# How many years is your house costing you?

The normal way of thinking about home affordability is bullshit. Traditional calculators confuse people with a very basic but mistaken assumption. Here is a fancy calculator from Nerd Wallet (NerdWallet is an awesome company in many respects! But here they just follow the herd). What jumps out as bonkers? If you’re missing it then you’re just like us a few years ago. What’s absolutely crazy? Every affordability calculator assumes the only sane option is to base the house you can afford on how much you make. Just a third of your income on mortgage payments, please! Don’t ask any questions!

Completely absent is any of the far more important factors: how much time you’d like to spend with your kids, how many times you’d like to hike in Yosemite before you die, how many ocean sunrises or sunsets you’d like to see with your spouse. The important things in life.

My wife and I followed the conventional advice when shopping for our own home a few years ago. It’s beautiful, but it is by far the largest line item on our budget. Every month mortgage interest payments go out the door never to be seen again. The question I keep asking myself: how many years of our life will this house cost us? How much earlier could we spend time with our daughter and each other if we moved to a smaller place or to a less expensive city?

So here is the answer! I’d like to introduce a different sort of affordability metric for houses. How many years of life does it cost?

How many years does your house cost calculator

You input your current portfolio value, after tax income, annual savings rate, investment return, borrowing cost, and the withdrawal rate you expect in retirement. It spits out the difference in years of life you’ll spend working given two different houses.

The assumptions behind it are simple. But the insight is mind blowing. To stay in our house in San Francisco vs. moving to a cheaper area would end up costing us almost 5 years of additional time at our jobs. Five years of missed adventures, five years of missed laughs, five years of missed time that can never be recaptured!

How many years is your house costing you?

A few of the assumptions:

- You stay in either house the entire time until retirement
- Property values will increase with inflation on average over time
- All returns are after taxes and inflation
- Current income is after taxes
- Current expenses are the same in retirement
- Obviously, this is just a comparison of buying one house vs. another. Buy vs. rent is a completely different topic worthy of a post all its own.

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