Happy with What You Have

Do you know that Warren Buffet lives in the same house in Omaha that he bought in 1958 for $31,500. He hasn't upgraded to a bigger, better house. Course, it became a more expensive house over time because of the real estate market: it's estimated to be worth some $700,000 today. But the guy's worth billions and "good enough" is good enough for him.

So what is it with people who don't have Buffet's money – or his brains – and think that they should be living in a home that eats up all their cash flow?

Are marble floor and granite counter-tops so important to our definition of ourselves that we're prepared to spend money we haven't yet earned to have them? What the hell are we thinking?

The Financial Post did an article earlier this year called "The New Face of Debt" where they profiled a retired couple living in B.C. who thought it was fine to go into debt to the tune of almost $70,000 – twice their retirement income of $37,000 – to repaint, put in new kitchen counters and custom French doors, along with "other elegances".  Are we so shallow and uncertain of what's important that we would risk our long-term security for some nice doors? Whazzup with that?

And now, having paid too much in renovations, even downsizing would leave this silly couple holding the bag. And they're not alone. All over the place, people are consolidating consumer debt into their homes and hiding it from themselves. They're using credit to put in gardens, pave driveways and replace their sinks and bathtubs. They're piling on the debt even to the point of moving into retirement with a bag-full.

Recent studies show an alarming trend. More and more people retiring are doing so with debt. One study by Investors Group found that 62% of people plan to retire in debt.  The Royal Bank found that one in four people begin retirement with a mortgage on their homes. Is this new trend to indebtedness in retirement a measure of our inability to stop spending or our unwillingness to live within our means? And regardless of whether we're driven by some unseen force to take on debt or willingly walk into Debt Hell, do we actually imagine things will be easier once we're living on a fixed – often significantly reduced – income?

As if it isn't bad enough that we bought too much house to begin with – our eyes were bigger than your budgets – we've chosen to throw money at consumer goods, travel and stuff before prioritizing becoming debt-free by retirement.

It isn't your income that's getting in the way of a safe and secure future. And it isn't your expenses. It's your attitude. If you're tired of being in debt, if you don't want to be hauling a wheelbarrowful of the stuff into retirement with you, then you have to decide that Debt-Free is the target. And every time you see someone's shiny new car or someone else's sparkling new kitchen with the granite counter-tops, know that below much of that  dazzle is rot. That's what debt is: rot. And you know what rot does? It spreads. Little by little it takes over the healthy parts of your financial life until everything just collapses in on itself.

The trick is to do what Warren Buffet does and see what you do have instead of what you don't. Become sure of what you really want and then good enough will be good enough for you too.

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