Save Money on Housing with House Hacks – Ep 4

The Frugal Friends take a look at the fundamental need and expense of shelter! In this episode Jill shares her adventures in non-traditional housing solutions and Jen talks house hacks and how she uses her home as income property. A number of internet articles are explored and the pros and cons of renting versus buying are equitably discussed.

Notable Notes

• The Case for Renting
  • What the Internet has to say
    • Market Watch Article
    • Jacob Passy boldy supports his claims that, in some cases, it makes more sense to rent than buy. Citing shifts in economics and the housing market, Jacob gives a convincing argument to stick with the landlord, and enjoy the freedom that comes with renting.
      • What Jen and Jill have to say
        • You do run the risk of rent inflation but when you own your taxes increase too so you’re not immune.
        • Renting includes being absolved from fixing anything that breaks, renters insurance is a fraction of the cost of homeowners insurance, you don’t have to pay property taxes, there is no interest lost when you rent.
        • Jen -“we love our house but it’s a luxury”. The house you live in isn’t an investment, it’s a home. Until you’re ready to incur the cost of maintenance, upkeep, and designing it to be a place you love, no one, including yourself, should rush you into buying. You’re not missing out on anything by renting, it’s the frugal thing to do. mic drop.

• Alternative Housing
  • • Jill shares on her journey of renting inexpensively, living in an RV, house-sitting, and living with grandma!
      • Get paid to care for your elderly family members
        • Caring for Elderly

• Ready to Buy
  • Things to Remember
    • 1) rates are always at “attractive lows” and housing prices are always “only going up from here”
    • 2) Start doing best practices to increase your credit score and decrease your your debt-to-income ratio (less than 28%). Better yet, get out of debt first! Your goal is to qualify for a conventional loan.
    • 3) Save your downpayment (the more you save the lower your interest rate and less PMI you’ll have to pay.) And look at grants.
  • What the Internet has to say
    • Coach Carson Article
    • Chad Carson gives a very thorough description (with pictures!) of his ‘house hacking’ journey. The article includes Chad’s own break down of the costs incurred and revenue accrued from his fourplex, along with a creative guide for others who are interested in ‘house hacking’.
      • What Jen and Jill have to say
        • Chad Carson is who Jen learned house hacking from – she always assumed it was an option, but Chad actually gave it a name! 
        • Jen’s version of ‘house hacking’ includes renting out a room in their single family home on Airbnb
          

• The Case Against a Commute
  • What the Internet has to say
    • Mr. Money Mustache Article
    • Mr. Money exposes the true cost of commuting and dispels the myth that ‘commuting is a good way to save money’
      • What Jen and Jill have to say
        • Some people think opting for lower rent outside the city and settling for a 30-40 minute commute is the smart thing to do, but the frugal friends disagree.
        • Jen agrees with Mr. Money Mustache that you should pay the higher rent to live close to your work and life if you’re willing to 1) bike to work 2) sell your financed cars (and never finance cars again!)
        • This math is worthy of the show notes: A couple that wanted to live in a more affordable neighborhood added 38 extra miles a day – and using the IRS’s standard 51 cents a mile for deductions – estimated they’d pay an extra $19 every weekday to live in the cheaper neighborhood. Not to mention the commute in traffic would take 40 minutes each way. That’s $4700.00, which if spent differently, could mean a big dent in your debt or almost completely funding your IRA.
        • Another option is finding a job close to your affordable home. It’s easy to get complacent at a job with people you like and tasks you know how to do but being on the lookout for higher paying jobs with/or better benefits packages closer to home should always be on your radar.