by Dana George | Nov. 19, 2019
It doesn't matter if you rent or own your home. If you are a prisoner of high costs or too much stuff, downsizing might be the answer.
What's the first image that pops into your mind when you hear the word "downsize?" If it's a couple of empty nesters whose kids have flown the coop, it may be worthwhile to take a closer look at the benefits of moving into a smaller living space -- at any stage in life.
Reasons for downsizing vary, from getting in too deep financially to wanting more money for investments. Whether you rent or own your home, if you can relate a bit too closely with any of these five points, it may be time to move.
There's an interesting contradiction in today's housing market: Average Americans cannot afford a median-priced home in more than 71% of U.S. housing markets, and yet 64.8% of us own our homes. Which suggests that many homeowners may own houses they can't afford to live in over the long term.
How do you know that you can't afford your current home? If your housing costs exceed 30% of your gross income, it's a sign you're in too deep. If you're a renter, that 30% should include rent and utilities. And if you're an owner, it should include your mortgage, insurance, property taxes, and maintenance.
It may be tempting to think that someone just pulled the 30% figure out of their hat, but it's the standard that has been used by the U.S. government since 1981. Here's why: Historically, those who spend more than 30% of their income on housing are what the government calls "cost burdened," and those who spend 50% or more on their housing are called "severely cost burdened." That's because it's these folks who have the most trouble keeping up with their payments and saving for the future.
One thing we should all be saving toward is an emergency fund. The problem with emergencies is that you don't know for certain how much they will cost, so you need to set the bar high enough to cover whatever reality brings your way. Most financial experts say that an emergency fund should contain enough money to live on for three to six months, enough to sustain you if you become ill or lose a job.
If, no matter what you try, you can't seem to put away as much money as you should, it's time to look at how much of your income is siphoned away by housing costs. An easy way to know for sure is to journal your expenditures for two months. If costs like heating or cooling your home, making repairs, or rising property taxes are costing money that should go towards savings, it's time to consider a new living situation.
If you've been renting for years but are ready to take the plunge into homeownership, you may discover that you can purchase a smaller home in your city for the same monthly payment you're making toward rent. There's no reason to view downsizing as a negative. It may just be a way to move you closer to your goals.
It's easy to imagine yourself in a new situation, to invent what life might look like if only it was different. If you've ever purchased a home due, in part, to its gorgeous gardens, you know that you must care for those gardens once the property is in your name. If you have ever lived in a drafty, three-story home because it's a historical darling, you understand the reality of cleaning all those rooms and heating spaces you never intend to use.
It's good to try new things and to explore where you belong. But if you've made a miscalculation regarding where you're happiest, now would be a good time to simplify your life. Perhaps it's time to move into a place that realistically reflects how much you want to invest in your living space.
It hits most of us at some point of life, the feeling that we will scream if we have to dust one more tchotchke or rearrange one more pile of junk to make it look more presentable. The people of Sweden -- declared one of the happiest countries in the world by the World Happiness Report -- have a practice called lagom (pronounced "la-gum"). Lagom focuses on finding a healthy balance in life, or everything in moderation. It doesn't mean restricting yourself, but rather avoiding excess.
If the idea of getting rid of all the stuff that you've been moving around for years appeals to you, it may be time to live your own version of lagom. Sell or donate what you don't absolutely love or need. Find a home that leaves you time -- the most valuable of resources -- to do what you want to do with your life.
Somewhere along the way, we Americans got the idea that bigger was better, even if taking care of that bigger place made us miserable. When you find yourself realizing that you'd rather have less stuff and more time, you know it's time to think about downsizing.
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