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Downsizing: Overcoming the Emotions10 MIN READ | SEP 24, 2021
By Ramsey Solutions If you never thought you were sentimental about your home, try putting it up for sale. Suddenly every nook and cranny is the spot of some special event or sweet memory. But don’t let emotions keep you from downsizing your home.
Downsizing could bring great benefits to you, your family, and your finances. But to cash in on those benefits, you’ll first have to overcome your emotions.
Emotional Reasons That Prevent DownsizingThe decision to downsize your home can be difficult to make—and following through can be even tougher, even when you know it’s the best move to make. To save yourself from staying stuck in a home that’s not right for you, try to understand why you feel emotional about selling your home.
Here are some common reasons why homeowners can feel emotional stress about downsizing:
Find expert agents to help you sell your home.
Are you an "empty nester" who still lives in that big house where you raised your now-grown kids? Imagine how much time and money you could free up if you downsized! Instead of managing the upkeep of the house and lawn, you could spend more time and money on vacations and date nights! And you could have plenty of cash leftover to invest more for your dream retirement.
What Does Downsizing Your Home Actually Look Like?Let’s see what the impact of downsizing could look like. Pretend you and your spouse own a four-bedroom home you bought 10 years ago when your two kids were young. At 3,000 square feet, you’ve got plenty of room for your family and friends to hang out.
Unfortunately, everything else in your life feels cramped.
Even though you and your spouse work hard to provide for the family, you never seem to have the money to do fun things outside of the house. With a $60,000 household income, your $1,375 mortgage payment takes up nearly a third of your paycheck each month. You have enough to cover the bills each month, but that’s it.
You’re making slow progress on your car loan—the last remaining bill in your debt snowball. Once it’s paid off, you’re looking at an additional two years to build your emergency fund before you’re ready to invest for retirement. You’ll turn 43 this year too, so you don’t want to delay saving for retirement much longer.
Also, it won’t be long before your two kids—ages 12 and 14—leave the nest. You and your spouse want to make the most of the time you have left together under the same roof, so you decide it’s time to trade all your space for the life you really want.
From Barely Paying Bills to Baby Step 4After you declutter your home, you work with a real estate agent to get it sold. After a month on the market, you accept an offer for $300,000. With just $165,000 left on your mortgage, you bank $135,000 off the sale.
Here's what you do with $135,000 Monthly SavingsCover agent commission and other seller costs on your current home$18,000
Pay off your car loan$6,500$560
Stockpile your emergency fund$12,000
Put a down payment on a $185,000 home with a 15-year fixed rate mortgage at 4%$91,000$440
Cover buyer closing costs on your new home$5,500
Fund a family vacation$2,000
That chunk of cash catapults you forward to Baby Step 4, eliminating debt and setting you up with a solid emergency fund. To celebrate this major money milestone, you use some of the proceeds from your home sale to go on a much-needed family vacation. You also have plenty of cash left to put a sizeable down payment on a smaller home and cover any closing costs.
Living Larger in Less SpaceNow that your home is sold, it’s time to find a new place to live! Your agent helps you land a great deal on a three-bedroom home with 1,700 square feet for $185,000.
You put $91,000 down on a 15-year mortgage at 4%, which—if you use our mortgage calculator—brings your monthly payment to just $935! With your debt snowball complete and a lower mortgage payment, that gives you a total savings of $1,000 a month.
That kind of extra cash makes saving 15% of your income for retirement much easier. If you contribute $750 a month toward retirement for the next 22 years, you could retire with over $700,000 in your nest egg. Even better, a 15-year mortgage means you can look toward retirement with more confidence knowing your home will be paid off before you even turn 60.
If you really want to get intense, check out the mortgage payment calculator to see how much money you can save by paying off your house early.
Tips for Successful DownsizingDownsize Your "Stuff" Before Your HomeNow that we’ve walked through an example, let’s apply these steps to your own situation. Think about which downsizing benefit speaks to you most. Keep that at the forefront of your mind during this process. You can overcome the emotions that are holding you back. But you might need a strategy to help. So, let’s get tactical.
First, don’t think about the house. Start with the little things that make up your house—like old baby clothes and blankets, the bikes your kids learned to ride on, the squeaky wooden bunkbed, and the dusty grand piano. These items tend to build the majority of our emotional resistance to downsize in home. Give yourself enough time to sort through items that are precious to you. Then, when it comes time to sell the house, you won’t feel stressed or rushed. Instead, you’ll feel confident the items that represent “home” to you were cared for properly.
Sort your belongings into four main categories:
Look for someone who puts service before sales—but who also knows how to get things done when it’s time to sell. Our real estate endorsed local providers (ELPs) know how to stage your home’s best features and estimate fair market price, and they have the skill to negotiate a fast home sale for the best price. Want the best of the best in your area? We can connect you to a real estate agent we recommend
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