housing budget

One of the biggest decisions I need to make that will determine whether this living well on minimum wage challenge will be successful or not is my living conditions. I’ve spent a lot of time thinking about this and there is little doubt that renting would definitely be the safer, cheaper option.

The first question I asked myself was do I really need to pay for a place to live? Could I create an arrangement where I could live someplace for free? Would it be possible to find someone leaving the country for a year and housesit for them in exchange for a place to live? Could I find a family that would let me live rent free if I was willing to do their grocery shopping for them since they would end up getting thousands of dollars worth of food each month for pennies on the dollar? Could I find a place with an older couple that would trade basic maintenance for a room? While I think these possibilities are out there and that it’s worthwhile keeping my eyes open for them as I do this challenge, they probably are not ones that I could arrange before the beginning of the year. So while I will keep these in the back of my mind, I needed to look at some more realistic possibilities for the beginning of the New Year.

The next question became what type of rental could I get that was inexpensive, yet still a decent place to live. Looking through advertisements it quickly became apparent that renting an apartment for myself, even if just a studio, was going to be $400+. Then there would be the need to furnish and to pay utilities and other fees. Even worse, most had a minimum of a 6 month commitment, with most wanting a year. While this certainly could be done, it would be pretty basic and wouldn’t allow me to take advantage of other opportunities if they arose.

As I continued to explore, it became apparent that renting a room within a house was often priced in about the same range, but often came with furnishing and sometimes with utilities and other fees included. There were still time commitments on most, but many would allow for a month to month for a slightly higher price. The trade-off was that there would be a lot less privacy since the kitchen and other rooms would be communal. While ideally I would prefer a place all to myself, I think that the better house conditions and locations would make a room in a house a better overall deal given the right circumstances. I began to search to see what I could find in this area.

After sending out some emails and making some calls to family and friends, I was able to find someone who was looking to rent an extra room in their house for $400 a month with a six month commitment which would include all utilities. They would be willing to do a month to month arrangement for $475 a month. It’s already furnished so I wouldn’t need to buy anything extra which would be a great savings. I would have my own bathroom and shower, but the kitchen and living room would be shared. That would be a flat $4800 for the entire year if I went with the 6 month commitment, it would be easy to budget, and there would be little risk involved with additional or unexpected charges hitting me from out of the blue.

If this was simply a “minimum wage challenge,” this is probably the choice I would make without hesitation. If finances were the only aspect to the challenge, it would be a no brainer. However, an essential part of this challenge is the “living well” portion. For me, that means getting out and traveling a fair amount. Living in a set place would greatly inhibit my ability to do this, especially on such a restrictive budget.

With this in mind, I have decided to stay purposely homeless for a three-month trial period. While there is a chance that the room will get rented out while I’m doing this trial period, I know that the person is only willing to rent out the room to someone they know well which means that there is a fairly good chance that it will still be available in three months if I need it. It’s a risk, but one that I think is worth taking to see if I can make the full-time traveling work. Basically, I’ll have an opportunity to try to do the traveling that I love to do, and have a back up plan if it isn’t working out quite as well financially as I hoped.

Of course, as soon as my sister heard I made this decision, she cried foul and said I was trying to cheat. She immediately demanded that we set a new rule to the challenge that I’m not allowed to spend more than a week with the same family member or friend per month (with the one exception being at her house where I am more than welcome to stay as long as I want to babysit her kids). Basically, she was afraid that I was going to stay long periods of time with someone for free, and that wouldn’t have made the challenge hard enough in her eyes (because, apparently, that is her main concern in all our bets — to make things as difficult as possible for me so that she can win). I figured that since doing so would defeat the purpose of why I decided to choose “homeless” in the first place (to travel more) that it was something not worth fighting over and accepted the new rule.

This choice comes with some risks, especially when compared to having a fixed living cost of renting. The main one will be the cost of hotels. There are times when the unexpected happens and I find myself in a position where I end up having to pay far more than I expected for accommodations. A perfect example was on one trip I took when I pulled into a small town mid-week where I was sure I could find a cheap place to stay only to find out that there was a popular festival going on that had most of the rooms in town booked. I ended up having to pay $150 at a dive motel, and if something like this happens too often, it could quickly ruin the budget. I think with better planning and less of the “OK, let’s just start driving as see where I end up” attitude I usually have, I should be able to avoid most of these costly mistakes.

This will also raise the cost of my food. Although I think that I can still keep costs at pretty low levels, living on the road means that couponing will be a lot more difficult (it’s hard to find deals in areas where you aren’t familiar with the stores) and it won’t be possible to stockpile the great deals the way I could if I had a place of my own. This is another area I will need to think through since it does get easy to spend a lot on food through convenience and restaurants when on the road.

So the question is, will I be able to cut down the costs of my current living lifestyle to the $400 – $500 a month range? I would estimate that these expenses are currently running in the $1000 – $1500 a month range (again, I don’t usually budget, so I’m not exactly sure), if not a bit more. There are certainly things that I can do to bring these costs down, but I’m not sure if it will be enough. That is why I will be giving it a 3 month trial period, then go onto plan B if I find that it’s just not possible for me to get down to a spending level that will allow me to remain within the budget.

While I’m aware that me choosing this option means that it’s extremely unlikely that is will apply directly to the vast majority of the readers of this challenge, and not nearly as much as renting a place would, my hope is that it ends up proving to be much more inspirational than renting would (and who knows, I may end up being there in a few months anyway). While renting would be the safe bet and be more applicable, it would also be a pretty boring choice in that I have locked in everything I could (no fluctuating utilities, no need to buy furnishing, etc). Locking in these costs when renting is the financially prudent thing to do, but it also doesn’t allow for many situations where I would need to make hard choices. I believe that by traveling, I will have much more opportunity to go through the decision-making process of choices before me. I believe it’s that decision process and looking at options creatively that ends up being a fundamental skill that can help people save money no matter the situation. I will certainly have to have my creative money-saving juices flowing to make this work…

Next entry: Car or Carless

(Photo courtesy of katerha)