A key step in my signature “fitness program” is financial fitness, along with physical and spiritual fitness.
Financial fitness, though, is truly the lynchpin if you want to live your passions in your bonus years… and even sooner.
When you’re financially fit, you’re nimble and able to pursue the kind of work you really want to do, be your own boss, travel, or spend more time on your giving back efforts pro bono.
For many people, the simplest, and, perhaps, boldest move to get into financial shape is to, well, move, to sell their current home and buy something smaller. The cost of housing and all that goes with home ownership, afterall, is one big ticket item in all of our monthly budgets. And the equity we’ve built up in our homes may be our biggest asset.
Here are the six reasons you might consider downsizing.
Whether or not downsizing is a real possibility for you will depend upon a myriad of factors. If the timing is right for you to explore trading down, you might start by asking a local real estate agent to help you get a bead on what your current home is worth and give you a ballpark figure for the price for a smaller abode in your town.
One tip: You will probably get the best deal on your smaller residence, if you make an offer to buy after you’ve sold your current home. That’s because having the purchase contingent on that sale can slow the process down and diminish your bargaining power. Cash is king when it comes to negotiating.
You might also consider renting for a while and put your stuff in storage temporarily. This will give you time to find the perfect home to suit your needs in the years ahead. This is a particularly good idea, if you opt to relocate to another state to be closer to family.
While these are all practical financial reasons to downsize, for many of us, it’s not so black and white. The reasons not to downsize are often emotional and psychological, not monetary ones, and it’s hard to put a price tag on that.
Our homes are often entwined with our sense of identity. Be honest–our egos can come into play. A home can be a symbol of success. Then, too, our home is often a place of respite and comfort. It might represent years of happy memories. And if you’ve paid off the mortgage, or nearly paid it off, and you don’t feel the financial pressure from a monthly obligation, downsizing might not have enough of a financial upside that makes up for moving on.
Here are a few reasons you might consider not pulling up stakes:
My advice is to go slow and be thoughtful about your motivations for downsizing. Take time to do some soul searching and budget crunching. Should you stay or should you go will rarely be a slam-dunk decision, but for many of us, it can be a ticket to financial and psychological freedom.
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