Your home is probably your single biggest expense. If you live in a large city, rent is likely 40% or more of your income, according to a recent survey based on U.S. Census data. And if you buy instead of renting, lenders say it’s just fine for you to have 28% of your income eaten up by principal, interest, taxes and insurance.
Add the costs of utilities and maintenance, then measure it all against your after-tax income, and you can easily shell out 40-45% of everything you make to rent or own a home.
What would do with the money saved if you could cut that cost in half? Is it possible? Certainly there are ways to save on rent, like negotiating a new lease or living with multiple roommates. And if you’re planning to buy a home, you can look for a lower mortgage rate.
But some people take more drastic measures to save money, opting for alternative housing and creative living arrangements. Here are some examples of these unusual options, including a few ideas you probably won’t want to try.
1. Live in a School Bus
To save on rent, Trevor Pirtle and his girlfriend moved into a converted school bus outside of Boulder, Colorado. Pirtle explains that he and his business partner, Kevin Lane, also run their clothing company from the bus. He says wealth isn’t based solely on money, but also time and mobility. This lifestyle allows the group more time for doing what they like and more freedom to go where they want.
The couple paid $2,600 for the bus, plus a couple thousand more for renovations. They pay $120 per month to park it, which includes electricity and access to a shower and kitchen. Paying $120 rent per month, versus $800 for their previous apartment, frees up more than $8,000 per year that can be saved for big goals, or it allows them to simply work less for money and more on the things they want to do.
Another example: My wife and I once met three guys living in an awesome converted school bus in the desert. They were camping for free near a hot spring in Arizona. An occasional odd job was all they needed to support their traveling home.
2. Rough It for Half of Each Year
My friend and coworker had a practical strategy for keeping housing costs low. He camped during the warmer months in northern Michigan, paying about $5 per night to set up his large tent in a state park that had showers.
Because he paid only $150 per month, versus the $600 per month an apartment would have cost, he was able to bank a nice chunk of cash by the end of summer. When the tourist season ended, he found he could rent small waterfront hotel rooms cheaply, so he got a place with a nice view for the winter.
3. Become Semi-Nomadic
My wife and I lived in our van for a month. We started with a week at a hot springs park in Arizona for $3 per night. Later, in Florida, we spent a week at a campground which was free and had showers. We had rented out our house at the time, and it was nice to travel while collecting that rent.
The semi-nomadic lifestyle often involves a recreational vehicle and two locales — one for the warmer months and one for winter. Where can you park and live in an RV seasonally? Among the possibilities, here are some of the more practical options:
This can be expensive, but some parks discount their rates for long-term stays.
State and Federal campgrounds are the most affordable in our experience, but many have limitations on the length of your stay, so you will be a nomad.
You can stay on most national forest and BLM lands for free for up to 14 days, as noted by RV-Camping.org. This is referred to as “boondocking.” But after your temporary stay, you have to move at least 25 miles to do it again.
Long-Term Visitor Areas (LTVAs)
The Bureau of Land Management (BLM) administers large, long-term RV camping sites in Arizona and California. For example, at the Hot Spring LTVA in California you can stay seven months — September 15 through April 15 — for a fee of $180. That’s less than $26 per month! These areas are rustic, but include access to water and a pump out station for RV waste tanks.
Of course, you may need a location-independent way to earn money if you choose to be a nomad, unless you can move around within driving distance of your job. Also, an RV or motorhome uses a lot of gasoline, so to keep your gas bill low it’s best to move only a few times each year.
4. Live in Mom’s Basement
In Rich Dad’s Cashflow Quadrant, Robert Kiyosaki explains how he and his wife moved into a friend’s basement (after a brief period of homelessness) as part of a plan to avoid jobs and work on their business. If crashing in a basement for a while works for future millionaires, it might work for you too.
But instead of turning to friends, you might get a better deal from mom and dad, whether for the basement or spare room. In fact, 36% of adults in the U.S. age 18 to 31 live with their parents, according to a recent survey. It’s not a bad way to survive while you build a business or to save for a down payment on a home.
5. Buy a House in Detroit
If you check Realtor.com for homes in Detroit, you’ll find more than 100 listed for less than $1,000. They start at $1 — and that’s not a misprint. Yes, they’re in rough condition (to say the least), but paying less than the cost of a cup of coffee leaves some money for repairs and renovations, right?
There is even an organization fixing up and giving away free houses to writers in an effort to revitalize the city. If you’re moving to Detroit to work for a specific company, you might also want to check out the Live Downtown program, which offers incentives like a $20,000 forgivable home loan or a $2,500 rent allowance.
6. Live in an Investment
What could possibly be better than free housing? Making money with your home! For example, 12 years and 10 moves ago, my wife and I bought a house in a beautiful mountain town in Montana for $17,500. Four months and $2,000 in repairs later, we sold it for a profit of about $6,000 and moved on.
The idea is simple, but the reality of flipping a house is hard work. The plan looks like this: Buy cheap, live in the house while you fix it up and sell it for a nice profit.
This strategy works best if you stay a couple years. That’s because you can avoid paying any tax on your capital gain if you live in the home for two years, according to the IRS.
Living Arrangements to Avoid
A few of the more creative ways some people survive probably shouldn’t be emulated. But in the interest of showing just how many different ways there are to put a roof over your head, here are some other solutions.
It’s common for squatters to move into abandoned foreclosed homes in Portland, Oregon and southern Florida, though they also often choose other abandoned buildings. One of the online tutorials explaining how to squat a building suggests it’s better to move into places the city has taken over, since it’s easier for a private owner to evict you.
You may face some serious problems with squatting. For example, most abandoned homes and buildings don’t have power or running water. And then there is the fact that living without permission in buildings you don’t own is generally illegal.
8. Live at the YMCA
It used to be you could find a cheap room (or at least a bed) at a YMCA. But many of them no longer have rooms to rent, and those that do are generally expensive.
For example, at New York’s West Side YMCA, the cheapest room at the moment is $111 per night, and you have to share a bathroom. A listing on HostelWorld.com shows that you can get that down to $56 per night at the Harlem YMCA, but that’s still $1,680 per month.
9. Live in a Storage Unit
One former police officer found it necessary to live in her storage unit outside of Denver. She had already been paying to keep her things there, and the managers of the facility looked the other way when she moved in. She stayed there for four months.
Living in storage units is becoming more common in places like Florida, but it’s more a sign of the desperate times some people face than a viable housing option. Industry insiders advise owners and managers not to tolerate it. And then there is that lack of running water or toilets…
Your Turn: Have you ever found a way to cut your housing costs with an alternative housing arrangement? Have you tried any of these strategies?