There are many reasons to downsize things that take up your time, efforts, and money. For example, many people in the United States have single-family homes that are more than twice as big as the average home in the mid-1900s. With bigger homes, bigger yards, and bigger automobiles come increased maintenance and operational costs. Downsizing may seem like a step backward, but there are several benefits to making this change.
Is Downsizing Right for You?
A closer look at switching from a larger vehicle to a smaller one uncovers some important benefits, including financial and time savings and decreased amounts of upkeep and maintenance. As you first consider the savings and possibilities, take time to carefully determine whether this step is right for you.
- How will depreciation losses compare with reduced gas costs and your existing monthly payments?
- How much are sales taxes on automobiles in your state?
- Have you owned your current vehicle for three years or less?
If you already own a gas-guzzling automobile and you’re looking to buy a new car, downsizing could be a very good option for you. If, on the other hand, you just bought a new car a few years ago, you’ll wind up spending lots of money on that new car, losing money in depreciation as soon as you drive it off the lot, committing to a financial obligation, maybe for longer than the car will run, and then trading in that car or truck for something smaller while still hanging onto all of the costs.
Depreciation and interest add up to a hefty 46 and 12 percent of owner costs in the first five years of ownership respectively. As you weigh the pros and cons of downsizing with a new vehicle purchase, carefully consider the differences between new monthly car payments, increasing debt, and those lower gas prices.
Making Your Purchase
If you are in a good place to downsize, you could enjoy lower monthly payments, decreased insurance premiums, reduced maintenance costs and time commitments, and financial savings at the gas pump. The experts at Consumer Reports recommend finding a car or truck that safely holds you and your passengers. They further recommend purchasing an auto that is reliable and fuel-efficient. In fact, the company offers many resources to help buyers find vehicles that meet those criteria within certain price ranges.
Consider All the Options
As you consider the move from a larger to a smaller vehicle, consider the possibility of reducing the number of autos you own. You may find it possible to get by with just one car and a bus pass or ride-share arrangement. If you can’t get by with one less car, you could consider downsizing to a smaller car that has been previously owned.
You can successfully downsize by following a pattern recommended by financial experts.
- Consider long-term needs and expectations
- Get rid of things that don’t have a purpose or function (Maybe you don’t need a minivan anymore!)
- Search out all those hidden costs, such as the immediate depreciation of new cars
- Recognize new benefits, like being able to reach the climate control knobs
Of course, there may be some sacrifices that are a little harder to make. You could save money on your new car purchase by skipping extra features, including a sunroof, automatic door locks and windows, and Wi-Fi. You may come to realize within a week or two, that the extra expense really wasn’t worth having a sunroof that you could only use for a few months of the year.
Your Takeaway Points
Here’s a quick recap: If you’ve owned your car for more than three years and own your car, or are very near, downsizing may be an excellent option for you. The benefits could include financial, time, and effort savings. Make sure you find a reliable, cost-efficient vehicle and carefully evaluate any and all amenities before paying for them.