Last weekend, I attended a taping of The Truth About Money with Ric Edelman here in Washington, D.C. The show consists mainly of audience members asking Ric Edelman questions about their personal finances. As expected, I learned a ton of information about money – stuff I’d never even thought of. It was all so fascinating.
However, there was one topic that really stood out, and I’d like to share it with you today.
So, here’s the situation.
A woman in her late 30s to early 40s stood at the mic to ask Ric if she should rent out her home. Although she could cover the bills, things were tight. The woman estimated that she’d net an extra $300 to $500 per month if she leased an apartment and rented her house.
After going over the risks and costs involving this strategy, Ric told the woman it may be a workable means of bringing in some additional cash.
Satisfied with the response, the woman thanked Ric and cheerfully plopped down in her seat. Perhaps not totally content with his answer, Ric then asked the woman what I’d been thinking all along. “Have you considered taking in a boarder?”
Now, what do you think her response was?
I’ll tell you what her answer was. It was cringe worthy – made even more cringe worthy by the guy to the right of me who echoed it in agreement.
The woman wouldn’t feel comfortable with a stranger living in the house with her. She wanted her privacy. I mean, after all, she had a young daughter.
My mind as well as my heart began to race. I felt my blood pressure rising.
So, so, so committing yourself to another obligation outside of the mortgage you can barely afford makes perfect sense, huh? To hell with vacancies, evictions, repairs, maintenance, and unpaid or late rent. Bring ‘em on.
This woman was prepared to take on an obscene amount of risk. And for what? Comfort.
She’d make way more money by getting a roommate without all the financial risk.
The point I’m trying to make is that comfort is expensive. We often disguise it as privacy, safety, convenience, peace of mind. Whatever we call it, the concept is pretty much the same. We don’t like being uncomfortable. Well, boo effing hoo.
The next time you rationalize spending or passing up money you can’t afford to lose, I want you to do two things.
- Calculate your costs, and
- Assess your risks.
For instance, does it make sense to keep your big ol’, spooky 4BR/3BA house practically empty if you have to pass up $10K for the privilege of privacy? In a city like D.C., it may be closer to $20K.
Try it. Think about your situation. How much is comfort costing you?
This post was featured in the Carnival of Money Stories #98 – St. Patrick’s Day Edition over at Money Thinking.