If you are like many, you are probably either living in a house that is nearly too big for your budget or, you are considering a home upgrade that will soon put you in the same position.
I say stay away and live below your means.
Here are 7 reasons you should consider either downsizing or staying put in a smaller, and more affordable home.
1. It gives you more disposable income.
Guess what? If your mortgage is $1,500/month instead of $3,000/month, you have an extra $1,500/month in extra income. Crazy, right? And you would be surprised how handy, particularly in an emergency, an extra $1,500/month in disposable income can be. Cash is king, and the more of it you have not dedicated to a specific expense the better. You can even throw all of it at savings and investments. $1,500/month can add up quick.
2. You will be out of debt faster.
Also, if getting out of debt is something that you care about, it turns out that most people can pay off a $200,000 home faster than a $400,000 home. I know, I know. It’s weird how math works. In the example from #1, one could use the extra $1,500/month in income and pay off their home twice as fast.
3. It makes for a more disciplined life.
Ever live in a small house? There is nowhere to put anything. In no time, you have to decide what is worth keeping in your limited space, and what should be gotten rid of. Ever live in a big house? You never get rid of anything. There is always another corner to throw your junk in.
4. You will be more in-tune to what your kids are doing.
If your kids live upstairs, fifth door on the right, you never have a clue what they are doing: And a big part of parenting is just being involved. You go up to find them and it turns out they took the back stairs down to the basement 3 hours ago. You had no idea. And even worse, it’s another hour before you actually find them, because, by the time you made it down to the basement, they were in the kitchen getting a Coke and heading back upstairs. This is why larger houses sometimes have intercom systems. In my experience, they are, however, rarely used. After that, you are left simply texting your kids, and hoping they respond.
5. The rest of your house can be better.
Back to finances, if you spend less on your home, you will naturally have more money to spend on the things you do put in it. With less of a mortgage payment and more disposable income, you can now buy the nice couch you always wanted, instead of using your parent’s old one. You can now even afford your choice of TV, dining table, desk, flooring, and bookshelves. And now you can even put in a pool.
6. It can keep you humble.
A good number of people with nearly anything that is expensive tend to be prideful about it. How unattractive. Large house, six-figure car, vacation home, ridiculously expensive watch or a diamond ring, you name it, people tend to hold on to things too tight. It’s just stuff. And you can’t take any of it with you.
7. You can give more.
Finally, with your finances in better order, due to a smaller mortgage, and possibly having no debt – if you wish – you can have the ability to give more than you ever thought about. What better to do than change someone’s life, or support a cause you believe in? And all it took was a smaller house.
It’s honestly ridiculous. I know of people in their late 20’s and early 30’s looking to buy half a million dollar homes.