Thinking of Downsizing Your Home? Suze Orman Says to Do It Now

You may want to get moving ASAP.

The decision to downsize a home isn't always an easy one. But often, it's a smart one and a necessary one.

If you're retired and your children have grown up and moved out, then you may no longer need a four-bedroom home when a one- or two-bedroom will more than suffice. Plus, generally speaking, it costs less to maintain a smaller home than a larger one within the same neighborhood. If money is getting tight, or if you're newly retired and want to conserve your IRA or 401(k) funds, then downsizing is a good way to shrink your housing costs.

But if you're going to downsize your home, now's a great time to do it, according to financial expert Suze Orman. Here's why.

Shed expenses as soon as you can

These days, many consumers are buckling under the weight of inflation. And higher living costs are hitting retirees on a fixed income particularly hard. That's why downsizing could be a smart move.

Even if you own your home outright, it generally costs less money to heat, cool, and maintain a smaller space than a larger one. And your property tax bill is apt to be lower, too. And if your home isn't paid off, downsizing could mean swapping a higher monthly mortgage payment for a lower one.

In a recent podcast, Orman gave those looking to downsize some key advice -- get moving. Specifically, she says, it pays to downsize now because home prices are high, and even if you're buying and selling at the same time, you might come out ahead financially.

Plus, Orman says, living costs are already high, but they could get even higher. And housing tends to be the average consumer's single greatest monthly expense. So the sooner you shrink that expense, the more money you'll free up in your budget. And that could spell the difference between managing during this period of rampant inflation and ending up with unhealthy debt.

Additionally, Orman thinks a recession may be on the horizon. If you've been struggling to afford your home while holding down a job, imagine how difficult that prospect might be if you were to lose your job. Since that's a possibility today's workers can't discount, Orman insists that those thinking of downsizing really shouldn't delay.

What's the right call?

You may have some mixed feelings about downsizing, and it's definitely important to work through them. If you're not sure if you should downsize, ask yourself what you stand to gain financially, and whether keeping a larger home is hurting your finances and putting you in a position where you really can't manage your bills. If the answer is yes, downsizing may be necessary.

Remember, too, that downsizing doesn't have to be permanent. If you're in your 30s and are struggling to afford your home right now, you might downsize to a smaller place, live there for a decade, and then upsize in your 40s once your income has increased.

Even retirees have the option to downsize if money is tight and change their living arrangements after the fact, so don't assume that if you downsize in the near term, you're stuck in that situation for the rest of your life. It may just be what you need to do to get through these difficult times.