Before downsizing, it is important to establish why you need to downsize as it relates to your current lifestyle.
Perhaps you have no need for the additional space, or maybe you need a residence that is better suited for your finances. Knowing when to downsize to a smaller residence can come at different stages during your life as your needs change, so it is important to weigh all your reasons carefully before making the decision. Whatever the case may be, you should determine your lifestyle needs and downsize accordingly. Ask yourself what is most important about this move and how it will affect your life and your future.
There are many people that are finding themselves in homes that are larger than they imagined. Many times people find themselves buying a home for a potential family. This home is for the children to grow up comfortably and have their own space, but when the kids move out, people are left with empty rooms. Whatever the case may be, you should ensure that your decision to downsize works well with your current lifestyle or the lifestyle you are trying to obtain.
As stated above, a large part in homeowners choosing to buy a big home deals with the idea of a growing family. When the kids move out for college or to start their lives, it typically leaves additional bedrooms available that are not being used. These rooms still have to be cleaned and the spaces are still being heated and cooled while no one uses them. Because the kids have moved out, your lifestyle has definitely changed when it comes to your living situation. Downsizing will allow you to live in a cheaper home without paying utilities or fees for rooms that are not being used. Since you no longer need the four or five-bedroom home, consider something smaller that still feels right for your lifestyle. Money is a huge factor in knowing when it is time to downsize to something smaller.
The expenses in a large home could be a struggle to maintain, which is why it is a major factor in knowing when it is time to downsize to a smaller space. When you have a large home, it is typically more expensive to maintain and insure. Your property taxes will cost more as well. If you are looking to change your lifestyle in hopes of saving some extra money, know that a smaller home will save you money on these monthly and yearly costs. You can also expect bigger homes to have higher utility costs. Higher payments get in the way of what you want to potentially be doing with your money. For example, if you are close to retirement, it could take you longer to reach that goal because of the costs of a bigger house. If you are already retired, being able to save this money can make your additional retirement income go a lot further.
In the event that your home is already paid off or you have a good amount of equity in your home, there is still a chance that you can sell your home, buy a smaller one in a less expensive area and still have a nice amount of money left over.
Your lifestyle can have a lot to do with where your home is located. For instance, if you live near parks, you may go on more walks. If you live in a city, you may stay inside more. Take this into account when determining the value of the house you are trying to sell. If your surroundings are a large part of your lifestyle, you should look into smaller homes in a similar area. This will create a way for you to still enjoy the same activities you did before downsizing. Selling your home and downsizing to something cheaper will help you save more money, allowing you to spend money on other things. If retirement is a goal, invest the money in retiring.
For the financial aspect of your move, be sure to stay up to date with the real estate capital gains tax. This tax stipulation helps homeowners because you can exclude up to $250,000 in profit if you are single and $500,000 if you are married.
One reason you may consider downsizing your home could be the amount of maintenance your large home requires. If you have a large home, as well as a large yard, it probably takes a lot of work to maintain. Mowing the lawn and cutting the grass can become a huge hassle that only gets worse for your body as you age. While outdoor chores are strenuous, indoor chores can have the same effect in a large home.
If you are looking to do less work in your home, downsizing is an ideal option. Outdoor activities like raking leaves may seem easy for a younger individual but if you are 60 years of age or older, the chore can be tiresome. There is the option of paying someone to take care of these landscaping and household chores, but it could get very expensive. Either option, whether you are paying for services or doing it yourself, presents different situations that you may be trying to avoid.
With a smaller home, there is less space, meaning that it will take less effort to maintain and keep up with. If you want to eliminate the outside work all together, consider downsizing to a townhouse or condo. The exterior work is usually taken care of by a management company. Depending on your lifestyle, you should research which would be better fitting for you between a smaller home, condo or townhouse.
When deciding how you would like to downsize, it is important that you consider what parts of your lifestyle you want to keep and what you want to change. If money is your main reason for downsizing, then you should choose a place that is much cheaper. If space is the reason, you should choose a much smaller space. It is important to keep in mind the activities you enjoy doing when looking for a smaller place. What brings you joy should have a lot of influence over how you downsize and where you move to. Although downsizing is not for everyone, the benefits of downsizing can enrich your life.