Tag Archives: downsizing

Want to Rent A 72 Sq Ft Apartment?

With the massive increase in rents, imagine what you’d pay in places like downtown LA, Manhattan, Toronto or Vancouver!

One of the few options, if you don’t want one, two or three roommates is to downsize to less square footage. This is a story of a lady that really wants to live in Manhattan on a budget. How? A micro apartment of 72 square feet for $1,345 a month.

Her futon turns into a sofa, there’s no stove, so it’s a hotplate and air fryer and the entire bathroom is a shower. Finding clothes is hard as they have to stashed everywhere. For a balcony she can sit on the fire escape out her window. Having people over is…well…a challenge.

If you’re living in a studio apartment, you likely have around 600 square feet. If you’re in a one-bedroom it’s maybe 800 or more. So could you downsize to one-tenth that space? What would it take? Count me out for being able to do that.

Here’s the story from Business Insider or just search “Manhattan 72 square foot apartment.” https://www.insider.com/living-in-microstudio-apartment-in-nyc-what-its-like-cost-2021-6

To Downsize Or Not?

Here’s a great question that’s worth sharing and thinking about for any of us within 10 to 15 years of retirement:

“I was wondering if you could give your opinion on which direction my husband and I should take?   At what point does it make sense to sell your home and downsize? Financially, we are sitting home with an outstanding mortgage of $300,000. Our home value is about $725,000. We are both in our 50s and will be relying on the equity made on our home to fund our retirement. I will have a small monthly company pension and my husband will not. My question for you is, do we try and sell our house now and pay off half our mortgage/credit line? Or would it be financially better to remain in our home for another 10 years or so, and chip away at our mortgage?

Sadly, the answer is: I don’t know. I can’t answer that for you because the critical part is the answer to what the value of your house will be in 2032. If anyone claims to know that, they’re lying to you. I can’t even get more than three lottery numbers right so I’m not the one to ask.

You need to remember that I only ever answer questions, or talk about stuff, in terms of what I would do because I don’t ever have all the information. In my case, I don’t have any pensions and my house is up for sale in order to downsize significantly.

Half the world would ride it out and hope for a much higher value. The other half more conservative and risk averse group would downsize and reduce the debt, the interest that’s needed to carry it, and lock in the guaranteed $725k value by selling.

But lots of that depends on what degree of downsize. Using your math, it’d be about $1500,000 on the new condo, house, etc. Would that, divided by 10 years, be workable? Would those payments guarantee that you’ll be debt free in 10 years when retiring? If so, that’d be a huge saving.

After all, whether you make more income in retirement or have LESS debt to pay, it amounts to the same thing…actually it’d be more valuable as income is taxable, paying off debt isn’t. That’d be like an extra $1,500 in retirement that’s not going to the mortgage!

Gamble the house is $850,000 in a decade and that any correction comes and goes in that cycle, that there’ll be no correction, or take the money and run? That’s entirely up to you two and your comfort zone.

I do know that you can’t eat your equity. In other words, the equity isn’t something you can use unless and until you do sell. So the day will come…but when?