Practical Money Skills: The Upside to Downsizing

The Upside to Downsizing

Downsize often has a negative meaning in relation to the workplace; but when it comes to your home, car and lifestyle, downsizing or simplifying can actually be positive, improving your peace of mind and your financial outlook. According to a 2011 Federal Reserve report on consumer credit, total U.S. consumer debt has reached $2.43 trillion. In America, many of us are continuing to live beyond our means–buying more house, car and products than we can use or afford. In an effort to improve your finances and lifestyle, here are a few things you might consider downsizing:

  • Home or living space. Most of us are familiar with the sentiment “bigger is better.” But is it? When it comes to homes, larger houses require more maintenance, more insurance and higher mortgages. Before buying or renting that home with a few extra bedrooms, ask yourself: do I need this excess space? Is the cost worth the benefit? You may find that a smaller home or apartment actually provides some freedom from the expenses and responsibilities of a larger one.

  • Car or transportation needs. For many people, a large car symbolizes luxury. But in actuality, a smaller or more fuel-efficient car could be more comfortable, more environmentally friendly and more affordable. Likewise, relying on alternate means of transportation like carpooling, walking, biking or public transportation can not only offer significant savings in terms of gas and maintenance costs but can also be less stressful, more healthful and more sociable than driving.

  • Debt load. Personal debt is a major cause of financial stress and strain for many of us. The first step to tackling debt is sitting down to figure out what you owe. Next, create a plan for paying it off, consolidating balances to lower-interest accounts if needed. Although it takes time and dedication, tackling debt and building your savings is key to financial wellbeing. The less debt you have, the easier it becomes to build savings and meet financial goals. Find out more about the best ways to tackle debt here.


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