{"id":153,"date":"2012-01-20T20:32:22","date_gmt":"2012-01-21T01:32:22","guid":{"rendered":"https:\/\/www.cashflownavigator.com\/blog\/?p=153"},"modified":"2012-01-20T20:32:22","modified_gmt":"2012-01-21T01:32:22","slug":"the-money-pit-part-2-beware-a-house-that%e2%80%99s-too-small","status":"publish","type":"post","link":"https:\/\/www.cashflownavigator.com\/blog\/2012\/01\/the-money-pit-part-2-beware-a-house-that%e2%80%99s-too-small\/","title":{"rendered":"The Money Pit, part 2: Beware a House That\u2019s Too Small!"},"content":{"rendered":"

\"\"<\/a>I think we can call this \u201cThe Goldilocks principle of housing\u201d. A few articles back, I wrote about misadventures during an earlier housing bubble, when we bought a house much larger than our family needed. With a super-sized mortgage, high property taxes and maintenance costs, it put a real strain on our monthly cash flow. We had trouble building equity and, just as important, that single high-cost asset kept us from paying down other debts or making other, better investments. We were on the precipice, so to avoid falling into the money pit we decided to sell the house and downsize to a smaller one.<\/p>\n

A good decision, right? Absolutely\u2026at least for the first few years.\u00a0Immediately after downsizing we went from barely break-even to a solidly positive monthly cash flow. How nice it was to have that cushion! But we also had some growing children. We thought: Wouldn\u2019t it be nice if we extended the house a bit further into the back yard? That sure would give us all a lot more living space. $100,000 later, that thought became a reality.<\/p>\n

Shortly afterwards \u2013 I think we were in the new entertainment room at the time \u2013 we realized that the \u201colder\u201d part of the house didn\u2019t quite match. The bathrooms in particular were a little old and outdated. I think you know where this is going.<\/p>\n

After 10 years our smaller house was now a bit larger and completely updated. We had \u201ccaught up.\u201d Trouble was, after adding all the costs, we spent more money on the downsized house than our original money pit. We just stretched out the expense over a number of years.<\/p>\n

We really did enjoy our addition and the new baths. After all, not everything in life should be measured in dollars and sense. But if we made a better second housing choice we could have had our cake (or porridge) and eaten it, too. Instead of going from one extreme (too big) to the other (too small), we could have found a house that was just right. It would have cost a little more than our \u201ctoo small\u201d house but not nearly as much in the long run.<\/p>\n

The moral of this story? If you\u2019re shopping for a house you plan to keep for at least 5-10 years, take some time to think about what your future family needs will require of the house. And before committing to a purchase develop realistic cost estimates of likely repairs and upgrades to the house you\u2019re considering. Unlike porridge, when it comes to a house purchase the impact on your cash flow of a wrong decision can be severe and long-lasting. If possible, like Goldilocks, try to find one that\u2019s just right.<\/p>\n","protected":false},"excerpt":{"rendered":"

I think we can call this \u201cThe Goldilocks principle of housing\u201d. A few articles back, I wrote about misadventures during an earlier housing bubble, when we bought a house much larger than our family needed. With a super-sized mortgage, high property taxes and maintenance costs, it put a real strain on our monthly cash flow. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,10,9],"tags":[],"class_list":["post-153","post","type-post","status-publish","format-standard","hentry","category-asset-accumulation","category-assets","category-cash-flow"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/comments?post=153"}],"version-history":[{"count":8,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/153\/revisions"}],"predecessor-version":[{"id":169,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/153\/revisions\/169"}],"wp:attachment":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/media?parent=153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/categories?post=153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/tags?post=153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}