Housing is probably the biggest expense most people have, it is my biggest expense at least, and there is high probability that it is also yours.
So, when choosing housing, one needs to carefully consider the wants and needs, as a small percentage in savings can represent a HUGE saving long term.
I owe this part, as many of my lifestyle philosophy to Mr. Fisker even though I have not managed to be as extreme as he is.
Most people in the western world, have a dream of what would the perfect house/apartment be, there is the typical cliché of a house in the suburbs with a garden and two cars parked in front. Maybe those are our true desires, or maybe it is something that the consumerist society has put in our minds. (most likely the latter).
Just as much as we cannot rely on pure emotions when choosing a place to dwell in (such as “the dream house” myth). We cannot rely purely on reason and logic, it needs to feel right as much as it needs to make economical and utilitarian sense.
Needs and Wants
Let’s then, take a look at how to choose housing, by looking at our needs as well as our wants and see if we are willing to sacrifice financial independence for those wants.
First, we need to consider, what is exactly what we really need when we consider housing, basically it is a place to sleep, not more. We can also include in there, secondary needs, which are not indispensable but most people would consider basic needs, toilet and bath and a place to to store and cook food.
Taking these basic needs into account, we need to be aware of all the different solutions that can solve that problem. When doing this exercise one cannot already assume that one needs three bedrooms or needs a garden, balcony etc. Because in reality none of it is really needed, it is just some luxury that we want and we tell ourselves that we need in order to justify our consumerist and hedonistic tendencies.
It is not that I am immune to nice places, I am currently living in an apartment and I could easily survive with a smaller place, we are all walking the way, and one has to start somewhere, what I think is most important is not to get blown out of proportion. That is, have a reasonable number of rooms, reasonably cheap location, reasonable number of bathrooms (that is max. 2 if you are 4 or more people in the house hold, for 1 year I lived in an apartment where we lived 8 adults with only bathroom), etc.
When it comes to the housing, it is not like in other parts of the lifetime where you can just change it. In that case you will need a good agreement with your partner if you have one. That is, of course not easy, and sometimes a compromise can be reached. It is, obviously much better to share your life with someone that is at a similar level as yourself and is committed to financial independence, but that is not always possible and one has to compromise.
The truth of owning a home
You might have heard, as it is popular wisdom, that it is always worth it to invest in a house or apartment to life in. FALSE, that is plain and simply NOT TRUE, not always at least.
When you buy a house to live in, that is not an investment. It can be an investment, if you include ALL the costs of running a house compared to the price you might sell it for, that is financial costs, property taxes and maintenance costs mostly.
Rent cheap and buy property for renting out
First of all, as the smart reader will infer from what it has been in the article so far, one of the smartest things to do is to live cheaply in a rented apartment (that is at least true in most European cities), once that is accomplished, the next step is to save money and buy a rental property, that property does not need to be small or modest, it needs to give a good rent compared to the buying price.
The next step is let your tenants pay for the mortgage, and when that is finished you can move back to the apartment that the tenants paid for, or you can continue living in the modest place, covering your rent from the rental income as well as putting some money aside each month.
It seems, from what we see in the news, movies, and the mainstream media in general that our only choices when it comes to housing are to buy either a house in the suburbs or an apartment in the city. I have already tackled the you-must-buy-a-house fallacy further up in this post, but aren’t there other forms of housing?
Tiny homes are such a hipster trend right now, but it DOES make financial sense, you can relatively cheaply buy or lease land and park your mobile tiny home. You save on property taxes, maintenance cost, and purchase cost. As well as a tiny house giving a big advantage of not having space (yes, it is an advantage) That will keep you from buying too much stuff!
Houseboats have many of the advantages of tiny homes, such as being mobile and small. Boats generally require a lot of maintenance and can be REALLY expensive, so if you love sailing or boats, consider this option. One can find relatively cheap second hand sailing boats where one can easily live in. Alternatively, lifeboats can also be reconverted into house boats relatively cheap, but on the other side are not comfortable to sail on.
I have recently read an article, mentioning that in Hong Kong, there are some projects of building micro-apartments from huge concrete pipes. In that case, it is of course used to further exploit people desperate for housing, but the fact is, that concrete pipes are cheap and relatively light structures that can be used to build a modular tiny house.
The concept is great, creativity is the limit.
You can see all the people showing off in instagram.
in Many countries you can overnight in your van as long as you are legally parked and self contained.
That is a great option for people with nomadic tendencies, and may I add from places with great view.
My girlfriend and I almost always travel and live in a camper-van when on vacation, if one is willing to do that long term, it is possible to modify a cargo van into an almost self-sufficient camper-van for a very small cost compared to renting or buying property.
- Examine your needs
- Do not fall into the “Buying the dream house” trap
- Consider the long term cost of superfluous wants
- Consider alternative housing concepts
- Develop your skills