Is a cottage in your future?

I have to be honest. I don’t get the cottage thing. When I lived in the city and I watched people pack up the groceries, the kids, the clothes, sheets and towels to head out for a three-hour commute to the cottage, I scratched my head. When I moved to the country, despite living in paradise, my across-the-street neighbours had a cottage that they packed up and drove three-hours to get to.

North America is the only region in the world where regular folks own more than one home, other than for investment purposes or because they’re stinking rich. It’s in Canadians’ blood to buy a place “up north” to escape. (Me, I make paradise wherever I am and save the commute.)

Okay, so you’re determined to buy a cottage.

1. Do you know how much extra money you have to devote to cottage costs? If you don’t already have a budget, it’s time to make one. You have to figure out where your money is going now so you can a) find the money to save a down payment and b) carry the cottage once it’s yours. Speaking of which…

2. Do you know what it’ll cost to carry the cottage? You’ll need to cover the mortgage, property taxes, maintenance and improvements, and perhaps cottage association fees. If you plan to buy a $200,000 cottage with 20% down and interest rates running at about 5%, it’ll cost you $1,500 a month just for the mortgage. Do you have that spare cash flow in your budget?

3. What else do you plan to do with your life? Travel plans may have to go out the window as you scrimp and save to have the cottage life. And if there are babies on the horizon, how will maternity leaves, and the loss of income associated, affect your plan?

4. Will your overall financial plan still be sound? Do not rob your emergency fund, short your long-term retirement savings, or take on consumer debt on credit cards or lines of credit to make the whole cottage thing a reality. If you undermine the rest of your financial foundation in pursuit of this one goal, you will regret it.

Ownership isn’t the only way to experience the cottage life. You can rent a few weeks a year for about as much as you’ll pay in property-taxes and home maintenance. You won’t have to rush north to shovel off a heavy snowfall so your roof doesn’t cave in. And you won’t have to fork out a penny if there comes a year when heading to the cottage becomes more of a chore than a pleasure.

If you’re still determined to do the whole cottage thing, do your homework. Make a plan, and stick to it so you don’t end up putting every other part of your life at risk for the sake of a second home.