How to Decide Whether to Downsize to a Smaller House
Should You Downsize Your Home?
Are you trying to decide if you should downsize to a smaller house? If so, you're part of a growing trend. It used to be that people would live in a large family home until they retired in their late fifties or early sixties. And even after retirement, there were traditionally plenty of people who stayed in that same family home. But now, with the economy providing little confidence and many people out of work, it's a decision younger people are considering as well. There are many benefits to downsizing your home including saving money, however, there are some downsides as well. If you're seriously considering selling your large home in favor of something smaller, you need to look at the decision from all angles.
- Why Less Stuff Will Lead to More Happiness
Research shows that owning more stuff doesn't lead to lasting happiness. Instead, spend your money wisely on experiences with those you love and watch your happiness multiply.
- How to Decide Whether to Buy a House or Rent
With rents increasing and property prices declining, the rent vs. buy decision should be reconsidered. As long as you can afford the higher costs of home ownership, now may be one of the best times in a long time to buy a home.
Benefits of Moving to a Smaller House
You'll Save Money: This is the most obvious benefit of moving to a smaller house and the one most people think of first. When you sell your large home in favor of a smaller, less expensive one, your mortgage payment will be smaller as well. This is especially true if you take any equity you have in your old home and use it for a large downpayment on the new home. In fact, you could be in a position to purchase your new home for cash, depending on your equity position.
The mortgage payment isn't the only cost that will decrease with a smaller home. You'll also save money on property taxes, insurance, utility bills from air conditioning and heating, and home maintenance and repairs. These savings further sweeten the deal when evaluating the decision to move to a smaller house.
Because your housing expenses are less, you'll be in an enviable position to invest more, work less, spend more on vacations, fund your children's education, or funnel some of your savings into your mortgage payment to pay it off early.
You'll Experience Less Stress: The peace of mind you'll experience by putting yourself in a better financial position is immeasurable. By reducing your monthly outlay for housing you'll have so many more options because you'll no longer be a slave to the mortgage payment. In addition, you'll have fewer rooms to clean, reducing stress and allowing for more time for relaxation and fun. And finally, you'll have less stuff simply because you'll have less space for it all. For many people, having fewer belongings leads to less stress from maintaining it all.
You'll Be Eco-Friendly: Smaller homes use less lumber, less water, less electricity, and less gas. They're much friendlier to the environment and that's something you can feel good about. In addition, when you own a smaller home, you can make energy saving updates like adding insulation, new windows, and solar panels more easily since they simply cost less for a small home.
Drawbacks of Downsizing Your Home
With all of the benefits of moving to a smaller house, it may seem like a no-brainer to just go ahead and make the plunge. However, there are some drawbacks that you'll need to consider first.
You'll Need to Get Rid of Stuff: Okay, so this was listed as a benefit of downsizing but it can also be quite painful for some people. If you're in a larger home now, it's likely filled with stuff including furniture, clothing, knick-knacks, artwork and more that you've collected over the years. It can be emotionally difficult to sell or give away these things, even though you know rationally that you don't need them.
You May Feel Less Successful: Some people rely on the things they own to give them a measure of status in life. A large house is one of those things that people use to show where they fall on the economic spectrum. Therefore, downsizing can make some people feel less successful, almost as if they've failed.
You'll Have Less Space: Again, there are plenty of benefits to having less space but the reality is that you could very well be tripping over each other in a smaller house and fighting over use of the bathroom. If you're soon going to be an empty nester, then this will be less of a concern but if you're moving your family into a smaller home, you could feel the pain. You'll also have less space for house guests and having people over for gatherings and parties. If you like to entertain, this could also be a major problem.
An Extreme Example: The Tiny House Trend
How to Make the Final Decision
Now that you've weighed all of the pros and cons of moving to a smaller house, it's time to put it all together. Before you do anything, sit down with your family to talk about your ideas. Make sure you cover and agree upon the following topics before making the move:
- Are there rooms in your house that you aren't using? If you use a room fewer than six times per year, experts say that you can do without it.
- What's the square footage of the rooms you aren't using? Subtract this number from the total square footage of your current home. This is the size of home you can look for as you downsize.
- What can you absolutely not live without? If you have a family, this could be an extra bathroom. Or maybe you have a room devoted to a hobby or fitness pursuit that you don't want to do without. Or perhaps you're a gourmet cook and want a spacious kitchen.
- Start talking about the stuff you own and what you absolutely must keep and what you can get rid of. Start selling or giving away the things you decide to discard.
- If you're feeling like a failure, try to remember all of the benefits of downsizing. Status is great but it can't give you the peace of mind you'll likely get by simplifying your life and reducing your monthly housing expenses.
Ultimately, the decision to downsize to a smaller house is a tough one emotionally, even though rationally it makes a lot of sense. It's important to sort through your emotions and think about the benefits, which can be substantial.