Downsizing your Home: The Highest Impact Financial Move you can Make
You’re looking for a new place to live, you’ve gone through your checklist, and even gone so far as to analyze the price to rent ratio in your area.
It’s time to go out and find yourself some new digs.
So, like most Americans, you look for a place that is larger than your current residence. According to recent Census estimates, the median new home size in the U.S. just hit 2,306 square feet – the highest ever. In fact, it’s gone up just about every year since the mid 1980’s. Even more alarming is that in 2012 the average American household contained a record low 2.55 people (904 sq. ft. per occupant). Compare that to 40 years ago, when the average household size was 3.01 people and the median new home size was 1,550 sq. ft. (514 sq. ft. per occupant).
You’re not like most Americans. In fact, just by virtue of being here on this blog, you’ve already shown you want to be different than most Americans.
So, you do something unexpected. You move, but not to a bigger home. You move to a smaller home – one that is far below the national average.
In the process, you’ve just successfully executed possibly the single highest impact financial tactics known to mankind: you’ve downsized (or right-sized, some might say). Moving to a smaller home not only takes a hatchet to the highest expense you will likely have (your housing costs), but it also allows you to:
- Reduce the risk associated with a mortgage/lease if you hit economic hardship and can’t keep up the monthly payments
- Reduce the need to buy stuff to fill the home: less empty space = less stuff bought
- Sell off extra furniture or clutter that you don’t need
- Reduce your heating and cooling costs by virtue of less pace to heat and cool
- Reduce your property taxes (if you own)
- Reduce necessary maintenance
- Reduce renovation costs
- Reduce home insurance premiums
- Reduce environmental impact
- Reduce cleaning time/costs
One move suddenly has a domino effect of more than a handful of additional cost savings and lifestyle benefits. Less stuff, less maintenance, less cleaning, and less costs = less stress and more time and money to do things you really want to do.
Step #1 to Downsizing: Sell your Stuff
What’s the first step you take on the path to downsizing your home?
Sell. Your. Shit.
Actually, that’s the first, second, and third thing you should do if you’re serious about downsizing now or in the future.
Sell half your stuff. Then sell another half. Craigslist, EBay, Amazon, yard sales, garage sales, email blast at work. Whatever it takes.
Once you’ve gotten rid of all (and I mean ALL) the excess, you’ll have much more clarity in to how much space you truly need.
Step #2 to Downsizing: Living in the Now
Human beings, by nature, like to plan for the future. Sometimes years, even decades in advance.
You’ve just gotten married and you want to get a home. What home do you buy?
Why, the one that fits not only you and your significant other, but also 2, maybe 3 kids, a dog, and all of your future toys.
Buying too big of a home right away to meet future expectations was one of my biggest financial mistakes – and I won’t let you repeat it. I’ve since downsized and want to downsize again.
Avoid the cliche and expectations of more, more, more – and you will prosper.
- Afraid to downsize? What is holding you back?
- Have you downsized lately? What tips do you have?
- If you have downsized, what kind of savings or other benefits have you realized from the move?