I recently read this post about a 28 year-old New York woman who retired with a net worth of $2 million dollars thanks to her smart investing, frugal lifestyle and killer paycheque right out of school.
Her biggest piece of advice was to keep your housing, transportation and food expenses low. I think this article really resonated with me because Paul and I have been thinking about whether we should downsize into a smaller place. It’s something that’s crossed our mind since we purchased THIS vacation home on the Oregon Coast.
For now, we rent around a 1000 square-foot open concept loft-style condo in Portland, Oregon. We thought we would need all that space – but it turns out, we really don’t. However, if we were to downsize into a smaller unit that was 640 square feet in another building – we could save $600/month = $7200/year that we would put right back into investing and savings for the future.
Beyond the money, we both feel like we are out-of-town at least 1 week out of every 4 – if you count all the weekends we go to our airbnb, work travel and regular travel. So we’re only in our condo 3 weeks a month.
Additionally, if we ever feel cramped – we can always head out to our on the coast. This is more likely in the off-season when the house isn’t booked by renters. All the rent we make in the summer, helps offset the cost of the house for the year.
I think owning a vacation house (above) has made me feel more free to explore the idea of living in a smaller apartment in the city. Additionally, our car is paid off in full and we don’t spend a lot in gas because we live in a super walkable neighbourhood and anything we want to get to in the city is always less than a 20-minute drive away.
In terms of food expenses – we could definitely eat out less. Not only would that be better for our budget, it would also be better for our health. I like the idea of cooking more and seeing exactly what goes into our food.
Though this one is a toughie because Portland is such an amazing food city – eating a delicious meal doesn’t have to be expensive. But we should probably do it less.
We’re saving more in Portland because there’s 0% sales tax and the cost of living is lower than Toronto and Los Angeles. For example, the cost of a fancy haircut with a senior stylist in LA? $175! In Portland, it’s $60-75 to see the top stylist in the salon. A gym membership in LA could run as high as $150/month. Right now I’m paying $50/month for BOTH of us – and it’s a really nice gym too!
So all of this has got us thinking about whether we should downsize again to save even more money.
We’re seriously considering it and will probably decide in the next month as I think the rent we pay now is pretty outrageous – considering the fact we don’t LOVE our apartment. It actually feels like TOO much blank space, which doesn’t make it feel cozy at all.
I should also mention that when our lease is up after 16 months, our rent + parking combined will have increased almost $225 extra a month! Out of principle, that’s ridiculous – I don’t want to stay in this building. Secondly, who knows how much they will increase it in the future.
I mean sure, we could buy MORE furniture to fill all of that space, but what is the point when our next place might even be smaller? We would have to sell it all again!
Don’t even get me started on buying a place. The market is so red hot in Portland, Oregon right now and we don’t NEED a house right this second. Condos in our current neighbourhood are going for as high as $650/square foot. We’re actually okay with less space in our day-to-day since I’m a minimalist and we can throw anything extra into a $50/month storage locker if we downsize.
I’m pretty sure we are leaning towards YES!
So what do you think? Have you thought about downsizing?