Today we have a guest post about house hacking from Erik. Erik a personal finance and self-improvement junkie who blogs over at The Mastermind Within. House hacking is one of those things I wish I knew about when I was a bit younger. It’s entirely possible to house hack your way to zero housing costs. Housing represents 35% of the average household’s budget so reducing that, even by a little bit, can mean a huge increase in your capacity to save.
In this post, Erik shares the 5 reasons why he believes house hacking is the best early age wealth building strategy. I hope you enjoy it!
Eating healthy can be hard. It can also be expensive. But it doesn’t have to be either these things. With a little work, eating healthy can cost you less than you currently spend on groceries each month.
For the average household, groceries account for over 10% of their annual spending. That’s over $6,100 per year! If you have children it’s even higher; families with children have an average expenditure of $8,753 per year!
Cutting 10-20% from your grocery bill can mean $1,000’s per year in savings. Saving money on groceries can help you fund the simple retirement plan or help you reach other financial goals.
But saving money on food doesn’t mean eating crap. Below you’ll find seven different ways to cut down on your grocery bill and still eat well.
In our home I’m responsible for 80-90% of the cooking and because I do most of the cooking I also do the meal planning and grocery shopping too. This means the grocery budget is entirely my responsibility.
For the four of us, two adults and two children, our grocery budget is $4,800 per year. That’s $400 per month or about $100 per week. We spend about 45% less than the average family with children.
To make this work we use the seven strategies below to help reduce our grocery budget while still eating healthy.
Living small is a great way to save money. Today we’ve got a guest post on 1500 Days To Freedom about how our family of four lives in just 1,000 square feet.
1500 Days To Freedom is a blog written by Mr.1500 (he blogs anonymously). The blog is about his family’s goal to achieve financial independence by amassing $1,000,000 of investments in just 1500 days. Check out our guest post about living small and please make sure to check out the rest of the site too!
In the guest post you’ll find a detailed layout of our house. We live in a three bedroom bungalow that measures just 40ft by 25ft. We have a full size kitchen, living room and dining room but our bedrooms range from just ~80 square feet to ~120 square feet.
We chose to live small for many reasons, all of which are covered in the post, but one important reason was that it lets us save big. Our annual housing costs are approximately $15,000 lower than other family homes in our area.
Living small also allowed us to buy a house in a great location. This helps us save big on transportation every year.
In total, for both housing and transportation, our annual budget is only $13,220 per year.
Having a hobby is great. Hobbies are an awesome way to enjoy something you love, meet other people, and learn new and interesting things. What can be even better is having a hobby that has the potential to actually MAKE money.
Some people only choose hobbies that have the potential to be profitable. They get to do something they enjoy with the added benefit of possibly making some extra cash on the side.
That extra cash can be put towards all kinds of financial goals. Paying down debt. Saving for retirement. Saving for a special vacation. Or just fun stuff in general.
Over the years I’ve had a number of hobbies that would make extra money. In total I’ve made over $50,000 from my personal hobbies. Some are more profitable than others. The important thing is that they’ve all been fun. This extra money has gone straight into investments where it can grow further thanks to the power of compounding.
There are some things I hate to save money on. Things like entertainment, food, hobbies are at the very bottom of my savings list. These are the last things I’ll cut if I need to save money.
BUT on the flip side there are some things that I love to save money on. These are things that no one ever sees. These are things that no one ever cares about. It’s things like investment fees, car insurance, or utilities. No one cares how much you spend on that stuff, absolutely no one, so it’s the perfect way to save money.
If you can lower your electric bill by $20 per month, you’ll save an extra $240 per year and no one will have a clue.
When was the last time you compared electric bills? Never.
When was the last time you noticed the number of lights in a person’s home? Likely never.
Our electricity bill is down to around 200 kwh’s per month. The money we save goes directly into investments each month. Saving money on electricity is the perfect way to build stealth wealth.
When first buying a home it’s hard to comprehend the sheer number of new expenses there are. There are mortgage payments, home insurance, property taxes, maintenance, water, sewer, electricity and gas, just to name a few.
When coming from a rental you may be blissfully unaware of all the new home expenses that you now need to budget for.
These extra expenses are tied directly to the size of your home. A larger home means larger expenses.
Before purchasing a new home consider all the expenses attached to your decision. Buying “just enough home” is a great way to save money. Buying “too much home” can cost thousands per year in extra expenses.
This is one of the main reasons my wife and I live with our two daughters in a small 1,000 sqft bungalow. Although we could afford a much larger home we chose to purchase something much smaller…