Downsize and Reduce Home Costs

(Keyword: frugal ideas). This article should address the economic considerations of home downsizing. It should emphasize the cost-saving opportunities that home downsizing presents.

The enviable benefit of home downsizing is cost downsizing. Virtually all the major living expenses tied to the home are cut, but only if the downsizing is well planned. These cost reductions can be seen in the mortgage payment, utilities, property maintenance and overall living expenses. No doubt the cost factor is the primary driver for most people pursuing the downsizing option. A new survey conducted by Better Homes and Gardens magazine found that price, energy-efficiency, organization and comfort are the top priorities for home buyers. The survey noted that the downsizing or "right sizing" trend will continue, with more consumers expecting their next home to be "somewhat" or "much smaller." Cost savings was listed as a high motivator.

The largest potential money saver is a reduced mortgage payment. Month in, month out, the mortgage payment is generally the largest single expense that consumers face. Average mortgage payments amount to about 30 percent or more of homeowners’ gross income, sometimes reaching as high as 50 percent of their net income. Living in a smaller house can result in slashed mortgage expenses. Wise investors take what they save monthly and use the extra cash flow—or at least a portion of it—to invest in secure areas. Mortgage expense savings are also seen in the interest savings over the term of a mortgage. Selling a home and getting something more affordable in today's market can be a challenge, as sellers won’t likely get as much for their home as they would have before the housing market bust. That said, the lower housing prices make it possible to buy the replacement home for a bargain.

Smaller homes also generally require less to heat and cool. The energy savings in electricity for powering fewer and smaller appliances is another source of cost reduction. With fewer square feet and cubic feet to energize, better cash flow is virtually guaranteed. Maintenance is another area that can be cut down, because less property to maintain translates into less money spent. No more landscaping or lawn care service bills. A smaller driveway—if any—needs resurfaced. Fewer and smaller rooms need repainted. Less floor area of carpet needs cleaned. The list goes on.

There are also times when downsizing does not make sense from a financial standpoint. For example, it is not advisable to sell your home in a down market and buy in an up market. One scenario that stacks the odds in favor of a loss is selling a spacious home in a less-expensive rural area and purchasing a smaller home or condo in a more-expensive city. Those considering downsizing and moving from large to small should also understand that smaller homes like condos and townhouses often come with fees, such as association and maintenance fees. Always check these out before making the move.

When the decision to downsize does make dollars and sense, once in the smaller space, homeowners find that utilizing every square foot of living space is essential. This comes with an inherent efficiency of living arrangements, which leads to an overall reduction in living expenses. For example, in the area of collectibles or objets d’art, it is no longer logistically practical to purchase an item strictly for its consumer appeal. The practice of one thing in, one thing out comes into play. For some, this is too drastic a lifestyle change, but it is a reality that must be considered. The good news is that cutting down on the extras cuts down on costs, with dramatic savings over time.


Want to learn more about the average price build house and how home downsizing can save you big money? Visit my website at http://www.thesmallerhome.com.

Andrzej Kozlowski has written numerous articles on topics ranging from home downsizing to simple living. He is also editor and co-author of the book, "Living Smart: The Money Saving, Eco-Friendly Guide to Downsizing Your Home and Belongings."