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Millionaire Mind

Net Out Even

I had a meeting with a client last week and we were discussing options for his multiple properties and what the costs would be for moving his operation.

The funny thing was, the more we talked about it, the more it seemed like every alternative we came up with had a zero benefit once all the factors were taken into consideration.

In this example, there was talk of moving the main buildings from one area to another. On closer examination, while the actual rent would be lower, there were higher taxes, energy and other utility charges. Not to mention that the cost of moving and additional distance between the previous and new building. The net savings was zero.

This got me thinking about my own life whenever I make long term decisions. What amount of emotion am I adding before I have a firm grasp on the overall outcome?

As an example, when choosing a home would you rather live closer to the downtown core (assuming you work downtown) or further out in the suburbs? Here are my calculations:

Downtown Monthly Costs
Mortgage on $750,000 property: $4500 per month
Property Taxes: $280
Commuting Time 20 minutes per day @ ($25 – $50 per hour):$200 per month
Fuel: $0
Total: $4980

Suburb Costs:
Mortgage on $ 450,000 property: $2700
Property Taxes: $168
Commuting Time 2 hours per day @ ($25 – $50 per hour): $1190
Fuel: $125
Total: $4183

Other costs to consider: Renovations to old buildings, premier location prices, local traffic, amenity access

Once these costs are determined and the final analysis being so similar, you need to then move on to other factors such as lifestyle, location, schools etc. What value do you want to add to these things?

I use this in many aspects of my life. I find that doing a quick overall monthly cost calculation will allow me to view decisions objectively and not just change for the sake of change.

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