When is the Right Time to Downsize Your Home?
A big house might have been a necessity at some point in your life. Maybe at a time in your life when you were focused on growing your family, assets, or status. But as your life changes, so does what you need in the place where you live. All that extra space that was so important, may only be more space to clean every week. Downsizing helps match your needs to your space so you feel more “at home” in the space you live in.
Deciding when to downsize is personal. There is no single point in time for every person to suddenly downsize. It is different for everyone. But delaying a move can wind up costing you more — in money, in time, and in opportunity. There are common scenarios in which homeowners begin to think about downsizing.
Common Situations Where Downsizing is the Answer
Studies show most Americans don’t have the amount of money they need to maintain a comfortable lifestyle during retirement. Downsizing when you retire means you can drop your mortgage and other high costs associated with a large home. This can free up cash to do other things and even give you breathing room in your day-to-day budget. Selling your home can also leave you open to experiencing other living options, like RVing, work-camping or living in a senior community where all your maintenance and upkeep is included in your costs. It could also enable you to live near your kids or to move to a neighborhood that includes the services and amenities you’re looking for.
You’re An Empty Nester
Empty-nesting is one of the biggest reasons why older people downsize. Once your kids are out, it’s time to focus on what you want to do with your own life. Suddenly, the house you’re living in is a lot larger than you need, and also a lot more costly to maintain. Downsizing frees up the cash you need to set and fulfill your own goals while also minimizing the time and effort you need to devote to your home. Plus, it helps you shed a lot of possessions you no longer need or want.
Your Homeownership Costs are Excessive
Good rule of thumb: If you add up your mortgage (including the principal, interest, and PMI), homeowners insurance, property taxes, and HOA fees, and the total exceeds 30 percent of your household income, your house pretty much owns you, not the other way around. When so much of your income is tied up in just the ownership costs of your home, it’s difficult to find the cash to fund vacations and other “extras.” It can be hard to pay your regular bills, like utilities, car payments, and even food and medical bills. Downsizing to a smaller and more affordable home can make a big difference in your budget and your financial future.
Maintenance and Repair Costs are Rising
If you have an older home (or if you’ve just been putting off maintenance and repairs), keeping your it in good shape (and making it attractive to live in) can take a major toll on your budget. Even if your ownership costs are affordable, maintenance costs are going to grow as the home gets older. Smaller homes with less square footage are naturally less costly to maintain, or you might opt for a rental where at the upkeep is on someone else’s shoulders.
Homeownership is Getting in the Way of Your Other Goals
Big homes cost a lot to own and maintain. Maybe you want to go back to school, travel, or simply lead a more eco-conscious lifestyle that doesn’t use up so many natural resources. Whatever your goals may be, downsizing from a big home to a smaller home or rental can give you the freedom and the opportunity to follow your dreams.
Your Home is Too Big Now
A bigger home might have seemed important when you were younger and maybe more focused on growing your perceived status. But now, you realize it’s not a big home that makes life valuable. And all that extra space seems wasteful. Downsizing helps match your needs to your space so you feel more “at home” in the space you live in.
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