At some point in my life, I’ve dreamed about living in a gigantic mansion on some exotic location where the ocean breeze lightly blows against some beautiful Egyptian cotton curtains. I will bet that most of us have that dream at some point – and perhaps some of us are already creating a path to get there someway, somehow.

Well, maybe not all of us have those dreams; but still, we often strive to live a little better. Let’s start with that small 2 bedroom condo. Oh wait, we need more space. We need 3 bedroom townhouse. But I really want a yard. This kitchen is too small. Where’s my man cave? Our kids need a room. Pretty soon, we are trading up from that tiny apartment to a gigantic house, or from living in a neighborhood where you are a bit scared to walk at night to that neighborhood with the really good schools.

It is the American dream, isn’t it?

But sometimes you have to consider the costs of trading up your residence. I know two couples who live in Orange County, California who, after living maybe a couple of years, are already looking to trade up to a new home that cost nearly double of what their previous residence was worth (i.e., $350,000 to $800,000 range). Sure – it is in a much better neighborhood. Sure – sometimes you need that extra office and nursery… but consider the costs! Even at 4%, your monthly payment would have gone from (let’s just say you put 20% down each time and this is a 30-year fixed loan) $1337 to $3055! That is a lot of change no matter what you do.

Well, what about building that net worth?

Surely, you can build equity faster every month with the bigger house, but that is because …read more