One of the most effective strategies for really accelerating your progress toward your financial goals is to make a major downsizing move, one that will free up hundreds of dollars a month and/or quickly produce thousands that you can instantly apply to progressing toward your big goal, whatever it might be.
For many people, that’s retirement. A person in their 50s or early 60s with some solid money in the bank and a desire to have plenty of time to enjoy life without work while still in good health might want to take that final leap over the threshold to the amount they need to retire on while also reducing their monthly expenses.
For others, it might be something like a house down payment, the funds to go back to school for a few years or the funds to launch a business idea they’ve had for a while.
Whatever your big goal is, a significant drop in your monthly bills or a quick influx of cash can make all the difference, but the price can be costly, too. You don’t want to make a move that would make your life miserable or untenable, so the trick is to stick to just one or two that seem like they’re palatable to you.
Here are seven ways you can “downsize” to accelerate yourself toward your goal.
Cancel your cable or satellite.
The average American pays over $100 a month in cable or satellite bills, with many families paying well above $200 a month for packages laden with premium channels. Simply canceling the service means that you’re no longer paying that bill.
Cutting the cord isn’t easy. The free replacement is an over-the-air antenna, which can get you 15 to 20 channels of content in most cities. You can also replace the service with streaming options such as Netflix, Hulu, Amazon Instant Video and Disney+, but those come with a small monthly cost — much smaller than a cable package, to be sure, but still significant. If there is a cable channel or two you just can’t live without, take a look at Sling — it’s another monthly bill, to be sure, but you can at least retain a few cable channels that you deeply enjoy.
Currently, we have an over the air antenna, Netflix and Disney+, and we only have the latter because we got a deal on it for under $4 a month for the first three years. Our “television” bill is about $15 a month all told.
Cancel your cell phone and switch to a simple pay-as-you-go phone.
Cell phones are incredibly useful, but you don’t really need the latest smartphone with a huge data package under a long term contract. Rather, assess your actual needs and consider dumping that heavy contract by moving to a lighter pay-as-you-go service like Ting or even a much more lower-end option from your current provider.
The average cell phone bill in America is somewhere around $80 per month. If you can cut that to $20 or $30 (or even down to nothing), then you’ve made a significant change in your finances going forward.
If you find that you have tons of unused data each month, this is a change you should seriously consider making.
Cancel your home internet service.
If you’re a heavy cell phone user and the above option doesn’t seem to click with you, consider instead canceling your home internet service. The average home internet service is above $60 per month for people with broadband, and if you’re not using it frequently for data-rich purposes, your cell phone can likely provide all the internet you need.
One great way to figure out whether you need a certain service — whether it’s cable, internet or cell phone — is to intentionally go without it for a month, or to use it absolutely minimally. Does your life go smoothly without it? If so, it’s probably a service you can easily drop. Plus, you get a fresh view on any tired routines you may have built up over the years.
For many people, canceling either home internet service or cell phone service makes a lot of sense. Having only one of them enables the internet access that people often need, and the one you choose likely depends on your lifestyle.
Do a major “possession purge.”
A few months ago, one of my friends decided to do a thorough “possession purge” in which he got rid of 50% of his possessions. He took almost every type of possession he had, divided it in half based on which ones he actually valued and which ones he didn’t, and proceeded to sell off the 50% he decided to get rid of using Facebook Marketplace and other services.
While this might seem like a pretty radical step for some, for him it was quite freeing. He described his home as feeling completely uncluttered, he had tons of closet space again, and perhaps most important of all, he felt a lot more ready to move in the near future, as he’s considering moving within the next six to 12 months.
Even more important, he used that influx of cash along with a trade-in to ditch his old car and get a much newer and more reliable one. He now has stable transportation for a long while without adding another debt to his life.
If you simultaneously feel like your home is cluttered and your possessions take up too much space while also wanting to make big strides toward a financial goal, consider a giant possession purge. If you’re not sure how to start, consider simply dividing each type of possession you have in half, sorting by the value it has for you, and selling off the lesser half.
Sell your house and buy a less expensive one, either smaller or in a different location.
Many people, particularly people who have had children recently leaving the nest, have recently done a “possession purge” or have opportunities in other areas, find themselves with a bit more space than they need and thus the possibility of downsizing their home becomes real. The truth is that most of the space in our homes is used to store stuff, the vast majority of which we rarely use, so a smaller home isn’t really that big of a shift if you get rid of a portion of those things.
If you do decide to downsize your home or move elsewhere, you’re likely to not only recoup money from the value of your home, but you’ll also see reductions in mortgage costs, property taxes, insurance, utility bills, (possibly) commuting costs and home maintenance costs. The impact of a downsize in your home can be tremendous.
This is perhaps the biggest single game-changer on this list, but it’s not right for everyone. For example, we currently have a teenager, a pre-teen and a child nearly at the pre-teen stage in our home along with two adults, so downsizing would be a bit of a challenge for us right now. It’s possible, but not particularly comfortable. However, in 10 to 15 years, when it’s just Sarah and me under this roof, downsizing will likely be much more appealing.
Move into a cheaper apartment.
Moving to a smaller or more efficient place doesn’t just apply to homeowners. The same is true for apartment dwellers, too.
Moving into a smaller apartment means less rent, of course, but it often means lower utility bills and it can also often mean a reduction in the cost of commuting. If you can get a smaller apartment that’s positioned better to allow you to use mass transit, you can easily ditch your car, use mass transit for almost everything, and occasionally use rental services when you have additional needs, saving a ton of money.
This is a major transformative move, but it’s one that can save you a ton of money each month, turning a situation where you’re barely treading water into a situation where you’re getting ahead quickly.
Sell your car and use only mass transit.
Obviously, this can pair well with moving to a place that’s closer to mass transit, but it can be a smart move for anyone with easy access to mass transit systems in their city.
The act of selling off your car can directly raise some significant funds, but when paired alongside the elimination of the many expenses surrounding a car — registration, insurance, fuel, maintenance, parking — selling off a car can result in significant ongoing savings as well. The cost of a mass transit pass is only a fraction of those expenses.
If you live near mass transit, seriously consider selling off your car and relying on the mass transit system with occasional help from other services. It’ll produce a bundle of cash right now and save you money every month going forward.
The goal isn’t to do all of these things, but to find one (or maybe two) that make sense for you and actually do that one.
Doing everything on this list would be an enormous shock to most people and likely outside the realistic limits of their life choices, but for most of us, doing one or two of these things in the service of achieving financial goals and accelerating our progress toward big ones can be quite powerful.
Look for one or two items on this list that are in line with the realities of your life and then do those things. Don’t just sit around and think about it. Do it.