Downsizing – the ultimate way to get debt free faster?

  • Emily Doran
  • 25th of May 2016

I’ve worked for New Zealand Home Loans for 8 years now and the aim has always been to ‘help our clients get debt free faster’. I’ve been a client for 7 years now, since buying our first home and now, pregnant with our second child, my husband and I have made what might seem like an unusually timed decision, to downsize.

The NZHL system has been working well for us, we’ve made a lot of progress during our years of home ownership (partly due to our own efforts and partly due to this crazy old property market) but in truth, nothing prepared us for how expensive having kids is. Money that used to go towards achieving milestones like travel is now sucked up by the daily grind of daycare costs. Time that we used to spend on the house and gardens is now spent hanging out with a toddler (which is way more satisfying imho). We got to a point where there just wasn’t enough time or money for all the things we wanted (or needed) to do, something had to give.

Like most people, our housing costs (whether it be rent or a home loan) is one of our largest costs, so significantly reducing this will free up a decent amount of money. Our plan is to go from a 5 bedroom, 2 living area house to 3 bedrooms, 1 living area. Not only will we save significantly on home loan costs but experience tells me our power bill will be less in a smaller house, not to mention rates and insurance. This will then leave more money in our account to a) reduce our interest costs and allow us to pay down our (smaller) home loan even faster and b) have money available to achieve milestones like spending Christmas in Ireland with my husbands family.

The house has just gone on the market so I’ll let you know how it all goes and if we achieve our downsizing dream. However downsizing doesn’t always have to be that extreme, there are plenty of other areas of our lives that we can ‘downsize’ that will still have a huge impact on our wallet and our ability to achieve our milestones and become debt free faster. For example:

Downsizing your car – lets face it, petrol is always going to be a limited commodity. Buying the smallest car for your needs could save you hundreds of dollars a year (possibly even a month depending on your usage).

Downsizing your home – downsizing your home doesn’t just need to be for home owners. If you’re renting, rather than spending extra money on the ‘nice to haves’ in a rental property, you could opt for something a bit more basic and put the extra rent you would be paying towards saving.

Downsizing your lifestyle – Instead of buying your lunch five days a week at work, what would happen if you limited it to just 2? Instead of buying a bottle of wine with dinner, what about just a glass? Instead of buying that top in every colour, how about just one? Downsizing your lifestyle in little ways can make a huge difference to your bottom line.

Downsizing your power bill – there are plenty of ways that you can downsize your power bill, some that I’ve even tried and tested, and coming into winter, now is a good time to do so as this is normally when they can spiral out of control.


The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.


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