Back in June my wife and I decided to buy a house. Ever since we moved to Toronto, we've lived in a 540 square foot condo with a "to-die-for" view of downtown.
The PRO's of this decision are (1) more space in the event that we have a baby and if friends or family want to visit, (2) a parking space for a car, and (3) more investment exposure to the Toronto real estate market. **This last one could be seen as a CON depending on your perspective, but we will get into that later.
The CON's of this decision are (1) more space means more cleaning and spending on maintaining a "bigger" lifestyle, (2) living further away means 1 extra hour per day lost to travel time, and (3) the loss of the convenience of living in downtown and in a condo with 24 hour concierge/security.
What are the material costs of moving?
Moving Boxes: $17.85 for 9 big boxes
Hiring Movers: $129 per hour + $50 surcharge for end of month, 2 hours = $348.04
Renting a Car (twice): $128.04 + $67.56 = $195.60
Total Cost of Moving: $561.49
The true cost of moving is the tradeoff between the PRO's and the CON's. To be quite honest, both my wife and I believe the CON's outweigh the PRO's except for one variable. The investment exposure in Toronto real estate.
This is a big IF because we don't know how this investment will turn out yet. But given the amount of high paying jobs in Toronto, the expected population growth and the number of young families looking to buy something similar to the house we just bought, we are probably ok.
The Biggest Revelation Of My Life
Going through this process of buying a house and subsequently selling our condo changed how we feel about our life, our net worth, and our closeness to Early Retirement. We sold our condo and made a hefty profit. Prior to selling our condo, we would do a net worth calculation at the end of every month. In this calculation, we treated our condo's value as the price we paid for it. We never considered any potential price appreciation in our net worth.
So when we sold our condo for $200,000 more than we paid for it this was a huge revelation to us. We are now $200,000 closer to Early Retirement than we were before this summer.
Investments in stocks that are priced every day give you a running tally of where you are on the road to Early Retirement. But investments in your home or investment properties are unique assets that are not priced daily and therefore can provide surprise net worth gains when you decide to sell.
Save Money Retire Early is written by Jon Lo, a barely 30 something Chartered Financial Analyst. I believe anyone can be rich or poor, it's what you save that makes the difference.