How Far Would You Go to Save Money?
A year ago, I moved into a new apartment building. It’s a luxury building, and I was the very first tenant to occupy the 600 square foot space with granite countertops and stainless steel appliances. At the time, the brand new building was offering 2 months free rent, bringing the pro-rated monthly total to just within my price range. Fast forward 12 months and my lease is up. The rent is going up $90 per month and my two free months are last year’s news. Needless to say, the apartment is no longer renting for a price I feel comfortable paying.
Searching for Something New
I live in the greater DC metro area, which is a very expensive place to rent. I had a roommate for the first two years out of college, but have lived alone for the past year. I would be willing to share an apartment with a friend, but am not really willing to live with a stranger. Since all of my friends are locked into situations they’re happy with, I was once again searching for an affordable studio or 1 bedroom.
I found a newly converted basement apartment in a great location. All utilities and bills are included, down to cable and internet. I would be saving a total of 41% of my current housing and utility expenses. With the money I will save, I can likely pay off my student loan balance (my only outstanding debt) in the next 12 months – a full 11 years ahead of schedule. The cons: shared laundry with the homeowners and a kitchenette with only 2 burners and a convection oven. The apartment is probably 30% smaller than what I have now. The walk to work is longer, but the walk to public transportation is shorter.
Things to Consider
Before deciding whether to make this leap and sign a lease on this apartment, I came up with a list of major considerations:
- I spend most of my non-work time at home. It’s probably worth being comfortable!
- Housing is one area where it might make more sense to spend money up front to save money in the long run. With a reduction in kitchen size, I might be tempted to eat out more, thus erasing some of my savings.
- Paying off debt ahead of schedule is always preferable to the alternative.
- I’ve enjoyed living alone and would like to continue doing so.
- Since graduation I’ve lived in managed buildings with on-site maintenance, secure entries, pools and fitness centers. On the other hand, I’ve used the latter fairly irregularly, the basement is part of a house in a very safe neighborhood, and maintenance needs are likely to be minimal since the unit is brand new.
The Big Decision
So my question for you is – how far would you go to save money? Does the answer differ depending on whether or not you have debt to pay off? What would you give up to eliminate your debt? Would you take a substantial decrease in your standard of living? Would you switch your diet to consist of slow cooker, one-pot, or microwaved meals? Would you give up cabinet space, closet space, and living space? Or would you suck it up and pay the money to keep what you are used to? Alternatively, would you live with a stranger in a nicer building?
I’m getting close to needing to make a decision, as my lease ends at the end of this month. I’d appreciate any help you all can offer before then!
Let’s look at what I think is most important getting rid of a debt in 12 months instead of 12 years.The year will be over before you know it,you will be debt free and ready to decide whether to stay and invest the extra money,rent a more expensive apt. or buy a place. If you keep your overhead low there a so many more options.I retired when I was 45 my $450,000 house is paid for and I have Real Estate investments to pay my everydays my top pay when I retired was a little over $30,000 a year. I live simply but not overly frugle
I think the basement apartment sounds like a wonderful idea for all of the reasons you cited, plus the added feature of having landlords that actually care about YOU and not just your monthly payment. I don’t even consider this a lifestyle change because you are just a few years out of college and most likely haven’t collected much furniture or had sit down dinners for 20, so you don’t have that much “stuff”. In my experience, twice a year is when I need the whole stove top.
I think you’re being very practical and the rewards are tangible (bye bye student loan!) so you’ll feel good about yourself and your decision almost every day. You will be the envy of your friends when you decorate your space inexpensively and are enthusiastic about the opportunity you’ve been given.
My son is moving into his first apartment and just said “anything is better then a dorm room”.
Why not ask your current apartment if they”ll renew your lease at last years rate? It will cost them more to have a vacant apartment or to try and fill it…especially if your record us of paying on time.
I think it’s about your priorities…do you get more satisfaction paying off debt sooner than a few more hundred feet living space. Which appeals to you more?
SuzyQ had a good idea. When I used to manage apartments I always preferred to maintain residents when possible. If they are unwilling to negotiate and you need to move the basement place sounds great at least until you have a good savings amount and debts paid off.
Like SuzyQ and Carol, I’d first ask to renew the lease at last year’s rate. Mr. BFS and I did that several times out of college and always got it since we were the perfect renters – paid a few days early every time and never gave them any problems at all.
If that doesn’t work, I’d move to the other place since it sounds good (just not as great) and you can pay off your debt faster. Take advantage of the small kitchen by learning to cook one pot meals, which comes in handy in a bigger place too. 🙂 I’d suggest stir fry and crockpot recipes (Frugal Scholar is coming out with a Rice Cooker cookbook as well)…
I’ve found that making decisions that moved me towards becoming debt-free to be very motivating, rather than constraining — “What can I do to meet this goal in the shortest amount of time?” — Almost like a game with myself. Then it doesn’t feel like deprivation, but a contest with myself to meet a long term goal in the shortest time frame that I can. Seems like a great opportunity to pay off your student loans in a short amount of time, which will give you the freedom to rent a larger space. But who knows, you may end up feeling like it’s not deprivation at all! It would be nice for you to continue to live alone, since that seems to be the preference. All the best to you in making this decision. The great thing is, if you don’t like this new living arrangement, you can change in a year. You’ll blink and it will be August 2011.
If paying down my debt meant some short term sacrifices. I’m all for it.
Go with the basement. I am moving out of my 2700 sq foot house to a 1000 sq foot townhome for similar reasons. I will save about $800 per month, allowing me to also pay down debt. 1 year!! Then go get back some of the luxuries or stay 2 years and build up a sizeable emergency fund.
Go for the basement and get rid of the debt. Not even a close call from my perspective. Cutting 11yrs off debt repayment is huge! With a couple of burners, and oven and a microwave there isn’t much you can’t make. I have a full sized stove and only use all 4 burners simultaneously at Christmas and Thanksgiving. Maybe. Really, is an extra stove burner worth years of extra loan payments? If you find the reduced space confining, plan to joing a (free) biking or walking group, or spend time reading at the library. Or even better get a part time job to keep you out a few evenings a week making even more money to build your emergency fund, save for a downpayment, or some other future purchase. Use this year as your time to fast forward yourself years ahead financially. Without a partner or kids to consider you only have to decide if you can live with it for a year. You may find it’s not so bad and stay a second year and really bank away the money. Wise money choices now can put you years ahead on your retirement. This is the easiest time in your life to make this king of short term sacrifice for long term gain. Don’t miss out on the opportunity!
Don’t worry about the 2 burners and convection oven. You can add a slow cooker and small microwave. My family (2 adults, 2 kids) lived with only a tiny bar fridge, no oven/stove!, a microwave and an 8″ square frying pan for 5 months (while waiting for our 2900 sq ft house to be built). You adapt.
What did you end up doing?
Here is Jill’s update on which one she picked: 7 Frugal Moving Tips.