To Downsize or Not To Downsize?
What do you think of when you hear the word downsizing? Is it what parents do when the kids move out of the family home and mom and dad purchase a smaller home with fewer rooms? There are certainly more scenarios where downsizing your home would be a wise decision. Maybe you could benefit from downsizing your current property? Here are 7 reasons why you should consider downsizing from your house.
Pay Off Debts
If you downsize from your current house, you could pay off some or all of those annoying debts they never seem to go away! If you sell your current house and buy a smaller one, depending on your current finances, you could end up with a nice chunk of change to apply towards the balances on your debts or potentially pay them off altogether! What that increased feeling of freedom would mean to you is something only you can determine.
You would not only be saving money because your mortgage principal would be smaller, but also because every month you would be taking advantage of the insanely low interest rates!
And if you can muster up the discipline, you would be able to pay off any outstanding credit sooner with that extra cash from a smaller mortgage or rental payment! After that, you could also put that extra money towards lump sum payments on your downsized house and pay off your mortgage balance even faster! That’s further down the road, but it can lead to a better place for you financially if you can stick to the plan.
Downsizing from your current home could free up the equity and cash flow you need to reduce your outstanding debts. Only you can decide what that feeling of freedom is worth to you.
A Love/Hate Relationship With Your Home
Another common reason to downsize is because your current home just doesn’t do it for you. You’re just not that into it. There are a whole host of reasons why that may be the case. Do any of these scenarios apply to you?
- The layout isn’t what you thought you wanted. You’re second-guessing your decision to go without that extra bathroom or bedroom.
- The yard is just too small for your children and pets.
- Your commute to work is more than you can bear each and every week. Maybe
- You are needing a home that is a bit more rural….where there is more room for you to sprawl out, relax and feel the freedom that all the extra space provides.
- Your house has a larger environmental footprint than you’d like. A lot of people are starting to live in smaller houses that do not use up as many resources as larger houses.
- There is just too much stuff in your home and too much home to keep clean! You want to free up time and simplify your life.
Whatever the reason, if your current home does not deliver the goods for you, it may be time to move on with a downsize.
Some people are in a ‘strained relationship’ with their current homes. It happens.
A Smaller House Means Less Stuff
Home Owners with smaller homes tend to resist the temptation to accumulate too much stuff. There is just no room for it all! If there is an empty space, people will tend to fill it. “Honey, that corner looks so empty. Maybe we need to put a shelf there?” It seems to be human nature.
For example, if you don’t have any room in your house for that new treadmill, you’ll be even less tempted to purchase it in the first place (no offense to those of you who own a treadmill… and actually use it!).
Perhaps you are not at the point where you are ready to downsize from your current property, but you realize that you are being ruled by your possessions. Here is a good article if you need some help decluttering and simplifying your current home. Here are the key points:
- When downsizing and decluttering, understand your ‘why’
- Create a decluttering plan and keep on it
- Share special items with family and friends
- Keep what really matters to you
- Donate items to local charities and non-profits
- What type and quality of items to donate
Here’s an example of decluttering and re-purposing that preserves the memories while reducing the clutter. The owner re-purposed an entire t-shirt collection to a much smaller footprint and preserved something special to them.
If you need EXPERT HELP downsizing and decluttering, why not reach out to one of our trusted partners to make some headway?
Save For University Tuition
Why not create a sizable college, university, or trade school tuition fund for your children or grandchildren? If you downsize your home, you could start an RESP or Registered Education Savings Plan for your children or grandchildren. It’s beyond the scope of this article to get very in-depth, but the link is a great place to start. The key element in RESP’s is that the government will provide a 20% return on funds you contribute (but there are limits).
So the difference between the sale price of your existing home and the purchase price of your new house can create some great savings momentum for this purpose. Combine that chunk with any extra money you will be saving each month and you can REALLY help springboard your (grand)child/children forward with a HUGE head start in life by avoiding debt at the start of their journey into adulthood.
Accumulate Retirement Savings
If you downsize your home, you could quickly boost your retirement fund. You could open a savings account or emergency fund with that large chunk of money and keep adding to it every month with the difference in monthly savings.
You could also invest that money into a regular or self-directed RRSP. There are many choices when investing in this manner. You could make your own decisions and manage your nest egg by purchasing everything from GIC’s to bonds to equities. Or you could take a hands-off approach and invest in index funds or hire active management to invest in mutual funds.
Even if you are at retirement age, downsizing later in life can be a nice boost to an account of liquid funds. And when society opens up again, maybe these monies could fund that big retirement trip you’ve been dreaming about. Regardless of what your plans are, it really comes down to your age, stage, and future plans in life.
Do not save what is left after spending, but spend what is left after saving.
Maintenance And Upkeep Are Killers
If you are having difficulty staying on top of all the housework and cleaning, it may benefit you to downsize your home. Why not find a new residence with less bothersome yard work? Perhaps living in a community where all that is taken care of for you would be the ideal setup? It would give you the time freedom to spend on activities you’d enjoy doing rather than on constant upkeep.
Maybe time is a factor and you don’t have as much to garden as you once did. Or perhaps there is too much dusting, sweeping, and vacuuming. If so, downsizing might be a wonderful option for you. With the money you save from downsizing, you could maybe even hire a cleaning company to help you with your general upkeep! It’s your life. YOU DECIDE how to live it!
Keep Your Costs Down
In most cases, the number one reason why people choose to downsize from their current residence is to reduce monthly expenses. It’s almost a given that unforeseen circumstances will visit you, and these can be costly depending on the event. As a result, you may need to downsize to reduce the burden of your monthly bill collection. And maybe it puts you in a spot where you can’t afford things as they are. What to do? You could sell your current house and get a financial boost of capital. Find a new, less expensive home to reside in where your overall costs would be more affordable each month.
If you feel the need to learn more about the simplifying, downsizing, and decluttering process from your current home, we welcome you to read some of our other articles on this timely subject. What Seniors Should Know When Downsizing AND Downsize & Declutter Your House Without Any Cleaning. Here we discuss useful and practical information to help you downsize quickly and easily.