If you’re struggling with your budget or hoping to avoid foreclosure, you’re likely thinking about downsizing to a smaller home. Downsizing simply refers to moving to a smaller home or property. For most people, this means selling a larger, more expensive house for a smaller, less expensive property.
If you think you know all there is to know about downsizing, here are a few myths that might have tripped you up.
Myth: Downsizing is always about saving money
While money certainly plays a factor in why people choose to downsize, that’s not the primary reason they downsize for many homeowners. There are many reasons to choose a smaller home or property, including less maintenance, health issues, a simplified lifestyle, and less responsibility, so they travel more. In fact, some people choose to move to a smaller space in a larger city with access to better amenities for more money.
Further, selling your home might not yield as large a profit as you’d like. You should find out how much your house is worth compared to similar properties in the area to help you determine if downsizing will offer any financial benefit.
Myth: Downsizing is only for people of retirement age
Anyone can downsize. You might have noticed a tiny home trend if you’ve watched any HGTV in the last decade. Many homeowners are swapping out their larger homes for smaller living spaces. It’s not uncommon for young couples with small children to downsize to a smaller space to simplify their lifestyle to allow for more freedom in how they spend their time and money.
Myth: Everyone should downsize when they reach retirement age
Just because you’ve reached retirement age doesn’t mean you have to give up the home you’ve spent years paying off. If your house fits your lifestyle and makes you happy, you’re under no obligation to downsize. If you can afford to stay in the home and continue maintenance on your home and property, you may not see a reason to downsize. If you have additional rooms or space, you may even consider renting out the space for extra income each month while staying in your larger home.
If your instant response to downsizing is, “I don’t want to sell my house,” you might want to consider other options.
Myth: Downsizing means living in a tiny house
Most people think that when a homeowner downsizes, they’ll end up living in a tiny house. While you could certainly opt for a very small home, apartment, or condo, you might downsize into a similar-sized home on less property. Some homeowners opt for a slightly smaller home with one floor instead of two. While the living space might be a little smaller, the layout might provide more functionality for someone with health needs, so it works better.
Myth: You’ll need to get rid of all your belongings to downsize
This one isn’t a myth, so much as a misconception. You will likely need to declutter, and you may need to get rid of some things to fit into your new space. However, just because you choose to downsize doesn’t mean you have to live in an empty space. Downsizing for you might just mean one or two fewer bedrooms or a similar-sized home with no yard. Additionally, if you have items you want to keep, you might choose to build a garage or pay for a monthly storage unit to keep your smaller space clutter-free.
Myth: Downsizing will always reduce your property taxes and/or utility payments
Many people think that downsizing will always save them in all areas of homeownership. Unfortunately, the cost of property taxes and utilities can vary widely depending on what part of the country you live in. If you relocate to a city or state with higher property taxes and utility rates, you may not save much on these expenses.
Myth: Downsizing takes a long time
While downsizing does take planning, it doesn’t have to be a huge ordeal. Moving to a smaller home doesn’t take longer than the traditional buying process. You may need to put a little more effort into rehoming or selling items. Still, with a bit of planning, downsizing won’t take you any more time than any other move.
Myth: Downsizing is the only way to save money
While downsizing can help you save money, it’s not the only solution. If you don’t want to sell your home, there are plenty of other ways you can reduce your monthly budget. Some things you can do to increase your liquid assets include:
- Creating a strict budget (every dollar is accounted for)
- Take on a side gig
- Ask for a raise
- Sell items you don’t need
- Reduce utility expenses with more energy-efficient windows or appliances,
- Talk with a tax attorney to see if you qualify for additional tax breaks you may have missed in the past
- Invest in real estate
- Cash-out of investment properties
- Eat at home more often
- Check for lower quotes on home and auto insurance
While downsizing to a smaller, less expensive home may be the simplest way to cut your monthly budget by a lot, making small changes can add up too.
How many of these myths have you believed in the past?
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