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Instead of fearing the mess, see it as an opportunity to declutter and make your home more affordable. Downsizing can also be a great way to estate plan and leave a home with greater value for your children or other heirs. If you’re struggling with expensive housing costs and want to reduce your expenses, downsizing is one of the best ways to achieve that goal alongside budgeting and planning. I use a budget journal like this.
According to the Financial Disability Alliance, 40 percent of adults over the age of 50 have not begun saving for retirement. Moving into a smaller home could provide a financial boost by decreasing housing costs, lowering maintenance fees, reducing utility bills, and reducing mortgage payments.
Let’s take a closer look at downsizing your home as well as some tips on how you can sell your home more quickly in case you choose this option eventually.
What Is Downsizing?
As adults age, most want to stay in their current homes because of sentimental or family reasons. However, if you decide to downsize to a smaller home, it can have many benefits, including: Lower housing costs. Less maintenance (fewer repairs, no yard work).
Lower utility bills. Lower insurance costs. If you move to a location with lower property taxes. Smaller payment if you’ve refinanced your mortgage. Easier care if you’re struggling with a chronic illness or aging in place. If you’re experiencing financial hardship, downsizing is a good option because it allows you to reduce your housing costs and mortgage payments.
You can also move into a smaller home where costs are typically lower.
Why You Should Declutter and Downsize
Cluttered and disorganized homes can lead to major financial stress — and the clutter isn’t just an eyesore. When the clutter piles up, it can also pile up on your finances. If you have debt, then it is sometimes extremely hard to make progress towards paying it off.
One thing that many people don’t realize is that most of your debt isn’t payments on credit cards, auto loans, student loans, etc. It’s your mortgage! If you are stuck in a large house payment, it can be extremely hard to pay everything else.
If you have a high-interest rate, you may find it overwhelming to make progress. If you have a low-interest rate, you may be able to refinance and lower your monthly payments.
If you are struggling with finances or have unpaid debt, decluttering and downsizing is a great way to start making progress towards getting things under control.
4 Smart Financial Reasons to Declutter and Downsize
– Savings on energy bills – According to HGTV, clutter around the home is the leading cause of dust, which leads to higher energy bills. Cleaning up your living areas to reduce clutter can help lower energy costs.
– Getting rid of extra stuff – Getting rid of clutter can help you pay off debt, save money, and reduce stress. For example, if you have a garage sale and sell your extra stuff, you could get some extra money.
– Increasing home value – If you decide to stay in your house, decluttering and downsizing can help you increase the value of your home.
– Estate planning – If you have kids or other heirs, downsizing your home and moving to a smaller one can give you the chance to leave a home with greater value.
3 Big Financial Benefits of Downsizing
- Decreased housing costs.
- Lower maintenance fees.
- Lower utility bills.
- Lower mortgage payments.
Decreased housing costs.
If you’re struggling with expensive housing costs, downsizing is one of the best ways to reduce your expenses. According to the Financial Disability Alliance, 40 percent of adults over the age of 50 have not begun saving for retirement. Moving into a smaller home could provide a financial boost by decreasing housing costs, lowering maintenance fees, reducing utility bills, and reducing mortgage payments.
Lower maintenance fees.
If you’re dealing with a large property and lots of costly landscaping, you may want to consider downsizing to a smaller home with less upkeep. A smaller yard means fewer costs, and less upkeep overall. Choosing a home with less square footage can help lower maintenance fees as well as utility bills.
Lower utility bills.
A smaller home means fewer utility bills. If you’ve had recurring high-cost bills, downsizing to a smaller home can reduce those costs. – Lower mortgage payments. If you’ve refinanced your mortgage or have a low-interest rate, moving to a smaller home can help you reduce your monthly payments. You may even be able to refinance your mortgage again to get a lower rate or pay off your mortgage faster.
Decluttering and downsizing your home can help you make some extra money, save money, and have a less stressful home. You can also make your home more appealing to potential buyers by making some simple changes. If you’re struggling with a large mortgage payment or high-cost bills, it may be a good idea to consider downsizing your home.