Why Tiny Homes Are One of the Best Home Purchases You Can Make
It seems like everywhere you go, you see tiny homes for sale or articles in magazines, websites, and ads on social media about them. People are searching for the courage to pursue their goals and dreams; become more self-reliant and save money. Living tiny achieves those goals.
Living tiny denotes a lifestyle quite suitable for young people who are single, young couples, retired couples, and even those with children adaptable to small spaces. Many YouTube videos exist that depict couples with two to three children, living in tiny homes.
Traditional Home Prices Are Up, Medium Income Is Low
Housing costs have soared at exponential rates over the recent ten years. Markets in some of the best cities in America have priced the average person out of ever owning a home.
For example, according to Zillow, the average Seattle home price tag has reached $960,925.
Census information lists the median income in the US for 2020 at just $67,521. It can appear hopeless that someone earning under $100k per year can purchase a million-dollar home in Seattle. Yet, it’s a great location for workers in a variety of tech fields.
Many people settle for living in locations, not where they aspire to live, but where they feel forced to live because of a mismatch between their income and the housing market. This can rule the better jobs in places with higher costs of living.
Tiny Homes: Solution for Those Who Can’t Afford (Or Want) Traditional Homes Anymore
Young Americans leave college and start careers with a mountain of debt. Many find themselves buried under student loan payments that turn the idea of homeownership into a mere dream.
While many graduates entering the workforce find it necessary to relocate to specific geographical areas, they simply cannot afford both the housing in those areas and their student loan payments.
Tiny homes offer a perfect solution. You can easily park them on campgrounds, on very tiny lots, and even in the backyards of family members in some places.
If you would like to consider a tiny home for your situation, check the laws in the area where you’d like to park a tiny house, since not all cities welcome tiny homes.
The average cost of a tiny house comes to around $55,000 if you order through a builder. If you build a tiny house yourself, you could spend anywhere from $8K to $100K, depending on how basic or how elaborate you design your home.
Even those with families enjoy tiny home living because of the freedom it allows for other possibilities. Saving money is easy in a tiny home. Taking children on vacation is as simple as towing your tiny home on wheels to a new location for a few weeks. Retirees can enjoy downsizing in style, with minimal cost or upkeep.
Types of Tiny Homes One Can Buy at an Affordable Price
Many builders now specialize in tiny homes. Tiny homes on wheels (THOWs) can be found for as little as $55,000 with appliances, and completely plumbed, wired, and ready for occupancy.
Tiny homes differ from a camper in some important ways. Tiny homes have frames like a house and include similar insulation. Campers usually have an aluminum frame and include minimal, if any, insulation. Campers have onboard septic tanks for holding wastewater from toilets and sinks. Tiny homes do not have holding tanks and must connect to a water supply and sewer line or else come furnished with a dry toilet.
The THOW can go with you wherever you need or want to live. All you need is a place to park it, which often costs far less than trying to finance a home in the same location.
You could also consider buying a cheap lot that has no home on it but is zoned for a tiny home under 600 square feet. Place your tiny home on the lot and set it up on a permanent foundation.
For the sake of comparison, a 30-year, $750,000 home loan with 10% down (which very few budget-minded people have lying around) and 7% interest equates to a monthly principal and interest payment of over $3,000, plus property taxes and homeowners insurance that can easily take it to nearly $4,500 a month.
You can often finance a tiny house on wheels with a price tag of $55,000 for a maximum of 20 years. With the same terms of 10% down (which many creditors will waive if you’ve got good credit) and a 7% interest rate, your monthly payment might equal just $650 per month, including lot rental and insurance. That comes to less than what rent is for most apartments in the US. Bear in mind that the longer you finance, the more the home costs in the end. If you don’t plan on living in the home for 20 years, it makes no sense to finance it for that long if you can afford higher monthly payments. Your payment will go down lower if you put more cash down as well.
In the end, many people prefer building their own tiny homes because of the lower costs. You generally do not need to worry about building codes, but you will want to make certain you follow the basic rules of building so that your home is sturdy and safe.
Household Budgeting Spending Plans/Saving for Your Tiny Home
Consider living at home with family as one of the best ways to save for your tiny home down payment. Many young couples do this, even with small children. If this makes sense for you, it can give you the time to save for or build your tiny home.
If living with family is not a possibility, find a small apartment or find a camper to live in temporarily. You can often park campers in campgrounds that include utilities but strangely prohibit tiny homes. Check ahead. Living in a camper is a great segway into the tiny living life, honestly. Obviously, its small size forces you to rethink what you have. You may need to thin your possessions. After all, habits change when you live tiny.
Saving Money to Go Tiny
Shop at discount stores for your groceries. Avoid big box retailers because they may suck you in with specials but charge you more for additional items that make your bill higher at the checkout each week.
Don’t eat out. This one simple change alone saves most couples a couple of thousand dollars per year. Make your morning coffee at home, and take it with you to work rather than stopping for the expensive cup of trendy coffee that costs $4 to $5 per cup.
Consider using an apartment-sized washer that can hook up to your shower. Then try hanging your clothes to dry on a rack in your bathroom. Most people spend who spend $20 per week at the laundromat end up with a $1,040 annual expense.
Saving for Emergencies and Short-term Goals
Once you get moved into your tiny home, don’t forget to continue saving. With any luck, you’ll save even more each month without spending a fortune on rent. Make it a habit to save 10% of your paycheck every month.
You’ll want to pay to insure your tiny home as well. And since emergencies happen in all homes, you will need to continue saving for the unexpected. You’ll have upkeep and repairs as your home ages. You also never know when an emergency will happen or when a job lays you off.
When you have at least 3 to 6 months of income saved, you can relax while others are panicking. Then, you can focus even more on your long-term security with investments or even business pursuits.
A tiny home can give you the flexibility to enjoy your life while others are working themselves silly to make enormous mortgage payments. In fact, living tiny puts you in a position to pay your debts off early as well. Many families get totally out of debt when they choose to live tiny. You can experience life, rather than paying debts and having no life. Which sounds better to you?
