The Fastest Way to Slash Your Expenses
By: David Ferrara
Tags: Saving, Budget, Personal Finance

The biggest three expenses in most household budgets are housing, transportation, and food.

Let’s talk about housing, i.e., the biggest one. Because if you’re looking to slash your expenses, that’s where you can get the most bang for your buck.

One of the biggest reasons I have been able to get to where I am today financially is my housing decisions.

I grew up in a typical American suburb in a typical home. We moved a few times, but most of the houses for our family of five were townhomes, probably between two and two and a half thousand square feet. So not exactly mansions, but definitely a good size house.

That’s what I was used to, and when I left home, went off to college, and started working after, that’s what I thought I wanted.

You can imagine the house, especially if you ever watch HGTV. Big kitchen with an open floor plan to the dining and living area. A few bedrooms upstairs. A big basement with plenty of areas for hobbies, entertainment center, rec room, etc. Big walkout doors into a yard somewhere.

That’s what I thought, even if just subconsciously, I needed to be happy.

I changed my mind

In 2002, when I was twenty-four, I went to Serbia for a friend’s wedding.

There were remnants of the Kosovo war all over the place. Belgrade received the heaviest bombing by NATO forces in the war. In particular, two half torn down buildings directly across the street from each other right smack in downtown made you think.

My friend’s brother, who was acting as our tour guide, told us many other buildings like these had already been repaired. But they left these two as a reminder.

A reminder of what exactly, I’m not sure. Why Serbia shouldn’t have invaded Kosovo? How much U.S. bomber planes suck? Probably a bit of both.

Besides the remnants of American bombers, there were also remnants of the Soviet regime. Belgrade itself is a contrast between beautiful areas and well, not so beautiful areas. There’s the old fortress, built over 2000 years ago sitting on the Danube, and some beautiful cobblestone streets lined with outdoor cafes and lit up like a fairy tale at night.

But other parts of Belgrade and most of the suburbs directly outside of Belgrade, and you are reminded of the Soviet influence. With the old grey concrete, Soviet block-style housing.

Photo by Denis Ozdemir on Unsplash

I stayed in one of these, just outside of Belgrade. The wedding was a good size wedding. One Serbian marrying one American. So, there was an influx into this tiny little suburb of Americans. The housing situation was quite different than what I was used to. I was on a couch for one.

But here’s what I noticed, the apartments were small and spare bedrooms didn’t exist. There was a lot of moving around to make space. Serbian parents, aunts, uncles, etc., would go to their neighbors at night (where I presume they spent the night on couches) so that the American parents, aunts, uncles, etc., would have beds in their apartments to stay in.

There was none of the American tradition of spare bedrooms for guests. As well, nobody had houses or townhomes. Everyone was in tiny apartments. Yet, they, through using their community, made plenty of room for this influx of guests.

The thought of anybody living in a hotel was thrown out immediately as Serbian hospitality simply wouldn’t allow that. Plus, I don’t remember seeing any outside of downtown Serbia, which was over an hour away.

I always remembered this, and it changed my perspective. Do I really need a twenty-five hundred square foot house somewhere in the suburbs? These people were just as happy, if not happier.

Do we really need a finished basement, a two or four-car garage, and a driveway to be happy? I really believe to most Americans that is not only the dream but frequently the end goal. That’s what people are working towards if they are not already saddled with one.

Most of the world lives very differently, and it could be argued they are happier.

How I live now

I always lived with roommates until I changed cities and didn’t know anyone, then I made do with smaller, older apartments until I bought a smaller, older condo.

I had a car for a while but made do without one for years when I was younger and made less and saved up for that down payment.

Living in a smaller, older place allowed me to live in parts of the city where a car wasn’t needed so I could save up.

Plus, I now am so used to it, having a smaller place to furnish, clean, and take care of and therefore more time and money are available for other things. The thought of having to clean a two thousand square foot or even one thousand square foot apartment regularly isn’t a pleasant one to me.

Appreciation

Many people will argue that I should have bought a bigger place, and the appreciation of the house would have made me more money.

Here’s the flip side. I moved out of the first place I bought and rented it out. Then I bought another place.

Believe me, as a landlord renting out an apartment, is so much easier than a house. You don’t have to worry about gutters, pipes freezing, landscaping, etc.

Not to mention, my biggest worry at the time renting my place out was what if I didn’t have a tenant for a month or two. Carrying two mortgages without any help at that point in my life would have hurt. This happened a couple of times when I needed a couple of months to get a new tenant. Believe me; it would have hurt so much more with a mortgage for a house vs. the condo.

House hacking

I guess you could call what I’m doing, buying, renting out, then buying again a type of house hacking. To me, it just happened naturally. But I do enjoy reading about house hacking and if you wanted to take the approach of buying a duplex and renting a side out, or buying a larger house and renting rooms out. That definitely works too.

To me, that’s the same philosophy that I’m using. You’re living with a little less now, to have more in the future.

Delayed gratification applied to your living situation.

Some practical tips

Let’s say you’re looking for that perfect apartment:

Pick the one that’s in the neighborhood that people tell you is dangerous. Now don’t go live somewhere where people are being murdered. But if you go there and you see many young twenty years old’s out having fun. Then chances are it’s not as bad as you heard.

Pick the one with the older kitchen. Learn to cook without a million appliances, and you don’t need a thousand square feet dedicated just to counter space.

Pick the one without the walk-in closet—perfect chance to move more towards minimalism.

Pick the one on the fifth floor without an elevator. Now, you can get rid of the gym membership: Bam, double savings.

Pick the one close enough to work that you can ride a bike and get rid of the car (as well as the car insurance, property taxes, registration fees, gas, oil changes, repairs, etc.)

To me, this place is actually a better place to live anyway. The old character-filled apartment you are going to remember so much more fondly than the modern apartment. You know, the one with all the exact same cabinets, countertops, hanging lights… seriously, is there one manufacturer with one color shade that makes these for every new apartment building in America.

If you are a writer or creative especially. Dingy with character beats sparkly and soulless as a place to write in every damn time.