The Financial Case For Downsizing Your Home

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Downsizing is never easy. No matter how you cut it, you’re going to have to say “sayonara” to some of your stuff if you want the move to be a success. The problem is that saying goodbye to your treasured possessions is easier said than done.

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But despite the problems with downsizing, it’s something that has become increasingly popular over the last few years. It’s not just about there being less money in people’s pockets. It’s also got a lot to do with people’s desire to be financially independent, be closer to work and have less impact on the environment.

 

Regardless of how you’re downsizing, here’s how to do it and save money at the same time.

Sell The Stuff You Don’t Want For Cash

 

First things first: before you trot off looking for apartments for rent, you need to sell all your stuff. Start off by printing off some flyers or sending out a message over social media that you’ll be holding a yard sale. Next, start heaving out all the stuff that you’re not going to need after the move onto your front yard. Don’t just mark up all your stuff with ridiculous prices, like “75 cents” for a TV. Think carefully about how much people would be willing to pay so that you squeeze the most money possible out of your community. The more money you make, the cheaper moving to your new home will be.

 

You also want to sell any the extras or “insurance items” you may have. This includes the spare mattress in the basement, and the table and chair set you keep in the attic, just in case the one in the kitchen breaks. All this stuff is rapidly depreciating as it gets older. It’s best to get rid of it now, while it’s still worth something, rather than sell it later when it’s not.

 

Avoid Duplicates

 

Before moving, it’s a good idea to collect an inventory of all the stuff in your home. Once you’ve put the inventory together, you should be able to see how many duplicates you have of certain items. For instance, usually, you’ll find that you’ve got more dishes and mugs than you could possibly use, items that are only going to take up space in your new kitchen once you’ve downsized.

 

Do you really need two sets of couches, dishes, flatware, desks and chairs? Probably not – and certainly not if you’re planning on moving to somewhere smaller.

 

All these duplicate items can be sold off in the yard sale before they end up undermining the move. Be clear with yourself about how minimal you want your new home to be. Although you may entertain crowds of twenty or more occasionally, usually you’ll only have to provide crockery for yourself and your significant other.

 

Save On Utilities

 

The bigger your home, the more you’ll have to spend heating and lighting it. That’s just a fact of life. But most people never do the calculation to make the savings real. For instance, suppose you’ve got a 2,500 square foot home, and your heating bill is $300 for the month. This means that you’re paying more than 0.12 cents per square foot to heat it every month.

 

Now suppose you’ve got your eye on a 1,000 square foot apartment. It’ll cost less to heat but by how much? It turns out that if you do the math, the 1,000 square foot apartment costs just $120 to heat, assuming they’re both equally efficient. That’s a 60 percent saving.

 

Save On Your Other Debts

 

If you’re a student, you’ll know all about the horrors of student debt: that never-ending pile of money that you somehow have to pay off over the course of your lifetime. It turns out, though, that having an additional debt (usually in the form of higher rent or mortgage payments) can make paying off your other debts take longer. And if they take longer to pay off, you’ll wind up paying more interest.

 

For instance, suppose you’re paying the minimum $200 a month on an $18,000 student loan with a 6 percent interest rate. To pay off that debt with the lowest payment of $200 a month would take more than ten years, thanks to the enormous interest costs. Paying off $500 a month, however, slashes those interest charges and means that you could have your debt paid off within just two and a half years. It’s a massive difference. Downsizing, paying less rent and putting your money into paying off loans means that you can achieve financial freedom faster.

 

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