It’s been three months of apartment living. Four months since we sold and moved out of our house. Three months since we returned from an epic cross-country journey (while we waited for our apartment to be ready for move in). Here’s the nitty-gritty so far. Lets start with the cons:
We live in a smaller space. This is a debatable con, but it is a fact that we have less space now than when we lived in our house. We went from nearly 1,700 square feet (which isn’t all that huge) to 750 square feet -- So less than half of the space we had before. The largest manifestation of that space loss is our office space. We had two separate offices with doors we could close. Now, I work from a built in office space and my wife has her desk placed (sort of) in our living room. We also have been able to utilize the ample office/work space provided within the apartment amenities when we NEED to get out of the apartment. I think we both miss the privacy and space of our own office, but we’re also fine with our current arrangement.
We miss the community of our neighborhood. This isn’t true for any and all neighborhoods, but where we lived was special. Neighbors knew each other and hung out together and helped each other. Everyone has been cordial at the apartments, but it’s not the same. In that same train of thought, we miss the opportunity to entertain. At least a couple times a year, we would host get togethers at our house because we had more space, privacy, and a beautiful back yard. We still hang out with people here, but it’s in smaller groups. I will certainly miss the opportunity to host an oyster roast this winter.
Back to the space thing — There is no bathtub. Not a big deal for most, but I greatly enjoy a nice bath. It evens me out, lets my body heal (from long production days), and gives me space to think and read.
We also sold off a bunch of stuff before we moved so that we could fit in our new apartment. That has actually been fine and we’ve made the most of storage space here (there is a very large closet that catches most of the things we didn’t get rid of).
That’s really about it for the cons — basically, less space and less community opportunities. So here are the pros:
An obvious pro is the cost, which was the main factor in the decision to move. And, honestly, it wasn’t as much the cost, but the debt. We now live truly debt free. Of course, we still pay rent, but there isn’t a $200K+ mortgage over our heads. That feels good.
As far as our monthly costs go, here are some relevant average costs for us in 2018 (keep in mind that by working from home, our businesses paid for portions of some of these areas):
Misc Home Expenses: $88.70
And here is our 3 month averages so far in the apartment:
Misc Home Expenses: $560 (we spent a good bit of the money we made from selling things to upgrade furniture our first month in the new place — couch, bar stools, rugs, bookcase, vacuum, etc)
Basically, everything is moving down (including how much our business pays every month — putting more money in our pocket).
The added financial benefit (outside of spending less per month) is that we cashed in the equity we had in our house and added that to our liquid assets. Our goal is to continue to add to that until we can purchase a home outright (or very close to outright). We are still contributing to tax-advantaged retirement accounts, but only to the point where we will not owe any taxes (something we’ve strategized with our CPA). We’re pulling back a bit on those investments in order to save the money to purchase a house.
This is where the investment math gets a little confusing and where personal finance becomes personal. From a strictly numbers perspective, we would probably end up with a higher total net worth if we just invested our savings into the stock market. However, we have decided that having zero debt makes us feel better about our life in general. That is our current goal: Live in a house that is completely paid off. Drive cars that are completely paid off. Pay no interest on anything at all. And when that becomes our reality, those numbers we mentioned before will plummet further, decreasing our yearly cost of living significantly.
Cost of living is important because it is the determining factor in your FIRE number. The equation is 25 x your COL = FIRE. So if you are living on $20K/year, your # is $500,000. If you’re living on $30K/year, that # is now $750,000. COL makes a big difference. Since our major goal is to be financially independent, we are working hard on lowering our cost of living and, thus, lowering the number we need to reach FI.
Of course, when you lower your cost of living, you’re increasing your savings rate. You are stacking cash more quickly, enabling you to achieve your total savings goals faster. The other element that factors into this equation is earnings. The more money you make, the more money you can save, getting you to the finish line even faster.
So our goals are three-fold currently:
Save money to purchase a house that is completely paid for.
Lower our cost of living (by living completely debt free), thereby lowering our FI #.
Increase income to speed up the process of achieving FI.
All of those goals have lots of sub-steps, but having a clear goal of where you want to be and listing out the tangible steps of how you are going to achieve it is absolutely paramount to your success. Those goals influence all of our decision making. We try to align our daily habits with our main objectives and those habits tend to help us lead a more fulfilling life.
Which brings me back to some of the apartment pros:
The amenities. When we moved, we also gained a gym membership for two as well as a lovely pool that we can access 24 hours a day. We also enjoy a theatre room and common areas for entertaining (maybe I can have that oyster roast after all) and commerce. We’re walking distance to the newest movie theatre in town as well as lots of dining and entertainment options. AND our apartment actually connects to the cross city bike trail!
Additionally, there is literally NOTHING to do. No lawn to mow. No steps to be repaired and painted. No list of never ending house projects. I did absolutely enjoy doing some of those things and I learned a lot by owning my own home, but getting all of that TIME back is huge. Time is our most precious resource and I am determined to use my newly-found extra time effectively (by working on my business or creating a side hustle, for example).
To be sure, there is a give and take to our new lifestyle. But we believe we are gaining in lots of ways and, most importantly, we’re moving closer to our overall life goals. And that feels amazing.