How to Make Changes Without the Pain
This is the story of a couple who decided the time had come to make some serious changes to their lifestyle, but did not know exactly what to expect. How do we go from owning a home and two nice cars to living in an apartment with one vehicle and a motorcycle with half the posessions? Well, we did it, and so can you.
Ok, so I should start at the beginning I suppose. Why did we need to downsize to begin with? This is not the story of a couple who lost their home to forclosure, thankfully. But, sometimes we just get a little too deep into the spending and don't put enough thought into the paying off. Perhaps most people my age, early forties, have this all figured out, but myself and my husband did not. So here is our story.
One day I checked my credit score and discovered that it had risen dramatically since the last time I had checked it. This was a wonderful surprise, although it probably meant that I hadn't been checking it often enough. Nevertheless, I found this to be the perfect time to apply for some more credit. How fun to get that little incentive at the store when you apply for the card and get approved! 10% off the first purchase, I'll take it! $40 gift card on the first purchase, yippee! So, that's what I did. My husband too. Until all of a sudden we had about two dozen credit cards and so many bills to pay each month that I had to create a spreadsheet to keep track of them all. It was a full time job just opening the mail and keeping track of the different expirations on the promotional payoffs - another one of those bonuses I just loved at the time of purchase. Good grief, this was just too much!
I also took the opportunity to trade in a used vehicle for a brand new Ford Edge. Wow what a great car! I loved it. Really. Gorgeous and fun to drive, all the extra stuff I had never had in a car. And a car payment that we just did not need. What was I thinking? I wasn't, and that's the truth.
So, after a couple of years of this mess, we weren't getting anywhere in paying all of this junk - yes junk that we did not need- off. We had more IKEA furniture than any couple needs, more TV's from Best Buy than a family of four would need! What were we thinking? It was time for a house cleaning, and I mean that literally. We had too much stuff, too large a house, and too many bills to keep track of. So, I sat down with my husband and we stared brainstorming. We couldn't just sell our three bedroom house- with two bedrooms that were never even used- could we? We were homeowners. That means something, doesn't it? This is the American dream right?
Surprisingly, we both said no. To that being the American dream I mean. We just don't feel like owning a home and a bunch of stuff is all that important. Maybe if we cared what our family and friends thought about our "stuff", or if we wanted to impress other people. But the truth is we just don't care. Peace of mind is so much more important to us. So we made the decision. Even in the rotten economy we were getting our house market ready and selling. We didn't even care how long it took, a year even, but we would sell. I, being the one not working, was in charge of getting the place ready to sell. Ok, not so bad. A little paint and a little deep cleaning, some packing up of extra stuff from those bedrooms that never got used, and we'd be ready.
Here's where the first stage of downsizing comes in: Getting Rid of Stuff! We rented a storage room and moved all of the things we couldn't really give away but didn't want in the house while it was being shown. But the best part was when we went through the house and decided what pieces of furniture, boxes of books, clothing, dishes, etc to pack up for the Salvation Army. I will admit that this was my favorite part of the whole process. We actually had an entire carport of items for them to pick up. It made me feel great, even if we were still paying for some of that stuff on the credit cards. Then we did the same for things that we could sell on craigslist. We sold a treadmill, some antiques that didn't fit our style, a huge tv that we didn't even need, among other things. This was also very satisfying because we used the money for our later move into an apartment. Another thing to get rid of was that Egde that I loved so much. Now this may seem radical, but we sold it to Carmax and I bought a little motorcycle. I know, that is extreme. But it saved us the car payment every month, and the insurance and gas are nothing for the bike. If you can bring yourself to do something like that, give it a try. I'm never buying another car.
Here's when we come to the second stage of downsizing: Selling the House in a Lousy Market. I had the house ready, neat and clean, wall holes covered and baseboards freshly painted. This is very important because there is so much competition out there. In our neighborhood I watched the various listings online and kept track of what was selling and for how much. You have to know what your competing against. We even had a friendly realtor who had helped us buy the place. We were ready within a few weeks and had the house listed. Here is where you just have to take the advice of your realtor whether you want to of not. I know how hard it is to hear what they think your house will sell for, but if you listen to them you will succeed. So, I made sure that every time I was notified of a showing on the house I would vacuum again, clean the cat box, and freshen everything up. Then I had to grab the friendly cat who wants to pester everyone who enters the home, put him in his carrier and get out of there! He enjoyed this because we would sit at the neighborhood pool and he could watch the birds from the carrier. No cat hater wants to go see a home with a cat following them around, so make sure your pets are far away while showing a home. Once I knew the people had left we would go back home. This went on for about a month and all of a sudden we had an offer! What a fantastic feeling. We got through the negotiations and had it closed in a couple more months. In the meantime we had been looking at apartments closer to my husband's workplace to save on gas. We went from a three bedroom house to a one bedroom apartment and are so happy we are determined never to go that big again. (for a more extensive hub about selling tips that work, please check out this link)
This brings us to the third part of the downsize: Paying off the Debts. For us this includes credit cards and an auto loan. We looked at many different plans for this. You've heard of the debt snowball I am sure, pay off the smallest first and get rolling that way. Well others will say to pay off in order of highest interest first and work your way down. That makes more sense to me, but we did need to get the number of bills down so we did a combination. We paid off a few small balances, which seemed to have the highest interest rates anyway, and actually closed those accounts that were the most recent. This won't hurt your credit since these aren't the ones that give you a long credit history. Besides, it may be worth a small short-term hit on the score to simplify your life. There is a great tool on the Identity Guard website, which is a subscription service for identity protection, that lets you calculate payoffs for different time periods with your different interest rates, etc. I found it invaluable. We got five paid off pretty quickly, and the rest are on a set tragectory to be paid off over a few years. This gives us some wiggle room, and is much simpler that the previous way I was doing things. We now feel like there is light at the end of the tunnel and we aren't throwing away all that money to interest payments each month. We also refinanced my husband's truck and saved $100 a month without extending the loan. Work with your bank instead of the auto finance people and you may be able to save too.
So, I hope that I have at least given you some ideas or some hope here. I know that advice from every corner varies, but learning from other people's experience can sometimes be easier than learning from our own. Good luck with your budgeting and downsizing, and don't forget that the charity organizations can always use those things that you just don't need or have room for anymore.
This is the story of a couple who decided the time had come to make some serious changes to their lifestyle, but did not know exactly what to expect. How do we go from owning a home and two nice cars to living in an apartment with one vehicle and a motorcycle with half the posessions? Well, we did it, and so can you.
Ok, so I should start at the beginning I suppose. Why did we need to downsize to begin with? This is not the story of a couple who lost their home to forclosure, thankfully. But, sometimes we just get a little too deep into the spending and don't put enough thought into the paying off. Perhaps most people my age, early forties, have this all figured out, but myself and my husband did not. So here is our story.
One day I checked my credit score and discovered that it had risen dramatically since the last time I had checked it. This was a wonderful surprise, although it probably meant that I hadn't been checking it often enough. Nevertheless, I found this to be the perfect time to apply for some more credit. How fun to get that little incentive at the store when you apply for the card and get approved! 10% off the first purchase, I'll take it! $40 gift card on the first purchase, yippee! So, that's what I did. My husband too. Until all of a sudden we had about two dozen credit cards and so many bills to pay each month that I had to create a spreadsheet to keep track of them all. It was a full time job just opening the mail and keeping track of the different expirations on the promotional payoffs - another one of those bonuses I just loved at the time of purchase. Good grief, this was just too much!
I also took the opportunity to trade in a used vehicle for a brand new Ford Edge. Wow what a great car! I loved it. Really. Gorgeous and fun to drive, all the extra stuff I had never had in a car. And a car payment that we just did not need. What was I thinking? I wasn't, and that's the truth.
So, after a couple of years of this mess, we weren't getting anywhere in paying all of this junk - yes junk that we did not need- off. We had more IKEA furniture than any couple needs, more TV's from Best Buy than a family of four would need! What were we thinking? It was time for a house cleaning, and I mean that literally. We had too much stuff, too large a house, and too many bills to keep track of. So, I sat down with my husband and we stared brainstorming. We couldn't just sell our three bedroom house- with two bedrooms that were never even used- could we? We were homeowners. That means something, doesn't it? This is the American dream right?
Surprisingly, we both said no. To that being the American dream I mean. We just don't feel like owning a home and a bunch of stuff is all that important. Maybe if we cared what our family and friends thought about our "stuff", or if we wanted to impress other people. But the truth is we just don't care. Peace of mind is so much more important to us. So we made the decision. Even in the rotten economy we were getting our house market ready and selling. We didn't even care how long it took, a year even, but we would sell. I, being the one not working, was in charge of getting the place ready to sell. Ok, not so bad. A little paint and a little deep cleaning, some packing up of extra stuff from those bedrooms that never got used, and we'd be ready.
Here's where the first stage of downsizing comes in: Getting Rid of Stuff! We rented a storage room and moved all of the things we couldn't really give away but didn't want in the house while it was being shown. But the best part was when we went through the house and decided what pieces of furniture, boxes of books, clothing, dishes, etc to pack up for the Salvation Army. I will admit that this was my favorite part of the whole process. We actually had an entire carport of items for them to pick up. It made me feel great, even if we were still paying for some of that stuff on the credit cards. Then we did the same for things that we could sell on craigslist. We sold a treadmill, some antiques that didn't fit our style, a huge tv that we didn't even need, among other things. This was also very satisfying because we used the money for our later move into an apartment. Another thing to get rid of was that Egde that I loved so much. Now this may seem radical, but we sold it to Carmax and I bought a little motorcycle. I know, that is extreme. But it saved us the car payment every month, and the insurance and gas are nothing for the bike. If you can bring yourself to do something like that, give it a try. I'm never buying another car.
Here's when we come to the second stage of downsizing: Selling the House in a Lousy Market. I had the house ready, neat and clean, wall holes covered and baseboards freshly painted. This is very important because there is so much competition out there. In our neighborhood I watched the various listings online and kept track of what was selling and for how much. You have to know what your competing against. We even had a friendly realtor who had helped us buy the place. We were ready within a few weeks and had the house listed. Here is where you just have to take the advice of your realtor whether you want to of not. I know how hard it is to hear what they think your house will sell for, but if you listen to them you will succeed. So, I made sure that every time I was notified of a showing on the house I would vacuum again, clean the cat box, and freshen everything up. Then I had to grab the friendly cat who wants to pester everyone who enters the home, put him in his carrier and get out of there! He enjoyed this because we would sit at the neighborhood pool and he could watch the birds from the carrier. No cat hater wants to go see a home with a cat following them around, so make sure your pets are far away while showing a home. Once I knew the people had left we would go back home. This went on for about a month and all of a sudden we had an offer! What a fantastic feeling. We got through the negotiations and had it closed in a couple more months. In the meantime we had been looking at apartments closer to my husband's workplace to save on gas. We went from a three bedroom house to a one bedroom apartment and are so happy we are determined never to go that big again. (for a more extensive hub about selling tips that work, please check out this link)
This brings us to the third part of the downsize: Paying off the Debts. For us this includes credit cards and an auto loan. We looked at many different plans for this. You've heard of the debt snowball I am sure, pay off the smallest first and get rolling that way. Well others will say to pay off in order of highest interest first and work your way down. That makes more sense to me, but we did need to get the number of bills down so we did a combination. We paid off a few small balances, which seemed to have the highest interest rates anyway, and actually closed those accounts that were the most recent. This won't hurt your credit since these aren't the ones that give you a long credit history. Besides, it may be worth a small short-term hit on the score to simplify your life. There is a great tool on the Identity Guard website, which is a subscription service for identity protection, that lets you calculate payoffs for different time periods with your different interest rates, etc. I found it invaluable. We got five paid off pretty quickly, and the rest are on a set tragectory to be paid off over a few years. This gives us some wiggle room, and is much simpler that the previous way I was doing things. We now feel like there is light at the end of the tunnel and we aren't throwing away all that money to interest payments each month. We also refinanced my husband's truck and saved $100 a month without extending the loan. Work with your bank instead of the auto finance people and you may be able to save too.
So, I hope that I have at least given you some ideas or some hope here. I know that advice from every corner varies, but learning from other people's experience can sometimes be easier than learning from our own. Good luck with your budgeting and downsizing, and don't forget that the charity organizations can always use those things that you just don't need or have room for anymore.
