Of big houses and luxury cars

Jonathan Clements' points out in this week's Getting Going column that Americans might be putting less money in savings because they are spending more on their homes and cars. (Thanks to JLP of All Things Financial for alerting me to the article.) I think he's on to something.

I see people who have 5-year, $450 monthly payment car loans, despite large credit card balances and student loan bills. One couple I know is paying off a new truck, in fact, that's worth more than the mobile home they live in.

M and I live in a townhome. About a year ago, we decided to look for a house with a yard in a town with better schools. We even bid on two larger houses that were almost double what our current home is worth (even at the still-inflated housing prices in our area).

Thank the Lord that the sellers took someone else's offer. While we may have had a larger home, I believe the heftier mortgage payment would have offset most of the benefits and created a lot of stress on our lives and marriage.

What's more, M just finished her job as a schoolteacher and is now a full-time mom. She's thrilled, as am I. (The other day she surprised me with brownies! Yes!) Making that choice would have been virtually impossible in a larger, more expensive home. (I plan to write more about how we decided to make this lifestyle choice in a later post.)

Even with one relatively modest income, we're still managing to save through my employer's 401(k). We're probably going to cut back on what we put away for our kids' college funds, as well as for Christmas and vacation. Plus, we're probably going to need a van next year for M, and my car is also making a lot of funny noises.

But to me, saving for the future is a conscious choice. As Clements points out, we need a place to live, and arguably, reliable transportation. But how much of each do we really need today that is worth jeopardizing tomorrow?