Downsizing your home means that you trade your present house for a smaller or less-expensive one. For instance, you might switch over to a condo or townhouse, or you could move to a home similar to yours in a more affordable area of town.

When you downsize successfully, not only you reduce your mortgage debt by taking on a less-expensive home, you might also have enough cash left over to pay off your other debts, such as a student loan or credit card. Downsizing also may reduce your monthly mortgage payment — that leaves extra cash in your bank account each month to deal with other needs.