Our last home was a single-family house that turned out to be more than we needed and frankly more than we wanted. With this excess space came excess costs. And these excess costs often left us with no savings at the end of the month or even cutting into our savings. Therefore, we decided to downsize to a much more reasonably-sized and affordable condo.
In the process, we cut a variety of costs related to owning and maintaining a home. In fact, our new home has helped us reduce our home-related costs by about $27,000 in the 18 months we've lived here as compared to our previous home, and with each passing month, we build upon this amount.
Mortgage savings: $24,000
When we downsized, we in effect were able to take the proceeds from our previous home sale after we paid off the mortgage and closing costs, pair this money with savings, and buy our current condo outright. This allowed us to ditch completely the nearly $1,335 monthly mortgage payments that we had been making. At the time we sold, of this amount, about $780 was going toward principal and around $555 was going toward interest.
Over an 18-month period, this reduction in cost has added up to about $24,000.
Utility savings: $1,800
Our utility costs are significantly lower in our condo as compared to our previous single-family home. While we did our best to section off and insulate our last home, as well as keep the thermostat low in the winter and high in the summer, reduce our cable package, and reduce our water bill by not watering the lawn, there was only so much we could do to cut costs.
Our current savings on utilities is about $100 a month, mostly from reducing natural gas and electric consumption due largely to only to having to heat and cool just one floor rather than three. This adds up to about $1,800 in savings since we've been in our new home.
Property taxes, repairs, maintenance and insurance savings: $1,000
We pay a pretty hefty $300 association fee that covers many of our repairs, property maintenance, and common insurance for our condo. We pay about another $15 a month for content insurance, and then around another $230 a month for property taxes for a total of just over $550 a month for these items. However, at our old home, these costs averaged near $600, $50 more than we're paying now. That has left us with an overall cost reduction of almost $1,000 over the past 18 months in these home expense categories.
Peace of mind: Priceless
So in the last year and a half, through our downsizing of homes, we've cut our home-related costs by about $27,000. But more than this, we've bought ourselves some peace of mind.
I can only try to explain how nice it is not to have a mortgage. Not only this, but knowing that even should a job loss or other significant financial issue befall us, a monthly mortgage payment isn't there, is a huge relief. And this peace of mind certainly lets us breathe just a little bit easier while getting by on an income that's already somewhat limited.
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The author is not a licensed financial or real estate professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Banking & Budgeting