Would Downsizing Actually Save You Money?

by Isaac Benmergui, Esq on June 9, 2017

downsizingCall them tiny houses, or just small houses, downsizing is a trend. Many millennials eschew larger homes as examples of conspicuous consumption, making what used to be aspirational a pariah. This is especially true in neighborhoods built post-2009, when builders tried to recoup losses in sales volume by charging more per square foot. This led to building to the edges of lots and last-minute design upgrades that have been parodied on sites like McMansion Hell.

So of course the pendulum has swung in the opposite direction, to tiny homes, defined as home less than 400 square feet, and small homes, homes that range from 400 to 800 square feet. The idea being that spending less on your living space gives you more time and money for experiences like travel.

First, getting rid of stuff is the first thing you have to do before you can even consider downsizing, and that can make you some extra money right there. Second, a smaller home means lower utilities, taxes, and other expenses.

However, you also have to look at how much equity you have in your home, and how long you plan to stay in your next home. A smaller home will usually mean a smaller mortgage, but if you bought a long time ago when prices were cheaper, that may not be the case. Unless you are planning to buy much smaller, then you may not even realize a significant monthly savings. If you bought more recently, you may also not have enough equity to make the switch worth it.

Financial experts say that downsizing will only make a significant impact if you can save $500 a month or more to put toward other financial goals. So, if after all is said and done, you can make that big of a gap in your current expenses minus potential new expenses, than go for it.

Call Miami Real Estate Lawyer Isaac Benmergui at 305.397.8547 and set up a no charge, no obligation consultation to discuss your case. We have over a decade of experience handling Real Estate and Civil Litigation cases throughout Miami and South Florida, and will use our expertise to help your case to the best of our abilities.

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