The House Or The Vacation: Your Questions Answered

By: Creativity103

I recently received a great reader question that I’ve posted below, and I thought I would share my answer with all of you in case it helps someone else. Here we go:

Hey Cat,

Is it frivolous to have a house on the lower end of our budget just to be able to afford luxuries like vacations or more expensive cars?

I don’t like expensive cars because they depreciate in value so quickly. My husband doesn’t like expensive vacations because he says he has nothing to show for it. (I guess memories don’t count – ha)

Sometimes I feel like we should be saving that money for the future or putting more money towards the house since it will most likely go up in value over the years.

Should I feel guilty spending the money on luxuries when we don’t have a lot left over every month?

First of all, thanks for writing in!

You’ve actually asked a few questions here, so let me break it down (yo, yo break it down.)

Is it frivolous to have a house on the lower end of our budget just to be able to afford luxuries?

Absolutely not! This the exact same model that the hubs and I use. We would rather have modest cars and a modest home in the future and get to see the world. However, it’s important to note that everyone is different, and in a marriage, we’re supposed to compromise (so they say!).

My husband doesn’t like expensive vacations because he says he has nothing to show for it.

I can see his point. At the end of the day, a larger, more luxurious home will raise your net worth far more than several luxurious vacations. However, to me, life is not about your net worth when you hit the end of the road. It’s about the combination of experiences that you get to have. So for you I would say that perhaps y’all can go on vacations but have them be slightly more modest, and your hubs can have a nicer home, but perhaps not the nicest you can afford. I am a little biased on this point, since I currently live in a foreign country. Traveling can change your life and the lives of your children. Getting to see the world is a privilege and understanding cultures different from our own makes us more well rounded people. That’s a lot to show for it, in my humble opinion.

Should I feel guilty spending the money on luxuries when we don’t have a lot left over every month?

Guilt is a tricky thing, and it can hold us back from doing the things we really want to do. I would encourage you to not think of having an amount “left over” every month, but instead to allocate your paychecks 100% to various goals.

If you’re focused on buying a house right now, then put away a certain amount each month for that. Right now, you may allocate more savings for the house, but that doesn’t mean you can’t put $100+ in a vacation savings goal each month.

Also, when you save for a house, you can utilize an account like a Discover Bank online savings account that has a great interest yield. You can do the same for a vacation fund because vacations are important to you. It’s a good compromise for you and your husband, and you won’t have to feel like you are “giving up” your fun, younger vacationing years just to buy a house.

For example, your whole paycheck should be accounted for by breaking it down into categories like rent/utilities/401k/car payment/gas/cellphone/downpayment savings/vacation savings. Right now, you may allocate more savings for the house, but that doesn’t mean you can’t put $100+ in a vacation savings goal each month. Sure, you might push back getting the house by a month or two because you saved for a small vacation, but you’ll also get to enjoy yourself and reward yourself for being so money conscious.

By doing this, you might only get to take 1 trip a year instead of 2 or 3, and it might be to a more modest location in the U.S. instead of a two week Paris extravaganza. However, you also get the house you are saving up for, so I feel like it’s a win-win situation.

Basically, as long as you are covering the basics like paying your rent and saving for your retirement, there’s no reason why the amount you have left over can’t be split up to achieve both of your goals.

Ok! Hopefully I have helped. Readers, feel free to weigh in your thoughts in the comment section below, as I know I can’t be the only one with an opinion. If anyone else has a money question, please send it along to Cat [at] BudgetBlonde [dot] com, and I’ll be sure to write you back quickly.

About Catherine Alford

Catherine Alford aka "Cat" is a personal finance freelance writer who currently lives in the Caribbean with her husband and spoiled pup, Julep. To learn more about her writing services, please visit her Hire Me page or e-mail her at Cat[at]BudgetBlonde[dot]com. Follow her on Google + to get all the latest updates.

Lovely comments:

  1. That is the beautiful thing about money, we can set whatever goals that will make our life better and use it for those goals. Just because the general knowledge is to use money to increase your net worth doesn’t mean you can’t use it to increase your emotional net worth. It’s your money, do what you want with it, just keep it legal!

    • Haha I laughed out loud at your last sentence! Yes, for sure keep it legal, and I agree that amping up your emotional net worth is aways worthwhile.

  2. I think you’ve given some pretty solid answers here. I always think it’s weird when people define themselves or feel guilty/weird about net worth. I pay zero attention to that idea/number. I have no idea what I’m worth in that way. Becuase it doesnt’ matter. Family, friends, … that’s the good stuff in life. Not how valuable you are becuase of your house size or some crap like that. So shoudl this person get the cheaper house? Heck yeah! THen you got money for retirement and then you got money to visit friends and pay for family dinners or whatever. Whcih is more important anyway.

  3. It’s fine not to want an expensive home, car, or fancy vacations. But don’t forget to save!

  4. If you don’t have a lot leftover, I think you should be at least a little focused on saving. Try and find a way to fit everything in! :)

    • Yes, saving is so important! This couple sounds like they know that; I think they’re just struggling choosing what exactly to save for. Choices, choices!

  5. One thing you didn’t mention was an emergency fund/general savings account. I think it’s important to have a general savings account with several months (I think the generally recommended number is 6) of living expenses for an emergency, and IMO this should be a higher priority than either a house or vacation fund. Savings is savings, but if you end up in the ER or your car breaks down, there won’t be any arguments over which account you use. Also, if your car breaks down right AFTER your vacation, you’ll still be able to get it fixed.

    • Ah, you are so right. I’m a big fan of the emergency fund. I feel like that’s a given before you save for anything big, but you’re right, it would have helped to mention it!

  6. It all depends on your values. I would try to have a slightly bigger house though, and rent it, so I can accumulate equity while having the rent money to spend on equity. But that is riskier, and having a small home is nice in case one person loses his or her job.

    • Losing a job is definitely something to consider. That’s why an emergency fund is definitely key, as one commenter mentioned.

  7. Unfortunately it sounds like the real issue here is how to find a compromise between your husband and you…it would be easy if you were both single; he would not spend as much on vacations and you would not spend as much on a house (and more on vacations!). Maybe you can do both but spread out the vacations a bit more?

    • True, true. She has to find a good balance with her hubs. They are a young couple from what I can tell and so they have many years to look forward to saving for various goals.

  8. I don’t see the point in having an expensive house if you can’t afford to do anything else. I know that outside of work our home is where we spend the majority of our lives but if all we do can afford to do is go to work and sit in our house it’s a pretty boring existence if you ask me.
    Great Post!

  9. We rent, so I don’t see any point in having a nicer place – I keep rent low so we can spend on food and travel!

  10. So glad I came across this, good to know I am not the only one feeling guilty about wanting a nice vacation! We chose to buy a modest home to have some money, but it needs some updates. (nothing major, just cosmetic) but I really think we should take one more vacation before we start a family, the memories are worth it!

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