Recently, a client called our office in a panic. He’s a successful professional whose career had required him to have a certain level of comfort with numbers and finance, so he wasn’t oblivious to the obvious mess he had gotten himself into. He had spent more money than he should have to build his stunning $2+ million dream home, and now he was up to his eyeballs in debt and fighting with his wife. On top of that, his plans to retire in the next few years were on the ropes, since he was going to have to withdraw funds from investment accounts and even borrow money from his 401k just to finish the project.

On top of all that, he was dejected, depressed, and afraid he would lose his high-pressure job because of all the stress this was causing. It was a frightening time that required some seriously hard decisions and a resignation that he would have to work longer than he really wanted to.

I really felt badly for him. Beyond being a genuinely nice guy, he’s worked really hard to climb the corporate ladder, and clearly deserves to enjoy the fruits of his labor. Hopefully once he finishes the house, he can just buckle down and save as much as possible for retirement to be able to meet his goals.

But this incident got me thinking about how the big lifestyle choices we make can affect our financial futures. We’ve all read the blogs that preach a message of micro-managing your budget to build wealth. They talk about things like cutting out that daily latte purchase and taking up extreme couponing. And while I suppose there’s some value to that, I think it’s much more important that we think long and hard about the big lifestyle decisions that we make more than anything else.

So I started thinking about the most common lifestyle choices that I see clients making that end up keeping them from reaching their goals, and some of what came to mind you may find quite surprising. In fact, what I see often in the American culture is that it’s the unconscious lifestyle choices we make based on the unconscious consumerism message that society gives us that ends up costing us the most.

A Long Commute to Work

You might not think it, but that long commute is not just annoying, it’s probably also sucking you dry financially. I live in Atlanta, one of the worst cities in America for long commutes, and I hear it on an almost daily basis.

“Traffic was so bad today. It took me an hour and a half to get to work.”

“Did you see the accident on 285? Looked like someone had to be airlifted out. That’s why I was an hour late today…”

The way it generally works in Atlanta is that if you want a nice house, you have to live way out in the ‘burbs because city houses are extremely expensive. So, for the same monthly payment as an apartment near the office, you can buy a bigger house with a yard and a garage. That’s the American dream, right?

But the catch is that that house comes with a 3-hour per day commute, which is bound to take a toll on you, your vehicles, and your wallet.

Here are just a few of the ways:

  • You pay out the nose for gas and car maintenance, as well as just the fact that your cars wear out more quickly. It’s depreciation on steroids.
  • You can’t give 110% at work because you have to leave earlier than everyone else to beat the traffic. And you’re in such a bad mood from fighting traffic in the mornings, that you hate everyone in the office and the feeling is probably mutual.
  • And of course your health is deteriorating, because who has time to exercise after sitting that long in the car?
  • Not to mention you can forget about taking night classes to improve your job skills or credentials. And starting a side gig for extra income on the side is now out of the question. None of that is on the table after 3 hours of commuting is added to each and every day.
  • Last and most importantly, your relationship with your spouse and kids begins to suffer, and studies show that divorce causes an huge drop in wealth on average.

The House-Poor American Dream

As Americans, we used to have a modest dream. We used to dream about being able to afford our own house, a place we could call our own. But let’s be honest, back in the day when we first started dreaming the “American Dream,” we were talking about something entirely different than the houses of today’s standards. In fact, in 1950 the average American’s house size was around 1000 square feet.

Now it’s almost 2500.

In addition to that, according to the latest census data, the average household size has gone from about 3.5 to around 2.5 today. So nowadays we have 1000 square feet per person, on average, as compared to less than 300 per person in 1950.

Now, of course, there’s nothing wrong with having a large house, if you can afford it. Or, if you understand the trade-off that you may be making, and are willing to make sacrifices elsewhere to still meet your financial goals.

What do I mean? Well, if you put your life in a spreadsheet, and plot it all out, what if owning that house meant you had to have $2000/month less in retirement? Or retire five years later?

I can hear the response already: “Well, that’s not true in my case, because I have the same monthly payment here as I would living in an apartment near my job.”

That may be true, but the problem is that that house costs much more than just the mortgage payment. You have to factor in:

  • your commute (see above)
  • maintenance (new water heater, carpet, roof, HVAC, etc.)
  • landscaping (water, seed, fertilizer, lawn care services, plants, etc)
  • more area to heat and cool
  • more stuff begins to accumulate over time (stuff that you don’t need, could be sold for cash, and the proceeds saved and invested)

And don’t forget that you have to furnish, paint, and decorate as well. You have to fill all that room up with something, right?

But it gets worse. The U.S. Census Bureau also tells us that the average American moves about 12 times in his lifetime. Assuming you buy a new house (usually a slightly bigger one) every time you move, you have to pay moving costs, closing costs, new furniture, and probably some remodeling costs each time. It’s impossible to know how much that is because it obviously varies from person to person, but clearly, we are talking thousands and thousands of dollars.

However, the most common argument I hear about buying a house instead of renting an apartment, is that you’re building equity in an “investment” that goes up over time. That’s true, but it’s not a great as you think. First of all, you have to pay closing costs on the purchase and sell of your house. So if Zillow’s numbers are correct, and the average is 2-5% of the cost of the house, a lot of your appreciation is eaten up by fees (unless you live in the house for a long time.)

In addition, the average rate of appreciation of residential real estate in the U.S. is typically vastly overstated. While prices did appreciate a healthy 6.4% from 1968 to 2004, they fell an unprecedented amount during the Housing Crash of 2007-09. In addition, you have to factor in the almost triple square footage per unit increase which I would argue distorts the numbers significantly. (Read more in this great Investopedia article: “The Truth About Real Estate Prices.”) In the end, housing prices generally tend to just keep up with inflation.

The Average American Car Payment

America’s obsession with cars has a long history. Ever since we could buy the first Model T, we fell in love for the freedom, prestige, and luxury that new car could give. But what many of us don’t realize is that we can often satisfy our transportation needs without breaking the bank. Because the real freedom is being able to walk away from that job on our own terms.

Experian now reports that the average American’s car payment has crossed the $500/month mark. What is worse, the average length of today’s car loans hit 68 months — over five and a half years! At that rate, it’s impossible for most people to get ahead because they will forever be re-upping for a new car loan once they finally pay off the last one.

I probably don’t need to run the numbers on this, but I will anyway. Let’s assume that two twin brothers, Tom and Jerry, both graduate college and get a good job. To keep the numbers simple, they both work 40 years, both save for retirement, and both get the same investment returns.

However, there is one major difference: Tom pays cash for his first car, a clunker for sure, but he then saves a little bit each month and eventually buys a slightly nicer car a few years later. He repeats this throughout his working career. Jerry, on the other hand, simply finances a new car every five years.

If we assume a reasonable rate of return on Tom’s money that he invested instead of buying new cars, he will have over $2.4 million dollars more than Jerry at retirement!


If you’re one of those overachievers that are already saving more than enough for your future, then this post isn’t for you.

Now for the other 99% of folks, take a hard look at these three “lifestyle choices” for a minute. Obviously, they all go together to some extent: if you didn’t have the big house in the suburbs, you wouldn’t have to furnish, heat, and cool two thousand square feet that you rarely enter. Also if you didn’t have that house, maybe you wouldn’t have that three-hour commute. And if you didn’t have a 3-hour commute, you wouldn’t feel like you needed a second home on wheels for a car.

These might not apply to you. Or maybe some of them do and you have a good reason. Fine — I’m really not trying to “beat anyone up” here. These are just a few thoughts about some of the lifestyle choices I see holding folks back from a secure financial future.