We recently shared in several articles that we are considering downsizing our home—and the resulting financial and lifestyle perks that we could enjoy. Today, we are at a decision crossroad as we decide which path to follow.
Through a somewhat complicated deal, the parents of an acquaintance of ours signed a contract with us to purchase our current home. However, there are many challenges that could derail this purchase. In theory, we will finalize the transaction in early January if all goes well. At the time of this posting, the deal is still on.
We are seriously reflecting on what our path should be at this point. There’s certainly the desire to upsize and to live a bit “higher on the hog.” We would still be living within our financial means; however, these housing desires are bubbling to the surface and influencing our decision-making process and they seem to be leading us in a new direction. This could potentially change our website name and mantra to: “Just yet another One More Year.”
Three Options at Our Decision Crossroad
Every day, people face decisions between standard (small), more (medium) and a lot more (large or supersized). Do you choose the small, medium, or large soft drink or French fries at the fast food joint? Many avoid this question all together by not drinking soda or eating fries at all. Do you buy the base model car with no frills, the middle-of-the-road model, or go for the premium? Do you select basic cable, basic with movies, or the deluxe package? Again, you may say that you skip cable entirely and go to Hulu, Netflix, local channels, or free movies from the library. Heck, maybe you don’t watch TV at all.
Game show host: Which door do you want to pick? Door #1, #2, or #3?
Contestant: I can’t decide. What if I pick the wrong door?
Game show host: You have 10 seconds to make your decision.
Maybe it is better to describe this decision from the perspective of the old Goldilocks and the Three Bears tale. Do you remember the story about Goldilocks walking through the woods and finding the bears’ home unoccupied? She is hungry, so she eats the baby bear’s porridge; she starts to feel tired, and tries everyone’s bed to find the perfect fit. Finally, since it is “just right,” she falls asleep in baby bear’s bed.
Our decision also involves bedrooms and the number of beds. Which one fits just right for us?
Making a decision, when we have so many options!
Now it is time to describe the options without getting into too many details and boring our readers. Here it goes:
The Baby Bear option: We sell our current single-family home and downsize by about 30% into a smaller Sedona property. This property is an end-unit town-home with two parking spots, one covered with a carport. We would update most of the home by re-texturing the walls, painting, replacing trim, remodeling the kitchen, updating two bathrooms, and replacing all the flooring. Once all of these updates are complete, we would still have a sizeable emergency/replacement/bucket list fund remaining. We could retire immediately.
The Mama Bear option: We stay put in our updated 1970s rancher that is in a great Sedona neighborhood. It is a very comfortable three-bedroom, two-bath home with a two-car garage. Should we decide to remain in this home, we would probably remodel the kitchen and do additional work to a covered patio in the next few years. We would be on track for our retirement goals before the end of 2016. The remodeling projects would be completed with savings.
The Papa Bear option: We upsize to a ten-year-old, 50% larger home in a bedroom community that is a 15-minute drive from Sedona. This is the builder’s model home, offered at a deep discount compared to past pricing. We recognize this as a bargain based on the square footage price, compared to buying in our Sedona neighborhood. This is located on a premier lot nestled next to a golf course green with unobstructed views of a mountain range. Our new palace would have 12-foot ceilings and high-end upgrades throughout the property. Nothing but the finest for us, I say! Oh yeah, we would have to take on about $100K in debt to purchase the home and purchase more stuff to fill the space.
How do you know when your home is enough?
The “not enough monster” attacked Dianne and me last weekend. We went from a focused approach of aggressively paying off all our debts, the finish line less than 90 days away to…
Wait for it…
Maybe we should go ahead and purchase our dream home now?
The justification machine jumped into overdrive. Hey, we have great jobs, only $30K in debt buried inside a rental property LLC, awesome cash flow, we deserve it, we have worked hard, and the list goes on! We would qualify for this loan in a heartbeat.
Everything we read over the weekend—along with the direction the wind was blowing, and any random phone call we received while we were discussing the subject—surely proved that all the planets were in perfect alignment. This had to be the correct path for us to follow.
Synchronicity was in full force, alive and well in our household last weekend. This is a classic example of “confirmation bias” showing us that this was the right decision to make. When talking with realtors and local homeowners in the community, all we heard was how logical a decision this would be.
Going back to the daily grind (work) on Monday changes your perspective
Our weekend became a giant brainstorming session, discussing all the things we could do, buy, and change to have our dream home. And then the reality of going back to work on Monday sunk in. Do we really want to extend our timeline out longer so that our rooms are bigger? What happens if we move and the desires of “enoughness” aren’t satisfied and we find it necessary to upsize again?
When or how does the treadmill stop? We have managed to squash these desires as much as possible, and we recognize this is probably like a 12-step program that will never end. I know that we have to be careful to avoid a YOLO bender, otherwise years of dedicated planning and saving could be shattered due to an emotional decision.
We are now leaning towards being OK with what we have and to give up the desire to upsize. That is our normal default approach. The question becomes, should we downsize?
This is a real-world, complex decision-making process for us. We are trying to make a sensible decision, however we are swayed with the nice new stuff and the possibilities that our new and improved life would give us in the upsized home. That is something we, as a couple, recognize and understand we must monitor. Our decisions can have tradeoffs and unexpected repercussions.
As of today, we are leaning toward staying in our existing home. If the buyers of our home back out, we simply stay put, count our blessings, and enjoy our living space. This will have been our third “almost sold” event with our non-liquid asset also referred to as “our house.”
It is helpful for us to remember the reasons we want to be debt free—to no longer need to work to cover our expenses, to travel extensively, and to enjoy pursuing our own interests, regardless of whether they make money. The downsizing option achieves all of these objectives and more for us but at the cost of comfort.
This story is not complete, as there are so many elements at play between six different parties. Stay tuned for an update in the next couple of weeks on which path we will choose at our housing decision crossroads.
I see this as a chapter in our lives that will be vastly different than our three decades of working. Heck, if we don’t like it, we can always buy a bigger house and attempt to get new jobs.
How about you, is downsizing your home something you are considering as part of your early retirement?