Reducing Housing Cost Key To Saving For Investing

[Russell Brazil]

Ive been hearing a lot lately, and this seems to come in cycles that people in expensive areas feel they can not save and invest.  I categorically deny that.  Ive lived pretty much my entire adult life in Boston and Washington DC, two of the most expensive housing markets in the country. (Im originally from Boston, went to college in Oklahoma, went back to Boston, then down to DC).

I made choices while I was young to both live cheaply, and consciously chose to live in expensive areas cities.  My student loan, credit card, and car debt when I was young was not going to change whether I live in Boston, or in say Tulsa. So better to live where I could make more and be able to tackle that debt.  Also while living along from 2002-2006, and after moving in with my future wife in 2010 through 2017, I did not have cable tv.  That is a luxury I now afford myself though.

Below are my housing costs from age 21 to now.

2000 -  Age 21- $300 per Month - Tulsa, Ok, - Split a $900 per month 3 Bedroom house with 2 other roommates

2001 - Age 22 - $120 Per Month - Tulsa, OK - Same House, $950 rent split 8 Ways 

2002-2006 - Age 23-26 - $400 Per Month - Chelsea, MA - Lived in an illegal basement studio apartment for 4 years following college

2006 - Age 27 - $550 Per Month - Silver Spring Md. Split a 4 bedroom house with 3 friends

2007-2010 - Age 28-31 - $750 Per Month - Washington, DC - Split a 2 bedroom rent controlled apartment 5 minute walk to the White House

2010-2012 - Age 31-33 - $1550 Per Month - Rockville, MD - Purchased Home w future wife, but with 2 incomes, this was essentially the same as my rent controlled apartment with half the payment being $775.

2012-2017 - Age 33-38 - $1300 Per Month - Rockville, MD - Refinancing dropped out payment by $250 per month.

2018 - Age 39+  - $3000 Per Month - Gaithersburg, MD - My current residence

While my housing payment may now seem high, I am at a point in my financial journey, where that number is not very big for me. Most of the people in my income range live in homes many times more expensive than I currently do. But the point pf this is I sacrificed and lived cheaply for many years so I could tackle my debts, save, and invest.  You can live in DC, NYC, Boston, anywhere and find affordable housing so you can save more. And there is nothing wrong with spending a lot on housing, but life is full of choices. If you want to invest, and you do not have a super high salary, you have to make the choice to live below your means, save if you want to invest in real estate.

[Steve Vaughan]

Originally posted by @Russell Brazil:

Ive been hearing a lot lately, and this seems to come in cycles that people in expensive areas feel they can not save and invest.  I categorically deny that.  Ive lived pretty much my entire adult life in Boston and Washington DC, two of the most expensive housing markets in the country. (Im originally from Boston, went to college in Oklahoma, went back to Boston, then down to DC).

I made choices while I was young to both live cheaply, and consciously chose to live in expensive areas cities.  My student loan, credit card, and car debt when I was young was not going to change whether I live in Boston, or in say Tulsa. So better to live where I could make more and be able to tackle that debt.  Also while living along from 2002-2006, and after moving in with my future wife in 2010 through 2017, I did not have cable tv.  That is a luxury I now afford myself though.

Below are my housing costs from age 21 to now.

2000 -  Age 21- $300 per Month - Tulsa, Ok, - Split a $900 per month 3 Bedroom house with 2 other roommates

2001 - Age 22 - $120 Per Month - Tulsa, OK - Same House, $950 rent split 8 Ways 

2002-2006 - Age 23-26 - $400 Per Month - Chelsea, MA - Lived in an illegal basement studio apartment for 4 years following college

2006 - Age 27 - $550 Per Month - Silver Spring Md. Split a 4 bedroom house with 3 friends

2007-2010 - Age 28-31 - $750 Per Month - Washington, DC - Split a 2 bedroom rent controlled apartment 5 minute walk to the White House

2010-2012 - Age 31-33 - $1550 Per Month - Rockville, MD - Purchased Home w future wife, but with 2 incomes, this was essentially the same as my rent controlled apartment with half the payment being $775.

2012-2017 - Age 33-38 - $1300 Per Month - Rockville, MD - Refinancing dropped out payment by $250 per month.

2018 - Age 39+  - $3000 Per Month - Gaithersburg, MD - My current residence

While my housing payment may now seem high, I am at a point in my financial journey, where that number is not very big for me. Most of the people in my income range live in homes many times more expensive than I currently do. But the point pf this is I sacrificed and lived cheaply for many years so I could tackle my debts, save, and invest.  You can live in DC, NYC, Boston, anywhere and find affordable housing so you can save more. And there is nothing wrong with spending a lot on housing, but life is full of choices. If you want to invest, and you do not have a super high salary, you have to make the choice to live below your means, save if you want to invest in real estate.

 Excellent post and excellent points, Russell.  Folks need to limit basic living expenses to invest for the future. Having savings doesn't just happen, expensive area or not.

As many know, I moved my little family 3 states away (closer to family) to a trailer park to do this.  I bought the doublewide 3/2 for $14k and my total monthly housing expense including power & w/s/g was less than $300/mo.  5 yrs later we moved up when we had 3 dozen rentals.

I would add 2 other big factors in reducing our living expenses- driving a reasonable car with no payment & brown bagging my lunch.  I have always brought my own lunch, saving time and money.  Cheers to you!