A number of readers have requested information on small spaces and finances, so we thought it would be interesting to devote an issue of the SLJ to this topic. In this issue, the authors discuss a number of financial benefits to small living.
Disclaimer: The authors in this issue are not financial advisers. If you chose to follow the advice in this issue, you do so at your own risk.
I think the main financial benefits of small living are pretty apparent.
These are the obvious up-front savings you should expect to see with decreased rent or purchase/construction cost. Add to that (or subtract from it!) the limited utility and maintenance costs associated with small living, and we’ve got most of the financial benefits of small living accounted for.
So much money can be saved right here that I can say with some certainty that there are loads of people out there who don’t identify as small-housers, (or even know that such a thing as the small-living movement exists) who nevertheless choose to rent or purchase tiny apartments or houses simply because they cost less; the money they’re not spending is instead salted away or put to better use.
Minimized Consumer Spending
This is probably the second biggest financial benefit to small living. The small house, as we have all no doubt observed, offers scant quarter for superfluous items, (so little in fact that it may present a bit of a problem when Christmas or birthdays roll around, because one can begin to dread the presents purchases by clueless but well-intentioned loved ones.
So obviously, the small-houser is prohibited from excessive consumer spending simply by virtue of space issues. This should contribute to financial strength.
Simple Living, Organization, and Finance
I’d LIKE to think that the practical steps taken when moving towards the simplicity and organization that the small house demands would have salutary consequences in the realm of financial organization, budgeting, and spending etc. This is however, merely a speculation on my part. Financial discipline is it’s own realm, but I can see it going hand-in-hand with the discipline of small-living.
One of my favorite apartments was in a little village in Upstate NY quite near the Vermont border. The apartment was part of the house in which my wonderful landlords also lived. MaryAnn used to invite me over for dinner often and I soon felt like part of the family
It was located high above the Batten Kill where the waterfalls thundered below. This blocked out the other undesirable noises of various sorts around the area. The deck off the back overlooking the river was like heaven!! There was a hand-built stairway down to the river where I used to go often to de-stress.
My half of the house was 3 stories high. The basement was largely unused, but being on the river meant colder and damper conditions that filtered up thru into the living areas. The drafts were MANY!! As an example of just how cold it can get on that river, the photo you see was taken at roughly 25 below zero!! It takes an awful lot of fuel oil to keep things warm at that temperature!
My Dad put plastic covering over every draft he could feel while Mom cooked us dinner one cold January day. I was so grateful for both since I had neither the ambition nor the energy from my 2 hour per day commute each week!
So, as noted, my payoff for this wonderful spot (and in my book, the very best apartment available in those parts!) was a very long drive to work everyday. In winter weather conditions it often meant an even longer, more dangerous trip. Then, when I added in all the other expenses that went with that, it became very apparent that I was defeating my purpose of country living:
- Gas for the car (right when gas was getting totally ridiculous in price!!)
- Wear and tear on my car
- Higher car maintenance costs
- Higher car insurance costs
- Wear and tear on my body, mind and spirit
Plus, the rent itself wasn’t all I had to pay for. I also had the extra, separate expenses of:
- Weekly garbage pickup
- Filling a huge tank of fuel oil for heating
For all the peace that wonderful apartment and that river brought to me back then, I had to be realistic and make a difficult decision to move a lot closer to my job. Physically and mentally I just couldn’t take that long drive anymore and the costs of driving were becoming a financial burden. The job is non-negotiable at this point. I only have a few short years before a nice retirement plan will afford me to live almost anywhere I want to
So, my next place was only 3 miles from work. I moved to an apartment complex with lots of bells and whistles. It only took a couple of years there to decide I didn’t use most of the luxuries I was paying for…the dishwasher, the nasty garbage disposal that was stinkier and more trouble than it was worth, the tennis courts, the noisy, kid-filled swimming pool, the community room filled with smokers, a pool table and a fireplace, the basketball courts and the ever-so-crowded exercise room.
The rent was high, but not higher than my former rent with extra costs & that brutal commute. However, in winter months the costs of heating with electric heat (even though zoned) was phenomenal. Most winter months I fought to keep them under $300/month. The worse part was that I was never really warm! I decided I had had enough and moved to the apartment that I live in now.
Although this move was 5 more miles out, my now 8 mile trip is still very painless! Not only is the rent cheaper, but my heat and hot water are included. I have never been cold on even the most vile, brutal winter days in the last 3 years. The apartment was much smaller, but more elegant. I have lots of light from the windows and a sliding glass door with lots of cross ventilation. I saved enough money to pay off some of my bills that would have otherwise taken a lot longer to pay. I have more peace & quiet. The brand new workout room is uncrowded and quiet. I have the dumpster right nearby for my uncluttering endeavors. (For all you garbage-conscious folks, I always put my unwanted and/or unneeded stuff next to the dumpster and mostly it never makes it into the dumpster before someone decides to make it their own little treasure).
So, with all this said, I have saved about 40% of my costs of living with these moves. Ironically, I have not been sorry for them. Of course, you tell me which way you would rather live: in surroundings of a beautiful environment complete with neighborly love or the savings & convenience of living near the job?
At the beginning of 2008, Logan and I sat down and made some big commitments and we followed through with our goals of living a smaller, debt free life. For us the key to staying on track was writing down our goals and checking back in every few months to measure our progress.
A number of blog readers and friends have asked me how the heck to live a smaller, debt-free life. So here are a few tips that might help you:
- Follow the program in Your Money or Your Life. If you want to understand more about finance and money management, pick up a copy of Your Money or Your Life. Why am I advocating that you read this book? Economic uncertainty, layoff’s and other world events have many people stressed out about money, how to spend it, save it and invest it. This book lays out simple steps that will help you gain a better understanding of money.
- Budgets? Budgets are like diets. They don’t work. To get around budgets we’ve developed a monthly tabulation sheet, that allows us to evaluate our spending and examine our true consumption patterns. Our general expenses like rent and food stay constant, but we’ve found that our monthly spending pattern is never the same. Usually there is some kind of weird expense that pops up. Even though we watch our spending, we know that it will fluctuate. Thus, it is better to be mindful of each purchase.
- Live within your means. Don’t buy stuff you can’t afford. This probably sounds like cliche advice, but how many people do you know that charge stuff on their credit cards all the time? Know the true expense of items by converting the price of stuff into your labor cost to earn it.
- Wear out your stuff. Before you buy something new (like shoes), wear them out first and get repair estimates before buying something new.
- Plan in advance. Planning drastically reduces the dreaded impulse buyer regret. For instance, make lists before you go grocery shopping and research the best deals for things like clothing and food.
- Evaluate your living situation. If you’re paying an excessive amount to “own” or rent, take some time to evaluate the value of your location and the space you use. Examples of living small in this journal demonstrate how very little we need to live.
- Buy local food. Healthy, organic, and fair trade foods can be very expensive in stores. To obtain this great food inexpensively look for a local farmer’s market to save money. Farmer’s markets allow you to purchase directly from the producer without the overhead cost of brick and mortar store fronts.
- Cut out the unnecessary shopping trips and stay out of the mall. If you don’t go shopping, you won’t purchase items on impulse and your wallet will stay fatter.
- Before you buy anything, ask yourself these 3 questions:
A. Did I receive fulfillment, satisfaction and value in proportion to life energy spent?
B. Is this expenditure of life energy in alignment with my values and life purpose?
C. How might this expenditure change if I didn’t have to work for a living. What expenses would increase, decrease or disappear if I didn’t go to work everyday?
Living a smaller lifestyle has changed my perception of consumerism and how so many of our spending choices negatively effect the economy, the work we do, and the planet. I wish I’d stumbled across the concept of small living earlier in my life.
Would you add anymore tips to this list?