past that there isn’t some kind of subway problem or discussion about inefficiencies of the the entire transit system… The pollution downtown on a nasty windless hot summer day, the constant noise, you can’t even open a window in some buildings. I could go on here it’s easy. What is the price of your time?

    I can’t see their being such a big savings if you buy a house that you buy with your brain vs. your heart. Become just a little bit handy to save costs and do some of your own maint. Pay your house down fast and kiss goodbye to your mortgage. By a good used car and do a little work on it yourself. (Especially if you are home all day, you have plenty of time to learn). There are lot’s of ways to save money around the home and they are really simple, but people usually aren’t willing to adapt and change.

    • retirebyforty June 12, 2012, 12:11 am

      It’s great that you like the suburb. I don’t think there is anything wrong with that. That’s why most people live in suburbs. We just like city living better and have different priorities. Your downtown doesn’t sound good. I wouldn’t want to live there either.

  • krantcents June 11, 2012, 12:43 pm

    In real estate, location is the most important aspect! I have and will spend more on location because it makes it more attractive to sell. My previous home was a view property overlooking Los Angeles. The view made it more expensive, but it also made it more attractive to sell. My townhouse is more reasonable in cost, but closer to the city which makes it more attractive. The layout is unusual for a townhouse which makes it more attractive too. I do not mind spending more on real estate and other assets that will grow.

    • retirebyforty June 12, 2012, 12:12 am

      Location location location!

  • Crystal @ Prairie Ecothrifter June 11, 2012, 12:56 pm

    Yeah, we are also going to be spending way more on housing than necessary. But we are fine with driving the same cars until they die, keeping entertainment expenses low by hanging out around the house with friends, and rarely purchase stuff just to own stuff. But our new home will be our biggest splurge ever.

    • retirebyforty June 12, 2012, 12:12 am

      Bring some pictures to FinCon. I would love to see them. 🙂

  • Jacob @ iHeartBudgets June 11, 2012, 1:16 pm

    I am totally there. We spend about 76% on housing (also due to my wife now being a Stay-at-home-Mom). We would not have it any other way. My first post ever on my blog was about making a priorities list, because you can’t manage your money if you don’t first write down what is important to you. We live in th burbs and have a big backyards. In two years, we have hosted AT LEAST a dozen parties and LOVE having family/friends over. Yesterday, we hosted a birthday/graduation party, played games and had the outdor speakers setup. Everyone had a wonderful time and told us so as they were leaving.

    For me, my family, friends and community are at the top of my list, so of course our money is going to go towards that. We want our home to be a community center where we can love on people and minister to them. Our bank statements reflects that priority! Good call on prioritizing! If you don’t prioritize, then you’re probably blowing your money on stuff that really isn’t important to you.

    • retirebyforty June 12, 2012, 12:14 am

      Wow, 76% is a lot. Your parties sounds great though. It’s great that you prioritize your spending and use the money on what matter most.

  • Priorities are huge and it looks like you guys have yours figured out 🙂 Right now there isn’t anything in particular I’m spending a ton of extra money on but if I find something I won’t feel bad for doing it because I can cut back in other parts of my life.

  • Thomas S June 11, 2012, 5:44 pm

    Nothing too big for me,be good food and fast Internet/HDTV programming. I spend more then i should on my Internet/HDTV programming, but i like, and enjoy it. I also spent to much money on Sushi and good BBQ.
    If i had to dip into my emergency fund for day to day survival i could cut these two “luxuries” out. Well the expensive food, i would keep the internet, and can the HDTV programming.

    • retirebyforty June 12, 2012, 12:15 am

      We love good food too, but limit ourselves to eating out once a week. 😉

  • SavvyFinancialLatina June 11, 2012, 8:32 pm

    I am young, so I am willing to sacrifice space for location. My hubby and I don’t need more than 700 sq. feet to be happy 🙂
    Plus, I hate driving. I want to live somewhere where it’s close to my job and close to shopping places.
    I am with you on this one Joe.

    • retirebyforty June 12, 2012, 12:16 am

      I was happy in a 1 bedroom apartment when I was young too. 😉

  • Prior to our move to Hong Kong, my husband and I never thought we would be spending so much money on rent. We spend about $3861USD for our 545sq 1 Bedroom apartment in Hong Kong. Back in NYC, we lived in an apartment in the suburbs which we owned and paid around $1800USD(including mortgage & maintenance) for a 2 bedroom/2 bathroom, 1200sq with a balcony. It is insane how expensive Hong Kong is!

    The reason we chose to live where we do in Hong Kong is because my husband works 90+ hours a week. We need to be within a 10 minute commute time in order for him to get any rest at home.

    • retirebyforty June 12, 2012, 12:18 am

      Holy Moly! That’s expensive for a tiny apartment. We visited Hong Kong and stayed at a tiny hostel. It was a lot of fun, but the tiny space is very cramp. I guess you get use to it. 90+ hours/week is a lot of work.

  • Leigh June 11, 2012, 10:18 pm

    I prioritize housing too. I would say that housing represents somewhere around 40% of my budget and my budget represents around 50% of my monthly net income.

    I don’t necessarily prioritize a view, but having some privacy in who can see in your windows is quite nice. I love having a good amount of space too, a nice kitchen and bathroom(s), and lots of closet space.

    For the amount that I pay for housing, even factoring in more gas costs, you could probably buy a much nicer house in the suburbs, but that would move my commute to car/bus instead of a < 30 minute walk and that is just so not worth it. Plus, the maintenance on a house? No thanks. If I'm going to buy, it's going to be a condo.

    • retirebyforty June 12, 2012, 12:28 am

      A nice kitchen is a must for us too. We spent quite a bit to remodel the kitchen and it’s a much better spot to cook now. We like living in the condo because we were spending so much time on maintenance and yard work at our old house. We get only a few months of nice weather here and I don’t want to spend every weekend working in the yard.

  • DaveL June 12, 2012, 8:59 am

    You made a lot of good points here. People will value many different things but its important to decide what you value. For me I think location is pretty important and I am willing to pay a little more for an area that I will be happier in. I grew up in Upstate NY (dont get me wrong its beautiful here…for a few months out of the year). I decided to move away for college to Southeastern University in Lakeland, FL. I can relate to how you felt with the gloomy skies all the time. I felt like once I moved to Florida and it was almost always sunny, I felt much more motivated to do things like go to the gym, go kayaking, etc. Being a recent graduate, one of the many big questions is where should I live now. I love NY but i think im going to have to choose the area that is sunny and that I enjoy more.

    • retirebyforty June 12, 2012, 2:20 pm

      I love Portland, but someday we’ll probably have to move to a better location. California is too expensive so maybe I’ll visit Fl and see if we like it. 😉

  • jefferson June 12, 2012, 1:47 pm

    this article makes me feel very glad to live in the midwest, where housing is cheap. we have a nice suburban 4 BR house that costs about half of what you are paying. a $2100/month payment would just destroy my budget..

  • AverageJoe June 12, 2012, 2:30 pm

    I love the city (great view by the way). Living right in the middle of everything for me would be worth the space difference.

    The thing I don’t mind spending more on? Films in the theater. I don’t get the same experience at home as I do in a theater. I prefer going during the day so it doesn’t cost so much, but it’s still something lots of people save money on by NOT doing that I really enjoy.

    • retirebyforty June 13, 2012, 7:35 am

      Great perspective! I don’t care about films at all. People are always talking in the movie theater and I don’t like that. 🙂

  • Roshawn @ Watson Inc June 12, 2012, 5:39 pm

    As sad as it sounds, I don’t mind spending on my BELLY. Food is such an important part of our lives, so while I am in no way a foodie, I do appreciate my meals 🙂

    • retirebyforty June 13, 2012, 7:36 am

      I splurge on food once in a while too. I love food, but usually I tend to cheap out on groceries.

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