Why Downsizing To A Smaller Home Can Make You Happier

As the current lease on our rented condo rolls towards the end of the contracted dates, some of our friends are asking us, once again, when we plan to stop renting and buy our next home. When I share my findings that renting is still cheaper than owning in our town, some suggest we “should” move into a larger home. When I ask, “Why should we move to a larger home?”, responses usually include a quick shrug of the shoulders, a time-stalling “uhhhh,” then perhaps something like “your daughter will need more space as she gets older,” or “don’t you want to grow a larger garden?”

I’ve learned that everything you own owns you. Several years ago, we chose to free ourselves from the handcuffs of STUFF. We downsized our lifestyle almost 50% by moving from a 2450 square foot home into a condo with about half as much floor space. In doing so, our housing and utility bills dropped dramatically. We sold half of our belongings and made over $13,000 in cash. Decreasing our monthly expenses caused our net worth to grow exponentially.

More importantly, our minds are more at peace, and we live a more culturally rich life. We have more time and energy to consume experiences rather than things. We play more with our child, talk more with each other, and enjoy more of life.

Less space gives us more of everything we value most.

According to David Wann, bestselling author of Affluenza: The All-Consuming Epidemic, many of today’s three-car garages occupy 900 square feet, which is about the average size an entire home was during the 1950’s. Today, most people use the extra garage space to store things they own but seldom use.

The number of “very happy” people peaked in 1957, and has remained fairly stable or declined ever since. Even though we consume twice as much as we did in the 1950s, people were just as happy when they had less! 86% of Americans who voluntarily cut back their consumption feel happier as a result.

This recession is putting the squeeze on many families. Perhaps it’s time to consider downsizing your biggest budget buster– your housing expense.

Renting is NOT throwing your money away

Whether you pay mortgage payments to the bank or rent payments to your landlord, you are paying for SHELTER. Contrary to what most people used to believe (but now we know better, right?), homes do NOT always go up in value. Your home is your shelter — not an investment. Often it is less expensive to rent a home than to buy one. Consider renting and investing your down payment savings and your monthly savings into income-producing real estate, businesses, stocks and bonds, or your education instead. You will often come out ahead financially in the long run.

And you might find yourself happier for it, too.

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Millionaire Mommy Next Door

A self-made millionaire shares her recipe for success, happiness and financial freedom.

48 thoughts on “Why Downsizing To A Smaller Home Can Make You Happier”

  1. We downsized after I got downsized.. Happier today than I was with 2500 more square feet 5 months ago.. Now in a 3 bedroom townhouse/rowhouse and it’s da’ bomb :) also got a couple 100k in the bank, it’s all good right now.. just need to find my next career..

  2. I’m right there with you on this. For a while it was looking like I would have to move so I set about looking for studio apartments. My reasoning being that it’s just me and my cat, how much space do we need? My utilities would be lower and there’d be less space to clean! Also, less space = less stuff = more able to move about freely and not be cluttered.

    My boyfriend is the opposite. He wants as much space as possible (typical loner!) and he feels he has to own a house and renting is throwing away money. We have some different views when it comes to that. Hopefully we can reach some kind of compromise.

  3. i totally agree! i also love the freedom that renting gives you–want to move across the world? no hassle, just give 30 days notice, pack up a suitcase, and go. (I did.)

    Although, when I think of the future, I do envision myself settling down near my parents, and in that case, I think I may just want to buy a permanent place and stay there forever. I’m getting really, really tired of moving…and I don’t like the fact that my landlord can just up and sell my place whenever they want (this has happened to me TWICE, it is such a huge pain in the butt!). That is the only reason I can think of to buy a house–to save myself the trouble of worrying about getting kicked out or foreclosed on due to no fault of my own.

    I don’t plan on having kids or getting married, so I should only need enough space for myself and probably a dog then. I will have to re-evaluate the numbers (renting vs owning) and my emotions when I get to that point! Until then…renting is the best!

  4. You are SO sage about “The things you own, own you!” When I wrote my book RIGHTSIZING YOUR LIFE: Simplifying Your Surroundings While Keeping What Matters Most (Hachette, 2007) we had recently moved from 4000 square feet of living space to 1200 and felt absolutely liberated! Mind you, my husband and I have been married for 32 years and had acquired a lot of stuff (we found 3 dead vacuum cleaners at the back of one closet…) Jettisoning all those earthly possessions for which we had no use, or didn’t even like anymore was like getting out of jail. And we are renters as well after a lifetime of home ownership. We saw the crazy prices in San Francisco when we moved north from 23 years in Los Angeles and said, “No thank you…this is nuts!” Given the meltdown in the mortgage industry, we’re feeling so blessed to be able to have a nice life in a lovely part of the world and yet be living within our means. I call Rightsizing— “Downsizing with a Difference!” The goal in my view is to surround yourself with ONLY what you use and love.
    Cheers to you for articulating this so well!

  5. I absolutely agree about the things you own owning you! Life, not choice, caused our family to downsize about two years ago. At the time, I wasn’t in the ‘less is more’ mindset and I was absolutely devistated. My husband’s job in the mortgage industry basically faded away and we were forced to sell our home, move into a rental and have a large garage sale to make money off all the items we did not ‘need’. Soon afterwards, my devistation turned into mental and emotional freedom! I didn’t realize how this ‘stuff’ was holding me down. Now I can’t stand holding on to anything extra. I’m in process of trying to convince my husband we should go even smaller and rent a townhome or condo. I tell him if we move near a park the kids will have plenty of room to run and we won’t have to spend our weekends maintaining it. We’ll see.

    I believe there is a down side to renting when you have children though. I don’t feel grounded and stable here. What if our landlord decides to sell the house (which we don’t want to buy) and we have to uproot the kids from the school they love? I don’t worry about a high mortgage anymore, but I worry more about the well-being of my children.

    By the way, I love your blog. When I see a new post in my inbox, I wait until I have a solid chunk of time to sit and enjoy reading before I open it. I know there will always be something useful for me to really think about in each post. Thanks!

  6. Of course you guys all forget that in 50 years your rent will follow inflation, as will housing prices generally. That will mean that in 15-30 years the people who own will be paying nearly nothing to live while your rent keeps increasing. If you buy a house that’s well within your means, that works too (IE, Mortgage 2x-2.5x income as a general rule). Either way, as long as you plan ahead to take care of your future and don’t overspend now you’re pretty much golden. I would prefer not to be stuck in a sardine can at the mercy of my neighbours for peace and quiet, which is why we own a house. With a mortgage at about 1.6x our income, it’s the same story of being able to afford living and not buying stuff.

    1. I live for free now ! I downsized to a condo and bought real estate investment to cover my taxes, insurance and HOA. All I have to pay for is utilities, food and vacations :)

  7. I don’t think any of us ‘forget’ about inflation, but we think in relative terms. If I can get my money to perform at a rate greater than the appreciation of the house I am up, in relative terms. It would be nice to find a house at 1.5 to 2.5 times one’s annual income, but the problem was (until recently) that you couldn’t find that. The closest I could find in my geography was 4-5x and then, well, I got downsized..

    With the rightsizing of the marketplace (read: current economic malaise) we may see this adjusted, but many people and parts of society will and are being devastated along the way. All in the name of increasing material wealth and accumulating more than the next door neighbors.

  8. We recently downsized to a 2K a month 2,000sq. ft. rental with our four kids and we couldn’t be happier. Less house for us means, less stuff to buy and take care of and most importantly it leaves room for us to have a housekeeper! With four kids I also love that we can provide a better neighborhood for them renting than we ever could buying. We have rental properties, but I prefer the freedom of renting and choice of neighborhood. It is important to know your landlord’s future intentions as best you can. Great post Jen. I’d love to hear more about this topic.

  9. A few years ago, my husband announced he wanted to “chuck it all” to travel the country in a converted bus for a year. I asked, “Why can’t you be like a normal husband in a midlife crisis and have an affair or buy a Corvette?” We’re both shrinks, but he’s obviously the much better one, as we did do the trip.

    We found that living in 340 sq ft with our 60 lb dog and 2 cats who hated each other was the happiest we’ve ever been. So now, we’re putting our “dream” house on the market to live in the bus. We decided we’d rather spend time together, supporting each other and not a lifestyle. When we returned from the trip and unpacked all the boxes we’d had in storage, I was shocked to see how much stuff I hadn’t missed – let alone given a thought to – for a year. It was a great lesson to me about what is really “essential.”


  10. We used to own a 3-bedroom condo and bought a larger home (in a more inexpensive area) for when we had kids. We are extremely happy with this decision. We are homebodies and we like having a yard, garage and lots of personal space. That being said, I was envisioning you all packed in a studio apartment when I read the first part of your entry. Our condo was 1300sf (ample for us as a family if it was all we could afford) and our current home is twice as big. I just had to laugh at the idea you “need” something bigger. A condo like that sounds quite comfortable to me. We will downsize to a smaller one in retirement, for sure. We found given the two, we really enjoyed the simplicity of condo living. Even as owners, there simply wasn’t near as much to maintain as on a detached home.

    I guess my point is we were pleasantly surprised how much we enjoyed condo living. so much so it is our long-term goal to downsize as we age. & I find it funny how others react to your lifestyle choice simply for being “different.”

  11. We went from a 2000sf house to a 750sf apartment and I HATE it. There are three things that drive me crazy: We love to cook but the kitchen only fits one and a half people at a time. The doors are so small my wrists keeping getting knocked on the knobs and posts and it hurts a lot. There is also no place to do a project and leave it out, the kitchen table has to do all the duties of eating and crafting and homeschooling.

    Really I think we would be plenty happy in a place only 1400sf, 2000sf was a bit much to take care of sometimes, we just need a home office and school room and it would be great. Though I would like a good sized yard for a garden. a handful of containers on the balcony is only really good for herbs, but that helps a little.

  12. What a timely post. Prior to this whole economic meltdown, I was thinking about which of our homes I’d felt most comfortable in and it was our condo. Granted we had 2 kids and it was too small to really have the size of family we have now (4 kids, 3 cats, 2 dogs); however, at the time I was thinking about this, I told my son that he might want to think about just renting instead of buying a home–just for the freedom to move about when you want to. I think ultimately we may move back into a condo, but that’s a ways away now.

    When we moved into our new 2400 sq.’ home 6 years ago, a lot of the things were just left boxed in the basement. About 3 years ago, my daughter volunteered to clean out all the boxes and at first I told her that she’d need to let me look through them as she was unpacking them. Then, I just decided that if I hadn’t gotten them unpacked in 3 years & couldn’t remember what was in most of them, that I didn’t need the stuff anyway. We ended up with probably 75% of the things from those boxes going to charity.

    Take care

  13. I think there is ‘less’ outrage this year due to the change in global economy, home owning isn’t the panacea anymore, which it was perceived to be, just a short while ago..

  14. Oh yeah, Chad, I remember the scathing comments I got in 2007 when I wrote about how it was often cheaper to rent, that home prices were due to take a great fall in value, and I suggested people do the math for themselves. Wow, did I stir up a bunch of controversy back then! I was the American Dream crusher, I suppose.

    At least now that the crash has happened, people are more likely to think for themselves than to blindly trust the “experts”, aka mortgage brokers, Realtors, banks – you know, everyone who benefits when consumers believe that homeownership is your best investment…

    In the long run, I think home values will drop to reasonable levels again, and for many, it will make more sense (financially) to own at that point. Unless the government keeps intervening with the natural process. I’ll wait and see.

    1. I couldn’t agree more. I have renting for the past four years after selling my home on early 2008 just before the housing market crash. For the most part, I am very happy renting and enjoy the freedom it brings. The only part that bothers me about renting is that my landlord can raise the rent every year if he wanted too. As far as I can see that is the only disadvantage for me. Although I do miss having a nice yard to do my gardening. The housing prices are still dropping in my area which happens to be the same area where I am currently renting. I totally agree with your statement about “thinking for yourself and not listening to the so-called experts.” I don’t believe that these folks have our best interests at heart just their own. I will wait until 2012 or after to buy if I buy at all. I am 7 years away from retirement and plan to move to another part of the country or possibly another part if the world. The possibilities are endless. Looking forward to reading more of your posts.

  15. I’m surprised there wasn’t more OUTRAGE at an “attack” on the “American Dream.” As a long time reader I can remember the outrage on one of your previous posts (about a year ago or more) suggesting that renting can be better financially than buying.

  16. Maybe the outrage wasn’t from suggesting renting could be better than buying, but because you suggested they do math. People don’t like math.

    I agree home values will drop to reasonable levels in the long run. However, I still see a fair amount of comments on blogs parroting the real estate gospel (renting is throwing money away, building equity, inflation, etc.). It will take a while to shake this out of our collective psyche. The stock market and general economy will probably recover faster than the real estate market.

  17. “Your home is your shelter — not an investment”


    Home may make sense when you have a big family, at some point you need more space. Three children sharing one room is not healthy

  18. I just found your blog and have read only this post so far. That was enough for me to make it a point to read your WHOLE blog!

    I’ve been in the midst of downsizing our belongings just in case we’re able to move to something smaller and get ourselves out of debt.

    I look forward to reading your advice!

  19. We recently downsized from a 1700 sq ft home to an old fixer upper of 900 sq feet. It’s been an adjustment, but I love having a one level home! And it sits on 4 gorgeous acres that we’re converting into a hobby farm (Farmers Market plans, etc). Because we moved 1 hr out of the city to a smaller town, the property taxes are a downright steal! We’re still in shock at the cheap energy and utility rates here. We simply couldn’t be happier with our choice to downsize!

    Hubby and I never understood the attraction to those McMansions, or the `Street Of Dreams’ type of homes. I guess to each his own, but when you factor in the costs of furnishing, upkeep, heating….gads! Who needs it!? 40 years ago, the average size home for a family of 4 was 1,000 sq feet.

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  21. I would say owning a home is a big benefit to your bottom line. Not because it will go up in value. I totally agree that your primary residence is not an investment.

    I bought a fixer upper in a neighborhood on the rise. I had to invest my time and some money, but now the house is great, and the neighborhood has come up considerably. While I do have a mortgage, taxes, insurance and maintenance, every renter also has equivalent costs. When you rent you pay a fixed amount to a landlord. The landlord then pays the bank or investor for the mortgage on the property. The landlord also pays property taxes, insurance and any maintenance. On top of that the landlord also wants a little something for his/her trouble, so that is thrown into the mix.

    Now comes the advantage to owning a house. I only have to pay the mortgage until the house is paid for. Once the house is paid for I only have to cover the other expenses. So for example you have a $600/month mortgage with $60/month for taxes and $40/month for insurance. Maintenance would be variable but let’s say $100/month. After the house is paid for my total cost is $200/month. The person paying $800 pays that forever. Over my lifetime I will save a considerable amount of money.

  22. Glenn, another thing is inflation protection. In year 25 of a 30 year mortgage your payment will still be what it was when you started (give or take a bit). The renter, assuming a 2.5% increase per year has their payment increase to be 85% higher than when they started. Plus, after you are done paying, their rent keeps going up and up and up forever, until their fixed income retirement can’t keep up and they have to move.

  23. I completely agree. My father died 8 months ago, and we have a 5,000sf 6 bedroom 4 bath house in a prime location on 1.5 acres, that is the valley in the woods leading down to a lake. We are looking to sell and down size not for finical concerns, because it is paid off, but for a more manageable life style. I completely agree with you, who needs such a big house.

  24. The psychology around being an “accumulator” or a “free spirit” is interesting. I know a few folks who were kids during the 1930’s and they tend to keep and store everything they ever purchased. They are compelled to not “waste” anything that could potentially have some future use. On the other end of the spectrum you have the “free spirits” who just want the basics and are confident they can always find/get what they need – which isn’t much. I think a similar dynamic occurs with owning/renting in a subtle way. When I say “own” I do mean own not mortgatged. To see where you fall on the spectrum, ask yourself, “if I had $500,000 would I feel better buying a home, or renting and having the $500,000 in investments? I think this is the most important decision – the emotional one, vs the financial one. At the end of the day, you might end up with a little more money doing one or the other, but you can’t take it with you and the journey is what’s most important.

  25. $500,000…? Buy a home for $200k (it’s purpose being a home, not a short term flip-able investment), startup a business using $150k as backup and invest the other $150k for the long term :)

  26. I love this site! I am in the process of moving to a smaller apartment, without the garage that I have now, to be closer to work, have less rent, and most importantly be within walking distance of stores and restaurants. I am going through my belongings in the garage and apartment with the ruthless aim of getting rid of absolutely anything/everything that I don’t need or use. Far from being a source of sadness, this process feels liberating. No more will I have the guilty feeling of “I should be cleaning out the garage”, and/or wondering what to do with the clutter that I have accumulated. I don’t want an entirely minimalist existance, just a reasonable one that I can maintain and enjoy. Thanks for showing that there are others who are the same!

  27. We, too, are on the verge of moving — from a 2450 SF single family house into a ? My preference is renting a townhouse, with just one living room, as opposed to what we now have, a formal living room with separate dining room, AND a family room. We almost never use the formal living room. With cathedral ceilings, I KNOW our utility costs will be lower. Also in a townhouse, we probably would not have to pay for the water, and that’s an expense of about $80 a month for our house. As for the costs of ownership, not only do we have a mortgage of $18,000 a year, but we also must pay for property taxes ($4,000 a year), homeowners’ insurance ($2,000 a year), homeowners’ association dues ($1,200 a year). The total cost is approximately $2,100 a month. We can rent a 1700 SF townhouse for about $1,000 a month total. That is about half our current costs, not even counting utilities savings. The idea of owning a house is as a hedge against inflation — inflation in real estate — which is not forthcoming, as far as I can see. And if you can’t see your way clear to actually owning the house you live in free and clear, then the debate is moot regarding owning vs. renting. Either way, you’ll have monthly payments, but with a house, your payments are much larger, cutting significantly into monies you can spend elsewhere.

  28. Interesting alternative post by “Queen.” There are many choices. My wife and I live in a mobile home, in a mainly elderly park with a pool and near a beach. Neighbors are quiet, friendly and polite, crime is zero and we have gardens and plants and a dog that is no one’s problem because we own the structure. Our rent and utilities total $400/month. Everyone says, “but those things lose value.” Yes, like the car in the driveway. While they never go to zero, like a car, let’s say they did. I paid $30K cash for it (and could get one for half that). After 8 years, that works out to another $312/mo. for 1216 sq. ft. This number will continue to drop. I have zero debt, and all but about $1000/mo. of my 6 figure income goes in the bank. There are many alternatives, and none are for everyone. Henry David Thoreau said in the 1840’s, “Most men are needlessly poor their entire lives because they think they must have a house like their neighbor’s. Consider how slight a shelter is absolutely necessary.” Amen.

  29. @Ernest, exactly. Love your post, and I couldn’t agree more. Hubby and I bought a 20 year old, 25 ft camping trailer for $2,800. Fantastic condition, meticulously maintined and has all the comforts one needs, full kitchen, bathroom, great storage. We spent 2 weeks on vacation in it and we realized that we could be completely happy in a small space with minimal possessions (and virtually all of those possessions purchased second hand).

    As George Carlin said “They call it the American Dream because you have to be asleep to believe it”. We’ve been programmed into thinking that home ownership, and bigger is best, is the way to go. It doesn’t have to be that way at all if you’re willing to live authentically.

  30. Wow, what a great article. I definitely agree with your quote, “everything you own owns you”. The more stuff you have, the more stuff you think you need. Pretty soon that’s all you think about. I think it’s great that you have decided to downsize. I think it’d be fun even to a simple converted bus and travel everywhere! Experiences are so much more important than things!

  31. My husband and I are downsizing fro 2500 sq ft to 1200 , was a little scary at first. But now we see the liberation of having less stuff and attaining affordable living. Going to enjoy experiences not posessions. What a gift to our selves.

    1. I too am downsizing. I am in the process of going from 2000 to 1300 sq ft and I am excited! Only sad part is that I must get rid of 3 cats. But I will find them good homes.

  32. I am from Australia and have just got onto this blog,very enlightening I wish I could convince my wife to downsize into the villa that we own ,but she says it isnt big enough for 2 of us? My moto is; Dont accumulate stuff, accumulate experiences. And also to choose safety,is to reinforce fear!

  33. I totally agree that downsizing makes sense. We went from 2500 sq ft to 1500 3 bd room/2 bth room place. No mowing/landscaping/less cleaning/our networth has grown well and etc. When we do buy something, it will be just a little bigger than the condo but able to pay it off quickly and retire.

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  35. Downsizing makes sense regarding the rising engery cost. I live in Germany. The costs for oil, petrol and energy are exploding, as are the rents in the cities. In my village many houses are empty now, especially the old ones.

    My brother and me own an old house (built 1825) that we inherited from our father when we were very small children, so there was no chance to refuse it. In the last 18 years the cost to maintain it (repairs, new windows etc. and it’s still not isolated …) were equally high as if we just would have rented. We were and are not able to sell it, because an aunt has an usufruct on it just for the reason that we cannot sell it. She’s attached to the house and loves it more than people, loved it even more than her deceased husband. :(
    That house is large and money-sucking due to energy and renovation costs and time-sucking to clean.
    Looking back we should just have moved away, rented a small flat, waited until her death and sell the damn thing. But that doesn’t free us from our duties as owners to maintain it and there are renovation regulations in Germany now so that we would have to invest much money first if we would like to rent it out.

    Really very very true that one can be owned by things or even a house. The larger it is, the more it owns you. Rent if you can. ANY house is rented, even the “owned”, because you cannot take it with you.

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