Where to Live?

The lion’s share of most people’s incomes goes toward putting a roof over their head. That’s why you need to rethink where you live when you find yourself with way more time than money.

Even if you live in a paid-off house, it may not be prudent for you to stay there. That’s what happened to us. Our house had been paid off for several years when my husband’s business declined along with the exportation of his industry to China. We figured out pretty early on that staying in our house was not going to be a good idea.

Why not?

First off, we did not have hope of my husband or me finding a good-paying job anytime soon. With the economy tanking, his industry evaporating and mine in a similar state, (even if I could get a job in it after being a stay-at-home mom for over twenty years), we knew our hopes of keeping a decent income coming in were slim.

Why is that a problem when the house is paid off? Even paid-off houses cost money. They need to be maintained. Things break and need to be fixed. The house needs to be kept up both inside and out.

Then there were the property taxes. Ours were almost $6000 a year and rising. We knew they wouldn’t be going down anytime soon if ever.

Most importantly, the bulk of our wealth was tied up in our house. We didn’t want to tap into it with a home equity loan or line of credit because we wanted to remain debt-free (after all, why go through the sacrifice of paying down the mortgage early only to turn around and borrow money against the house again?) We could have borrowed against the house in an emergency, but we had not reached emergency stage yet and didn’t want to. We were trying to plan ahead.

What I feared most was that a tanking economy would leave us with little or no income for quite a while, forcing us to rely on our savings. Once those were used up, how would we pay our property taxes? Imagine losing a paid-off house because you couldn’t pay the taxes.

Making the Decision to Downsize

So we sold the house in 2007. It took quite a while and was very stressful. But once the deal was done, we breathed a huge sigh of relief. We moved to an area where the cost of living was much lower and rented a house for only a few hundred dollars more a month than our property taxes alone had cost us.

But most people are not in a situation like ours. Most likely you either have a mortgage, or you rent. These are two very different situations, especially today, because the housing market for sellers is not good in most areas. If you rent, you can move to a lower cost area as soon as your lease is up; that may be the most prudent decision for you unless you have plenty of work opportunities where you are now. But if you have a house with a mortgage, you’re not nearly as free to make a change.

You need to look at your situation and decide if it makes sense for you to move to a less expensive home or even a less expensive area. Only you can make this decision. If having more time than money looks like it will remain your situation for some time to come, you should put the sign out in the yard as soon as you can. Price your house very competitively (10% under current market, which is not what your neighbor got back in 2005 when things were hopping) and hope for the best.

What If You Can’t Sell Your Home?

If your house does not sell within three months or so, reassess your financial situation. It could be that you can hang on for a while by renting out a room to a boarder. Many people are doing this now that the economy is wobbly. Check with local authorities to make sure it’s legal in your neighborhood. If you have a spare bedroom and a basement, you can rent to two people and bring in a steady income. Boarders also help with utility bills, which are always going up.

(Utilities are another area where you can pare down your monthly outgo. Keep your electric bill down by unplugging your television and computer every night. Yes, it will mess up the channels on your television. But you might be surprised at how much money you’ll save each month and decide it’s worth the inconvenience. That’s what happened to us. We saw enough savings that we now unplug the microwave each night. That little display on it does use a steady if tiny amount of electricity. Every little bit counts!)

Hopefully you’ll sell your house soon and move to a cheaper area. “Cheaper” sometimes means less safe, but with some study and searching you should be able to find a cheaper area that does not sacrifice safety. If a reasonably priced area looks clean and safe to you, the only way to know for sure is to live there and see for yourself.

The Rental Advantage

This is one huge advantage to renting a place to live. If you don’t like the area, you can move. But if you do like it, you’ve found a way to keep expenses down that will make a big difference to your bottom line.

If you decide to bring down expenses by renting a place to live, there’s a good chance that you’ll end up downsizing. This is nothing to be ashamed of. In fact, if you can accept that you’re living in a smaller place, you’ll find there are many benefits. For instance:

There’s not as much space to clean.
It costs less to heat or keep cool.
Renters’ insurance is much cheaper than homeowner’s insurance.
When something breaks, it’s the landlord’s problem, not yours.
You’ll likely have less yardwork to do (in our case, far less; our landlord insists on a lawn-mowing service so we do no yardwork.)

Renting an apartment or condominium also means you can leave town easily when you want to. You don’t have to worry about who will water the shrubbery or pick up newspapers left on the driveway while you’re gone. You’ll have more freedom to come and go; if anything goes wrong inside while you’re gone, there’s a landlord to take care of things.

Deprived? Not Us

I’m sharing all these advantages of downsizing and renting because they help balance out that feeling of deprivation that can occur when you’re forced to do these things. It was hard for us to give up our home of 20 years. We were the only ones who had ever lived there (we watched it being built). Many, many family memories were made there. We wondered what our family and friends thought, watching us go from a large house in the suburbs of a big city to a smaller rental house in a little town several hours away.

But once we got past that, we reveled in our newfound freedom. When you have way more time than money, you want to be able to enjoy that time, instead of worrying about the money so much. Selling our house took an enormous weight off of our shoulders, and gave us the opportunity to enjoy the freedom created by downsizing our living situation.

Best of all, it allowed us to stretch our limited amount of cash by reducing living expenses while adding to our supply of time….very important when you have way more time than money.