Wise Bread Picks
If you are trying to reduce your monthly overhead, one of the most significant line items for anyone (in addition to groceries and transportation) is the monthly cost of physically having a roof over your head. Following are one dozen suggestions for making this recurring monthly expense virtually disappear. (See also: Start with recurring monthly expenses.)
Some are more immediate. Others require a bit more time and discipline. All require compromise and responsibility. But...and here's the important thing, they all work. And if you are willing to do some work as well, being rent and mortgage free can happen for you...probably faster than you might think.
1. House Sitting
This is probably the most immediate method with the least amount of cash outlay. Normally, you are required to pay utilities, provide your own transportation (although depending on the location, this is not always necessary to have), and pay the cost of actually getting yourself there if you are not already in the neighborhood. Aside from a possible ticket or distance driving cost, the costs you are expected to pay are ones you'd be incurring anyway. Who is this a good idea for? Responsible people who have experience being completely in charge of pet and home care. If you are looking to find a cool pad in Paris you can party in 24 hours a day, keep looking. You won't find it on this circuit. Authors and people whose income is not dependent on a particular location are also ideal house sitting candidates, as are retirees and mature, responsible travelers.
2. House Swapping
This option is more for those who already own one home outright, and would like the benefit of having another place to visit that they do not have to take out a mortgage for. Retired or semi- retired individuals are very well suited to this option. Again, responsible individuals only need apply. You wouldn't want your house trashed by a group of derelicts, and nobody else wants their home abused either. Be considerate.
3. Buy a Multiple Unit Dwelling
There's a reason this strategy is popular...someone ELSE is paying your mortgage. Doesn't get any better than that. Ideally, you'll want a positive cash flow with the building so that the loss of a job or family health crisis does not have to mean the loss of a roof over your head. However, even if you only break even, you are still not paying rent. Of course, upkeep is still yours, as are any insurance considerations. This is a great way for young people with great credit but lower income to get into the game and start moving ahead. Word to the wise — whenever we have looked into these income buildings in the past the rule of thumb we were given was that anything up to a four-plex was considered residential which means that you'll get the residential rate when borrowing money. Five units and above fall into the commercial category, so you'll get charged those interest rates.
4. Use Your Job's Housing Allowance
If your job comes with a housing allowance (and many do), purchase a house in a price range that will cause the payments to fall within your monthly allotment. If possible, try to purchase in an area with great annual value increases. When the time comes, sell the house. If you have a profit (and most likely you will if you shopped wisely to begin with), great. If not and you just break even, at least you'll get a retroactive reimbursement of your living expenses. Yes, you have to wait for the return on this. And yes, you have to shop wisely up front. But how many landlords have you rented from who will refund your rent after you move out?
5. Pay Cash
Yes, this can be done. Granted for those without a trust fund (which is most of us), it requires the advance use of strategies such as numbers 1 — 4, but it IS achievable. I just did it, and I am way under the 8 year mark for how long it took. If you've been saving for a while and your income is not dependent on a particular location, consider purchasing a more rural property. You can often times get more bang for your real estate buck this way, and actually have a shot at things you want early on in the game. Maybe not the first purchase of a home, but certainly by the second it is possible to get things like more acreage, water front, or a small hobby farm type of property for the kids to enjoy. (See also: The Pros and Cons of Paying Cash for a House)
6. Live in a Yurt
Contrary to the belief of uninformed individuals, these structures are WAY above tipi status and there are modern versions that you can use in all climates, however extreme. They aren't all pitch dark and made out of goat hair, either. We're talking French doors, roll up walls, lots of windows, insulated enough to work in extreme northern climates or open enough to be plunked in the tropics. I've seen them with baby grand pianos, full bathrooms, fireplaces, full kitchens, internet, electricity, the works. The Cadillac versions might run closer to twenty-five grand, but there are many ways to get started for much less than that. This would enable you to pay it off very quickly and start saving for a home.
These structures leave a very low ecological footprint as well, if that's important to you. Many people choose to live in them permanently, while others use them after the home is up as a studio or guest house. Another bonus? You can pack the whole darn thing up and ship it to another location if you find things aren't working out well for you where you are. You'll just need to find a new parking spot for your home.
7. Consider a Quonset Hut
These will cost you a bit more than an actual yurt, and they are far from a traditional form of housing. That being said, I have seen them done on the interior in a style that those comfortable with the loft look could probably go for. You could also consider it a place to have an apartment in a loft section of the building and a garage underneath. Then you could plan to have this as a garage with a rental once a larger structure went up. Although, some people dig these things enough to make them their permanent home.
8. Shipping Containers
There has been much talk on the news lately about using these things to create alternative, eco-friendly housing. Some of them however, cost closer to half a million dollars. If that is your budget, good for you. If not, here is a much more affordable idea from a gentleman who created his own shippable home out of two containers he put together. It even has a car port. Extreme? Yes. Workable as a way to eliminate overhead? I say yes. Your ideas may be different. As I said, when I put together this list, I took care to include suggestions that people from a variety of situations could participate in.
9. Exchange Rent for Part Time Care Taking
There are many options available for this. Searching the newspapers from your area for people in need of a little handyman work in exchange for rent is a place to start. International house sitting organizations are another. In addition to the house sitting option listed first, many places need people to tend their lodge or working guest house while they travel abroad or tend to family issues. There are even people who love their remote larger estates yet have to travel and need people to stay there and make sure the pool guy can get in and that their dogs receive all the affection they need (rough, right?). As with the other home sharing / sitting options, responsible individuals only need apply.
10. Pay As You Go Construction
This can be a long, time consuming process depending on your current income level. Be prepared to suck it up with some seriously extreme frugality options when it comes to your lifestyle. However, let me share with you two examples I saw in my immediate area while we were living in Arizona. I want to share these two in particular because they both started out with the people living in fifth wheel campers and ended up (in less than five years) as extremely high end executive level homes.
One was actually in the neighborhood among the other homes. This was a family with kids, so they worked outdoor recreation facilities into their plan first. Some people may consider that frivolous. I consider it an extremely smart move for sanity purposes. The first two things they put up were a basket ball court (a full one) and a large covered ramada area with tables and BBQ options. This gave everyone a place to hang out, even in light rain, and the kids something to do to burn off steam. From there, they added landscaping, other fun outdoor features, and gradually built their three story executive home.
The other was my realtor and a close friend. She chose a property within the town lines, but more remote in that it backed up against a national park. She had to put in a private road and horse facilities first along with her utilities and well. Then, she also moved into a fifth wheel style camper. As she knew she wanted something with an in-law suite to accommodate aging family members, she started with that part of the house first and moved in when it was finished.
While she used high quality features (lots of granite and fabulous tile), the square footage of the in-law suite was smaller and because of that went up more quickly for less money. This got her out of the camper ASAP. From there, she took her time dealing with the rest of her home. It is absolutely to die for. Private acreage with no one near in the back, glamorous city views from the front at night, and a private road with no close neighbors. My kind of place. She also saved money by acting as the contractor for her house. Other people did the work, but she saved on the main contractor's part of the cost. A new vineyard / wine company opened in the area and had the grand launch at this place. It's seriously fabulous. And she did it all without a mortgage.
Is this option for everyone? No. But if you think you have the stamina it requires, you can have the house of your dreams.
11. Buy Small and Pay It off Early
The smaller the mortgage, the more rapidly you have a chance to pay it off. Go with a shorter mortgage, making extra payments at least once a year. This can happen very quickly if you are disciplined. After the pay off, you can enjoy where you are without overhead, or take any profit from the sale to pay cash for your next place if the market affords you that option.
12. Anchors Away
For those of you who haven't explored the living on a boat option lately — it's come a long way. Go with a small houseboat, or purchase a larger out of service barge from a ship broker and have the whole thing converted into a floating loft. Do a little exploring. You'll see some amazing ideas out there. This is a great way to get water front living ability in places a young professional might not otherwise be able to afford it. Think of every posh waterfront city you might want to live in and thought you could only drool over the possibility. You'll need a bit of cash up front for this option, but that amount can flex depending on the type of vessel you buy.
I've also seen time shares of these living spaces sold for certain times of year when the owners travel. It's a way to get back your cost fairly quickly if you are moored in an expensive location. This is also an option that many people may not be comfortable with. But if you are willing to think outside of the box, you can get a really cool place this way. A bonus? You can also have these towed to a new location if you get sick of your current one. I once saw a home that was once a ferry. The back had a door that dropped down, so you could drive your car in and have it towed along with your house. How cool is that?
So there you have it, twelve ways to gain independence from the traditional rent and mortgage scene. Some may seem extreme. Some may take a tiny bit longer than you had hoped. Let me say this: I never promised you a rose garden. Financial independence does not come without serious self discipline and at least certain periods of self sacrifice. As I said, be prepared to "suck it up" financially. That being said, financial independence in many cases can be achieved in less than ten years, and in some, less than five.
It all boils down to personal choice and priorities. Would you rather live large in small bursts for the rest of your life (or at least until old age), or have the power to completely check out of societal expectations and live large full time at a younger age? Only you can answer that question, and the answer is different for all of us, as is the financial path and method. But if you are serious about removing rent and mortgage overhead, the previous twelve methods should give you some starting point ideas.
