Moving to a smaller house or apartment can save thousands of dollars annually in housing costs. Reducing monthly rent or mortgage payments from $1,473 to $550 creates over $11,000 in yearly savings. Even modest downsizing from $900 to $650 monthly yields $3,000 annually. These savings can fund retirement, business ventures, debt payoff, or family goals.
Downsizing Financial Impact
- Aggressive Downsizing: $1,473 to $550/month = $11,076 annual savings
- Moderate Downsizing: $900 to $650/month = $3,000 annual savings
- Additional Savings: Lower utilities, less maintenance, reduced insurance
- Potential Uses: Retirement savings, business capital, debt reduction, education funds
Small House Example
Strategies for Housing Cost Reduction
- Move from larger home to smaller apartment
- Share housing with a roommate
- Relocate to a lower cost-of-living area
- Downsize from house to studio or efficiency
- Consider tiny house or ADU options
Lessons from Downsizing for Savings
- Housing Consumes Major Budget Share: Reducing housing costs creates the largest single expense reduction
- Extreme Changes Yield Extreme Results: Moving from luxury to shared housing maximizes savings
- Moderate Downsizing Still Helps: Even small reductions compound over years
- Moving Costs Are One-Time: Temporary inconvenience creates long-term monthly savings
- Extra Funds Enable Goals: Saved money can accelerate retirement, business launches, or debt freedom
Related Downsizing Topics
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Alex
Alex Pino is the founder of Tiny House Talk, a leading resource on tiny homes and simple living since 2009. He helps readers discover unique homes, connect with builders, and explore alternative living.
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I’d spend all my extra saved money on tootsie rolls and ecto-cooler! No- great article- and its too bad more people don’t see the light in this methodology- one of the reasons so many people are having their homes sadly foreclosed on them. On top of that, if you’re handy, buying a fixer-upper is a great savings too- that’s the route I took and it landed me a house that cost us less than what we were paying for rent!
-Deek
Relaxshacks.com
I could help my sister out more who is older and doesn’t have as much as she needs. I don’t know that I’d save a lot as my house is only $600 a month now but it’s possible. I want to live in a smaller/tiny place more for simplicity than cost savings. If I didn’t care to move where my family lives, I can’t live much cheaper than where I do now.
I am working less! We can still put money away, but work less. My husband, son and I are working out every day now (more time), Son and I are learning the guitar, and we were able to ‘donate’ 60 hours of free time to our favorite cause this past month! Thank you, Alex, for the great articles and thought provoking questions!
Debra
Hey Deek buying a fixer upper is a great idea, not for me yet, but some day – after the travels!
Timaree thank you for sharing.
Debra I like what you are doing with your time, sounds fun and I bet your family (and sense of community) is growing stronger.
Better yet- head for the woods- Maine, Montana, Vermont, Wyoming, and BUILD your own place. Esp. if just single, or a couple, you could start with a very small home, in a no-restrictions county, and erect it for less than $10,000- then, you’re in the best situation of all- NO Mortgage!
-Deek
Relaxshacks.com
I’m looking forward to something like that some day soon, Deek. OR a tiny house on a trailer… We’ll see
I’d actually be able to afford medical coverage for myself. Right now I pay $900 for rent and dropping down any amount would be good. Every penny is allocated and I still cannot afford to see a doctor (and I’m losing my ability to walk too) 🙁
hi Margaret, not too good about the medical coverage but maybe you could take a look at ‘hacres’ website – they are amazing with diet and what it can do for your health. Check out the testimonials. Good luck and best wishes, Mary.
Thanks Mary
Hope you are getting better, Margaret
Additional frugality:
*Explore an inexpensive, yet nutritious diet.
*Be satisfied with a two-week, interchangeable wardrobe.
*Live closer to work/shops – walk, bicycle, car pool or use public transportation.
*Vacation at home.
*Prevent future purchases – take good care of the things you have.
*Save money to make a purchase – as time goes by, you’ll realize most things are not really needed.
*Sell your crafts at the local shops to help pay for hobby materials.
Always thinking…
Di thanks for your awesome tips!
We downsized from a large expensive condo in downtown Portland last November to a smaller condo in Beaverton. Our house related expenses dropped from $2100 a month to $780. We don’t miss the larger place(except the fireplace)and the new place is much better located than the downtown condo. I am three blocks from a grocery store, mall and theater. Surrounded by many ethnic restaurants, am 4 blocks from the framers market and adjacent to the Max station. We couldn’t be happier with the decision to downsize.
Thanks for the success story Granville. Another example of how much better you can end up with ‘less’ especially when you choose your location wisely. I’m really happy for you guys and wishing you the best. Thanks again for sharing!
We “downsized” from a huge rambling farmhouse to a much smaller one-floor-with-finished-basement house with about 1200SF when the economy tanked in the late 1980’s. Our mortgage at the time was about $300 per month and the co we had it thru had started out as a great deal—cash back every year (it was a co-op) low interest–but that all changed. We put the house on the market and sold it as the sign was being placed in the yard. Payed off the loan and purchased the much smaller house for cash. We “Profited” to the tune of a whopping $1100 after the sale and closing costs etc.
At the time the taxes were much less in the house we bought—in the same county!–but now our taxes have more than tripled; the COL has changed dramatically; gas costs being what they are the former relaxing 45 min one way commute eats away at what we SHOULD be saving; we had a grocery store in this town when we moved in but that closed leaving us with a 20 min one way drive for anything more than milk or bread at the local Gas N Go sorta place; unless you need car parts or agricultural supplies you CAN’T get it here.
This was not so bad when my kids were little. Now tho two of them can’t afford to move out and one bright home a husband and two kids! Now–don;t get me wrong–we love to have them but—-the place is TOO SMALL. We get NOTHING in the way of “services” for all those taxes. The County Social Services has fought my daughter over health care for her kids even tho they qualify for Services. Salary’s have been stagnant and as we all know–food etc prices have gone sharply upwards.
Where IS all that money we are NOT paying out in a mortgage going to???
Fortunately the real estate crash did not affect this area as much as some places. So we are working on getting the house fixed up to sell and move South. This is ever so much FUN with little kids under foot!