5 Reasons Why Size Matters – When Buying A Home

I think we all have that admiration at a young age of the lavish lifestyle.  The large houses, mansions, luxury cars, etc.. But at a young age you have no concept of how much work it is for a dollar or what it takes to get there.  If you’re born with money, maybe you still don’t! 

Does your home size matter though?  Let me stop you… yes, the answer is yes!  

Since most of us don’t have the luxury of being born into riches, we have to think a little differently.  We have to be a little thriftier.  But deep down we still have that voice saying “Look at that beautiful, luxurious home!”.  Especially with the current climate and that feeling of being “stuck” indoors – real estate is hotter than ever.

The thing is… you can still have a beautiful home, but it doesn’t need to be so damn big!

Do you have any idea what that home costs?  Do you realize what it really takes for someone to maintain a home like that?  No?  A lot!  And it’s more than just the value of the home itself.

Even our daily habits can cost us years of additional work before retirement!

Here are 5 reasons why size matters! Home size that is.

1. Property Taxes

The bigger the home, the bigger this burden becomes since property taxes is based on the size of the property!  So now that you decided you needed that big home with extra rooms and a larger yard it can cost you!

home size

Every county and state assesses the property taxes differently, but they all revolve around the same ideas.  If you’re property value is double that of somewhere else then you’re going to pay likely double in taxes.

Most homes likely have many unused rooms, if only for special occasions.  Times are changing and homes aren’t used the same way as a home may have been used back in the 50’s.  Formal dining rooms, are they really necessary?  For some sure, but maybe there are other rooms they don’t find useful.

Imagine this scenario that we will tally up at the end:

  • Larger house purchase – $600,000
  • Property tax – $12,000 per year (assuming 2%)
  • Cost over 15 years (shorter term mortgage) – $180,000

Now, let’s say that instead of purchasing this lavish home that has 4 bedrooms, 2.5 baths, basement, large yard, you decided it was too much. So instead you buy a more modest home.

  • Modest house purchase – $400,000
  • Property tax – $8,000 (assuming same 2%)
  • Cost over 15 years – $120,000

Sure, it’s now only 3 bedrooms and 2 bathrooms with a more modest yard, but you didn’t need it anyways!  Are you mad that you didn’t get everything you wanted?

How mad are you?  Are you $60,000 mad!?  Or consider the home difference, $260,000!?  Let’s see how you feel at the end of this exercise.

This is just the start!

2. Electric Bill

electric billConsidering that same scenario with the 2 houses above, you now will use less electric for two less rooms and have a smaller square footage house.  Now, it’s probably not a record breaking cost difference per month, but it still matters.

Now you don’t need to pump that AC as hard and don’t need to remember to turn off the lights in the extra bedroom and bath.

Let’s say the electric is 25% less.  Grabbing some quick numbers the average electric bill by month is $110 so I’m going to say it’s reasonable to go with that for the smaller home.  That makes the larger home electric bill ~$138.  

Take that $28 difference every month for 15 years and it’s now $5,040.

Let’s add that to the tally – $265,040

3. Gas Bill (Heat)

The average gas bill per month let’s say is roughly $60.  This would include heat, oven, and whatever else uses gas in the house.  Per year that makes it $720.  Let’s compare that to the 25% extra cost it would be for the larger house and it’s $900 per year.

A difference of $180 over 15 years would be an additional $2700.

Let’s add that to the tally – $267,740

4. Furniture

Now that you have a larger home you’re going to have a few additional items to fill in the empty space.  Although you might not realize it over the span of 15 years let’s say you spent another $3000 and I’m probably being modest.

Let’s add that to the growing tally – $270,740

5. Maintenance

maintenance costsThe largest value, something that we can’t even put a dollar symbol on, is our time.  Our freedom to do what we wish. 

Now that your yard is double the size you have to spend double the time mowing and managing it.  If you don’t, then you’re spending money, which will also add up as you’ve already seen.

Now you need to spend more time cleaning the house.  Wouldn’t you rather spend that time with your family or friends?

Although I’m not putting a monetary value on this (and you definitely could) it’s important to note that having more space is going to take more time away from your life.  If that extra bathroom starts to have plumbing issues you’ll need to deal with it.  You’re going to have extra cleaning to do, extra lawn care, and other things you probably never thought of.  

What’s the damage?

So the total tally ended up being $270,740.

In bill savings alone per year that was $70,740.  If you had taken that money and put it into investments (index funds) instead, it’d have grown into $158,505 @ 7% interest per year.  Pretty amazing right!?

That $200,000 that you were going to spend would have turned into $338,000 after being compounded @3.5% monthly for 15 years!  That compound interest really adds up.  Why do you think Warren Buffett is so rich!?

How much did you end up saving?

Take those bill and add in the true cost of the additional mortgage and it comes to….DRUMROLL PLEASE!……


Unbelievable right!?  You saved a half a million dollars by making a more reasonable life decision!  Be proud because many people will never fully come to the realization of this.

Just to add insult to injury imagine if you took that half a million that you saved and continued to invest it for another 15 years @7% annually.

~$1.37 Million Dollars, Cha-Ching!

You became a millionaire because you bought a smaller house!  How do you feel now? Are you happy with your home size now!?

Enlightened? retired at peace


Well I hope so!  You became a millionaire making 1 big life decision.  You can go buy that mansion now!

Ultimately the choice is yours, but I hope you can walk away from this with the right tools in your pocket to make the right decision for you!

2 thoughts on “5 Reasons Why Size Matters – When Buying A Home

  • August 15, 2018 at 11:43 am

    I couldn’t agree more! I bought a very modest house for super cheap, and we have learned to use every bit of it to our advantage. Last Christmas, we gave the kids the gift of a basement jungle gym by making little swings and hanging knotted ropes off the ceiling, and more recently we turned the attic into the master bedroom.
    Buy a reasonable house in a great area, and develop your DIY skills to make it exactly what you want!

    • August 15, 2018 at 7:03 pm

      Absolutely… No reason waste money on space that you don’t use or need. Plus, like you mentioned – learn some new skills!


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