The Downsize Dilemma

The last blog post focused on the Envelope Budget.  Let’s take a break before diving into the next type of budget and instead focus on choices. 

 

When did you last make a big purchase?  Was it a home?  Car? Furniture?  In any case, the decision is rarely easy – short or long-term. 

Not too long ago, my husband and I were looking to purchase another car.  He bought a Kia Optima a few years ago that had the “cutting-edge” feature of remote keyless entry.  Thinking it was unnecessary at the time but nice nonetheless, he bought the car and thought nothing of it.  When it came time to replace my vehicle, however, he urged me to get one equipped with the same feature.  Why?  Because he upsized, and his expectations followed suit.

His love for remote keyless entry convinced me to seek this feature in my new vehicle, and I now share the same passion for it.  With three young kids to cart around in an SUV, I also LOVE the automatic trunk door hatch – it allows us to store groceries, strollers, and sports equipment without a lot of physical effort.

And so we’ve created a monster.  Although we both plan to keep our vehicles for a long time, it will be excruciatingly hard to ever go “back” to an old-fashioned key or manual trunk hatch.  On the rare occasion we use a rental car, it throws us for a loop.  While we weighed the timing decision heavily, we didn’t spend a lot of time pondering the features.  Seeing those benefits firsthand, though, makes it difficult to downsize. 

Maybe you and your spouse earned $150,000 a year, prior to having kids.  You lived in a comfortable home, saved a decent amount, and had extra money to spend on vacations, concerts, and meals out. 

What happens now?  Maybe you have two young kids and one of you yearns to be a stay-at-home parent.  Suddenly, your family of four must live on $100,000 a year.  Cutting $50k earnings out of your budget can be extremely tough!  Nice meals out and vacations will likely take a back burner, at least for a while.

The examples are endless.  The truth of the matter is this: no matter what the circumstance, it is ALWAYS EASY to “upsize” but so HARD to “downsize.”  I am a big proponent of living within or even below your means to create better possibilities down the road. 

Let’s suppose you have one child and both you and your spouse are working outside the home but are planning to have more kids.  You’re moving and are pre-approved for a $400,000 home.  Please consider buying a $300,000 home instead … you’ll thank me later.  The savings on that monthly mortgage payment (and possibly lower property tax bill) may give you financial freedom to explore other possibilities down the road.  A home renovation?  Fertility treatments to have another child?  Staying home for a few years with the kids?  Letting your spouse quit the 9 to 5 to start a business?  All of these ideas are within reach if you have that extra money saved.  Think of the opportunities you create with a frugal decision, not the sacrifices. 

At WorthyNest, we know many bloggers focus on frugal living with small, everyday decisions (like the daily Starbucks coffee or weekly grocery shopping).  We’re not here to comment on those.  Rather, we want to talk about bigger decisions … the ones that really matter.

If you’re ready to talk with me about creating a brighter financial future for your family, please schedule a free, 30-minute virtual consultation.  We can discuss your goals and values and create a customized plan to get you on the right path.

 

Forever Faithful,

Deb Meyer, CPA, CFP®