3 Signs It's Time to Downsize

Delaying downsizing even a few years could cost you tens of thousands of dollars or leave you unable to move on your own owing to health or mobility issues. So, once you've decided "if" you'll downsize, the next significant decision is "when." If any of these 3 telltale signals that it's time to downsize ring true for you, don't waste time sitting in uncertainty and sentimentality—get moving!

1. You no longer need as much space

Bigger doesn't always mean better when it comes to your home. If you can't recall the last time you walked inside your guest bedroom other than to dust, you might have more space than you need. These extra rooms could be a waste if they only collect dust. Unused rooms continue to cost money, not just in property taxes and future upkeep (leaky roofs, peeling paint, etc. ), but also in the amount of energy consumed to heat and cool them.

2. Your monthly housing costs have surpassed 30%

The ideal number to spend monthly on housing expenses should be right around 30%.

No, we didn't pick that number out of thin air—since the United States National Housing Act of 1937, the government has used 30% as the threshold for housing affordability. Since then, any household spending more than 30% of their income on housing has been considered financially burdened.

Housing prices may fit nicely within your budget while you're still working. However, the very act of retiring can push some retirees into the "burdened" category. As expenses rise and income declines in retirement, housing costs become more burdensome. While downsizing will save you money in the long run, you must be prepared for the costs associated with moving.

There are repairs on the house before selling, moving expenditures, closing costs, and upgrades on the new place—these expenses may exceed the specified budget amount in the short term, but downsizing can reduce monthly debt and increase monthly cash flow in the long run.

Staying in your home for longer can mean a lot of wasted money on maintenance. Whether you do the work yourself or hire someone to do it, you must ensure that your home is cleaned, maintained, and paid for. If you've been overwhelmed or simply believe you could be doing more with your time or money it might be in your best interest to think about downsizing.

3. You want to cash in on your home's equity

Unsustainable expenses, as we discussed before, are a sign that it's time to downsize. However, even if you're doing well now, you might want to consider selling a home that has continuously increased in value over time. Perhaps you want to plan for your retirement or check some items off your bucket list. Whatever you choose to do with it, cashing out and downsizing can allow you to put your equity to work for you.

In Conclusion

It may be hard to let go of the place where you created so many wonderful memories, but when it feels like it's a good time to downsize, you should seriously dedicate some time to weigh your options. If you would like some guidance on which direction would be best for you, we are happy to help. You can contact us through the form below or call us directly at (512) 261-1000.