Avoiding Home Ownership to Retire Early

In case you missed it recently there was a couple who received quite a bit of media attention because of their early retirement as well as their views on owning a home.

They advocate that anyone can retire early as long as they save enough and that no one should get caught up in a heated housing market by taking on more mortgage than they can afford.

The backlash to their story was almost more significant than the original story itself; if they wanted to stir the pot – they definitely succeeded.

I agree that taking on too much mortgage debt is a bad idea. Whether the housing market is overheated or not – time will tell. It’s certainly gone up to insane amounts in cities like Toronto and Vancouver, but where it’s headed is anyone’s guess.

Image Credit: Brandon Blahnik (Flickr)

Image Credit: Brandon Blahnik (Flickr)

The Right Time to Buy

The big theme from their story is that they avoided the “home buying trap” which allowed them to invest their money instead (and retire early). This lifestyle isn’t for everyone, and there will always be some who would prefer to own their home even if it’s considered a “trap”.

With the crazy house price increases in some of the bigger cities many people are wondering where prices are headed next and when is the right time to buy.

I get asked once and a while when is the right time to buy a home. In some ways it’s similar to asking when is the right time to buy stocks – with a long term view, now is the right time assuming you can afford it and you plan on staying there for 10 years (or more). With a short term view, I have no idea. The housing market could go drastically up or down in the short term, which means it’s more risky than taking a long term view.

Home Buying – What to Consider

When I bought a house I honestly had no clue where prices were headed next, instead I focus on what I could control:

  • I put down the minimum down payment of 20% in order to avoid paying any extra CMHC fees
  • I made sure the house price (and mortgage) was well within our affordability, and this meant some areas wouldn’t be considered because we simply couldn’t afford them
  • I had a long term plan to stay in the house for 10 years (or more) so that I wouldn’t even have to worry about the annual price changes in the housing market. For us, this meant buying a home big enough that we could grow into. We don’t use all the space in the home now but eventually it will get used. For other people this might mean the opposite – buying smaller with the idea that you’ll eventually need less space later on

Early Retirement – Not for Everyone

Early retirement (for some) seems like a dream – sleeping in, doing whatever you desire at your own pace and having tons of time to spend with friends and family.

This sounds pretty cool for a couple weeks but I think after that I would start to get bored. One of the biggest benefits would be spending more time with friends and family. But virtually every single person I know works during the day, which means I’d have to wait for them to be off work to socialize.

Another reason it doesn’t sound appealing is that I actually like my job and without it I think I would get bored quickly. Sure, I could probably always find something to do but almost everything I could think of costs money – which would be quite limited in an early retirement.

Selling your principal residence to travel the world seems like a great idea for some, but for us it just wouldn’t work – I like our home, and my wife loves her job and has no plans to retire any time soon.

Are we doomed to fall into the rat race just because we would prefer to keep working? I don’t think so. A rat race is a struggle for wealth or power – and there’s no struggle here.

Conclusion – avoiding home ownership to retire early might be appealing to some, but I prefer to own a home and have no plans to retire early. Everyone has different values/priorities so what works for one may not work for another.

What do you think – would you avoid buying a home to retire early?

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