Downsizing from a house to an apartment can save you money on your monthly payment. But there are some other advantages, too. On a Fool Live episode recorded on March 5, Fool contributor Brian Withers discusses his experience in moving out of a large house into a smaller townhome and the unexpected benefits along the way.
Brian Withers: Part of what we did when my oldest son went off to college, all of a sudden we were like, "Wow, this house is really big," now that there's not two teenage boys running around. And we decided that we were going to downsize. This is the other thing that happens, if you have space, you're going to fill it. Whether it's things for storage or furniture or whatever. Every time we ended up moving, we ended up getting a bigger house because we were yanking the kids out of school, and moving them across the country or whatever, and so they kept getting more and more. It was a family decision, but we wanted the kids to be comfortable when they move.
This last house that we lived in New Jersey was the most expensive, had the biggest yard, had a basement which we've never had before, a pool, a massive driveway, it was just tremendous upkeep. We decided to downsize and we moved to a townhouse, just one town over, and the rent versus the mortgage payment was $1,000 less for the townhouse and obviously less space, but we had a one-car garage and they did all the snow shoveling and stuff, which was I could totally see the happier part of that.
But what we didn't realize was all of the other things that came with downsizing: The heating bill was less, the cooling bill was less. We didn't pay to go to Home Depot, we were renting. Anything broke, a light bulb, just call maintenance and they come and replace a light bulb. Good grief, that's amazing. While we were there, we didn't pay for paint, we didn't pay for maintenance. We had a pipe bust and flooded the little room in the basement where my son was, but they took care of all of that.
The difference in the monthly payment outlay was $1,000. But what we ended up saving over the course of a full year was about 2,500 bucks a month. It was amazingly different, and then we moved down here and we even cut some more off of our mortgage. Don't discount renting, we did it for three years and that was really helpful to; one, I freed up the capital, and the other part, the outlay was significantly less.