Hey, Big Spender – A Rebuttal

I’m 6 months late I know, but I recently read the Toronto Life article about a 31 year old teenager and I feel compelled to make a few assertions. Hey, big spender, pump the brakes and think about your life a little:

The article begins with our ‘hero’ skipping work to go partying for his 30th birthday. They book a last minute flight to Montreal, stayed in Le Place D’Armes and stayed up all night trying (unsuccessfully) to pick up ladies. Sounds like a fun one-time weekend away. A great way to celebrate the lifestyle change, casting away the wild and carefree 20s and settling in to your 30s and life beyond. He goes on to explain that while he makes $130,000 a year (and has done for a considerable amount of time) and lives with his parents, he only has $80,000 in savings and he doesn’t want to spend that on a down payment for a home – there are way more fun ways to spend that kind of cash!

My intention from this point is not to go line by line to point out how myopic his lifestyle choices are, or how embarrassed he should be that he still lives at home and his mother does his laundry. Instead I’ll paint a picture of what his life COULD be. I present: I’m young and I’m rich, and I’m so glad I bought my first home when I was in my 20s (a fictional story):

When I turned 22 my father sat me down. “Son” he said, in that tone which let me know I wasn’t going to like what was coming next. “Son, you’ve graduated university and landed yourself a great job. It’s time to teach you about budgeting.” What followed was a 2 hour lesson on Microsoft Excel and compound interest. A lecture on responsibility and goal setting, and how with a little change in my lifestyle I could be set up to retire by my late 40s.

Unfortunately my eyes glazed over about 5 minutes in to the conversation and most of what he said went in one ear and out the other, until he mentioned they were selling the house. My house.

When I say my house, I mean my plan was to live in it until my parents passed away, and then continue living it in. I love my house, I grew up here, I skinned my knees on the front steps every summer because I always tripped on that uneven paving stone. I broke my wrist playing football with friends in the back yard. This is my house! THEY CAN’T DO THIS TO ME!

That was it though. My parents were ready to retire and I would be homeless. In a panic I went back to the excel budget. Good, my father had put a line item in for rent. $1,800 a month?! That’s over 25% of my income on a good month! Frantically I look at my proposed weekly disposable income. “How does $7,500 a month become only $300 per week??” I ask, the shock setting in.

My father then goes on to explain the expenses of life. “Do you like having the internet to play your x-cube?” He never got the names of these things and it drove me crazy. “X-box dad. Yes, I do.” I replied. “Ahh, well you see the internet isn’t free, you will probably need to spend about $150 a month just on that. Then there is your cell phone which your mother and I have been paying, food, insurance, transportation, hydro…” He kept talking but I was becoming overwhelmed. I felt so small, I felt like a burden. All these things that my parents had been paying for all my life.

We took a break, my father could see he had pushed me far enough for one setting. A few hours later he looked at me and said “You know, you could consider buying your own home…” My mind reeled again – another expense? If I can’t afford to rent, how will I possibly buy? “Your mother and I aren’t planning on selling this place for another 2 years” he continued, “You could use that time to save aggressively for a down payment, or even buy something pre-construction. Why don’t we look at some options next weekend?” He turned back to the TV, knowing the job was done and the seed was planted. The next 4 days I couldn’t think of anything other than buying a home and investing in my future.

Over the next few months we spent every weekend researching new developments, looking at floor plans, and eventually, buying a unit pre-construction.  I only had $12,000 available, but with a pre-construction down payment schedule, that meant I could start putting money towards a 2 bedroom condo overlooking the city that would be ready for me to move in 18 months.  18 months to save up another $63,000.  With my income I shouldn’t have any problem with that.

I’m 24 now.  I open my front door for the first time.  MY FRONT DOOR!  I own it.  I can paint the inside with polka dots if I choose and no one can tell me otherwise. The hardwood floors glisten as the sun breaks through my windows. Oh the view – MY view.  I’m moved to tears as I walk through, turning on all of the lights but then remembering I have to pay my own power bills now and turning them back off again.  I open my refrigerator.  One last gift from my parents – a bottle of Dom Perignon with a note: “We’re so proud of you.”  Just 5 words, but it is more rewarding than anything I’ve seen.  Over the last 18 months I’ve managed to put away $85,000 – enough for my down payment and a little extra for some nice furniture.  It wasn’t even a stretch, I could have saved more.  Looking around my home I see space for art, furniture, a bigger TV…  To think, if I hadn’t gone out for that one weekend on my birthday, most of which I can’t even remember, I could have a bigger TV.

I’m 31. It’s been 7 years since I moved in to my first condo.  I got married and we decided to invest in something a little bigger for our soon to be growing family.  We still have my original home and  rent it for a profit each month.  The extra income helped us buy our 4 bedroom house just down the road from where I grew up.  My condo is now worth 3 times what I paid for it.  We still travel – We take 2 international vacations each year, and many weekend trips across Canada.  We have a favourite restaurant on our street, and we treat ourselves to fancy drinks and lavish nights out every now and then.  We live for each other, which is so much more fulfilling than spending everything on myself.

I refinanced 2 years ago to free up some capital to buy into a pharmacy partnership, and I’m well on my way to retiring in the next 15 years if I so choose.  I love what I do, so I may work a little longer so that I can support my son or daughter the way my parents supported me, and one day I can sit them down and say “You’ve graduated university and landed yourself a great job. It’s time to teach you about budgeting.”

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