Stress Management: how to Know when It’s Time to Downsize

#1. Your Kids Have Moved Away

When children go away to college, the parents undergo a transition process and part of that process may include downsizing to a smaller home. Downsizing offers financial flexibility and stability as well as fewer responsibilities and expenses. The idea of simplifying life and having more money for travel, upgrades, and financial freedom makes downsizing appealing to couples in their 50s. Some people want to be closer to their grown children and grandchildren or simply live in a warmer climate.

Some empty nesters choose to downsize to cities or active suburbs where they have close access to shopping, dining, cultural events, and public transportation. According to a 2013 study by the Urban Land Institute, 72 percent of Baby Boomers said they would rather live in a smaller home with a short commute than live in a large home with a long commute. Some empty nesters opt for resort-style living in a patio home or condominium at a golf community. Their maintenance is covered and they're around others with common interests (golf) who are at the same stage in life. Many of these communities have active social groups.

#2. The Mortgage Payment Exceeds 30% of Your Income

First of all, take the time to calculate your debt-to-income ratio. You can use an online DTI calculator, or you can calculate it yourself. The debt-to-income ratio, or DTI, is the amount of monthly debt you owe compared with your monthly gross (before tax) income. If you have a DTI that exceeds 30 percent, then you may want to consider downsizing. There is some debate on how much is too much. Dave Ramsey suggests not exceeding a DTI of 25% while many lenders suggest staying under the 30% mark. Sometimes a lender will approve a loan to someone with a DTI as high as 43 percent, but there are usually other financial components needed for loan approval.

#3. You Realize You Can Move into a Nicer and Newer Home

Many people think that new construction homes are out of reach for their budgets. Homes with around 1,500 square feet are available for prices similar to older larger homes. So, it is possible to sell your current larger home and take the proceeds from the sale and purchase a smaller brand-new home, perhaps even for cash.

The Benefits of Home Downsizing

Greater Cash Flow

This is one of the main reasons people choose to downsize. Having money left over each month to pay for needs and desires makes your life easier and happier. You could even pay cash for the smaller home from the profit of selling your existing home. Being free of a mortgage altogether reduces your financial burden and allows you to buy items you’ve always wanted but never could afford.

Fewer Household Chores and More Time to Golf

With a smaller home, you’ll have fewer household chores and more hours in the day to do the things you enjoy like golf, traveling, or relaxing at the beach. Smaller homes have less space to clean and maintain.

Less Costly Utility Bills

Smaller living space means fewer areas to heat or cool. Many people who own large homes with vaulted ceilings struggle to meet their expensive utility bills each month. The smaller square footage of a downsize home will translate into lower energy costs.

Less Space Will Reduce Consumption

If you don’t have space, you won’t buy unnecessary items. This means you’ll be spending less money on consumer goods and items that you don’t need.

Less Stress

The smaller your home, the less responsibility and maintenance. You’ll have more money available to do the things that make you happy. This reduces stress. Money problems and hectic schedules are often the main causes of unhappiness. You can avoid that stress by downsizing to a home and budget that’s more manageable and financially liberating.

Brand New Home

Owning a new home, you’ll have the finest and latest appliances, countertops, and fixtures. This will seem like a luxury although the home is smaller. This also translates into fewer things to fix around the house.

The great thing about buying a new construction home is that you feel as if you have more usable space. These homes often have spacious open floor plans not to mention energy-efficient features. So, you can save energy as well as space. This is important because many people are often concerned that a smaller home will mean less space to entertain for parties and get-togethers with friends. Many newly built homes come standard with spacious kitchens. You can use a large kitchen island for casual dining and leave your dining room for formal events or for another purpose entirely. New construction builders will work with you on choosing the right floor plan for your requirements. Make sure to ask the builder for a floorplan beforehand so you can plan out how much space you’ll need in each room for your furniture. Also, ask the builder about flex room options in the floorplan.

How to Downsize without Stress – 3 Easy Steps

Work with a downsizing specialist to find the perfect home

To make your transition and moving process smoother and stress-free, consider hiring a downsizing specialist. Some real estate agents specialize in downsizing, so ask the realtors you interview if they offer this service. If not, there are people who do this for a living. They can help you plan your move by creating room layouts, sorting, disposing of documents, packing, selling your items, donating, disposing, recycling, organizing, and more. Also, they can advise you about choosing the best floorplan for your needs.

Determine the space of the new home and get rid of what you don’t need

Decide on how many bedrooms you want in your downsized home. Do you want space for visitors or grandchildren? Do you want enough storage for old keepsakes? This is a good time to determine what you really need to hang onto. Decluttering is one of the hardest things to do in the downsizing process. It’s difficult to part with so much of your past, but you’ll end up having to donate or give away some of it in order to downsize. Try to focus on the future goals you plan to pursue. This will help you push forward through the decluttering process. If you feel rushed, then consider renting a storage unit to hold items that you need more time to ponder.

Remind yourself that change is good

When you start to doubt your decision, think about the benefits of downsizing and the goals you had in mind for the future. Perhaps you wanted the freedom to travel to all those places you dreamed of but never had the money to do so. Maybe when you sell your larger home and purchase a smaller one, your dreams of world travel will be a reality. Your mortgage and utility bills will be lower.

Other benefits to remind yourself of are: less maintenance, less space to clean, lower utility bills, better school system for kids, new construction, shorter commute, good walkability score, good neighbors, and more.

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