Time to downsize

Don’t tell my neighbors, but I wouldn’t mind selling my house at today’s over-inflated prices. The problem would be convincing my wife that living in a tent camper could be the adventure of our lifetime. No, I just don’t see having that discussion right now.

On the other hand, most of us will reach a point somewhere in our lives when moving to a smaller, more efficient home makes a lot of sense.

Reasons to consider downsizing:

• It might save you money. If you still have a mortgage, selling your home and moving to a less expensive one might allow you to get out of debt and leave you with a profit. Your living expenses might fall as well, giving you more money to travel or do other fun things.

• It could be more manageable. Cleaning and maintaining a house that’s bigger than you need – not that I have any personal experience in this area – becomes increasingly unattractive after a while.

• A new home might suit your lifestyle better. Maybe you don’t want to mow an acre of lawn or shovel snow off a driveway the length of a football field anymore. Maybe you don’t want to climb a flight of stairs to go to bed every night. A new home might shrink or even eliminate those tasks.

• You might be able to work from home. Downsizing isn’t just for retirees. If your employer doesn’t require you to come into the office anymore, you can live just about anywhere you want.

Potential stumbling blocks:

• It’s easy to overestimate what your current home is worth. I realize that your home is the nicest one in the subdivision, but that doesn’t mean it will sell for 30% more than the neighborhood average. And you can’t go by what you see on Zillow.

• It’s also easy to underestimate what your next home will cost. Be sure to factor in property taxes, association dues, renovations, and other expenses compared to what you’re paying now.

• Moving costs money, too. You’ll pay commissions if you sell through a real estate agent, plus closing costs. And then there’s the move itself. According to com, the average cost of a local move is $1,250, and a long-distance move can easily top $5,000.

• You’ll have to downsize your possessions. Getting rid of junk is a good thing, but finding room in a smaller home for all of your cherished possessions can be a challenge. Just ask anyone who’s moved into a senior housing facility. You’ll be faced with some agonizing choices, and believe it or not, your kids don’t want your stuff.

When clients ask me about downsizing their homes, I advise them to focus on the non-financial aspects of making a move first. Will it get them closer to family? Will they have better access to the services they need? Are they closer to quality medical facilities? In short, I want them to be convinced that their lives will be better, not just less expensive.

Then we talk money. If their new lifestyle will cost more, let’s figure out how best to pay for it. And if they stand to come out ahead financially, what’s the best use for those savings? Finances are important, of course, but we’re talking about where you might spend the rest of your life, and there’s a lot more to it than dollars and cents.

Full confession: Tammy and I actually did “downsize” a few years ago to be closer to our family. We downsized our home by 20%, the lot it sits on by 50% - and still paid more for the smaller home than the larger one we sold. Thankfully, no tent campers were involved.

I would never make it as a house-flipper.