Article today on yahoo - smaller house = more money

marti8aOctober 11, 2008

The article is actually on what is keeping you from building wealth, but I thought the 9th reason was a good one:

Your house is too big: When you buy a house that is bigger than you can afford or need, you end up spending extra money on longer debt payments, increased taxes, higher upkeep and more things to fill it. Some people will try to argue that the increased value of the house makes it a good investment, but the truth is that unless you are willing to downgrade your living standards, which most people are not, it will never be a liquid asset or money that you can ever use and enjoy.color>

Another reason I like my small house.

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flgargoyle

I'm sure people who bought an over-priced large home at the peak 2 years ago would no longer consider it to be a 'good investment'!

    Bookmark   October 11, 2008 at 12:23PM
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teresa_nc7

In my area I couldn't even find anything to rent that approximated my monthly mortgage payment of $685. Although now is not the time, I keep thinking I want to move, but I know decent housing in a nice neighborhood would be about double my mortgage, so I will stay put for the time being. I live in a 1910 brick bungalow *near* the historic district that has about 1500 sq ft.

Besides, I think I would "rattle around" in a larger home just by myself.
Teresa

    Bookmark   October 11, 2008 at 12:46PM
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marti8a

Teresa, we have thought the same thing. We've been here so long that our house payment is half what it would cost to rent a one-bedroom apartment.

    Bookmark   October 11, 2008 at 1:31PM
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piper1014

Could you post a link to the article?

    Bookmark   October 11, 2008 at 4:49PM
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gayle0000

"Some people will try to argue that the increased value of the house makes it a good investment, but the truth is that unless you are willing to downgrade your living standards, which most people are not, it will never be a liquid asset or money that you can ever use and enjoy."

And another thing...people tend to think (or assume) the value of their home will always be up, and they can always count on getting out of the house financially ahead. The truth is, you can get assessments, inspections, and cost market analyses all day long, but the bottom line is you never know what the value of your home us until you actually sell it.

    Bookmark   October 11, 2008 at 5:18PM
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columbiasc

Have you considered this angle: Until recently, houses normally appreciate at about 5 to 6 percent annually. If you get a mortgage, that will cost you about 6 to 7 percent annually. You get some tax benefit from owning the home but by the time you pay it off, assuming no paying ahead, you will have paid back about three times what you borrow. Even if the house is worth three times what you paid for it, you really are only at a break-even. Of course you would have had to pay to live somewhere so at least while you are running the hamster wheel of financing a home, you will eventually own it somewhere down the road.

Unless you regularly tap the equity like so many people have done recently.

Vicious cycle.

~Scott~

    Bookmark   October 11, 2008 at 7:28PM
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jasonmi7

For a minute I thought you were talking about the idea that a 'smaller house COST more money', and I was going to point out that from a building, square foot analysis, that's true....but the long-term it isn't. Good catch and discussion!

    Bookmark   October 11, 2008 at 7:41PM
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marti8a

Sorry, thought I posted the link earlier.

Here it is.

Here is a link that might be useful: 10 Reasons you aren't Rich

    Bookmark   October 11, 2008 at 9:25PM
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jannie

I have an 800 square foot house with one bathroom. I do not envy my two sisters at all, with their McManshions with three bathrooms to clean. They can't even do their own housework. They need to hire housecleaners!

    Bookmark   October 12, 2008 at 8:13PM
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Kimberlyinva

Thanks for the link! I'm going to add it to our brochure once we put our old small house on the market!! haha The old house is 1400 sq ft. We added another 400 sq ft of space when we built this new one which was basically adding much needed laundry room area (lotta pets & farm clothing) and a half bath. Personally I don't want to heat/cool a McMansion...why pay for something that's rarely used? My sister & her husband purchased one in Florida, it is HUGE!! I get weekly phone calls saying that I have to come down there to help her with the rooms because she doesn't know what to do with them! Sorry, I don't know what to do with big rooms either....I've never had any!

KAT

    Bookmark   October 13, 2008 at 4:47AM
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FlowerLady6

That was a great article! Too bad a lot of people won't take it to heart.

We were told by some family members and friends that we ought to just tear this down and build. We said 'Nah', we'll keep what we have thank you. We are NOT in debt, our house is paid for and we are thankful for it.

FlowerLady

    Bookmark   October 13, 2008 at 7:20PM
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