Downsizing Your Life Can Make You Wealthy!
Why Downsizing Your Life is Necessary
Downsizing your life by cutting expenses is an extremely logical way to achieve financial freedom. Sure, the ability to earn money precedes the test of saving it. However, downsizing to save money requires a discipline rarely demonstrated in American culture. Accordingly, let’s discuss tips for downsizing and summarize the benefits of downsizing. Downsizing your life is essential to creating financial security- what else could be more important?
Currently, the United States’ economy is thriving. Thus, most Americans increase spending to improve their quality of life. However, one economic downturn could result in a financial crisis. In a recession, employers cut jobs and consumers cannot pay for non-essential goods and services.
As a WealthHunter, financial discipline is a source of pride. The logical choice for WealthHunters is to earn and save as much money as possible during good economic times and then spend your savings on cheap assets during a recession. Accordingly, downsizing to save money during a bull economy is very difficult to do, yet essential to developing wealth.
Why Downsizing to a One-Bedroom Apartment is Enjoyable!
Recently, my wife Stephanie and I decided to downsize from a two-bedroom penthouse loft to a one-bedroom apartment. With good jobs and a thriving economy, why are my wife and I downsizing to save money? Truthfully speaking, we are skeptical that the United States’ economy can continue to surge unimpeded over the next five to ten years.
Historically, the United States is due for an economic contraction- or possibly even a recession. I remember being a teenager and living through The Great Recession of 2008. I remember my father bravely acknowledging that money was tight. While we didn’t go on family vacations or eat at restaurants quite as much, we avoided poverty due to my parents’ hard work.
When the next recession takes place, the huge gap between rich and poor will further expand. Families living above their means will be economically exploited. Meanwhile, families with a decent amount of money in savings will capitalize on the low asset prices that come with a recession. In short, my wife and I decided downsizing to a one-bedroom apartment to save roughly $1,000 monthly was a necessity for us to capitalize when the next recession occurs.
We are culturally programmed to believe that downsizing signifies financial struggle. While that can be true, it can also be preventative and capitalistic. While my wife and I could afford our two bedroom penthouse, we realized we were wasting money by paying for extra space we did not need. Furthermore, we could foresee deeply regretting not saving the extra $12,000 this year if the American economy slipped into a recession. Downsizing to save money was an easy decision for us because of the mutual passion we have for achieving financial freedom.
Tips for Downsizing
Downsizing to a One-Bedroom Apartment
When you have the money to live above your means, it’s wise not to do so. For example, my wife and I knew we didn’t need our guest bedroom or penthouse. We knew these were luxuries weren’t necessary and we didn’t even have time to enjoy them. Thus, saving an extra $1,000 each month and still living comfortably feels extremely rewarding.
More Groceries, Less Restaurants
When downsizing to save money, buying groceries instead of eating at restaurants is an effective tactic. Trust me, I know far too well. In Los Angeles, it is not difficult to spend over $1,000 at restaurants per month. Although dining at restaurants is extremely popular and often more efficient, the cost is a huge deterrent for WealthHunters. Even if you can write off write off dinner on your taxes as a business owner from time-to-time, it still adds up tremendously.
End Non-Progressive Habits
Habits that cost money and aren’t progress are often unhealthy crutches. Cigarettes, binge drinking, shopping, and sex all have the ability to cut into your budget and distract you from accomplishing your goals. Developing a passion for self-education, meditation, and yoga can help you refrain from wasting money on non-progressive habits.
Benefits of Downsizing Your Life
It’s difficult to save money when the economy is performing well- let alone if things took a turn for the worse. Accordingly, downsizing to save money can be an effective strategy to recession-proof your life. Saving money is challenging, but it’s also the cornerstone of personal finance.
Decreasing your fixed monthly expenses protects you from an economic downturn. By living beneath your means, you are actively choosing financial security over temporary luxury.
Build and Maintain a Good Credit Score
By keeping your monthly expenses low, you can use the extra money to pay off debt. Living beneath your means also allows you to keep your credit utilization low. Building a good credit score provides extra financial security for your family in hard times.