Over the past several decades, Americans have been marketed to in ways that drill the notion into our heads that owning the largest home you can possibly afford is the mark of success. Post World War II, America was changed forever. While there was a brief baby boom, family sizes would steadily decline while home sizes would expand tremendously. Leading up to the housing bubble burst of the early 21st century, we saw “McMansions” being built all around us, with no concern for the sustainability of those homes. If you ignore or try to reverse this trend, you are made to feel like you are losing in some way, when in fact you are being wise. Carefree economic times never last forever; leaving yourself the flexibility to adapt and allocate resources to new issues should be your focus. You should not willingly become a slave to an overly large home.
Intangible Benefits to Home Downsizing
If you move to a smaller home, you will have excess stuff that won’t fit. So what do you do with it? Why not sell it and save the money? No matter what you do with it, decluttering can also lead to destressing. A smaller home with less frivolous stuff in it means less time spent cleaning and less money spent on upkeep. Have you also stopped to consider just how much alone time there is when all the members of a family have spacious rooms they can escape to? A smaller home can mean more incentive and opportunity for quality time. Bonding over shared meals and entertainment is much more likely to happen when the space your family lives in supports it.
What you can Accomplish with that Extra Money
So if you are saving hundreds of dollars every month on the mortgage, how will your life change financially? If you have any source of significant debt, downsizing your home to a much cheaper one will mean you can become debt free in a much faster time period than you otherwise would. Most people have placed their home, cars, and living expenses as priorities while they often pay the minimum required on other debt like student loans and credit cards. Increasing how much money you spend on paying down debt by a few hundred dollars will take years off the debt repayment process.
Debt isn’t the only thing to think about. You should also be thinking about your future and how comfortable you can be depending on the choices you make now. It is advised that everyone invest 15% of their income into pre-tax retirement plans. Again, this is a case where you would be surprised at just how much of a difference a few hundred more dollars will make over time. After 30 years of investing with the money you save from downsizing, a typical Roth IRA may leave you with a million dollars or more.
No More Mortgage!
The sale of your larger home may allow you to pay off the new, smaller home in its entirety. Living life with no rent or mortgage can be one of the most liberating feelings you have ever experienced! Even if you don’t use the proceeds to pay it off completely, you can put a large down payment and only finance a smaller portion of the cost of the new home. This way you can not only enjoy smaller monthly payments but also a shorter payment duration.
You Made it this Far; Go ahead and Downsize!
Downsizing won’t be perfect for everybody, but it will be a great choice for most people. If you have read this far, that probably means the benefits of downsizing are resonating with you on some level. It is hard to undo the programming that always says “bigger is better”, but it can be done. Don’t over-complicate it. Follow the simple steps in the above video to de-clutter and make the move all the more easier.