You’re working hard to grow your income as your family grows so you can afford a larger home with more furnishings to accommodate them. Over time you’re able to upgrade to a larger home in a nicer neighborhood. Then another, then another. Congratulations! You’re living the “American Dream”!
Now you’re 63 years old, semi-retired, all the kids are grown and have moved out of the house, and you’re sitting in your favorite chair in your 6,800 square foot, five-bedroom home with a pool and four-car garage on an acre and a half in an upscale suburban neighborhood and you think to yourself, “Why do I still have all this? My wife (or husband) and I really need to trim down our lives.” Eureka! You’ve discovered that you’re ready to downsize!
Each time you buy a house, then sell, then buy again, you’re (hopefully) increasing your equity position. In simple terms, equity is the difference between the price your house is worth minus the mortgage loan amount owed. As you pay down the principal and at the same time the overall market value of your house increases, that “spread” represents your growing equity. At some point when you downsize, you’ll probably be able to cash in on that equity and use the available proceeds to fund other assets or investments.
So how do you begin the downsizing process? Here are some ideas to help to help you get started:
Go through your belongings and decide what to keep, throw out, donate or sell. Bear in mind that to thoroughly declutter and downsize your possessions, you have to separate your wants from your needs. You may find that when you declutter your home youfall in love with it all over again.
Look at what you have multiples of and only keep your favorites. Simplicity can give your home awelcoming impression.
Storage space is your friend, so make the most of it. Hanging shoe racks, the space underneath your bed, and built-in shelves are all great all-purpose storage options. There are also many ways to maximize the storage capacity in your attic, such as:
If you’re planning on getting rid of most of your stuff, consider having a yard sale. Some of the best items to sell include furniture, kid toys, and clothing, as well as power tools and lawn equipment.
Fill up the closets in your new place with all of your best items, such as clothing, shoes and towels. If you end up with a lot of leftover items in less than great condition, you’ll know you can pare things down even more.
If you’re downsizing to a smaller home, you may not have enough room to fit all the furniture you want to keep. During the downsizing process, measure your furniture to make sure it will properly fit in your new place.