Oo. Someone’s feisty 🔥. I know. Those are some fighting words right there. If you own a large home, this might be uncomfortable reading but if you really love every square inch of that mansion of yours, props to you. If you are considering a large home, I hope this post will help you think twice about that purchase.
Reason 1: A whopper of a mortgage
That brochure sure does sell the place doesn’t it? That’s some next level living right there. Don’t be fooled, you guys.
The bigger the house > the bigger the debt > the bigger the chains that binds you down.
There’s a common myth that needs to be busted with some Jackie Chan 🤜s. Your home is not an investment. Sure, sometimes, by sheer luck, something awesome gets built by your local council but you totally did not factor nor foresaw that when you bought your home. What makes you think that the asking price for your home is a good price even? Other houses in the neighbourhood selling for that price? It might be the market supply price, that doesn’t make it a fair nor reasonable price.
If you take up a 30 year mortgage, chances are you will end up paying ~double your purchase price when you take interest and principal payments into consideration. Think that’s a great investment still?
More importantly, you will be tied down to a massive lunk of debt chain. There is good debt but this isn’t one of them. You know what kinda debt this is? An erosion of your freedom. Your freedom to move onto a more exciting role without fear of things not working out. Your freedom to take nice swashbuckling holidays without getting a gut punch when you look at your outstanding mortgage. Your freedom to not have, “I would love that.. but my mortgage..” conversations. 🤦🏻♂️
Buy a small home and fill it with love. You don’t need a big home.
Reason 2: The upkeep is a b****
I don’t know about you guys but this is my personal hate. I hate cleaning the house. We’ve got pets whom we love to bits but boy can they shed like a tiny mf-er. Let’s say, you have a house that is theoretically 2x the size of mine, your cleaning workload will not be 2x the amount, it will be at least 3x the amount. This is because you’ll have more things to clean and maintain. But if you enjoy being bound by a massive debt chain, you probably enjoy slaving away to keep it in pristine condition, amirite? 😉
Reason 3: 💵💵💵💵💵💵💵
Imagine this amazing home that you want that costs $800,000 (AUD or USD, pick your poison), I’m willing to bet that there is a place that is equally as amazing, albeit smaller, that you can get for 1/3rd of that price. Sure, maybe the commute is slightly longer, just gives you more time to do your mental wellness thing, listen to some crackin tunes, or read this *ahem* favourite blog of yours. Assuming the interest rate is 5% (annualised) and you’re only paying down the interest, how would that look like?
See that $27k in Annual Loan Payable difference? You know what that is? If you purchase Property B, that’s happy-juju-money™ right there. That’s money that you can do whatever the heck that you want with it. That’s money that if you wanted, you could stay in a hotel with fancy breakfast for up to 3 months. Instead of you spending every waking moment cleaning up a massive mansion,
THAT’S 3 MONTHS OF PEOPLE FEEDING YOU AND CLEANING UP AFTER YOU. 3. MONTHS.
Not-so-fine-print: Of course, as you naturally pay off the loan through the years, the loan payable and the total gap will decrease. This should theoretically be offset by increasing home maintenance costs for the varying properties.
Not financial advice, however for me personally, I would put those funds into a dividend paying exchange traded fund and use the dividends received from that investment to accelerate the payment of my mortgage OR if you want, spoil yourself with some sweet hotel stays 😎. Either way, it beats dealing with the money sink that is Property A.
Your home is just a home. A safe space of your own, your Netflix-chamber, your tiny castle of respite on this planet. You don’t need dozens of rooms. You don’t need “guest” areas. You don’t need.. all.. that.. space. You only have one body that takes up one body-worth of space in a room, in a bed, in the shower. You don’t need all this empty space to fill up with unnecessary ****. You will be perfectly happy in a small home.
It’s not an overachiever but boy will you love that tiny little thing.
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Thanks for reading. Time for Char Koey Teow.
joe from fidilaa