For many Americans, a big beautiful house is the classic symbol of the American Dream. And down here in Texas, we like to say that Bigger is Better. But when is it time to scale down? When is less more?
Here are some good reasons to downsize.
1. Empty Nest
Particularly if you have a big family, the transition from living with a bunch of rooms full of children to 4 extra bedrooms collecting dust can be a jarring one.
Sure, it might be nice to have a place where all the little grandchildren can come and convene for the holidays, but for many having a big empty house in their elderly years can be more trouble than it’s worth. It may even become a hazard if you find yourself struggling up and down long flights of stairs.
Also, if your concern is that you want to be a “home base” for your children and their new families, consider this: many grown children move away from the city they grew up in, homeowners elect to sell their home to move closer to their children after they’ve moved to another city.
2. Paying Off Your Mortgage and Debts
The most important financial tips are always the simplest, and this one’s the simplest of all: just don’t spend money you don’t have.
In other words, live within your means. That means if your debts and obligations have come to grow past what you can manage, it may be time to downsize your home to reduce your debt load.
Depending on the size of the home you leave behind and the one you move to, you could wipe out entire financial obligations and pay off your entire mortgage outright. If you’re behind on any payments or overexposed to debt, your first instinct should be to make sure that you’re living in the house you need, not the house you want.
Your home has what’s called a calculable appreciation. If that appreciation has already come to pass, then maybe now is the time to liquidate. Popping that dark debt cloud hanging over you can relieve so much pressure, you’ll feel like you can breathe again for the first time. It feels good to break the cycle.
3. Boost Your Retirement Fund
One of the most common reasons people explore downsizing as an option is retirement. As you approach retirement, you may try to bolster your savings by paring down your annual expenses. And you’ll be shocked at how much of a dent a $600 a month mortgage payment can make! If you save $600 a month over a few decades, that would mean a cool million dollars in the bank to coast through your retirement with. Sounds pretty good, right?
For some folks, their later years are the first time in their life that they can finally begin to indulge in some luxuries. But for many others, downsizing presents the perfect opportunity to save money, live better, and make room for what really matters.