The following is a guest post on behalf of MoneySupermarket.com.
If you’re struggling to meet the rising costs of living, you might have considered moving to a smaller, cheaper property. This might have been a viable option in the past, but with the changing value of property and the like, is it going to end up costing so much that it negates the savings?
Think about this: if you live in a three bedroom property and you could viably move into a two bedroom property, how has the value of the latter changed while you’ve been living in your current home? Chances are; it’s gone up. Downsizing could free up some of the equity in your home, but if house prices have gone up a lot in your area, then you might find yourself unable to downsize while staying in that same area. If you have to move outside of the area, then you’ll have to factor in the costs of commuting to work and travelling to see friends and family.
Then consider this, how much does it cost you to move from your current home to the new, cheaper one? You have to factor in legal, administrative and moving fees which could run into the thousands. Then of course there’s the fact that you’d have to actually live in the smaller property. Would this actually be practical? If you’ve more than one vehicle, how would the parking situation be at the new smaller place? Are you going to have to pay extra for parking?
Over in the UK, the neighborhood you live in can also have a big impact on the amount you pay in auto insurance premiums, as some areas are considered to carry a greater risk that your vehicle might be stolen, resulting in higher premiums.
Of course there are always other options and alternatives to downsizing, if it does to prove to be too costly or impractical. Some people refinance their mortgages to get a better, more affordable deal to allow them to remain in their current homes. If you’re going to do this, it takes some research on your part and you’ll have to study the market to see what’s out there and do your math. You can use an online mortgage calculator to work out your borrowings and repayments on different interest rates.
Then of course you can always look at other income streams to see if you can earn a little extra money to put yourself in a more comfortable position. Start with the old clichés – if you can play a musical instrument like guitar or piano, start charging for lessons. If your house is cluttered, get on eBay or do a garage sale. If your household has more than one vehicle, consider whether or not you could get by with just the one and sell the others. Similarly, see if you could save money on gas by car-pooling.
Property downsizing might still be an option for some, even if it means making a few compromises, but for others the associated costs might be too prohibitive these days. If that’s the case then you need to look at other ways to spend less and save more. You’re already at Budgeting in the Fun Stuff, so you’re making a great start!
FYI: I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year. I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home. If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!). Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!