So you might have read my post on “The American Dream.” It’s no secret that I think we Americans tend to live in excess. In fact, back in the 1950’s the average size of an American home was 1,000 square feet. A few years ago that average ballooned to almost 2,700 square feet. This got my wife and I thinking. Could we? Should we? Is it possible to buck the trend and live in a smaller house and put our money where our mouth is so to speak? So here are a few reasons why we are seriously considering downsizing and leaving our 1250 sq foot home for a 736 sq foot condo (and did I mention we recently had a baby?)
We want less of our monetary resources dedicated to housing. If you were to take a poll of how much Americans spend on housing we would already be towards the bottom of the list. Most Americans spend right at 35% of their wages on housing. We’ve actually taken extreme precautions to make sure that our mortgage is less than 15% of our wages. We don’t have any trouble paying it. We just want to be freed up totally from the idea of a monthly mortgage altogether. And soon. Remember when I talked about those IQ points dropping from financial stress? I’ve already got enough messed up brain cells without that happening. 🙂
We want to expand our rental property portfolio. We already have one rental property. It’s been such a good experience though that we want to add to that. I’m actually starting to think that being a full-time landlord could be a possibility for me down the road if we make some good financial decisions. Downsizing could really be a catalyst towards that possibility. We’ll double our rental portfolio immediately, and our new extremely low mortgage would make it even easier to triple that in the near term.
We love taking advantage of the deals around us. Right now homes aren’t a great deal – at least in our neck of the woods. The foreclosures and short sales just don’t exist at this moment in time. I’m all about going where the deal leads. And right now that deal is leading towards a condo. Condos aren’t selling in Atlanta right now. I’ve seen them go for $40-$50k. So, downsizing into a condo would help us take advantage of an incredible oddity in the marketplace – the ridiculously low price of condos.
It’ll force us to get rid of things we don’t need. Keep in mind, I’m not one of those extreme minimalists. But getting rid of a few things now and then and learning how to live with less stuff is a great exercise for us as humans. Fewer monthly obligations and less things to worry about can be incredibly freeing to the mind. It can really open us up for other possibilities that we were too preoccupied to see before. I hope that’ll be the case for us if we go through with this zany idea.
Stay tuned for future postings on our possible downsizing adventure! But what do you guys think? Would you be willing to do some downsizing in order to free your family and finances up for some bigger moves in the future? Would getting rid of some “stuff” help you clear your head for other pursuits?
[photos courtesy of Ochileer and Donald]
Keep in mind condo fees. I’ve got a feeling you would have a hard time with essentially “throwing away” money each month, though, depending on the age of the condo, it sometimes includes some of your utilities (mostly sewer and water). Also, as a person who lives in a condo, 736 square feet is damn small (about 60% the size of my place, which you have been to). Not having an outdoor space of your own to grill or have a party or let your kid (and huge dog) run around in is also a downside.
The condo fees at this place are extremely low. $175 a month – and that includes water and trash. Those two things alone at my place currently run about $100 a month – dang city of Atlanta! Thanks for the advice though Trip. The lifestyle thing would definitely be an adjustment. We’re still thinking through it but I’ll certainly update you on what we decide.
I think that downsizing when you have a child is actually a must and most people do the opposite. Children are a blessing, but a very large financial commitment over a long period of time and any way that you can save money to make space for supporting that child is a good thing!
I love the perspective Shannon. Thanks! Children are expensive from what I hear. 🙂
From reading the post it sounds like you may have already made your decision 🙂 I say the main thing is for you and your wife be on the same page. You both have to want it. The stress it would bring to your marriage otherwise wouldn’t be worth it in my opinion. Having said that, this doesn’t have to be forever. If you do it give it a time frame. Re-evaluate every few months to see if saving money has been worth it. I have known people who have done this with several kids and less space. The good thing is your baby won’t know any different right now. It would be harder on say a 7 year old. Now your dog on the other hand… My advice is go into it with your eyes wide open and weigh all of the costs and stresses the lifestyle change would bring to your family and look at those against what you and your wife value and then decide what is right for you guys. Also, it is always good to remember not to make a decision out of fear or anxiety but out of conviction.
Hey Rachel,
We actually hadn’t when I wrote this post. I should have listed the downsides too. For instance, living in a condo with a crying baby makes you really self aware. You know that affects other people and it sucks. So that is a definite negative. Also, going from two bathrooms to one. What if you really have to go? Big negative. So now I’ve listed a few of those. But I’ll list more on my next post to be fair about everything. And I’ll keep updating on where we are heading as a family.
And that is a great thought to not make the decision out of fear or anxiety but out of conviction. That’s what we’re trying to do. I’ll keep that thought at the front of my brain as we continue to think this through.
Like you, I currently own one rental property and have given some thought to adding a second property to my “real estate portfolio” if you will. However, our current house meets our needs so downsizing is not really an option. Moreover, the wife and I both currently maximize contributions to our 401(k)s and IRAs and those remain our first priorities so I’m not willing to reduce those contributions to pick up a second rental property.
Great post…and picture. Ha!
Thanks for your thoughts James. We’re definitely still unsure. We do really like our current house. I’ll hopefully be posting about the negatives of this possible move next week.
Downsize! Then send out a press release to every major news outlet telling them how you went from a 1,250sf house to 736sf condo. Some people may call you crazy, me…I’ll call you my hero.
I might be hiring you as my publicist for that 😉 Thanks for the encouragement man!
Hey Joel,
I love the idea in general; however, I have two areas of caution when considering the condo option:
1. Condo associations can increase the association dues AND, worse yet, they can assess a bond to cover major repairs (like a new roof, etc.). I know of several friends who were stuck with these additional costs after they purchased their condo and wished they had purchased a single-family home instead. Be sure you read all documents carefully to understand what can affect you down the line.
2. The condo may be a great deal now, but when the market for condos strengthens, will buyers be interested in a condo of that size? If it comes with a garage and other amenities it might not be a big deal. But remember, you are rare in understanding that small living spaces are often a good choice financially. Most people today still want something at least 1k sq ft or bigger.
Whatever you do, I’m sure you’ll make a good decision for your family. By the way, I’ve lived in a 1,023 sq ft home for over 20 years. It’s paid for and I have no intention of ever selling it. my carrying costs are low, which provides a lot of flexibility. You are definitely heading in the right direction!
Ree
Seriously fantastic points Ree. Thanks so much for your thoughts! The resale is actually the part that freaks me out the most. I do wonder, even if I get a great deal, if I’ll be able to sell it quickly. Definitely food for some more thought.
Hi: I am a mom of three and lived in an 800 sq ft house for 10 years. It can be done. I find now, with teenagers that I actually need more space. They need to be able to get away from each other and have private space. ( At least mine do.)
First, babies have a ton of stuff. Car seats, strollers, high chairs etc start to take up a lot of space. Budget in some money to buy a closet system or armoire to fit in all the baby stuff.
Second, you do 3x the laundry and babies make nasty smells and stains. You can’t just let that stuff sit there! Will you have your own washer and dryer ?? This would be a deal breaker for me.
Third, How many rentals are there in this association ? Some associations limit or prohibit rentals.
Fourth, do all of your due diligence on the finances of the association. Many in my area are not doing well due to no one paying the monthly fees on foreclosed properties. Even if the properties are sold etc , there is still a year gap in the funds that property would have brought in to the association.
Best of Luck! ~ Christie
Great thoughts Christie! I’m glad to hear that you have done it. And those are some great things for me to research. We would definitely have our own washer and dryer. That is really important since we are doing cloth diapering. And very true about baby stuff. It only seems to continue to grow in size…
That’s about the size of our condo right now, mind you we are only two people: no children, no pets. But there is still plenty of space for entertaining, we have a big balcony for BBQing in the summer and we even have access to a huge pool, tennis courts and a rec centre/library/games room. Storage space has been a little bit of an issue though, especially with the bikes. We have to carry them up and down three flights of stairs every time we use them and we don’t have anywhere to store them so they are currently sitting in the corner of the dining room..
I have a feeling storage space will be an issue for us as well in that small of a space. Thanks for your feedback!
I don’t think there is really a right or wrong answer. We have a pretty big house with lots of equity and have certainly entertained the possibility of selling it and buying something smaller outright with the profits. We haven’t because we really like our neighborhood and have good neighbors that we could probably not duplicate if we moved. We also like our space. With a 6 year old, it’s nice that she can have her own space (read not be in our face every minute). It’s also nice when she has friends over, and I’m sure that will be more true with time. If you lived in a small space, you’d both also be up all night when the kiddo was sick or just not sleeping for whatever reason. It’s always better when one of you can sleep and tag team times like that. I’m curious to see what you decide.
It’s all about the layout, holmes! 750 sq. ft. with a very open floor plan could feel just as big as 1,200 sq. ft. For us, we’re in a 1,500 sq. ft. house, and it’s plenty big for us and our (soon to be) 2 kids. We’re staying put as our family will most likely get bigger, but it doesn’t mean we couldn’t look around and see what’s out there. I love the idea of getting a rental, unfortunately not in the cards at the moment.
Currently I’m living in a bigger house than needed (in an area I probably wouldn’t pick out because of the covenants) but, it was all-inclusive rent with a landlord I get along with, that allows me to build wealth. Part of the deal was the labor in upkeep (LL pay on repair/materials) for the house plus yardwork.
It’s definitely taking up more time than I perceived. The location I’m at is a fancy neighborhood, so it’s a constant game of catch-up to prevent nasty grams from the HOA. The summer’s attempt to tame the yard is not the most sucessful, especially with all the rain this year (had a mini flood, and chunk of a tree fall into a neighbor’s yard as highlights). So the big plan includes a much smaller place next. In the meantime. Indoors, I’m working on reducing my stuff and sell my unwanted things.
There is no way I could live in a small house with my family. Well, I mean, if I had to, I could, but it’s not my choice. I have issues with clutter and stuff like that, and when you live in that small space, you have to keep it really clean. My husband, child, and dogs do not seem to approve of my clutter-free, clean environment plan which means we need a bigger space.
I don’t know that we need the size house we have but we definitely couldn’t do smaller than what we just moved out of. Our previous house was small but the layout was horrible, making it feel even smaller. I love my family but I do not need them living on top of me and that’s how it felt.
I admire the fact that you guys can do it.