Wednesday, September 30, 2020

Housing Expenses

As I mentioned in my last post, I wanted to start sharing strategies to help you keep your expenses in check.  When attempting to build wealth, your gap between income and expenses is going to be the engine that drives your wealth building progression.  Remember that it doesn't matter how much money you make; it matters how much money you keep.  Generally, the largest expense you will have is housing, so let's start there.  When my wife and I first started out in 2005 we kept our housing expenses super cheap by living in a small 1-bedroom apartment.  Our rent in our first year of our wealth building journey was $325 a month.  The low rent helped us keep our overall monthly expenses to a minimum and we were able to save $36,000 in our first year.  In the graph below, you can see our total housing costs from 2005 to present.  The total housing cost value I show here is the total of rent or mortgage plus the property tax and homeowner’s insurance.  I didn’t include home maintenance cost or remodeling, but any of you homeowner’s know that those costs can be significant at various points in your homeowning experience. 



  In 2005 I didn’t think we could reduce our housing costs much more.  However, in 2006 an opportunity came along for us to purchase a small 2-bedroom 1 bath 800 square foot fixer upper.  The price was $65,000.  At this point, we’d saved enough money to purchase the small house with cash, so we did.  The house was so cheap that the property taxes and insurance were very low.  The first full year we lived there (2007) represented the lowest housing cost to date.  That year our average monthly spend on housing was $173.  Now how did housing cost impact our ability to save you ask?  The graph below tells the story.



When we had very low housing expense between 2005 and 2008, we were able to save a really nice chunk of change, despite our lower income.  However, in 2008 I started my first real job.  We relocated and sold the little paid for house and moved into a much bigger more expensive house.  In 2009-2012 we saved less money even though I made more money.  Remember, its not how much money you make, its how much money you keep.  It took me 5 years (2008 to 2013) of steady pay raises to get back to and exceed the level of savings that we had in the first 4 years of our wealth building journey.  In 2008, we moved up in house too quickly and it negatively impacted our ability to build wealth.  We still live in the same city but are now on our 3rd house in our current location.  So, what lessons can we glean from my experience with housing expenses and strategies to keep them low.

1.      Try to start out with very low housing costs and save the money not spent on housing.

2.      Use your savings to try to buy a very small place with cash and live there for several years.

3.      Slow and steady.  Sell the small place when you outgrow it, but don’t make a big jump up in housing.  This didn’t stop us, but it did slow our wealth building.

4.      If you can pay cash or pay off your house, this greatly increases monthly savings, even if you don’t make a lot of money.

 

In the next post, I’ll discuss most people’s second largest expense… cars.  See you next time.

 


41 comments:

  1. Wonderful post. your post about Housing Expenses is very well written and unique. Thank you for sharing this post here. furnished 2 bedroom apartment in central London

    ReplyDelete
  2. This is a very much educated article which you have shared here about housing expense. This is an astoundingly edifying and significant article. Such an advice is nothing however hard to find thusly, thankful for this information. Sleigh Bed With Storage

    ReplyDelete
  3. The content was really very interesting. I am really thankful to you for providing this unique information. Please keep sharing more and more information. homes for sale in the Bronx NY

    ReplyDelete
  4. I am very much obliged to you that you have shared this knowledge with us. I got some different kind of info from your web page, and it is really helpful for everyone. Thanks once again for sharing it. House for sale in Los Altos CA

    ReplyDelete
  5. I am glad that I came here and discovered lots of valuable data from your article. It is a beneficial and convenient article for us to increase knowledge.rental agencies vancouver Thanks for sharing an article like this.

    ReplyDelete
  6. Thanks for publishing such great information. You are doing such a great job. This information is very helpful for everyone. Keep it up. Thanks. homes for sale in corbin ky 40701

    ReplyDelete
  7. These highlights come at an extra expense however ordered advertisements are the least expensive sorts of paper promotions accessible. Lofty and additionally costly houses for the most part work best as show promotions since this is the place where your objective purchaser is searching for these sorts of houses. defence housing authority peshawar

    ReplyDelete
  8. Decreasing expenses on your U.S. ventures is likewise a significant thought. When putting resources into U.S.Tajarat strives to be Pakistan's biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. For further detail visit
    rudn enclave

    ReplyDelete
  9. You've provided quite good information here about homes for sale in palo alto ca. This is fantastic since it expands our knowledge and is also beneficial to us. Thank you for sharing this piece of writing.

    ReplyDelete
  10. I am pleased that this article provided me with some important information about Real Estate Valuation Dubai. Thank you so much for sharing it. Keep up the good work.

    ReplyDelete
  11. The AC frameworks in homes are measured to meet the warmth gain and warmth misfortune upsides of the home. hermès los angeles

    ReplyDelete
  12. Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with more information? It is extremely helpful for me. property developer

    ReplyDelete
  13. I am grateful that I was able to learn something useful from this article about bid estimate. After reading it, I believe you possess excellent expertise. Thank you for sharing that. Keep up the good work.

    ReplyDelete
  14. Individuals of the Houses Who are individuals addressed by the houses? Everybody in your life is in that wheel some place. We will start with the four points and the procedure we will utilize is the subsidiary house framework for sure I call "wheeling the houses." home for lease

    ReplyDelete
  15. The information which you have provided is very good and essential for everyone. Keep sharing this kind of information. Thank you. ballarat real estate agents

    ReplyDelete
  16. Excellent post. I really enjoy reading and also appreciate your work. This concept is a good way to enhance knowledge. Keep sharing this kind of articles, Thank you. house removals company in Camborne

    ReplyDelete
  17. A very delightful article that you have shared here.metal works production in Brooklyn Your blog is a valuable and engaging article for us, and also I will share it with my companions who need this info. Thankful to you for sharing an article like this.

    ReplyDelete
  18. You have shared a lot of information in this article about Real Estate Agents in the Caribbean. I would like to express my gratitude to everyone who contributed to this useful article. Keep posting.

    ReplyDelete
  19. You should observe how the spot looks. A couple of years prior I was engaged with property appraisals for a program helping deranged patients. One of the main things we would observe is whether there was grass filling in the breaks of the substantial. One more thing was the state of the arranging (was the grass cut, the shrubberies managed, Cash home buyer Phoenix

    ReplyDelete
  20. I read the above article and I got some knowledge from your article. It's actually great and useful data for us. Thanks for share it. sell my house fast manor tx

    ReplyDelete
  21. Great things you’ve always shared with us. Just keep writing this kind of posts.The time which was wasted in traveling for tuition now it can be used for studies.Thanks Tinley Park IL realtors

    ReplyDelete
  22. The information in the post you posted here is useful because it contains some of the best information available. Thanks for sharing about sell my house to a cash buyer. Keep up the good work.

    ReplyDelete
  23. I always check this type of advisory post and I found your article which is related to my interest.Inherited Home Solutions in Fort Worth This is a great way to increase knowledge for us. Thanks for sharing an article like this.

    ReplyDelete
  24. I will share it with my other friends as the information is really very useful. Read more info about real estate for sale Bronx. Keep sharing your excellent work.

    ReplyDelete
  25. I came to your blog hoping that I would learn something about housing expenses here. And now that I've read the blog, I'm compelled to say that I've learned so much from your blog that I feel I can now manage my housing expenses as well as Dissertation Writing Service.

    ReplyDelete
  26. The information you've provided is useful because it provides a wealth of knowledge that will be highly beneficial to me. Thank you for sharing about Sicily Beach Villas for Rent. Keep up the good work.

    ReplyDelete
  27. Hello, I truly enjoyed reading your post. I found your site from Bing. Will bookmark to return later. Thanks!Best Mortgage Rate in Aurora

    ReplyDelete

  28. Good post....thanks for sharing.. very useful for me i will bookmark this for my future needed. thanks for a great source.Blended Mortgage

    ReplyDelete
  29. Very well written article. It was an awesome article to read. about Oshawa homes for sale Complete rich content and fully informative. I totally Loved it.

    ReplyDelete
  30. Ratetrade.ca is your one-stop shop for doing a quick search and easy comparison of prevailing mortgage rates in Canada to make smart financial decisions. Compare Best Mortgage Rates in Canada

    ReplyDelete
  31. Find the best Fixed mortgage rate in Baltimore that work perfectly for you. We make it easy to compare rates in Baltimore big banks and top brokers for free. Best mortgage rate in Baltimore

    ReplyDelete
  32. A very delightful article that you have shared here.100 Mile Realtor Your blog is a valuable and engaging article for us, and also I will share it with my companions who need this info.

    ReplyDelete
  33. It is many times a smart thought to finish the evaluation before you sign the agreement. This guarantees that your mortgage spending plan is sensible. toprankinmortgages.com/

    ReplyDelete
  34. Endeavoring repairs yourself incorporates all parts of home improvement like home repair, rebuilding, home augmentations, home repair costs and furthermore home repair awards. http://gillespiehandyman.com/

    ReplyDelete
  35. "The real estate market can be influenced by demographic trends. Factors such as population growth, migration patterns, and changing preferences can impact property values and rental demand." estate planning attorney chandler

    ReplyDelete
  36. "A successful home remodel requires careful planning and collaboration with experienced professionals." Drywall Contractor

    ReplyDelete
  37. "Urban homesteading is a fascinating trend, and I'm excited to help clients embrace this lifestyle." estate planning chandler

    ReplyDelete
  38. Mortgage brokers consider both short-term and long-term financial goals. https://toprankinmortgages.com

    ReplyDelete
  39. "Consider a ductless mini-split system for efficient heating and cooling." water heater replacement san mateo

    ReplyDelete
  40. "I added a garage bar for entertaining friends." Garage Floor Epoxy

    ReplyDelete
  41. "I had stains that I thought were permanent, but they managed to remove them." https://housecleaning4u.com/

    ReplyDelete

Search This Blog

Powered by Blogger.

The Real Millionaire

 I am a 39-year-old man with an amazing wife and 4 awesome kids.  I am also considered a net-worth millionaire.  Achieving this goal has alw...