For many of us, housing serves as our biggest expense. Whether you rent or buy, you likely pay some amount of money for the building, as well as the water, electricity, and heat you use. You may even pay for parking, repairs, and improvements.
What if there was another way?
At 1,500 sq ft, Garrett and I had far more space (and far more mortgage) than we could stomach. Being in the personal finance space has given us access to new ideas, new ways of thinking about the so-called “fixed expenses” in our lives.
As I’ve alluded to, I’ve been thinking more about the psychological, environmental, and fiscal impacts of our choices. All of our choices. Everything from major expenses, such as housing and transportation, to the seemingly small expenses, such as laundry soap and makeup. Look for more on these subjects in the coming months.
Given that we’re coming up on our one-year anniversary in the small house, housing has been at the forefront of my thoughts. Enter the guest series on alternative housing options.
Buy or Rent?
You can rent just about anything: apartments, condos, houses, rooms in houses, etc. If you aren’t sure whether you want to buy a house, consider renting various types of housing before you make the commitment to a mortgage. You’ll find out fairly quickly what works and doesn’t work for your lifestyle.
We had a difficult time selling our first home, so know that it can be difficult for some to get out of a mortgage. Not everyone has as much trouble selling their single-family homes, but some do and we happened to be in that situation.
Ang and Sporty rent a 345 sq ft apartment in Cape Town with an absolutely breathtaking view. After their experiences with home ownership, they became minimalists, opting for experiences over stuff. Their focus today is on living large, not living in a large house.
Other minimalists, such as The Minimalists and Macy of MiniMotives downsized their belongings and their housing in an effort to prioritize other areas of their lives. Seems to be working out well for these folks. 🙂
Despite what banks want us to believe, mortgages are not actually required to be an adult.
What Are Your Goals?
Consider your short-term and long-term goals. Scratch that. Write down your goals. Small goals. Big goals. Write ’em all down.
Next, consider your feelings.
- What do you want to do?
- What fulfills you?
- What truly makes you happy?
Then, consider practicality.
- Do you anticipate switching jobs in the near future?
- Do you want to move across the country (or the world) later in life? or next year?
Matthew and his family own a homestead in a different area than they live currently. They love their part-time homesteading adventure and have big plans for how they plan to turn their homestead dream into an opportunity to earn extra income.
The Frugalwoods recently moved from Cambridge to their Vermont homestead after years of diligent saving, research, and of course, frugal living.
If your goal is to travel, owning a home may or may not align with such a goal. Renting is a great solution for a temporary need for housing (i.e. less than five years). Consider your unique situation and where you want to be next year, five years out, etc.
Have You Considered Vanlife?
Consider whether or not you want to be mobile. Many W-2 employees, freelancers, and solopreneurs work from laptops in exotic locations. Breaking free from the cubicle chaos by working for yourself or even working remotely could give you the ability to move around the world freely. Many individuals, such as Cait Flanders and Pauline Paquin, present just a couple of perspectives on what it means to achieve mobility and flexibility in their careers.
Courtney and her husband Steve had two single-family houses in Arizona that they recently sold so that they could move into a 200 sq ft Airstream that now serves as their permanent residence. In 2017, they’ll leave full-time employment in favor of full-time travel and their side projects.
Vanlife doesn’t always imply travel, but it could! Stories of Google employees and professional athletes living in vans were prevalent this year. Why? Is it media sensationalism? I don’t think so. It sounds to me like vanlife or RV living are great ways to reduce living expenses in an effort to accelerate saving.
What If You Own a House?
Do you have extra space? If you were like us when we were in our big house, you likely have an extra room or two that you could consider renting. Imagine being able to subsidize your own living expenses by renting your unused space.
You can rent your backyard for a wedding or for tiny house parking. *hint*
How about a driveway? Did you know you could rent your driveway?
Guy on FIRE lives in one room of the house he owns. Guy rents the other rooms to help pay his mortgage in an attempt to reach early retirement in his early 30s, a strategy known as house hacking. Dom at GenYFinanceGuy.com also rents a room in his home to subsidize his mortgage. Brandon at BiggerPockets loves house hacking and cites it as a strategy for starting out in real estate investing. Win-win!
How About Downsizing Your House?
If you are uncomfortable renting space in or around your home, could you downsize?
What’s the market look like for selling or even renting your primary home?
If you can’t downsize immediately, can you take steps now to prepare to downsize later?
For four years, Garrett and I talked about selling our big, 1,500 sq ft. Both of us wanted to travel, but with the mortgage and other debts, we became discouraged. The market was blah, so we found ourselves underwater. It seemed hopeless that we’d be able to fulfill our travel dreams. However, we started downsizing our stuff knowing that the market would improve eventually.
In early 2015, the market in our area improved to the point we thought we could at least pay off the balance of our mortgage so that we weren’t underwater. We hoped that the sale of the big house would even yield enough to pay off the small house mortgage, but that wasn’t to be. Fortunately, we sold the big house and walked away from settlement without ending up having to pay even more money on our first mortgage. *phew*
Today, we live in a small, 500 sq ft manufactured home. Life in a manufactured home is significantly better than it was in the big house. We’re not the only ones who think so! Vanessa and Jacob of CashCowCouple.com also live in a manufactured home.
Our bills are also significantly lower. We’ve saved so much money that between frugal living and bonuses from work, we made three mortgage payments in August 2016 totaling $12,673. Crazy, right?! I hardly recognize us–we were so spendy before (and not in a good way).
We’ll have our mortgage for the small house paid off in October 2016, which is about a year after we received our first mortgage statement for it. Woot!
Crushing debt chart, oh yeah!
One story, five ways. Housing isn’t a conversation limited to which subdivision you want to live in.