Recently, we were invited on Channel NewsAsia's morning show, First Look Asia, to talk about downsizing of homes and how to make the transition easier (see video here). In this series of posts, we will address questions related to this topic. While it may not inspire an immediate move to minimalism, hopefully it will encourage us to think about what it is that we truly need to live on.
In our previous post, we mentioned 4 reasons why homeowners would choose to downsize. And one of them was financial freedom. Since property prices in Asia have yet to fall from their death-defying heights, we thought this point warranted further discussion. If you're in the market for a home, or are thinking of one, perhaps it may give some food for thought.
Why would anyone, in their right mind, who has a decent job and a decent amount of money, want to choose a smaller home? Isn't big always better?
A larger home would naturally equate to a larger upfront financial outlay - downpayment, mortgage, and renovation costs. Then there are perennial running costs - electricity, heating (in some temperate countries), maintenance fees (if there are community services), cleaning, water, etc.
Many Americans, Australians and New Zealanders, fed up with climbing home prices and concerned about their debt burdens are buying (literally and metaphorically speaking) into a movement called "Tiny House". Instead of signing up for a big house and a correspondingly big mortgage, these Tiny House folks choose to build small homes that usually cost around USD20,000, so that they can live mortgage-free lives.
Why are these homes called Tiny House? Because they range anywhere from 100 square feet to less than 400 square feet - tiny by American standards, where the average-sized is around 2,600 square feet (source). Owners of tiny houses interviewed on YouTube often cite financial freedom as one of the main motivations, and we couldn't agree more. Why saddle yourself with a 30-year mortgage and a fixed asset with unknown future value when you can invest that money in financial instruments with more stable (and even better) yield?
At the Channel NewsAsia interview, we spoke to a lady who downsized from a 4-bedroom apartment to a 2-bedroom, without any bank financing and with some leftover to travel and enjoy life. While leaving the physical representation of memories (aka things) behind was a tough emotionally, she said she's much happier with less to clean and lower maintenance fees.
Of course, there are those give up their larger homes out of necessity (e.g. to free up cash to pay off debt). But even then, we urge them to look on the brighter side of life