Is It Time To Downsize?
Chances are if you are reading this, you have internet or are in a place that has internet access. On top of that, you might have a car or a means of transportation as well as a place to stay and rest. We live in America where there are many ways to make a living as well as accumulate wealth. However, with that wealth typically comes the acquisition of more stuff and more stuff typically turns into "too-much stuff"...which then poses the question, when do I need all this stuff, why is my house so big when I only use a couple rooms and is it a good time to downsize?
What are the signs?
Downsizing sounds easy, until you try and figure out where to start and what to look for. Here are a few notable areas in which you should probably start thinking about downsizing if you happen to see these signs:
You are exceeding your monthly housing expenses -
- Typically, a good rule of thumb is to not spend more than 30% of your income on your home. If you are finding your budgeting is taking you over that threshold, then it might be time for you to downsize so that you can have money saved up for any unexpected purchases or bills. The last thing you want is your finances to take a bite out of your mental health or relationships. Downsizing can help you save in the long term and even drop your housing expenses.
You have little wiggle room each month once your bills are paid -
- Everyone has to pay their bills, but what makes the difference is what you are able to do after those bills are paid. If you find yourself not having the capacity to doing things that you look forward or want to do, downsizing might free up your cash so that you can enjoy some of your hobbies or interests during the month.
Difficult maintenance -
- Our homes might be the places where we make the most memories but many might stay past the time where they are able to take care of their homes directly. In the end, cleaning a two-story home and even doing some of the heavy cleaning tasks to maintain a bigger home can be harder as the years go on. Downsizing your home can allow you to choose a property that eliminates the back-breaking chores that you are used to. This sort of decision can have long-term implications especially if the house tasks pile up to a point where you are unable to keep up which will affect the value of the home too.
Cramping my style -
- As we get older, some neighborhoods begin to change either for the better or sometimes for the worse. Another good sign that downsizing and moving is the move for you is if you start noticing changes in the surrounding neighborhood that simply do not fit for you or your family like they did before. Commuting at one point was an easy thing to do in the past but now the commute is starting to feel a bit harder, or maybe the you have liked the city for so long but need a quieter place to stay, either way downsizing can handle those situations and get you in a better place to save money and be comfortable in the environment you are in.
Live anywhere -
- Downsizing has a lot of benefits, especially in the later chapters of life. Not only are you saving more money by going to a smaller home as well as getting rid of unnecessary things but you now have the opportunity to find a cheaper home in a better area with cheaper property taxes and expenses. You are more free to find a place that is comfortable for you!
Where can I go?
If you have decided that downsizing is the right move for you, then there are a few options you can consider based on your financial situation, ability to move, location and caregiving need. You could purchase a single-family home or condo, find an assisted living facility, move in with a loved one or move into an independent living community. There are many ways to downsize your home and life, especially as the years go by. There are certainly many factors and situations to take into account before you make the move, but most of the time, downsizing really makes life a bit easier especially if you are looking to free up some capital and have a bit more freedom financially.
Down payment requirements, closing costs, and loan amounts are for illustrative purposes only; subject to credit qualification, not all applicants may qualify. Not a commitment to lend. Not affiliated with or endorsed by any government institution. Please contact us for an exact quote and for more information on fees and terms. Equal Housing Lender. This article is for informational purposes only, Arrowhead Capital does not provide tax, health, legal or financial advice and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor or tax professional.
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