09 Jun When is the Best Time to Downsize Your House?
Isn’t bigger better? That is the way we Americans feel about many things. How about your home? Certainly, you want a little elbow room, and a place to entertain friends and raise your family in comfort. But eventually, there comes a time to downsize your house.
Living in smaller spaces has become a popular trend. Many documentaries and articles depict people who live out of a 200-square-foot trailer. In some ways, small has become the new big!
This isn’t just a hipster trend, and you don’t have to go to such extremes. Even reducing your home size just a little offers advantages. For many families, when the kids are out of the house, the decision to downsize your house can help in a lot of ways.
Consider Your Chapter of Life
Families of different sizes and in different stages of life have different needs. Some couples who live by themselves need to spread out and not see or hear one another for several hours a day. Some large families get a boost of energy by sitting around the same room for games, entertainment or conversation. People should not assume they NEED a house of a certain size, or follow a pattern that everyone expects.
If you don’t host a house full of people anymore, there may be a lot of advantages to downsizing. If you have grown kids, who live near you, what are those extra rooms for? Even if your adult kids visit from out of town, you may be able to accommodate them in something smaller. This article from Dave Ramsey points out that “the average home size in 1950 was less than 1,000 square feet—and families were bigger back then.”
Let’s take a look at some of the exciting reasons to downsize your house.
Reduce Work, Expenses, and Stuff
The amount of work a home requires is proportional to its size. If you enjoy mowing a huge lawn, fine. But if you don’t use it and could use those hours pushing or driving a mower around doing something else, maybe you should. Keep in mind, if you moved to a condo, a townhouse or an apartment, you would no longer have to maintain a lawn mower or a weed-wacker.
There is no guarantee that your next home will cost less than the one you are in now, but if you shop strategically, there are many ways a smaller home can boost your monthly bottom line.
A more modest-sized house means lower utility bills. You will heat or cool less space and change fewer light bulbs. Less minor maintenance and cleaning is also a benefit.
We don’t realize it, but clutter also has a cost. With a more minimalist lifestyle, you have fewer storage needs. Break the habit of buying so much. For example, if something breaks, you may feel the impulse to replace it. But if that thing is something you can live without, maybe you should decide you don’t need it.
In her popular book, The Life-Changing Magic of Tidying Up, Marie Kondō makes a strong case for living more simply. There is a peaceful quality of life, a serenity, that comes from a more tidy, clutter-free lifestyle.
Save Money With a Strategic Move
Hopefully, you’ve seen that living smaller is not only possible but confers some lifestyle benefits. Let’s examine how some good decisions as you move can not just make your life more efficient, but can make you wealthy!
Reduce or Eliminate Debt
If you downsize your house in a favorable market, you can capture some of your equity and channel it into retirement savings! There are limits, but if you are married, filing jointly, and you’ve owned your home more than two years, you can keep up to a half-million dollars of profit on the sale, tax free!
In one example in this article, a man sold a $1 million dollar waterfront home and moved to a $350,000 home, paying cash! He took on no debt at all.
Reduce or Eliminate Market Risk
A quiet but powerful benefit to reducing or eliminating your house payment is you eliminate the risk of losing it. Many argue that you will lose the tax deduction for the interest you pay, which is true, but not as good as the alternative.
There are several ways you can improve your tax situation when you downsize. You can intentionally reduce your taxable income because you don’t need to make as much to keep paying for your house. You can also reduce your property taxes if your property gets smaller.
If you are no longer in the child-rearing years, you might consider a section of town you like but is not as known for its great school system. You could save on property taxes. So compare tax rates in different neighborhoods around where you want to live.
Downsize Your House and Reap the Benefits
At a later stage in life, it may seem counter-intuitive to move to a less impressive home when your income is typically higher. You earned that money, why not show it off, right? But would you rather look rich or be rich?
If you take all these reasons, anyone at any stage in life may decide that they could benefit by tightening their home and lifestyle up a little. So, if you find you would rather trade that big house in an expensive part of town, you could set yourself up for a happier future with less stress heading into retirement.