Housing costs are a major part of any budget, usually the largest single piece. The government says you can safely put 33% of your income towards housing every month. Would you save more of your paycheck if you spent less on housing?
By Wallet Engineer #1
I’m fascinated by small houses – tiny houses and small houses. [ For the purpose of this article we'll define a small house as 800 sq ft or less and a tiny house as 200 sq ft or less.]
To me, a small house is about many things. One is giving a big middle finger to the 9-to-5 grind to pay for the oversize house. Simplifying life. Reducing costs. Reducing my footprint.
In any given day I use three rooms in the current house we rent – Bathroom, kitchen and bedroom. The bedroom does double as the location for my computer. In a given week, you can throw in the washer/dryer which is in the basement entry. In a given month, I use some extra storage in the entry way. In a given year, I have a futon for guests.
So… why do I need a large house?
Because I need the space? For what?
Because I have the money to buy an extra large house? Maybe.
Because it’s normal? No.
Because my value to society is determine by my house size? No.
Because resources are infinite? No.
Because I have nine children? Seems like a decent reason.
The short answer is I don’t need a large house and I don’t want a large house. I don’t want a big mortgage, I don’t want to be able to rollerblade inside my house. I don’t need superfluous storage for things I don’t need.
Pros
Less expensive to maintain the structure
Less expensive to pay the utilities
Less expensive to purchase or build
Much faster to clean
Less junk laying around
That’s a quick list.
Simplifying Life
What would you do in a given day if you had no way of watching TV programming (no TV, no internet streaming, no iPhone streaming)? Do you have a hobby that improves you, challenges you, etc? Would you read a book? Would you learn to play an instrument? Go running? Play games with your children? Volunteer? Garden? Write a book? Start a business? Cook more?
What would you do in a given day if you had 50%+ less space in your home to clean?
What would you do with 75% less storage space? Would you finally get rid of items you’ve been clinging to? Would you get rid of extra pillows? Old blankets? Unused dishes? Extra clothes? Extra shoes? Unused trinkets? Extra furniture? Boxes with unknown contents? Do you know what’s under the steps? What’s on the top shelf in the closet? What’s under the bed?
What would you do if your mortgage payment was cut in half? Would you work less jobs? Would you choose a less stressful job that pays less? Would you travel more? Would you donate money? Would you save more for retirement? You eat healthier(more expensive) foods? Would you visit the doctor more? Would you buy higher quality, longer lasting goods(that are more expensive)? Would you pay off your debt? Would you go back to college?
Tiny House Living
You can go a step further and look into the tiny house movement. In general the government likes to collect property taxes on your home. They do not like inexpensive housing. Thus, you have to skirt building codes by building your tiny house on a trailer.
The benefit, though, is that you can live in your own personal tiny house for $15,000 and up. Some companies will build one for you, but that means you pay for labor. Some companies are RVIA approved, meaning your tiny home can be insured as an RV. You can get financing from credit unions. For example, a Tumbleweed house is approximately $60,000, 10% down, 6% interest resulting in a payment of about $500/month. Utilities are super low. The only thing you have to do is find a place to live(park)!
My Living Thus Far
I started my life living with my parents until I went to college.
I spent three years in the dormitories. Two of those years with a roommate. The third year I had my own very tiny room. However, I spent >90% of my waking hours studying as an engineer. In my 4th year I lived in a frat house with 8-9 other people. Very large shared bathroom, very large shared kitchen. My personal 110sq foot room. Dirt cheap living.
After college I spent two years living with a roommate in an upscale apartment complex. My share of the rent was approximately $900 after rent an utilities.
Most recently I rent a room in the basement of a house. It has its own bathroom, tiny sitting area and personal entrance. Kitchen is shared. The room itself is about 160 sq ft. Friggin’ spacious.
In my next step I’m looking for a house. I’m a homebody, so I would enjoy a nice home. My current favorite is a 1,560 sq foot bungalow. Ideally(financially) I would keep the upstairs for myself and rent the basement. This would be roughly $800-900/month total for me and about 800sq ft, too. About $100 being PMI. Mortgage itself would be about $1,263/month, then we add PMI, homeowner’s insurance, utilities, and internet (and maintenance, always maintenance).
Where are you at in life? Does your current living arrangement make sense financially?
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