How Many Hours of Your Life Will Your Spend Working For Your House?


Housing is by far the most expensive budget item for practically everyone. So it should come as no surprise that we spend years of our lives working simply to pay for the place we call home. But exactly how many hours of your life are dedicated simply to having a place to sleep at night? And more importantly, how many years are spent just paying for the interest on the mortgage?

Now don’t get me wrong, I understand that housing is important, and I especially agree that home ownership is the way to wealth, but I believe that many folks have simply gone overboard in their quest for Mcmansions and the “good life,” which to many simply means bigger houses, which means bigger mortgages, and in turn, more time spent working to pay for their home.

To illustrate my point let’s consider two different examples.

House Money CostJill buys a house for $100,000 with a 30 year mortgage at 5%
Jack buys a house for $300,000 with a 30 year mortgage at 5%

Jill’s Monthly Payments – $536.82
Jack’s Monthly Payments – $1,610.46

Jill’s total interest over 30 years – $93,255.78
Jack’s total interest over 30 years – $279,767.35

Assuming Jack and Jill net $20 an hour Jill would spend 4,663 hours paying for her housing, while Jack would spend 13,988 hours.

That means Jill spends 2.2 years, while Jack spends 6.7 years simply working to pay off their mortgage interest.

That’s a long time just to be paying for interest!

The point I’m trying to make is that if you want to become financially successful it might be best to decrease the size of your primary residence significantly. Take the money you’re spending on mortgage interest and invest it rather than having a bigger house (which is essentially a consumer item) and isn’t really an investment.

If Jack decided to buy a smaller house for $100,000 and invest the difference in his monthly payments from his previous $300,000, he would have an extra $1,073 a month to invest. Assuming he invests this each month in the stock market and gains 8% interest, he’ll have his $100,000 house paid for, and have stocks worth $1,458,634 during the same 30 year period.

Now, I completely understand that real estate allows you to leverage your money and give you amplified gains if property appreciates. I strongly recommend using leverage in real estate, but do it with rental property which pays for itself, and cash flows unlike your primary residence, which can be a money pit and take years off your life, just paying for the interest.

So how many years will you spend just paying off interest on your home?

Do you think it’s worth it to downsize to gain more time in your life, or is it worth it having a more expensive home?

Images from chicagogeek and flickr.