5 Reasons to Downsize Your Home Immediately
Are you looking to downsize your home? The American Dream typically includes a house with a white picket fence, 2.5 children, and a dog in the yard. In reality, our dreams often have more depth and include different aspects for different people.
One thing that may hold true, however, is that everyone wants a nice, big house. We want a guest room so we can have friends and family come to visit. If we have kids, we may want each child to have his or her own room. All of that sounds nice but lasting happiness truly comes from financial freedom.
Here are 5 reasons that you should start looking to downsize your home as soon as possible
Less House, Lower Payment
The fact of the matter is, if you downsize your home, the lower your monthly payments will be. Although there are other factors involved, such as what neighborhood a house is in, a smaller home will come with a smaller monthly payment.
Imagine what you could do with an extra $500 per month. If you can reduce your mortgage payment each month, you’ll be able put the extra money into savings or towards an emergency fund.
Another option is to eliminate your mortgage entirely. If you sell your current home and buy a smaller one for cash, you could own your home outright. If you don’t have enough equity in your home, you could still come out ahead by using the money you make on the sale of your home. This money can then be used to make a hefty down payment on a smaller, cheaper house, drastically reducing your monthly mortgage payments.
Lower Payment, Extra Disposable Income
Don’t rush out and spend that extra money, however. Instead, put it toward paying off your debt. US News reports that the average student graduating in 2014 left college with a staggering $28,000 in student loan debt. Making minimum payments can make that debt last a lifetime, and sap your monthly budget in the meantime.
Instead, apply the money you save on your mortgage to pay down your student loan faster. The same concept can be applied to credit card balances, car loans, and even your mortgage. Nothing says financial freedom like being debt-free.
Less Space, Less Stuff
Let’s say you are currently living in a home around 2,400 sq feet, which the Wall Street Journal reports is the median house-size for all new homes built in 2015. What are you going to fill your home with? STUFF. You don’t just need a couch, you need a living room set. Your kids don’t just need three or four toys, they need three or four new toys each birthday and Christmas. See where this is going?
If you downsize, you’ll not only spend less on the home itself, you’ll spend less money on stuff to put in it. Imagine how much less time you’ll be able to spend straightening and cleaning if your living space isn’t packed full of of stuff. Minimizing also give you the opportunity to make even more cash by having a yard sale.
Less Stuff, More Travel
A new trend is starting and it’s a healthy one. Spend money on experiences, not stuff. Forbes magazine suggests that buying items gives a temporary thrill, but the memories we make on trips and outings with loved ones last a lifetime.
What about kids? Won’t they be disappointed not to get another five Lego sets this year? Instead, consider gifting the little ones in your life with trips to the zoo and city museum passes.
Less Now, More Later
You can also use the money you save by downsizing your home to save for retirement. Although the current retirement age is 62, some experts predict that today’s young working adults will not be financially able to retire until 75. If you want to enjoy your golden years, invest in your future now with IRA’s and 401K’s.