Your monthly housing expenses have increased by more than 30%. If you're facing a significant drop in your income due to retirement, wage cuts, or job loss, it may be time to move to a smaller, more affordable location. Downsizing your home has many advantages. You may have built up equity in your current home, and you can use the leftover capital to do whatever you want.
You can also buy your new home as a cash buyer, giving you more options and a faster chain. Reducing to a smaller home means less maintenance, lower bills, and more time to do the things you love. It's an exercise in saving money and time. If you're going to reduce your staff in the future, it means you can choose a property that better meets your needs as you age.
Start the downsizing process as soon as possible so that you have enough time to properly tidy up your home without feeling overwhelmed. A general rule of thumb is that you'll want to start at least 3 months before you plan to move, but the sooner the better. Retirement is one of the most common reasons people seek to downsize their home. As they approach or go through retirement, many people who hope to take advantage of their retirement savings want to reduce their annual expenses. A smaller, cheaper property can help achieve this by reducing property taxes, insurance, and mortgage payments.
If you can't remember the last time you entered your guest room, except when it was dusted off, it may be time to downsize. Unused rooms still end up costing money not only in property taxes but also in maintenance (leaky ceilings, peeling paint, etc.). When thinking about downsizing, it's important to forecast ahead for the future. While you may now be agile and capable, what will happen 15-20 years from now? According to Helen Guajardo, a real estate expert at KW San Antonio, medical problems or disability are one of the most common reasons why some choose to downsize their home. The time may come when climbing the stairs of your two-story house several times a day can be too much.
A one-story house or apartment may be more appropriate for your physical abilities for years to come. Financial problems are another reason why some consider downsizing their home in old age. The trick to successfully downsizing for financial reasons is not to wait too long. If you're already using your savings to pay for your home expenses every month, chances are you shouldn't be in that house. You need your retirement savings, not to maintain a lifestyle you had when you earned a higher salary. This is a signal that can be applied to any homeowner, not just those who are considering downsizing their staff at an older age.
Minimal maintenance is definitely an advantage of not living in a big way. After all, the time and money you used to spend on cleaning and maintenance can now be spent on fun things. That's why some people see downsizing as a step forward, not a step backwards. If you think there's less space, you're not alone. After all, an adult who usually goes to college isn't too close, but what about a son or daughter (or even another family member) who might need to move home for other reasons? Would you like to share a bedroom and bathroom with them? When looking for a new home, make sure it meets your physical and emotional needs as well as your financial needs. Just because you can find a bargain doesn't mean the house is worth it.
After all, if you're going to make the effort to move, you have to do it right. A simple idea to reduce the size of your home is to eliminate duplicate items. Get rid of excess plates, wall art, baskets and bins, and other unnecessary multiples so that you can focus on the items that you really need. If done right, downsizing may still be a good idea. Not only will you be left with more money but it may also simplify your life and reduce your home's maintenance and utility costs for years to come.
To achieve that happy outcome, however, there are four traps that await downsizers which must be avoided:
- Buying a house that doesn't meet your physical and emotional needs
- Waiting too long before downsizing
- Not forecasting ahead for the future
- Buying a house just because it's cheap