Downsize?

[Chaos Abounds]

I'm hoping to leave the rat race in a couple of years. Our home is paid for and the only expenses we have are our monthly bills. Only one more car payment! For just the two of us I consider our house to be too big. But, since it's paid for is downsizing something that we should consider? I love where our house is located but we have five acres that have to be maintained. What are your thoughts or things that I should consider in making this decision?

 

[ProspectiveBum]

I'm certainly no expert on the property tax laws in Texas, but anecdotally, there don't seem to be any "homestead" provisions that would limit or cap increases on your property taxes on your paid-for home. So assuming that you move to a less-expensive home, your property tax bills should go down. Hopefully, that smaller home will be less expensive than your current, larger house, allowing you to bank some of the equity from your current house.

From a financial standpoint, assuming that you move to a smaller, cheaper home, I don't see any issues, and there'd be less maintenance and yard-work, to boot. Seems like a no-brainer to me (assuming my many assumptions are correct, which is no sure thing).

 

[Chaos Abounds]

Thanks for your input. My husband has a 100% service connected disability and TX just passed a law ...we no longer have to pay property taxes. So taxes aren't really an issue for us. Does this change your thinking?

Once I'm retired then maintaining a house and yard won't be as big of an issue since I'll have more time on my hands. On the other hand, cleaning and yardwork doen't even come close to the top of my list of things I like to do.

 

[crazy connie]

Choices and options. Were it me and I could not see staying there long term and I had the financial ability to do so, I might be inclined to go shopping for what I want while the market is down and then dispose of current property in a year or so. I do anticipate some housing recovery within 18 to 24 months. That would give you a good purchase price and a better sales price. But this could be all wrong for you and the area. Also, if downsizing in size and cost that would put a nicer chunk o'change in the after tax accounts.

 

[wlaker]

We made the decision to downsize 2 years ago and had already purchased our 2nd smaller home in a warmer climate where we stayed in the winter. We did not need to seel for financial reasons -- it just seemed like the perfect solution because both homes were paid for and it seemed we were just housing a lot of "stuff". This summer we sold our large with the huge yard, tons of yard work, and beautiful view. As I am going through the process of moving out and getting rid of all of our "stuff" I am wondering if this was a good idea. I have so much remorse now -- seeing all the things I purchased to decorate the home -- going to goodwill or for nickels and dimes at a garage sale.

 

[Chaos Abounds]

That's kind of what I've been thinking about. If I'm happy where I am and everything is paid for why get rid of perfectly good furniture and other "stuff". It's all already paid for and you would only earn a few $$ by selling it. Is saving a few $$ each month on utility bills worth it? Anyhow, it seems like our utility bills are lower than our friends who live more in the "city". Does it sometimes make sense NOT to downsize?

 

[ProspectiveBum]

Does it sometimes make sense NOT to downsize?

Well, sure! If you're happy where you are, and don't mind the cost and maintenance w*rk associated with keeping up a large property, it might make perfect sense to stay put.

From a purely financial standpoint, you'd probably be able to save some money by downsizing, but that's only part of the equation. As wlaker notes, there may be sentimental reasons to stay put. I'm not a sentimental guy, and would have no problem downsizing after the kids are gone. My wife may find it harder to sell the home where we've raised our kids. We've got 16-20 years before we need to worry about it, so we'll cross that bridge when we get there.

Ultimately, the only right answer is the one that's right for you.