🎶If I had a million dollars🎶

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I was talking to someone at work about housing, and we discussed if buying a house is worth it. In Finland, housing prices are all over the place but you can expect to pay up to €40,000 for a right of occupancy license or up to €100,000 for full ownership. And I'm talking about an apartment complex, not a house. Houses vary in prices, but factoring what you expect about housing, then the idea of worth it changes depending on those expectations.

What is a house to you? What does it mean? Or represent?

Image by M from Pixabay

The discussion started with maintenance fees. If you buy an apartment for around €100k, why is the maintenance fee so high? I looked at the listing, it totaled to around €500 per month. I thought it was a good deal, invest 100k on an appreciating market and your housing expense is halved.

He argued however, if he had 40k, he might as well just play the stock market and grow his money. He can just work extra shifts to pay for the extra €300 instead of saving 300. I kind of get what he is saying but I'm not sure it is a net positive.

Rented housing means you are at the whims of your landlord, rent prices will rise and because you don't own the apartment, you are at a loss in the long term. If I live in an apartment for 10 years at €800 per month, that's €96k on housing (assuming rent prices don't go up). If I owned the apartment, and I pay maintenance of €500, my housing cost is down to 60k. That's 30 thousand euros that could be invested in the stock market, which after compounding with 7% interest goes to almost 50k. Not only did the saved money grow, the initial investment on the apartment (lets say 40k on a right of occupancy contract) will acquire interest. If I sell the contract in 10 years, I would have 40k + interest + 50k, totaling almost 100k in 10 years. And I didn't have to work extra shifts to make up for the extra 300 euros per month.

My personal philosophy when it comes to finance is all summed up in the Richest Man in Babylon. Keep my wallet full, patch any holes, and make the money grow.

Paying less for rent is patching holes. This is why we keep moving, we get better rent prices every two years to keep up with the housing market. So if I was like my friend at work and had the 100k to buy a house, I'd buy the occupancy contract and wait 10 years to essentially double my money.

But my take away from the entire conversation really boiled down to how we build wealth.

I hate working 7-14 hour shifts, I hate overtime, I hate working full time. Whenever I am at work I feel like I'm wasting my potential. I would rather just do the amount of work I need to earn enough to live comfortably and in the way I want. I don't take permanent contracts because I like the fact that I can take a vacation any time. I don't work full time because I like having 3-4 days off per week. And because I adjusted my spending, I am not in crippling debt, my savings is full and my portfolio is growing.

The good life doesn't need a lot of money, it's needs enough that you can live comfortably, and adjusted expectations that you are not sucked into a consumerist hell hole.

When it comes to housing, if it will save you money, just buy it. For nomads like me, I'd buy a house when I stop moving.

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