Downsizing took on a whole new meaning a few years ago when Matt Damon starred in a movie by that name. In it, Damon was shrunk down to a few inches tall so he could live like a king in basically a dollhouse. Although we can’t shrink ourselves we can downsize our lifestyle and actually live better on less money.
There are a variety of reasons one might choose to downsize. Some do it because it’s easier to maintain smaller homes, while others do it to save significant amounts of money in the long run. Children moving out of the home is a common reason, as well. But, no matter the reason, smaller houses mean smaller bills. That’s a fact. So, if you want to live a simpler life, you may choose to sell some of your furniture and other possessions and move to a smaller home.
What is Downsizing?
In simple terms, downsizing is the process of moving to a smaller house. People consider doing this for many reasons. Downsizing can improve your finances by reducing expenses, cut down on maintenance, or simply help you live a simpler life.
Whatever the reason for choosing to downsize the benefits are numerous. Some people may know exactly where they want to move to while others may use their newfound freedom to do some exploring before settling back down. If you decide to explore you can store your belongings relatively inexpensively especially if you’ve already decluttered.
You will need to prepare for organizing the paperwork, decluttering, selling or donating your possessions, stocking up on packing supplies, packing and moving to your new place, etc. Hiring professional movers to help you in many of these steps, from packing to moving things to your new home or storage unit, is a great idea. The significant benefits include time-saving, increased safety, and reduced stress… using the pros can save you tons of aggravation.
Here are some financial benefits of downsizing:
- Smaller bills
- Lower house price
- Lower taxes
- Reduced maintenance costs
- Making money off downsizing
- You won’t be tempted to buy more stuff
- You will adopt a new approach to spending
Bills
First and foremost, if you live in a large house, that means your bills are large, as well. Property taxes are higher as are heating and cooling costs and maintenance (time or expenses). If you have a large yard, garden, etc. you have to maintain that as well. Therefore, paying for all that extra space that you don’t need, doesn’t make much sense. Of course, you want to have enough room without sacrificing your lifestyle but the extra room just attracts clutter.
Pro tip: There’s an easy way to calculate the potential savings of moving to a smaller house. Knowing this number might give you the push you need in the direction of downsizing. Take the monthly or yearly total of your energy bills and divide it by your square footage. This will give you your cost per square foot just for heating and cooling. If you are currently spending $300 per month for a 3000 square foot house perhaps a 1500 square foot house would only cost $150 per month, saving you $1,800.00 a year just on that! Then add in property tax savings and you might save an additional $1,800.00. plus maintenance savings, etc.
This should give you a rough estimate of potential savings if you choose to move to a smaller home.
House Price
This saving might be obvious, but it is still worth mentioning. If you sell your house and buy a smaller one, you will certainly save a decent amount of money. This way, you will have the freedom to pay off your mortgage or invest your money further.
Even if you still have a mortgage after downsizing, it should be smaller and so your monthly payments will be a lot smaller. too. This could allow you to pay off your mortgage much sooner thus further reducing your monthly expenses.
Taxes
The value of a property determines your taxes. As a result, if you buy a smaller and less expensive house than your previous one, your taxes will also go down. These factors will make a significant reduction in your spending.
Maintenance Costs
Larger homes require more upkeep. More painting, pressure washing, mowing, driveway repair, window washing, A/C maintenance, etc. more things that require annual maintenance. When you choose to downsize, you will probably need fewer of everything.
Earn Money by Downsizing
When you decide to downsize, the first step is to get rid of clutter, which doesn’t mean you need to throw away everything you don’t need anymore. There’s a saying – one man’s trash is another man’s treasure – so you can try to turn the things you no longer need into cash.
You can advertise your stuff online or hold a garage sale. Naturally, the former is a safer option. If, for some reason, you choose the latter, be prepared for bargain hunters who will most probably knock on your door pretty early.
Reduced Temptation to Buy More Stuff
The need to buy large art pieces or various gadgets tends to fade once you move to a smaller home. The most significant benefit of downsizing is that it will effectively force you to cut down on unnecessary spending.
Moreover, if you decide to downsize, you might be forced to sell items you thought would fit but don’t into your new home.
A New Approach to Spending
Finally, once you learn to live in a smaller space, that will affect other spheres of your life and make you capable of living with less in general. Therefore, you might realize you don’t need a brand-new laptop or phone because those you have are working just fine.
In Conclusion
Downsizing to a smaller property can be beneficial on multiple levels. It not only frees up capital and time but also reduces aggravation and stress.
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