Childfreelife’s Weblog











{December 22, 2009}   My Downsizing Story

For the first 6 years of my adult life (21 forward), I lived with roommates in apartments and rental houses paying 300-400 a month for my share in housing. Then at some point, I decided I needed to own a home and my housing expenses doubled. My husband and I bought one, we were both making good money at our jobs and I figured we could afford the place if one of us lost our jobs. Both of us lost our jobs.

I could go through all the things we did to try and save our house, we had two roommates, cut every imaginable expense. But when it came right down to it, we bought in good times expecting them to continue and for us to both continue working, the good times ended, we are in a great recession. And like many American’s today, we can’t keep our house.

When I was laid off again from the job that would have allowed us to modify our mortgage. I cried for a day. Then I let go of the house in my mind. A huge load was off. I stopped crying. I am sure it helps that so many others are doing it, that I know first hand others are doing it because I work in bankruptcy law, and that I know how because I work in that field. There are multiple options for letting go of an underwater house. I think the simplest in our area, is just giving the house back to the mortgage company.

I think my personal downsizing story is kinda sad, but I am writing about it to give people hope. One of our roommates was too broke to continue living with us and moved in with his girlfriend because both their hours were cut at work. However, our other roommate wanted to move with us. We found a cute rental duplex that was a bunch cheaper and still has plenty of room. Its closer to public transportation, the little downtown art community, and the library. I am returning to my pre-mortgage life of about $300-400 of housing expenses per person, and it is freeing my life up so much.

And good news folks, my boss that had to recently lay me off, found me a new job! I interviewed for it and a I start in January. It wouldn’t have been enough or in time to save my mortgage, but it will mean I can comfortably begin to regrow our emergency fund, and actually start saving for retirement.

Sometimes endings signal new beginnings. And this is definitely one of those times.

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I am considering the issue of downsizing your transportation for this edition of Big Chunk because a fellow blogger The Simple Dollar wrote about this subject today and he decided against downsizing because of his need to have a spare car for emergencies with his small children. And I am wondering, once my husband is working again if we will need to run two cars. As a childfree partnership we certainly don’t need a second car for emergencies with children during the day. Also I live in a suburban area and public transport is readily available and all necessary services are within biking distance. In a medical emergency, honestly I would call an ambulance or ask a friend or neighbor for a ride. Having a second car around just for emergencies is unnecessary.

My husband and I have two cars. And recently, because of his layoff and the tire popping on his car, we have temporarily downsized to one car. We took that car off the insurance. I leave my car home with him most of the time and I take the bus. Downsizing one car can save you several hundred to several thousands a year on car insurance. You might end up with less car payments, if you were making payments on two cars. If you owned one of your cars and you sold it, that is cash in hand that can go towards debt reduction or savings. Furthermore, ditching one car and driving less often decreases gas and repair expenses. I know my husband and I save over $160 a month on gas with this arrangement. This is a big chunk savings issue similar to downsizing your housing and the savings can be just as significant as downsizing your housing. The monthly savings can be from several hundred to a thousand a month depending on your transportation expenses.

My savings without a car are smaller, because my expenses were low to begin with. I own my beater car, my husband and dad fix it once very three months for usually around $300.00, Gas is about $160 a month because I work in town, Insurance is about $25 per month, I have the highest liability and medical coverage on my insurance but no comprehensive on my little beater, I am over 25, own my home and I am married, I have a decent driving history, and I get a discount for paying a lump sum every six months. My insurance could barely get lower. Cutting out one car costs me a bus pass fee. Assuming I still work in my same town and go to the same school, my bus pass is about $5 per month. My savings are $280 a month right there.

The further you drive a day, the nicer your car and the more expensive your insurance coverage, the more you save by cutting out a car (also the cheaper your repairs because the car is new, so I left repair costs out of this formula). I know people who easily have a $300 dollar car payment, $150 monthly comprehensive insurance, and work across state lines spending $320 a month on gas. If they replaced their car with a interstate express bus pass which runs $100 approximately a month (no student discounts), their savings would be a real Big Chunk, $670.00! Now I have heard that time is money, assuming taking the bus is two hours a day, and you work 20 days a month, you are earning $16.75 an hour by taking the bus and getting rid of your car payments. If you can utilize your bus time listening to books on tape, reading, or writing, you are getting paid to invest in yourself. My second job only makes me $8.00 an hour, and I have to work a lot harder than just sitting on a bus.

So now to consider if you or I can sacrifice a car:

Can you take public transportation, is it more or less reliable than driving?

In my case public transportation, as long as I keep up my end of the deal (showing up to the bus stop early) is more reliable. Should the bus break down, another one comes along to save you within an hour and takes you straight to your location. When my car breaks down? I wait an hour or more for a tow truck which takes me and my car to a mechanic or my home. When it snows or ices? The buses put chains on the vehicles at something like 4 in the morning and get to running. I still make it to work, would I logically drive in that weather? Less likely. True I will have to wait for the bus in the snow, but if I get some good winter ski clothes, I can manage that. My city and neighboring cities have great public transport and I live very near both an interstate bus and an in town bus stop, if your city has more spotty service, this might be a “no” for you.

Can you carpool?

Whether you can carpool largely depends on the stability of your schedule and what you do after work. I tend to go to school after work some days, home other days, and to friends houses other days, I really doubt carpooling could work for me. If you have a predictable week that is the same every week day or nearly every weekday, carpooling could be an answer for you.

How far is your work, school, regular activities, store, etc?

I live less than a mile from a mall, a block from a corner store, and half a mile from a grocery store. Movie theaters and libraries are both at the mall. I can bike to most anywhere I need to be. School and work are both on the same bus route as my house. My new job is a little bit more of a challenge, but the offer I am hoping for is also on the same route as my house. Lets keep our fingers crossed on that one. If you work at home, you might be able to wait until your partner gets home to use the car, or you might just use public transit or a bike to get around. An option that I keep thinking would be great for a single childfreebie would be a Vespa scooter (or another type of scooter, I just think Vespas are cute).

Where is your spiritual, religious or philosophical meeting place and what is transport to it like on weekends and holidays?

My religious meeting place is in a rural area outside my town. Public transport on weekends and holidays is pretty spotty out there. However, my husband usually is sleeping in on Sundays, and for the bi-monthly evening activities he tends to not mind lending me the car if I drop him off at a friends house and pick him up on my way home. It is too far for me to bike.

Do you like driving?

I hate driving, I would rather do most anything else. I like reading on the bus, or watching the landscape while I bike ride. When I can walk, I love to stop and smell the roses and look at birds and rabbits. If you love driving, giving that up to be a passenger on a bus or to brave the weather on foot or a bike might just be a no-no for you.

Are the other options safe?

Without a car or two cars in your household, how would you deal with emergencies? Do you need to get around by yourself at night in parts of town you don’t trust? Are your bus stops and biking trails well lit? Is it safe to bike in your town? Do drivers give the right of way? Is the weather to severe for you to deal with waiting or spending significant amounts of time outside? If one of the partnership does drive to work, and you get rid of the second car, what would you do so s/he can get to work in the event your one car breaks down? I feel safe in my town. There are bike trails, the buses are clean and safe, the stops also clean and safe. The weather is relatively mild. There may be one week a year I might have to really bundle up and put on treads to get to a bus stop safely. If you live somewhere more arctic, eschewing one or both cars might not be an option.

For us, I think downsizing to one car could be a permanent situation. I can take public transport most of the time, especially if I get that in town job I want so badly.



As I covered in a previous post, the childfree can often downsize their housing more easily than the childed. Moving can be traumatizing for children, and kids tend to want their own rooms. However, a childfree person can lose the home-office or sewing room if they need or want to save some money by squishing into a smaller place.

I forgot to mention the other day when I wrote Big Chunk 1, that renters can often negotiate with their apartment complex managers for converting their lease to a smaller apartment in the same complex. Several of my friends have done this. The moved from three bedrooms to one or two bedroom apartments within the same complex, and the managers did not make them pay a penalty. However, their cleaning deposit was raided in both cases. If you can repay a cleaning deposit, but really need to save the extra bucks, you aren’t really trapped in your lease, if the managers will agree to move you down a size in their building.

When I up-sized into a house, I still had a fairly long lease on my apartment. It would have cost an $1800 penalty to end the lease! I had to be creative, and so I sublet my apartment. Now when you sublet you are still completely responsible for the apartment, and so you have to really trust the person you are subletting to. I sublet to a friend to help her get on her feet. She signed on as a roommate on the lease and I stayed on the lease with her until it was time to re-up the lease, then she did so on her own, we took ourselves off as roommates. For a while she paid me the rent and I paid the company. I sweetened the deal by giving her reduced rent the first few months.



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.



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