The latest craze in housing is no small feat. The tiny house movement has taken downsizing to a whole new level. Build your own 150-square-foot haven for around $20,000, and say goodbye to your mortgage! Sounds great as long as you don’t mind composting toilets and bumping elbows for the next few years, right? Of course, you don’t have to go to these extremes to save a few bucks.

Most American families have plenty of room to size down without cramping their style. Consider the numbers: The average single-family home built in 2013 was nearly 2,600-square-feet. You may not think that’s too big until you look back at history. In 1950, the average home size was less than 1,000-square-feet, and families were bigger back then. By those standards, today’s homeowners are living large.

Moving into a smaller home may feel like a step down, but a closer look reveals quite a few upsides.

Less is more

One question we always hear when the topic of downsizing comes up is, “Where will I put all my stuff?” Here are a few ideas: your neighbourhood yard sale, eBay or Craigslist. That’s right. Sell it and take that money to the bank, baby!

Sure, a smaller home means less space. But it also means less time, stress and money spent on upkeep. Think of all the fun you could have if you didn’t have to polish your miniature unicorn collection every weekend. You just might find a whole new world outside your door.

Shrinking your square footage might mean your family has to gather around one TV at night, instead of spreading out across three or four different rooms (Gasp!). But is more time with the ones you love really all that bad?

Let’s cut to the financial chase Still not convinced? Then it’s time to bring out the big guns and talk money. What if you reduced your mortgage by $500 a month, and put that cash toward other financial goals? Here are just a few of the strides you could make:

• Attack your debt snowball. If you’re working hard to kick debt to the curb, downsizing can help you maintain that gazelle intensity. Let’s say you owe $18,000 on your student loan. With a six percent interest rate, and a minimum payment of $200 a month, you’re on track to pay it off by July 2024. But throw an additional $500 at your loan each month, and you’d trim a whopping seven years and eight months from your pay-off date. Sallie Mae will have to find a new place to live, because you’ll be free from student debt by November 2016!

• Boost your retirement fund. Once you’re debt-free with a fully funded emergency fund, it’s time to build wealth for the future. Dave recommends investing 15 percent of your household income into Roth IRAs and pre-tax retirement plans. If you’re still working your way up to 15 percent, that extra $500 could be the push you need to get there. In 30 years, you could have an additional $1 to 1.6 million in the bank to get you through your golden years. You can do a lot of living and giving with that nest egg!

• Pay off your mortgage. Want to downsize Dave’s way? Trade in your mortgage for a paid-off home! Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down. If you can’t pay cash, aim for a 15-year fixed rate mortgage, and put at least 10 to 20 percent down on your new home. Apply the $500 you saved from downsizing to your new monthly mortgage payment. At four percent interest, you could pay off a $200,000 home in less than 10.5 years — saving over $22,000 in the process!

Is downsizing right for you? Downsizing might not make sense in every situation, but it’s worth a look if saving money and simplifying life appeals to you. Ask an experienced real estate agent to help you determine what your home is worth and show you options for cutting costs down to size. A true pro knows what it takes to get top dollar for your current home and negotiate the best deal on a new one.