Today I’m sharing a financial dilemma I recently had. To invest in stocks or to upgrade our house. As you probably know I only started investing less then a year ago and therefore my portfolio is still small. Most readers will know that to make sure that the snowball starts rolling you need to invest new capital into your portfolio. The faster you can make it grow, the sooner you realize your targets. This is where I had my dilemma!
We also bought our house 3 years ago. When we bought it, we knew the kitchen was old and the wooden floor was not very good. This means that sooner or later we had to replace it. And replacing a kitchen and a floor costs money. Serious money. This limits the amount of capital I can allocate to my investing journey and therefore to my target of creating a big passive income stream that will help me get more freedom in life!
This choice made me doubt about the investment in the house. But still, last week we ordered our new kitchen, and this week we ordered our new floor. In the end of september we are the proud owners of a new living room / kitchen!
The thought process to decide if we should do it or not was not that smooth. That we had to do it sooner or later was for sure, but we doubted. Shouldn’t we wait? Should we only replace the kitchen now and do the floor later? Should we upgrade the kitchen instead of buying a new one? Should we buy a smaller one or one that is less luxury? It all crossed our minds. But in the end we decided to go with what we really wanted which resulted in a 23.000 Euro expense for the complete rebuilding project.
“Why did we do it?”; you may ask. Well, we made a list of pros and cons for the kitchen. To start with the pros:
- We want to live for at least 20 years in this house. The sooner we do the rebuilding, the more we can enjoy it.
- We have a “working” kitchen again (in the old one the dish washer didn’t clean very well, the oven only cooked at maximum temperature, the refrigerator had a broken handle, the hob leaked gass and the worktop was damaged, this on top of the ugly color).
- It looks much better and the kichen will be completely to our liking.
- We can cook the way we want which is not possible now.
But there are also cons:
- It costs a lot of money. Money which could have been used to generate additional (passive) income.
- It really costs a lot of money.
- It costs so much money that I had to think for half a year before we decided…
In the end, It’s only the money that made us doubt. We know that financial freedom is a superb goal and we keep working on it, but still we used savings to do the rebuilding. I’m completely confident we will really enjoy our new purchase and that we won’t regret it. That made us go for it! We could have chosen for a cheaper solution, but I’m quite sure that I would have regretted that since the kitchen is something that you work with for at least 20 years. Well, at least we don’t intend to buy a new one every year. 😉
People may probably question if we made the right choice. For us this is clear. It’s a yes. Why? Financial independence is a great goals and we strive for it. But not at the expense of all. I read blogs of people that lead a completely frugal life. I must say, I have the greatest respect for those people. Why? Because I can’t do it. Does that mean we buy everything we want? No, absolutely not. We don’t buy much clothes because we don’t need / want them. We don’t go out that much and if we do, then we don’t spend to much. I go to work on a bike every day instead of taking a car. We look for the cheapest energy options. Our holidays are not expensive. And much more things where we save money. But in the end, it’s about the middle way for us. With each purchase I ask myself one thing: “Does this purchase make me happy or not?” If it does, then we go ahead. Otherwise we don’t.
The way we live we can save about 25% of our income. Could it be more? Probably yes. But this is much more then what we saved a couple of years ago and now we have a daughter who is quite expensive. Back then we didn’t have children. We are happy with what we have. And in the end, being happy is all that matters, isn’t it? I’m really looking forward to our new kitchen and floor. We will get it end of September. Nice times ahead!
I’m really curious how you all look at a situation like this. Would you have done the same or would you have saved every Euro for your target of financial independence? Are you living a frugal life or are you more going the middle way like we do?