I read an interesting news article recently. A Grandfather lost everything he owned, including his home because he failed to understand the significance of the single biggest decision made in his Personal Finance Budget - Where to live.
The riskiest yet most rewarding personal finance decision was taken because the man seduced himself into buying a house he couldn't foresee was unaffordable in the medium term. He was ultimately bankrupted, he said, because the yard, the garden, was stunning and it convinced him to buy it. The man, in search of that most primary of needs, shelter, had been seduced by kerb appeal.
Housing Shelter Position: Castles of Deception
The importance of shelter, of a home, connects to a very primitive human need - the need of protection against the cold, the prevailing wind and a place to feel safe, dry and warm.
Searching for a home is therefore a very emotional and deep rooted experience, and all the available advice to house sellers is to make it as easy for the prospective buyers to deceive themselves, to 'see themselves' living in the property.
Kerb Appeal advice lists the following
- Paint over blemishes
- Remove all visible trash, weeds, and dirt
- Groom the gardens and clean the yard
- Add foliage, plants, and flowers
- Wash the windows
Kerb appeal is all about creating a first impression, making the property sufficiently 'alluring' to make passing cars stop!. Similarly, inside gets the same clean out and clean up treatment.
Housing Shelter Position: The Emotional Sale
The combination therefore of the deep drive for security and the deceptively seductive garden, produce an imaginary high quality of life, imaginary happiness, and imaginary positive experiences.
People stand inside the three dimensional space and 'feel' their future - the conversations, laughter, relaxation, dinners and contentment. If it feels right, the true cost of the purchase, the price, the mortgage and the future repayments are all significantly affordable in the minds eye than if the house is somehow 'wrong.'
That having a home produces this response can be in no doubt - just ask any homeless person what they most desire.
Housing Shelter Position: Taking Preventive Action
Despite the manipulation, buying or renting a home is a big undertaking because of the financial implications of getting it wrong, and the commitment that ensues over a long time The fear of homelessness, or being unable to provide shelter for his family is a very common nightmare among men worried about job security. Housing Shelter Position Spending is one of the 14 different way in which our brain thinks about money. This category includes the hidden costs of moving and settling in, as well as structural changes like adding rooms, conservatories, and knocking down walls.
These are large, considered expenditures because they take out a significant proportion from the personal finance budget, it is important to know how these commitments track over time. Also, by understanding the details of how much and how often you spend within all 14 categories, you can start to control your personal finance budget.
It is very important when taking preventive action, protecting your shelter, that you match up your money in and your money out, and understand the consequences of a variety of decisions regarding spending money.
Large financial commitments such as these can be planned for as a financial budget goal, and having a personal finance budget forecast, an ability to see over time which changes need to be made when times get tough, allow for lifestyle adjustments early - rather than those forced on the Grandfather above, whose lifestyle change was forced on him through bankruptcy. He lost control of his life because he didn't take control of his money.