When it comes to downsizing, whether from a bigger house to a smaller house, a bigger car to a smaller car, more often than not, it would attract sympathetic looks from around. Those that probably say, “I am sorry that you are not doing well” or “Well, I guess it’s hard with those monthly installments after all”. You get the flow.
The thing is, these reactions are often the social stigma of downsizing. People automatically assumes the worse. It is seemingly a “forced” action for various reasons, though the not-so-positive ones such as – you can’t keep up with the payments, you have lost your job, the lifestyle is too difficult to upkeep, etc. Basically, downsizing emits negative stigma.
But is downsizing necessarily a bad thing?
Well, it would highly depend on how you work around it. A friend of Dave used to own and live in a 5 room flat at the western part of Singapore. He then sold his flat in the open market, and applied for a new subsidised 4 room flat (a BTO unit). With that move, he cleared his mortgage payment in one shot, plus got back some extras, in cash.
Should I add that he didn’t lose his job, he even got promoted, and that downsizing was a decision to take advantage of the market situation.
I envy him. HE HAS NO MORTGAGE DEBT.
Many people will never contemplate such a move. We are always looking at upgrading to a bigger house, bigger car, and downsizing has never quite been part of the equation, unless the situation calls for it.
A lot of people I know who are married and in their 30s have purchased their property (yes, home ownership in Singapore is one of the highest), with the majority (those that I know who are in this age group) living in executive condominiums (since some of them do not qualify for a BTO due to income ceilings), which are easily priced at around SG$750,000 – SG$1.25 million (approximately US$500,000 – US$1 million and yes, these are not even houses, these are small tiny apartments!).
The irony of it is, “I can’t afford to lose my job” is one of the most common lines that I hear regularly from this group, or “I can’t be a stay-a-home-mum/wife because I need this income”. Coupled with the fact that most of them own cars (cars are ridiculously priced in Singapore), it is often a wonder how people actually cope with their finances.
Society views upgrading as the norm and a natural progression. And people who are doing well, are often defined as those who live in fancy homes and car ownership.
As for Dave’s friend, he’s married with a kid. His wife is a home-maker but he has a pretty sizable investment portfolio. Even if he is retrenched from his job tomorrow, it is nothing that he needs to fret about.
He’s the type that I envisage to be.