As a retiree, I’m always looking for ways to cut expenses without degrading my lifestyle.

It’s a good plan, and it’s working. But it wasn’t feasible until two years ago, when Tricia and I downsized.

We moved out of the house where we’d spent the past 25 years. When we moved in, it seemed so big. We had lots of rooms with no furniture. We never thought we would fill it up. But we did. And then some. This was the house where our children grew up.

Then, suddenly, we were empty nesters. We wanted to do a lot of the things we had put on hold while we raised our children. Like traveling. And getting out of Florida during the summer.

How to pay for it was the question. The answer appeared when I looked at how much we were spending on the house. It was by far our biggest expense. Many Americans are in the same boat.

According to the most recent Bureau of Labor Statistics survey, Americans spend twice as much on housing than they do on anything else. Housing expenditures average 34% of take-home pay. And if you live in a major metro area, such as New York or San Francisco, your percentage may be even more.

Mark’s take on housing is that it is the No. 1 determinant of your lifestyle burn rate (LBR). He discusses calculating your LBR here.

A bigger house, of course, costs more money to buy. But that’s just the beginning. You’ll pay more in property tax. It also costs more to maintain, heat, cool, and furnish.

On top of that, a bigger house will likely be in a richer neighborhood. You’ll feel some pressure to buy nicer furniture and drive more expensive cars. And when the carpenter or plumber comes to fix a problem, I can tell you from my own experience that they will charge you more. Mark explores this idea of “the cost of possession” here.

If you’re looking to reduce your living expenses, it only makes sense to look at the biggest nut. But downsizing isn’t for everybody. In this essay, we’ll walk through the pros and cons. I’ll also give you a brief checklist to help you with your decision.

The Cons of Downsizing

  • It’s emotional

Most of us develop some sort of an emotional attachment to our homes. For some, that attachment runs quite deep. I’m not particularly sentimental. So the emotional part of downsizing was not a big issue for me. But it was for Tricia. It took her several years after the children were gone to even entertain the notion of moving.

But I don’t think it’s gender specific. My son was devastated when we sold the house. He even flew back from Colorado to have one last look at his room. My daughter, on the other hand, said simply, “Where are you gonna move to?”

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Naturally, any change produces anxiety. Dismantling a home is a significant source of worry.

  • Moving sucks

Moving is a real pain in the butt. I’d forgotten because I hadn’t moved in such a long time. And the last time I moved, I didn’t have anything close to the stuff I have now. Look around your house. If you’ve been in it for any length of time, chances are you’ve accumulated enough possessions to make the prospect of moving more than a little daunting.

But it gets worse. This move probably won’t be like your last one, because you’re downsizing. It’s a whole different deal when you move to larger quarters. This time, there won’t be room for all of your stuff.

You are going to have to get rid of things you’ve collected over the years. And many of these items will have emotional triggers. Treasures or trash? You will have to make decisions. It ain’t easy. Those of you who’ve moved recently know what I mean.

  • Loss of prestige

Like it or not, the size and location of your house confers a certain status. By definition, when you downsize your house, you downsize your prestige.

I’m embarrassed to say that this was an issue for me when we contemplated downsizing. It seems shallow to have any portion of self worth tied to an object. Yet by selling our home, I felt less successful.

Rationally, we were doing it for all of the right reasons. But for a while, it felt like a failure. It doesn’t feel like that anymore. The benefits have been too great. But be prepared for a temporary feeling of inadequacy.

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  • Loss of a family magnet

Before my father retired, my parents had a large home in Raleigh, N.C., where the whole family would gather for Christmas and other big occasions. I envisioned our house in Florida as serving that same function. It did so on several occasions.

Selling the big house meant that we would no longer be able to gather under one roof. My children would no longer have a “second home.” It gave me pause, and it may make you reluctant to move.

Logically, it makes no sense to maintain a home for 365 days to be able to gather the family for, what, maybe 10 nights per year tops? And there is an upside to no longer owning the family magnet. You can consider other venues for family get-togethers. For example, this summer, the kids will be joining us for a week at the house we’ve rented in Park City, Utah.

The Pros of Downsizing

  • Less stress

Downsizing will enable you to reduce your monthly mortgage payments. Or possibly eliminate them entirely.

We had what I called a “girlish” mortgage on our big house. We hadn’t gone in for refis and cash-outs during the boom, so our monthly nut was not even close to onerous.

I was surprised how relieved I felt when I no longer had a mortgage. I felt as though a burden had been lifted from my shoulders. A burden I didn’t even realize was there—until it wasn’t.

Maybe you’ll still have a mortgage when you downsize. But the payment will be much smaller. And your stress levels will decline proportionally.

  • More income

The money you save on your mortgage can translate into the things you’ve always wanted to do. Reward yourself. Take a dream vacation, join a club, buy a new car, or go shopping. Whatever. Add some fun to your life.

Your income will also increase because of the money you’ll save on maintaining your smaller home. The bigger the house, the more “fleas on the dog.”

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  • More to invest

Downsizing allows you to unlock the equity you have in your current home. For example, when we moved, I paid off my mortgage, bought a smaller house with cash, and had money left over. You may be in a similar situation.

You can invest this freed-up capital to start generating a second income.

  • More energy

Think about the last time you switched jobs. You stepped out of your comfort zone. The same old routines were history. You were forced into new behavioral patterns. Uncomfortable at first, certainly. But remember the excitement and energy that came as a result of getting repotted?

That’s the buzz you’ll get from downsizing. When you confine a plant to the same old pot, it gets root-bound and stops growing. The same can be said for many of us who’ve been in our homes a long time. We can stagnate. Downsizing, and the changes that accompany it, can open a new, exciting chapter in your life.

  • More leisure

Think of the regular chores you have to do to maintain your home. Yard work and cleaning come to mind immediately. And if you are in an older house (as I was), there is an endless honey-do list.

Any way you slice it, a smaller home will require less of your time. And that translates to more leisure time. More time doing the things you want to do and less time doing the things you have to do.

  • Less space

At first blush, this may not seem like a plus. But stay with me. It is. When you have less space, you have fewer places to put things. You must carefully consider every purchase and decide if you have room for it. Or what can you get rid of to make space for it? In the end, having less space keeps you from making unnecessary purchases.

  • More control

A few years ago, friends of ours sold their house and moved onto a boat. Not a mega yacht. A 40-foot cabin cruiser. It was pretty cool. We would visit them at the marina and enjoy cocktails on deck. Then we’d share a simple dinner of freshly caught fish.

I asked Tim what the best part of living on a boat was. His answer surprised me. He said the best part of boat living was reducing the number of his possessions. “Really?” I said. “I thought that was the bad part of boat life.”

“Nope,” he said. “It’s the best part. I used to have a lot of stuff, but after I moved to the boat, I realized that the stuff had me. I’m no longer a slave to my possessions. I feel like I’m starting over with a clean slate.” I remembered Tim’s comments years later as we began to shed possessions to fit into a house half the size of our old one. And they began to make sense to me.

A feeling of relief accompanies getting rid of stuff. My world is far less cluttered. I’m lighter. Leaner. More on top of things. More in control than I’ve felt in years. Heck, I’m ready to downsize some more and move to a boat! Tricia says she’ll visit me on calm days.

Downsizing Checklist

  • Right size

When you downsize, don’t go too small. Or too big. The first thing to do is to take an inventory of the rooms in your current residence that you’re not using. A good rule of thumb is if you visit them less than 12 times per year, you’re not using them. We had a lot of those rooms in our old house. The kids’ bedrooms and sitting room. Tricia’s office and the guest bedroom.

Add up the number of square feet these unused rooms comprise. Then subtract that square footage from the square footage of your current house. You now have the right size for your next abode.

Next, make a list the rooms you can’t live without. For me, that was an office and gym. For Tricia, it was a gourmet kitchen. Now you know how big your next place has to be and what rooms it absolutely has to have.

  • What to get rid of

This is the hard part. It’s easy to decide to get rid of what you don’t need. But some stuff that you don’t need has sentimental value, which makes it difficult to pitch. Expect some tears during this process.

What worked for us was dividing our possessions into three categories: the keepers, the clunkers, and the maybes. Unfortunately, you won’t always agree with your spouse into which category each item should go. Your largest category will probably be the maybes.

Tricia tends to be more of a pack rat. She’s not a hoarder but leans in that direction. I’m at the opposite end of the spectrum. If I have any doubts at all about an item, I’ll get rid of it. Needless to say, this difference in philosophy made for some spirited debates.

I won some. For example, we got rid of some of her mother’s china. She won some. We held onto an old chest (which we can’t open, by the way) supposedly containing her grandfather’s old woodworking tools.

One solution to culling the maybes is to ask whether your children would want an item after you’re gone. Put another way, do you want to get rid of it now, or do you want the children to have to throw it away?

  • What to do with the stuff you get rid of

Offer the items to your children. But be firm. It’s a take-it-now-or-lose-it-forever proposition.

Have a yard sale. We made $1,500 one afternoon getting rid of our clunkers.

Consider consignment shops. We sold our dining room chairs this way. You won’t get anything upfront, but when the item sells, you’ll typically get 50-70% of the proceeds. Meanwhile, it’s not in your house.

Put stuff up for auction. We used Leslie Hindman Auctioneers to sell two old Chinese tapestries and a tea set I had inherited from my mother.

Put stuff on eBay. I got rid of a stereo receiver and an old espresso machine using eBay.

Craigslist is great for stuff that’s too expensive to ship. We sold a bike and rattan furniture on Craigslist.

As far as papers and photographs go, we probably all have too many of those hanging around. Consider having your photographs and important papers professionally scanned. We had ScanCafe scan thousands of photographs, and now they’re sitting on a few DVDs.

  • If you start feeling blue

As you say goodbye to many of the things you’ve accumulated over your life, it’s only natural to feel some sadness. Trust me. That funereal feeling will dissipate, and excitement about what’s next will replace it.

Meanwhile, keep a running total of how much money you make selling your old stuff. Take that money and treat yourself to something special. Maybe a big night out on the town. Or a little vacation. Whatever it is, make it a celebration about you. And your new, less encumbered lifestyle.

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