In the past, we’ve seen downsizing as a thing to do when you retire or just before. However, the many benefits downsizing offers aren’t reserved just for the retirees.
Deciding to move into a small space can help with your mental health, simplify your life, or enable you to travel more. As well as free up cash and reduce debt.
So, when is the right time to downsize?
As one of life’s harder questions to answer, it will take some time for you to consider your options. To make answering easier, we’ve created a list of pros and cons.
Firstly if you’re moving to a smaller place for financial reasons, you could sort your debt problems out. It’s likely, you’ll have some cash left to invest in your new place. As well as on a treat for you and the family.
If you’ve dreamed of travelling more, then even if you’re debt free, downsizing can provide you with the necessary funds to travel in comfort.
As one in four adults in the UK has some sort of mental health issues, downsizing can bring clarity and enable you to deal with your health better. This work especially if you’re a hoarder as you’ll have to prioritize processions.
Downsizing is a superb way to control monthly expenses as a smaller space will use fewer utilities and cost less to maintain.
Lastly, You’ll shift your focus from accumulating possessions to making memories.
Moving is stressful, hard work and can affect both mental and physical health.
If you’re aiming to become debt free, then you might have to move out of your current area to a cheaper one. This could mean your social life suffers as you’ll spend more time in the travelling to friends rather than walking.
You could buy a property which requires work, which could use up all your cash, time and energy for a while.
Smaller properties have less space for entertaining and can quickly feel cramped. So you’ll want to bear in mind how you plan to store items and whether you can get rid of some possessions.
Finally, any change in life has an emotional aspect. Whether you’ve lived in your home for a few short years or decades, moving on will be hard. Take time to remember all the good times you’ve had but look forward to creating many more in a new space.
How to decide to downsize
Since there’s no perfect time to move, it can make deciding even more difficult. However, here are some basic questions to consider.
What are your goals for the next few years?
Our goals are constantly changing as we grow and walk through life. Therefore re-assessing if your current home fits into your 3, 5, or 10-year plan is worth it.
How small is still comfortable?
Moving from a 4-bed detached property on a 1/3 of an acre to a 2-bed apartment or bungalow might be a shock. So you’ll want to consider what spaces you currently don’t use or need and create a list of what you really need.
It’s possible to live in 400 sq ft space and enjoy the experience, but you’ll want to plan how you will use the space and adapt your lifestyle to match the space.
How will downsizing contribute to my bank account on a monthly basis?
Grab your calculator! There probably is no point in moving if you’re going to be left with the same costs, so ensure downsizing has a large positive impact on your bank account.
The classic! If you’re about to or have retired, downsizing can be a way to plan for the future when you still have the energy to do so. Also if your property has become too much to handle, then it’s probably time to downsize.
Should you be lucky enough to have seen your property increase by double-digit rises every year, then you might be liable for capital gains tax when selling. Having to pay tax could wipe any and all profit out, which could null your reason for moving.
Consider speaking to an accountant and doing your own research on tax.
How to Downsize Your Home
Dealing with the decision to downsize will be an emotional ride, which is likely to continue as you work through the process. It’s hard. We get it but here are a few ways you can make it easier on yourself.
Start property hunting
Look for potential and a place you can create more memories in. As you view properties remind yourself why you’re doing this. Picture how happy you’ll be having completed downsizing and achieving your goals.
Sort your stuff
Yes, it’s easier said than done! Here’s a simple method to help you. Find 5 large boxes. Label each one of the following: Keep, Sell, Give, Bin, Unsure.
Keep – means stuff you’ll be taking with you.
Sell – fire up eBay and get listing!
Give – either pass on to family, friends or charity.
Bin – getting rid of stuff is always good!
Unsure – a box of stuff we’ll come back to
By thinking logically and asking yourself which box each of your items fit in you’ll start to sort fast and enjoy doing it. Also, having a system makes sorting a scary amount of stuff, easy!
Stage your property
With your house looking tidy, it’s worth investing some time into presenting it attractively, so that it appeals to a wide range of potential buyers. This process is often called home staging and is a mix of tidying, DIY and arranging current furniture.
When done correctly, home staging aims to create a positive emotional reaction from the moment a potential buyer enters the property.
As an emotional process, make sure you take time for yourself. By including rewards into your plan you will enjoy the process more and have something to look forward too.
A reward can be something cheap such as a chocolate bar, some retail therapy or even a spa treatment or two.
Are there any alternatives to downsizing?
If you can’t sell your home or decide you want to stay, then you may want to consider an equity release. This will allow you to stay in your home and have access to some of the cash you have locked up in your home. However, there are many risks involved with equity release.
Taking the first step is the hardest. So once you’ve decided to downsize you’ve taken the first step.
Throughout the downsizing process remember why you’re doing this. Keeping your goal in mind and at the heart of every decision will make the process easier.
Remember to reward yourself as you go and try to relive all of the great memories you have. Trust us, you’ll make many more at your new home!