Talking about how to live for free: Do you know that forty percent(40%) of all your wages, of all your effort, of all your earnings, are just going to put in a roof over your head?
In this article, I’m going to be discussing how to live for free or at least how to get close to living for free because. If you want to reach Financial Independence, if you want to retire early you absolutely need to get your shelter cost under control.
We all know the average Canadian spend 40 percent of their income on shelter. Now that includes their house, their utilities, all the above, but that’s 40% of all your wages, of all your effort, of all your earnings are just going to put in a roof over your head. This is crazy, it’s absolutely insane and we need to get control of our shelter expenses if you ever want to reach Financial Independence and retire early.
Two factors you need to take into consideration when determining providing shelter for yourself and still live for free.
1. Daily or regular locations:
So for most people that are still in the 9 to 5 grind, you’re going to want to live for free close to work because that’s essentially a daily location, you going to live close, so your kids get educated or you want to live close to anywhere you visit on a regular basis and it’s important that when looking at where to get your shelter that you take all these factors into consideration.
Far too often, people into buying or moving to areas that make no Financial sense and no economic sense and don’t even make sense from just a life perspective, because if you’re living way out in the suburbs and you have to commute half an hour or an hour each way, every day to get to work and then you need to drive all the way across the city, as well to take your kids to their school or to their after class programs or whatever It is. Not only are you wasting a lot of resources and having to commute like pay for gas or transportation to those different locations, but you’re wasting a ton of your time and that time could be much better spent.
2. Permanence or your level of commitment to living in that place:
Do you plan to live there for the next three to five or longer years? If you don’t odds are the purchasing or buying a house or even an investment property, if you’re going to be relocating in the near future probably doesn’t make a lot of sense. We’re going to dive into that a little bit later though. And finally, you need to get your net shelter cost to 10% or less the moment you’re able to go from 40 percent to say zero or even just 10 percent all of a sudden you can say 30 to 40 percent of your income what that means is for every year of work. Now, you’re essentially saving one year of living expenses as well. It really allows you to speed up the trajectory of your financial Independence you’re retired early date. So that’s why getting shelter It’s the number one expense line of anyone. You need to get that under control if you want to get control of your personal finances.
Different tactics that you can use to essentially live for free.
So the traditional advice from most frugal people, from most people that were trying to get control of their financial lives in the past was to downsize, to reduce the overall cost, find a cheaper alternative, live with roommates, things like that, and these are all fantastic strategies to help reduce our financial costs, but in this days and age with the internet with Communications being what they are, is so much easier for us to find creative solutions to the shelter problem. And in fact, save all of our money on shelter expense or maybe even make some money.
Again, if your number one goal is to reach Financial Independence, retire early as fast as possible and you’re still in the accumulation phase of gathering assets, gathering Investments to create that passive income or create that war chest that you can live off of indefinitely. The number one thing you can do is get control of your shelter costs, gets them to a net cost of zero ideally or at least keep it to 10 percent or less of your gross income.
So here’s a handful of strategies that I think fit that definition of Creative Solutions that you know, 20 plus years ago wasn’t on most people’s radar.
1. House hacking now:
You know, a lot of us are huge Believers in house hacking and now house hacking can have a whole variety of different flavors, the concept though is you’re going to buy a property, you’re going to buy a house or multifamily, whatever that looks like and you’re going to figure out a way to live with roommates for free or other renters and get your cost to ideally zero.
So number one with roommates: This is how I started. I bought a house with 6 bedrooms lived in one of the bedrooms and then have a bunch of friends and strangers move in with me and my cost to operate that house, I think it was around fourteen or sixteen hundred dollars a month, and I could rent out each bedroom for four to four fifty a month. So by having three to four roommates, I was kind of breaking even those few times that I had five roommates, I was actually getting paid to live in my own property, which means, I am living for free in my own property. That was massive to building up my financial assets, It allowed me to get my cost down to zero or actually a net Surplus in the case of shelter when I had five roommates and it allowed me to save up money so much faster and just reinvest it in my case. I focused on Real Estate. Are you considering venturing into real estate business, you must read this article before you make your decision.
Another option is multi-family living: So maybe buy a duplex, a Triplex or a four-plex, move into one of the units and then rent out the others and as long as you’re making sure that you are hitting the 1% rule while having one unit vacant you’re actually going to be able to again live in that property for free or get paid to live there. Now this can’t be done in necessarily every real estate market but within a four-hour drive of where you live, I almost guarantee in North America, you’ll be able to find a market that fits.
Now again, this is a problem for profit situation. A lot of people are going jump in the comment section and say roommates or the multifamily or even AirBnB house acting is great, but it doesn’t work in my city because of real estates crazy expensive, I can’t meet the 1% rule.
Well, in that case, you got two options one is you can move or you can focus on one of the other sets of strategies here. The other set of strategies is
2. Rent Hacking:
And so again, rent hacking is very similar to the strategies that are been used in house hacking and can be replicated with rent hacking. So one is you can rent out a big house and then sublet the individual rooms two roommates or just pull your assets with roommate to reduce your net living costs, really popular, and this is a really flexible lifestyle for someone that’s maybe not sure if they’re going to live in this city or this neighborhood for the next two, three plus years. You don’t necessarily want to tie yourself down to a physical location for the long term.
Second is Airbnb: now whether this is Airbnb is a section of the property that you’re renting or the whole property just when you’re not using it. There’s a lot of different Alternatives. I remember right before I quit my day job. I was debating with the idea of are Airbnb where I lived, and I would just camp in the backyard when someone booked it, it was just an interesting strategy in order for me to save up additional money. I never ended up actually executing on that idea, but it was always one of the strategies I kept in my back pocket in case of money ever got tight or in case I just needed to increase my revenue or decrease. My personal expenses.
Finally is a live-in super option: Now, this is something I think most people Overlook or forget, but when you get into larger multifamily properties, they often have like a superintendent or maintenance person that lives on site often in exchange for being the maintenance or the super you actually get to live for free or significantly reduced rent. I’ve met multiple people who do it here in London Ontario and often, you know, if say their Apartments $1,000 a month in Market rent, they may be are living in a 12 or 30 unit apartment building and their net rent is only 400 or sometimes. It’s literally zero dollars a month now that is going to take some time and effort, but you can consider that just as anyone in any type of side hustle that’s allowing you to get your shelter costs for zero dollars.
The third test strategies I want to bring up and now these are going to be a little bit more extreme and probably some people are going to hate on them. But I think that they’re actually quite valid and for people that are on the problems versus profit Spectrum focused on profit, they’re actually going to love these Concepts and so I’m just going to call these at zero cost or almost zero cost strategies
1. Couch surfing:
So this may not feel like a long-term strategy. But in fact, if you build out a really strong personal Network, it wouldn’t be insane to go travel to a different city or different location every month and just crash with friends or family or whatever. Some people are going to be like, oh that’s your being a parasite your take advantage not necessarily similar to a living super maybe you can find a way to exchange value that’s not monetary.
2. van bus or tiny living in general, especially Tiny mobile living:
There is an initial cost. You initially have to buy that van or that bus or whatever you’re going to live in. Once you’ve paid for that unless you’re doing a lot of traveling there’s not a lot of overhead. You don’t have property taxes the same way that you do with a house, you don’t have all the same maintenance and utility requirements because you’re living in such a tiny living space. I actually love this strategy and I hope at some point in my life that I’ll get to implement it, but I know that lots of my friends are starting to do it.
3. work live blend:
I would argue that’s what I’m doing today. Is essentially where you blend your work live situation to the point where they’re essentially the same thing. I do all my meetings at this house, I prepare and write all my blog article in this house. I have some of my employees living with me in this house. And so, in fact, the vast majority of this cost of this house is business related. So what you can do, depending on your exact situation, talk to your CPA yadda yadda yadda, but there are versions where you can essentially work and live in the same space and have the significant or almost the entire portion of that property of that expense be allocated to the work side, which is tax deductible and that’s going to result in kind of that zero cost personal approach.
4. Living off the grid:
So this could go build a tiny shed in an unincorporated municipality where there are no building bylaws and where you’re going to be disconnected from the grid so you don’t have utilities you only have token property taxes or maybe just not even property taxes. If you’re really out in the boonies, these are really interesting strategies. They’re not going to be for everyone but there’s a strategy on this list that will work for everyone’s living situation again, it comes down to problems or profits. Do you guys want to win or do you want to lose if you have a winning mentality if you’re focused on finding the prophets out there all the problems disappear and you only see opportunities?
So these are all the different and tactics that you can use you can Implement today in order to get control of your shelter costs. Again, if your focus on financial Independence retiring early, you absolutely need to live for free or at least get your shelter cost to 10% or less of your overall income.
I think I’ve covered everything pretty comprehensively at this point, but I’d love for you guys to jump in the comments section, let me know. What opportunities do you think I overlooked, what Creative Solutions are you currently implementing or that your friends or family or implementing that are allowing them to reduce their personal overhead, to reduce their shelter costs?
I would love to know so jump in the comment section down below share your opinion share your experiences because again, I’ve only tried a handful of these strategies, but at the end of the day, it doesn’t matter which strategy you implement all that matters is that you control of your shelter costs get it to 10% or less smash that like button.