If you’ve been struggling with debt, or if you find that you are having trouble making ends meet, the solution to your cash flow crunch might be right under your nose. Have you considered downsizing your home? Downsizing your home can reduce your monthly spending in a big way. However, there are possible lifestyle sacrifices and potentially hidden costs to this move. Do they balance out for you?
“Your monthly mortgage payment is likely one of your biggest costs month-to-month. It stands to reason that if you can reduce that payment, you’ll be able to have extra cash to attack debt, build up savings or meet other expenses,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“While it’s definitely cheaper to live smaller, make sure that any lifestyle changes in downsizing make sense. It may be counterproductive to move further away from work or from family and friends who offer you support and help,” says Schwartz.
Here are some things to consider if you are thinking about downsizing your home.
Less is more
The mantra of minimalist living refers to a décor style, but it is good advice if you are trying to get more mileage from your monthly budget as well. If you reduce your “stuff,” you’ll reduce your need to store it. You’ll also shift your spending attitude away from accumulating things that you don’t need- which may be a by-product of overspending.
How much of your home right now is overrun with “stuff”? Take a look at where you live, and consider what it might be like if you eliminated a third or more your belongings. How much space do you actually need for you or your family? Don’t pay for storage; pay for actual living space.
The cost upside
In addition to reducing costs through your mortgage, you’ll save on utilities. The costs of heating and running electricity in a large home can be substantial. And think of it. If you have space in your current home that you don’t really need, you are essentially throwing money away to service it.
Your property taxes will likely be lower as well. Chances are your home insurance premiums would decrease too.
Make a smart choice
Don’t forget other costs that could factor in and erode any cost savings you might have at the outset. For instance, does the location of your new home require a longer commute? That will cost you more in gas and car maintenance, or more on public transport.
What about childcare? Does that have to change if you move, and is that another cost?
Don’t forget about things like condo fees, parking or community association fees when calculating your overall cost savings.
Are you looking for ways to stretch your budget? Are you living paycheque to paycheque because your debts eat up so much of your income? The solution is to develop a plan to conquer that debt and we can help. Give one of our trained credit counsellors a call at 1-888-294-3130 or get started with our online debt analysis.