Comments on: The Final Decision on Downsizing http://www.mydollarplan.com/the-final-decision-on-downsizing/ finance. money. action. Sat, 21 Nov 2009 16:22:09 -0600 http://wordpress.org/?v=2.8.6 hourly 1 By: Weekly Round Up- Easter Edition http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8262 Weekly Round Up- Easter Edition Sun, 12 Apr 2009 19:26:57 +0000 http://www.mydollarplan.com/?p=818#comment-8262 [...] The Final Decision on Downsizing [...]

[...] The Final Decision on Downsizing [...]

]]> By: Weekly Round Up- Golf Edition | Good Financial Cents http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8261 Weekly Round Up- Golf Edition | Good Financial Cents Sun, 12 Apr 2009 17:35:24 +0000 http://www.mydollarplan.com/?p=818#comment-8261 [...] The Final Decision on Downsizing [...]

[...] The Final Decision on Downsizing [...]

]]> By: * Weekly Highlights: April 12, 2009 http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8260 * Weekly Highlights: April 12, 2009 Sun, 12 Apr 2009 14:26:03 +0000 http://www.mydollarplan.com/?p=818#comment-8260 [...] AJC, but he made a good point about good debt versus bad debt that I intend to write a follow up on.The Final Decision on Downsizing at My Dollar Plan — If you have been considering downsizing your house to save money, read [...]

[...] AJC, but he made a good point about good debt versus bad debt that I intend to write a follow up on.The Final Decision on Downsizing at My Dollar Plan — If you have been considering downsizing your house to save money, read [...]

]]> By: Get A Tax Refund, Pay Taxes With Plastic http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8248 Get A Tax Refund, Pay Taxes With Plastic Fri, 10 Apr 2009 03:37:53 +0000 http://www.mydollarplan.com/?p=818#comment-8248 [...] My Dollar Plan: The Final Decision on Downsizing [...]

[...] My Dollar Plan: The Final Decision on Downsizing [...]

]]> By: Weekly Roundup - Almost Frozen Tomatoes Edition | Frugal Dad http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8242 Weekly Roundup - Almost Frozen Tomatoes Edition | Frugal Dad Thu, 09 Apr 2009 10:00:53 +0000 http://www.mydollarplan.com/?p=818#comment-8242 [...] The Final Decision on Downsizing [...]

[...] The Final Decision on Downsizing [...]

]]> By: Patrick http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8239 Patrick Wed, 08 Apr 2009 15:46:26 +0000 http://www.mydollarplan.com/?p=818#comment-8239 With the amount of research you put into this decision, I'm sure it will be the right one for your family. In the long run, a couple hundred dollars a month isn't worth uprooting and settling for less when you already have what you want. With the amount of research you put into this decision, I’m sure it will be the right one for your family. In the long run, a couple hundred dollars a month isn’t worth uprooting and settling for less when you already have what you want.

]]> By: The Carnival of Debt Reduction - Emergency Techniques For Reducing Your Debt | Ask Mr Credit Card's Blog http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8224 The Carnival of Debt Reduction - Emergency Techniques For Reducing Your Debt | Ask Mr Credit Card's Blog Mon, 06 Apr 2009 18:58:01 +0000 http://www.mydollarplan.com/?p=818#comment-8224 [...] My Dollar Plan presents The Final Decision on Downsizing [...]

[...] My Dollar Plan presents The Final Decision on Downsizing [...]

]]> By: unimax http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8205 unimax Sat, 04 Apr 2009 00:51:20 +0000 http://www.mydollarplan.com/?p=818#comment-8205 Glad you made a decision which make sense for you. Can you please share some version of your spreadsheet? Glad you made a decision which make sense for you. Can you please share some version of your spreadsheet?

]]> By: Madison http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8190 Madison Thu, 02 Apr 2009 19:41:10 +0000 http://www.mydollarplan.com/?p=818#comment-8190 @ Rassah: Very good point on the sunk costs. If we didn't already live here, the numbers would look very different! For example, if we were renting right now and trying to decide which house to buy, the savings with the less expensive house would be much more. @ Rassah: Very good point on the sunk costs. If we didn’t already live here, the numbers would look very different! For example, if we were renting right now and trying to decide which house to buy, the savings with the less expensive house would be much more.

]]> By: Rassah http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8189 Rassah Thu, 02 Apr 2009 19:20:04 +0000 http://www.mydollarplan.com/?p=818#comment-8189 Aside from "your premium" being a somewhat deceptive way of putting it, there's definitely a lot to be said for "sunk costs." I.E. I'm sure your numbers would be quite different if you included the closing fees and other fees that went into buying your current house, but since those are "sunk costs," they don't really matter any more. Aside from “your premium” being a somewhat deceptive way of putting it, there’s definitely a lot to be said for “sunk costs.” I.E. I’m sure your numbers would be quite different if you included the closing fees and other fees that went into buying your current house, but since those are “sunk costs,” they don’t really matter any more.

]]> By: sara l http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8188 sara l Thu, 02 Apr 2009 18:55:28 +0000 http://www.mydollarplan.com/?p=818#comment-8188 Glad you found a decision that works for your family! Glad you found a decision that works for your family!

]]> By: Gracia http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8186 Gracia Thu, 02 Apr 2009 16:28:57 +0000 http://www.mydollarplan.com/?p=818#comment-8186 Not thinking about downsizing, but we studied carefully my decision of going back to an office job vs keep trying to work my way in the freelance world. Most people would have said that, considering I was averaging a 20% of what I would earn working at an office, the answer was simple. It turned out not to be. I would only earn 250$ more going to work there, and I wouldn't be following my dream as I am now :) Not thinking about downsizing, but we studied carefully my decision of going back to an office job vs keep trying to work my way in the freelance world.
Most people would have said that, considering I was averaging a 20% of what I would earn working at an office, the answer was simple. It turned out not to be. I would only earn 250$ more going to work there, and I wouldn’t be following my dream as I am now :)

]]> By: Madison http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8185 Madison Thu, 02 Apr 2009 16:18:10 +0000 http://www.mydollarplan.com/?p=818#comment-8185 P.S. I'll work on putting together a detailed example soon. That way you can see exactly how it works. P.S. I’ll work on putting together a detailed example soon. That way you can see exactly how it works.

]]> By: Madison http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8184 Madison Thu, 02 Apr 2009 16:01:32 +0000 http://www.mydollarplan.com/?p=818#comment-8184 @ AnnMarie: I thought about embedding the spreadhseet, but it has so many of my chicken scratches, it wouldn't make much sense. However, from a total net worth perspective, paying down principal doesn't really factor into the savings much, only the interest does. Eventually you would sell either house. So you have to consider that too. In your example, you "save" $100,000 on the house by not paying that principal portion down. So you would essentially have that much in a savings account if you put the excess in each month. With the more expensive house, you would spend the $100,000 on paying down principal, but when you sell, you would have $100,000 in equity. That's assuming 0% appreciation. When I did the comparison, I figured we would sell each house in 5 years. The actual comparison is the final sale price of each house, less the loan balance and selling fees. Then you add in any tax savings and the savings account balance where you were storing the savings each month. Does that help? @ AnnMarie: I thought about embedding the spreadhseet, but it has so many of my chicken scratches, it wouldn’t make much sense.

However, from a total net worth perspective, paying down principal doesn’t really factor into the savings much, only the interest does.

Eventually you would sell either house. So you have to consider that too.

In your example, you “save” $100,000 on the house by not paying that principal portion down. So you would essentially have that much in a savings account if you put the excess in each month.

With the more expensive house, you would spend the $100,000 on paying down principal, but when you sell, you would have $100,000 in equity. That’s assuming 0% appreciation.

When I did the comparison, I figured we would sell each house in 5 years.

The actual comparison is the final sale price of each house, less the loan balance and selling fees. Then you add in any tax savings and the savings account balance where you were storing the savings each month.

Does that help?

]]> By: AnnMarie http://www.mydollarplan.com/the-final-decision-on-downsizing/#comment-8183 AnnMarie Thu, 02 Apr 2009 15:34:21 +0000 http://www.mydollarplan.com/?p=818#comment-8183 Could you provide more solid numbers? I just can't figure out how you would only save that small amount. A quick back-of-the-envelope figuring: Let's say you buy a house that's $150,000 less and you have $50,000 in related expenses. That's $100,000 less in a mortgage you have to pay over 30 years (not even counting interest payments). Over 30 years, that's a savings of $277 a month. Just by not spending $100,000 on a house. And while your taxes would "go up" because you'd have less interest to deduct, you'd be paying less interest overall plus, more than likely, less in real estate taxes. That should be another savings. I just don't see how downsizing this significantly wouldn't change things monetarily in the long run. Maybe it's far more complicated than this, but I just can't imagine that the other factors would affect the outcome as much as have $100,000+ less on your mortgage to pay. Could you provide more solid numbers? I just can’t figure out how you would only save that small amount. A quick back-of-the-envelope figuring:

Let’s say you buy a house that’s $150,000 less and you have $50,000 in related expenses. That’s $100,000 less in a mortgage you have to pay over 30 years (not even counting interest payments). Over 30 years, that’s a savings of $277 a month. Just by not spending $100,000 on a house.

And while your taxes would “go up” because you’d have less interest to deduct, you’d be paying less interest overall plus, more than likely, less in real estate taxes. That should be another savings.

I just don’t see how downsizing this significantly wouldn’t change things monetarily in the long run.

Maybe it’s far more complicated than this, but I just can’t imagine that the other factors would affect the outcome as much as have $100,000+ less on your mortgage to pay.

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