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If you believe that moving up in life means purchasing a larger home, it may be worth reconsidering. Many families can downsize their home without compromising too much.
When you look at the numbers, the average new single-family home is 2,700 square feet according to Census data. Although this may not seem too big, it is worth noting that in 1950, the average home size was less than 1,000 square feet, and families were bigger then. In comparison, today's homeowners are living in significantly larger homes. Even though downsizing may seem like a step down, upon closer inspection, there are numerous benefits. |
Less Is More
Sometimes, having less can actually be more. When it comes to downsizing, it's natural to worry about where you'll put all your belongings. However, downsizing can actually help you simplify your life and free up time and money for other things. By getting rid of items you haven't used in years, you can have a garage sale or use Facebook marketplace to sell them and declutter your space. A smaller home means less space to maintain, which can save you time, stress, and money. With less upkeep to worry about, you might even find yourself with more time to pursue a new hobby or activity you've been wanting to try.
Take a look at these numbers
Consider this: if you're still not convinced about downsizing, what if you could reduce your mortgage payment by $500 per month and use that extra cash to achieve other financial goals?
Here are just a few of the accomplishments you could achieve:
Pay down your Debt:
Downsizing your home can help you pay down your debt faster. For example, let's say you owe $18,000 on your student loan with a 6% interest rate and a minimum payment of $200 a month. If you continue making only the minimum payment, you'll be paying on that loan for another 10 years. However, if you downsize your home and redirect the money you save towards your student loan, you could pay an additional $500 on that same loan each month. By doing so, you would cut seven years and eight months off your payoff date, and you would be free from student debt in less than two-and-a-half years!
Increase Your Retirement Fund:
That's right! Investing an extra $500 a month can make a significant difference in your retirement fund over time. By taking advantage of compound interest, you can potentially earn a lot more than just the $6,000 per year you invested. The longer you invest, the more time your money has to grow. So, if you start investing $500 a month in your retirement account now, and continue doing so for 30 years, assuming an average annual return of 8%, you could potentially have between $1 million and $1.6 million saved up for retirement. That's a significant amount of money that could help you enjoy your golden years without financial stress!
Pay Off Your Mortgage:
Paying off your mortgage early can provide you with a lot of financial freedom and security. By downsizing your home and applying the savings to your mortgage payment, you can reduce the amount of interest you pay over the life of your loan and potentially pay off your mortgage much sooner than expected. This can give you more flexibility in retirement and allow you to allocate more of your income toward other goals like travel, hobbies, or charitable giving.
Is Downsizing Right for You?
If you're considering downsizing, start by assessing your current needs and lifestyle. Determine what features and amenities are must-haves in your new home, and what you can do without. Consider the location and proximity to amenities, transportation, and community. Then, evaluate your current home's value and what you could realistically sell it for. Finally, consult with a financial advisor to see how downsizing may impact your overall financial plan. With this information in mind, you'll be better equipped to make an informed decision about downsizing.
If you're interested in downsizing but aren't sure where to begin, reach out to us today for guidance and support. Contact us today!
Sometimes, having less can actually be more. When it comes to downsizing, it's natural to worry about where you'll put all your belongings. However, downsizing can actually help you simplify your life and free up time and money for other things. By getting rid of items you haven't used in years, you can have a garage sale or use Facebook marketplace to sell them and declutter your space. A smaller home means less space to maintain, which can save you time, stress, and money. With less upkeep to worry about, you might even find yourself with more time to pursue a new hobby or activity you've been wanting to try.
Take a look at these numbers
Consider this: if you're still not convinced about downsizing, what if you could reduce your mortgage payment by $500 per month and use that extra cash to achieve other financial goals?
Here are just a few of the accomplishments you could achieve:
Pay down your Debt:
Downsizing your home can help you pay down your debt faster. For example, let's say you owe $18,000 on your student loan with a 6% interest rate and a minimum payment of $200 a month. If you continue making only the minimum payment, you'll be paying on that loan for another 10 years. However, if you downsize your home and redirect the money you save towards your student loan, you could pay an additional $500 on that same loan each month. By doing so, you would cut seven years and eight months off your payoff date, and you would be free from student debt in less than two-and-a-half years!
Increase Your Retirement Fund:
That's right! Investing an extra $500 a month can make a significant difference in your retirement fund over time. By taking advantage of compound interest, you can potentially earn a lot more than just the $6,000 per year you invested. The longer you invest, the more time your money has to grow. So, if you start investing $500 a month in your retirement account now, and continue doing so for 30 years, assuming an average annual return of 8%, you could potentially have between $1 million and $1.6 million saved up for retirement. That's a significant amount of money that could help you enjoy your golden years without financial stress!
Pay Off Your Mortgage:
Paying off your mortgage early can provide you with a lot of financial freedom and security. By downsizing your home and applying the savings to your mortgage payment, you can reduce the amount of interest you pay over the life of your loan and potentially pay off your mortgage much sooner than expected. This can give you more flexibility in retirement and allow you to allocate more of your income toward other goals like travel, hobbies, or charitable giving.
Is Downsizing Right for You?
If you're considering downsizing, start by assessing your current needs and lifestyle. Determine what features and amenities are must-haves in your new home, and what you can do without. Consider the location and proximity to amenities, transportation, and community. Then, evaluate your current home's value and what you could realistically sell it for. Finally, consult with a financial advisor to see how downsizing may impact your overall financial plan. With this information in mind, you'll be better equipped to make an informed decision about downsizing.
If you're interested in downsizing but aren't sure where to begin, reach out to us today for guidance and support. Contact us today!
