One of the biggest advantages of downsizing is the ability to reduce expenses and create a life free from financial worries (or at least reduce the worries!) For most people, their housing costs are the single largest money expenditure each month.
Many financial advisors are comfortable recommending paying up to 25%-30% of your household income on your home. This might be financially feasible, but it can also trap us on the work to live treadmill.
Before I downsized, my monthly housing expenses were around $1,300 a month for my mortgage, taxes, insurance, home owners association fees and electricity. Now I pay about $700 a month for my Tiny House mortgage, my RV spot (which includes utilities) and insurance.
The best part is I was able to rent out my previous home for more than $400 a month positive cash flow. In effect my living expenses went from $1,300 a month to $300 a month. What would you do with an extra $1,000 a month?
By reducing the number of square feet you have to buy (or rent), you cut living costs in terms of mortgage or rent. But this isn’t the only way you save. By reducing the number of square feet of your home you also reduce the amount of money it costs to heat or cool your space. Smaller spaces use less power by virtue of fewer lights, electronic gadgets and power sucking appliances, which means smaller power bills. Smaller spaces are also typically cheaper to insure and maintain.
An added and unexpected financial benefit of smaller spaces is shopping less. I shop less now that I am in a smaller space because I have less room and because I need less to make my house feel like home. Less shopping frees up time and money each month.
Before I lived in a small space I typically spent an hour or two each week at Target and the grocery store. In an average month, I spent $300-400 on home projects, groceries and “things” to make my house feel like a home. But now that I have less space I am much more intentional about my shopping, which has saved me money and reduced the number of hours I spend at stores.
Reducing living expenses by downsizing allows you to spend less, pay off debt faster and free up extra money to spend on the experiences that add value to your life.
Easier to Maintain
Most of us don’t love cleaning and maintaining our homes. Sure, we might get a sense of satisfaction from a nice clean kitchen or bath or an organized closet, but most of us don’t love spending the time we have to maintain our homes. I am a professional organizer and OCD and I don’t even love the cleaning process!
Smaller homes are easier to clean and maintain than their larger neighbors. Downsizing means you spend less time and money actually keeping up with your living space. Because they are easier to maintain, smaller spaces are a great way to simplify your life.
A simplified life allows you to spend your time doing the things you really enjoy. Rather than focusing on maintaining a home, you have time to enjoy life.
So why is saving money and time in a smaller home exciting? I think most of us would like to have a little more wiggle room in the budget. The ability to spend money doing fun things rather than paying for a house is exciting and the fact that a smaller space frees up time means you will be able to do the fun things you love.
Downsizing gives you more free time. No, downsizing can’t actually give you more hours in the day, but it can reduce the number of hours required to maintain your home both in terms of how many hours you have to work to pay for it and how much time it takes to maintain.
This weekend I spent my Saturday doing a high ropes course, which was a great experience that I will remember for years. In my old house, I spent most Saturdays cleaning and preparing for the next week at work rather than having fun.
What would you do with more time and money?