Bensman Risk Management, Inc.


Insurable Interests

Bensman Risk Management, Inc.
2333 Waukegan Road Suite 275
Bannockburn, IL 60015
847-572-0800 Phone
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Insurable Interests may offer general financial, insurance, tax and business ideas. However, due to the ever-changing tax laws as well as the complexity of the financial industry, you should seek professional advice before implementing any of the ideas contained in this newsletter. The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C. assumes no liability whatsoever in connection with the use of this newsletter.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS). Kestra IS and Kestra AS are not affiliated with The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C.

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Insurable Interests

Vol. 3, Issue 4December 2007

FINANCIAL INTERESTS

Smaller Homes

For years, the mantra in housing seemed to be that bigger is better. All over, people were building huge McMansions that loomed over the surrounding homes. Cathedral ceilings, two-story entryways, granite countertops and master bath suites seemed the norm. But after years of excess, more people are rethinking the idea of living large.

First, the current housing crisis has left some people with houses they can no longer afford. Even if they can pay the mortgage, the cost of heating and cooling huge homes is becoming more burdensome.

In addition to the cost in dollars, there is the environmental cost of large homes. Energy use is an issue, of course. But so are things like covering up green space, which can increase runoff during rains and make flooding worse.

And not everyone needs thousands of square feet. The house you needed when your children were all at home may have become too much. You may feel that you are rattling around in those extra rooms, and you are getting tired of going up and down the stairs. Or maybe your primary house is fine, but you want a simple vacation place on the beach or in the mountains.

Smaller homes also have tended to hold their value better during the current home price downswing. According to the real estate Web site Zillow.com, midsize homes, from 1,200 to 1,900 square feet, declined 3.1 percent in value in the second quarter of 2007 over the same period a year earlier, and large homes over 1,900 square feet were down 2.8 percent. But small homes, those under 1,200 square feet, dropped only 1 percent.

So how small can you go? Pretty small, it turns out. Greg Johnson’s Iowa City, Iowa, home is less than 140 square feet, which is smaller than a lot of closets. Johnson heads the Small House Society, which promotes smaller housing as a way of preserving the environment and simplifying life.

Extremely small houses like Johnson’s usually are equipped sort of like a small recreational vehicle, with a shower stall and bare-bones kitchen. The bedroom is often a loft above the living space.

These houses won’t work for more than one person, and even one person may find them claustrophobic. But you don’t have to go tiny. There are several advantages to considering a smaller traditional home.

The most obvious, of course, is the price of the house. You also will save on utilities if you are heating and cooling fewer square feet. And you probably will realize savings in other ways. For example, you will need less furniture, less carpeting, less paint, fewer window treatments, etc.

And living in a smaller space may help you simplify your life. When you have fewer places to put stuff, you probably will accumulate less stuff. You may become a more careful consumer, not just of energy resources but of all kinds of resources.

In the end, you may find you have to put less money, time and energy into your house, leaving you with more for your family and friends, your job – and yourself.

Photo courtesy of iStockphoto.com

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