Childfreelife’s Weblog











{June 13, 2008}   Big Chunk: Reducing Housing Expenses

When it comes to reducing your monthly budget, few things make as big of a difference as reducing housing expenses. Childfree folks have incredible flexibility when it comes to this. If we are currently renting, our only limitations are in some cases leases and pets. If you own your home, your freedom to downsize could take longer, but a childfree person or partnership can downsize with more ease than a childed family. I am going to list some of my favorite options of making a big chunk change in your budget and downsizing your housing:

For renters:

If you have gradually found yourself in nicer and nicer apartments and homes, and you have filled up the space successfully with furniture, dishes, art, and a huge bed, the idea of downsizing can be scary. However, really you are only limited in downsizing by your pets and your lease.

If you have a large dog and live in a house with a yard: your options for downsizing are to find a smaller house with a yard, or to take a roommate on to share the house with you. Maybe you should find a roommate that also has a dog.

If you have small pets or no pets, you can downsize to a smaller house or even a smaller apartment to free up possibly several hundred dollars a month. If you have big stuff, a big bed, furniture, you can store it for more cheaply than the difference in rent, or you can get rid of it. If your parents have a garage you might share the savings you are making by paying them the going storage rate to store your stuff instead of letting the money leave the family.

For homeowners:

As a homeowner you likely have a garage and maybe an extra room or two. If you are like me you are not using your space as efficiently as possible and you could make room for a roommate. I spent a day getting rid of most of the boxes of random jank in my garage. I was shocked at the junk we had kept. When I was making room for our roommate, I sacrificed my art studio, or so I thought. I realized we never ever use our kitchen nook. It is just wasted space. I actually moved my art room into that space and I can still use everything but my giant easel, that did end up in the garage. We freed up an entire room for a roommate by rearranging two areas in our home, I bet most people have a dining room or nook that doesn’t really get use they can empty their office into to make room for a roommate.

Being honest up front with your roommate about how annoying you are is key too. I am one of the few people I know who’s ex roommates still like me. I am not less annoying than everyone else. But before they move in I tell them: “I am a slob, I will try to change, but don’t count on it, I do a lot for the household but it is not in cleaning. I get moody once in a while, but I will apologize if I take it out on you.” That usually covers things. It is really important since I cannot clean so much that the roommates understand what I do contribute, I am a good listener, I always make sure we have enough food and money. I am financially creative. I am fun to hang out with. These things add up to help my flaws be less glaring.

Selling your house

If you are in an area where the housing market is doing okay, or you have owned your house long enough that you can sell it for a lower price and still pay off your mortgage, selling your house to move into a smaller one or renting your house out so you can move into a smaller place and enjoy rent income are downsizing options. A house can tie a childfree person down. Some of the benefits of being childfree are the ease of picking up and moving for great opportunities without having to affect anyone else, or only your partners. If selling or renting your house out is an possibility for you, do your research and see if it is worth it. I looked into the options for my house and it really is not a good time to make that move.

There numerous pros and cons to owning versus renting, and you have to take your personal situation into account. Owning a home can be an investment: money you put into a house, if you sit on it long enough can build you income. However, sitting on it long enough is the key phrase here. You have to be able to afford the payments through a variety of situations in your life, and your investment should not be holding you back from bigger investments, like a better job, graduate school, your health.

If you live in a city like mine, renting is significantly cheaper than owning. For example, the difference my income tax credits make just covers my homeowners taxes. In a year or two I won’t be paying enough interest to even qualify for the credit as far as I can tell. If renting a 2 bedroom town home is $200-300 cheaper a month than a mortgage on a 2 bedroom duplex, then all the advice about investment goes down the drain. That 200-300 a month can go directly into an investments with much higher returns on it than the real estate market offers.

Don’t take the standard advice made for families at face value. As a childfree person or partnership your situation is clearly different and you have weigh the pros and cons of owning and renting based on your set of circumstances.

Downsides to Downsizing

Downsizing might be uncomfortable at first. And some options are not possible for all people. For example my friend and her husband have extra rooms in their house they could rent, however she is of an orthodox faith where she must cover her head in front of men beside her family. That narrows down her possibilities for a roommate, or at least it would make life at home much less comfortable, she would have to cover her head all the time if she had a male roommate. However, she could put out there that she specifically wants a female roommate.

Moving into a smaller or cheaper apartment is hard and getting a roommate when you haven’t had one is hard. You have to get rid of a lot of your stuff that takes up space, you have to put up with different living arrangements. However, if your stuff is keeping you from having good personal finances, maybe you really do need to let it go. Your happiness isn’t really based on your stuff, no matter how much our commercialized society tries to convince us it will.

Roommates might be noisy or annoying. I don’t like moving in with someone I don’t already know pretty well. They don’t have to be your best friend, but knowing and accepting their habits is key. Keeping open communication and renegotiating terms when new things come up will help things go smoothly. The worst thing I have seen happen to friends that became roommates, is that they stop being friends for some reason. The roommate never spends time at home because they consider their home to be a place to crash not a place to hang out. If that happens try to go out with your roommate too. Fights over living arrangements get to your friendship. Stop the cycle early and renegotiate. Your friendship meant enough to you that you helped each other by living together, it is worth saving. And if things aren’t working out, help your friend move out, help him/her find a new place and stay in contact, throw them a good bye party or a room warming party at their new place.

A smaller place might be less pleasant to hang out in all the time. I find that big windows can make the difference. I can’t stand living in a cave, I have done so and it drove me nuts. Having a small place with enough light can help a lot. Especially if you are like nearly everyone in the world and darkness depresses you a little bit.

Conclusion:

However despite the initial discomfort the extra money in your pocket can mean a lot towards your happiness, if you don’t just let it disappear. It is so easy to let extra money just become money you waste away. Be sure to direct it towards savings, paying off debt, or increasing your quality of life in noticeable ways. There are valid ways to spend your extra money that increase your quality of life. I am going out on a limb here because most personal finance articles are so focused on savings and debt reduction. However, you might be freeing up the extra money for health care, reliable transportation, to take a cooler but lower paying job. Is it worth having a huge living space that keeps you from being healthy, affording basics you need, or being a slave to a job you hate? Yet the conventional wisdom does apply, if you have health care, covered your basics, have reliable transport and you like what you do for a living, downsizing is a great way to have a few hundred extra to apply to financial matters.

Advertisements


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

et cetera
%d bloggers like this: