The Surprising Impact of Downsizing

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My wife and I have downsized. We sold a large condo in a high-rise building and are moving to a much smaller house in a nearby community.

The process taught me a lot about financial planning.

Clueless... in retrospect

We had lived in the same condo for the past 22 years. We bought when it was brand new.

It was in a beautiful, gated community, with extensive facilities that included three golf courses. Neither my wife nor I are golfers.

Before moving in, I didn’t consider the increasing costs we would be assessed to maintain facilities we didn’t use.

I also didn’t appreciate what happens with assessments in residential buildings as they age, although, in retrospect, it should have been obvious.

There’s evidence maintenance costs increase substantially over time. Frequently, budgets aren’t adequate to address the need for costly updating and repairs. This means residents may be saddled with significant assessments to cover the shortfall.

Another factor that eluded me was the impact of changing demographics, which was accelerated by the pandemic. It’s not surprising that our building, located in a desirable community near Naples, Florida, would attract a younger demographic with more disposable income and different aspirations for the building than older residents. For many, living and working in a resort-like atmosphere in a temperate climate is very appealing.

As I assessed our situation, I perceived a future dominated by significant – and uncertain – increases in costs, over which I had no control.

The final factor that influenced our decision was an overheated real estate market. The number of listings in our community plummeted to an all-time low. It was an excellent time to sell, even though we had no place to go.

It would have been impossible for even the most competent financial planner to anticipate this confluence of events.

Our decision

We found a nearby community that was under construction. We selected a model that will be smaller than our condominium, but more than adequate for our needs.

The community has no golf courses. The monthly homeowners’ fee is a fraction of our previous costs. It can go up, but it’s unlikely to do so soon.

The cost of the house was significantly less than the sale price of our condo.

The only issue was interim housing. We needed a place to stay while the house is being built. Rentals were in short supply and costly.

We were able to find a short-term rental (10 months) in a complex near downtown Naples. It had one significant downside: It was very small.

We wondered how we would deal with the practical side of downsizing (getting rid of “stuff”), working in smaller quarters, etc.

I thought the interim adjustment would be challenging.

I was wrong.

A surprising impact

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We found it liberating to free ourselves of many of the possessions we had accumulated over time.

The temporary space meets our needs. It’s compact but efficient.

We don’t miss the services lavished upon us in our high-rise building or the additional rooms we rarely used.

It’s not just “learning to live with less.” We enjoy having less: Less room and fewer “things.”

The most welcome change is that, by lowering our expenses, we have a much better handle on our finances and can plan more intelligently.

We aren’t resting on our laurels. We know the future can be as uncertain as the past.

I wonder whether “comprehensive financial planning” would have alerted us to these issues so we could have planned better to address them.

Dan trains executives and employees in the lessons based on the research on his latest book, Ask: How to Relate to Anyone. His online course, Ask: Increase Your Sales. Deepen Your Relationships, is currently available.