Downsizing is a popular topic among real estate professionals and has been the focus of the financial community. The financial aspect of downsizing your home is complex and can be looked at from many different angles. The first thing that comes to mind is that you will be saving money if you decide to move to a smaller home. Secondly, your expenses will reduce, and the possibility to invest that extra cash will increase. Therefore, looking at downsizing as a chance to explore some new financial options might help you accept that you will be living in a smaller space. With that said, here are a few money tips for downsizing your home.
There are many reasons people decide to downsize their home
It comes a time in a person’s life when they realize that owning a large home doesn’t have the benefits it once used to. Maybe you are nearing retirement. Or you might be sending your kids to college this year and experiencing an empty nest syndrome. You might even be tired of all the expenses and maintenance costs you have to account for year after year. Still, remember that buying a home is better than renting. The only thing you need is a smaller property that will eliminate some of the negatives you have been experiencing about your sizeable 5-bedroom house.
When you decide to downsize your home, you will undoubtedly experience some financial benefits. Those will include:
- Lower mortgage payments
- Smaller maintenance costs
- Lower utility bills
- Fewer insurance costs
- Lower real estate taxes
With such a reduction of your monthly and yearly expenses, you can expect quite a lot of savings. And there are at least five money moves to consider when you are generating more savings. However, how you decide to invest the funds is entirely up to you. You might even put it in a retirement fund or treat yourself to a nice vacation. So, before you decide, spend some time thinking about it and coming with the best plan that will suit your needs.
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One of the best money tips for downsizing your home is to beware of hidden costs
Once you decide to put your house on the market and look for something smaller, you have to start planning. Sit down with your family and discuss the whole situation. What will happen, when, and how will it impact your family budget and financial situation? You have to be aware that selling your house and moving to a new one comes with certain costs. First, you have to pay for home improvements, repairs, and renovations needed to get the best offer for your home. These can add up to a pretty sum, so be vigilant and construct a budget before anything.
Another expense is moving. Relocating your entire household can be quite a costly endeavor. It is imperative to handle this in an affordable way and get professional assistance from experienced moving specialists. Of course, there are many ways to save some money when relocating. But, to achieve this, you have to be highly organized and a bit creative. Start by choosing an off-season moving date and the right moving company. Then, continue with a sound moving plan and finish by decluttering your home and selling all the excess stuff to reduce the relocation costs and put some extra cash in your pocket.
A reduction in your monthly mortgage payment can help pay off your debt
We all have some debt. Some of us have been struggling with paying our student loans, while others are constantly juggling to pay their credit card bills. Wouldn’t it be great if you had some extra funds each month to go towards paying off some of your long-term or short-term debt? With downsizing to a smaller home, you will reduce your monthly mortgage costs and will be able to put some of that money into your debt payment plan. You might be thinking of closing that student loan or reducing the number of years on your new mortgage. Another good option would be clearing your credit card debt and lessening some of that financial burden of adulthood.
Boost your retirement fund once you get out of debt
If you manage to plan your moving expenses, get a fair price on your home, and buy a smaller one, you will most certainly reduce your mortgage and living costs. If you put some thought into this and consult a professional, you can even plan towards financial freedom and add to your retirement fund. An excellent way to invest the increase in savings is into your future. You have already decided to move into a smaller place, reducing your debt to a minimum, and you can begin to add significantly more towards your golden years’ fund. Think of all the possibilities and opportunities that await. You can travel, start some new hobbies, learn new languages or spend more time with your family.
Downsizing makes perfect sense when you know what the benefits are
Your reason for downsizing might not be linked with your finances but will undoubtedly have an impact on them. It would be foolish not to consider the financial possibilities when faced with much lower monthly and yearly expenses. If you invest some time into this matter and get acquainted with money tips for downsizing your home, you will surely find a creative way to support yourself well into the future. Whether you choose to go debt-free or add to your retirement fund, be sure to get the best possible price on your current home. That way, you will be able to work towards financial freedom while at the same time getting used to living in a smaller, cozier setting.