Tiny homes, large mortgages and F.I.R.E

What is best in life? Time or money? Lifestyle, or stylish life? Which would you choose?

Some of you may have come across blog articles and online videos promoting the benefits of alternative housing and low-cost lifestyles, and dreamed of the possibility of escaping the city to live mortgage free. It’s an attractive proposition, but is there more to it than simply living in a ‘tiny house’?

Downsizing and thinking differently

The concepts of minimalism, frugality and financial independence are becoming more popular with people who find themselves in large amounts of debt to sustain lifestyles they don’t really enjoy. Online success stories of those who've chosen to live, work, and think differently are an inspiration to anyone who, at some point, has thought to themselves “there must be a better way”.

It’s an attractive proposition for those who see it as a way to live a more sustainable lifestyle in tune with their values and possibly even to retire early (‘early’ is a vague term that may mean thirty, forty, fifty, or beyond). Online videos present inspirational stories of ordinary folk who’ve escaped the debt burden of a mortgage and opted out of the rat race by choosing to live in more modest accommodations and downsizing their needs at an earlier age.

Some choose to build their own home and some have even abandoned housing altogether, instead choosing a life of sailing the high seas. Often this is a philosophical choice about what matters most in life; a less extravagant lifestyle can represent a rejection of modern consumerism and excess which appears to be at the root of many social dysfunctions.

What if I suggested that that answer is to spend less, budgeting more, live a simple lifestyle, and let the Joneses get on with their goal of a large house in the suburbs? What if I proposed that you pursue a long-term strategy of debt-minimisation and frugality? Is it really that simple? Well, this is the essence of movements such 'F.I.R.E' (Financial Independence Retire Early).

F.I.R.E

F.I.R.E (Financial Independence Retire Early) is as much about a state of mind as it is about a radical lifestyle change. A good, but dense, read on the topic is Early Retirement Extreme by Jacob Lund Fisker. According to Jacob’s biography on Amazon.com:

“Having pursued a goal of skill-based self-reliance, he has spent less than $7000 per year for the past 15 years while saving the rest of his income and developing the skills to maximize the value of every dollar spent to easily achieve an inconspicuous middle class standard-of-living. This highly unusual behavior of saving money led to financial independence at age 30 and he hasn't needed to work for a living since then.”

But is F.I.R.E just the latest fad, a fashion, a flash in the pan internet flavour of the month before the next sensation takes hold? Is it just a clever acronym hiding the reality behind a get-frugal-quick scheme? Is it for the fortunate few who can afford to escape the city and a dream for the rest of us?

Yes and no.

If you’ve seen one “Retire at 30”, “How I’m going to retire at 35”, or “Listen to me tell you how not to waste your money” video, you’ve likely seen nearly all of them. There is often a backstory behind the organic farmer living in a yurt on ten acres of rural land involving a highly-paid corporate career or inheritance that supports our intuition that this is a way out for the lucky, privileged few.

It is also true that the F.I.R.E lifestyle and goals will not suit everyone; some of us are content enough with our lives and don’t see such a radical plan as realistic or attractive given our circumstances.

However, there are many inspirational tales of smart, motivated people who’ve chosen a deliberate, no-frills values-based lifestyle and put in the hard work over a decade or more to slowly establish a lifestyle that allows them to live their dream; a modest dream of greater freedom, independence, and the pursuit of their passions.

As larger cities become less affordable and information on alternative lifestyles is shared widely on the internet, people are connecting with a more self-reliant past where it was not an automatic choice to get a stable job, save for a deposit, and take on a mortgage for many years; it has become clear to many that this is a path towards dissatisfaction and unhappiness.

Light the F.I.R.E?

So, you’ve spent hours online combing through the fine details of other people’s success stories. You’ve collected the kindling, you’ve lit the match, and you’re ready to warm yourself against the flames in your new life as a cheese-making, goat farming, yurt-inhabiting freelance YouTube sensation. Or perhaps you need a little more guidance.

A little More Guidance

We are nothing if not generous at Men’s School, so here is what we’ve gleaned from many weeks of intensive research:

• Save money. Spend more than you earn. Do this consistently. The main targets here are rent, food and luxuries, but strategies for cost-minimisation differ greatly.

• Understand your values, set realistic long-term goals in accordance with these values, and be ready to adapt to new challenges along the way. What kind of relationships do you want? Do you want children? Do you need to live close to your parents?

• Don’t deprive yourself: the journey is as important as the destination. Every day matters, and happiness is not necessarily a cheap apartment and baked beans on toast for the next ten years, even if it does allow you to retire at thirty-five. Especially when you realise that we’re not guaranteed the next ten years.

• Be intentional with your choices. Why are you going out to a nightclub and paying for over-priced liver-killer? Is this a good use of your time? Where is the best place to live minimally and save money on rent and transport? What do you need to live well?

• Learn skills. Learn to fix, mend, and make to avoid paying others to do if to you. It all adds up.

• Don’t buy a new car; buy a reliable used car if needed, or use public transport and cycle if you're able.

• Diversify your income – invest, start a small business, get a part-time job, or monetise your hobby.

• Simplify your life: keep less stuff and develop a greater appreciation of friends, family, and free services such as your local park.

• Educate yourself online about different financial strategies, but don’t get too caught up in theory; most of the real answers are simple.

The Philosophy

Now, back to the original question: what really matters?

Is it more time, less stress, and greater freedom to forge our own destiny, or money, status and the ability to buy our way to a comfortable lifestyle? It’s easy to become idealistic when considering these choices and make snap decisions which we later regret (like quitting a job), especially if we find ourselves stuck in a situation we dislike.

A lack of information can lead us into conforming to a lifestyle that we did not expect and come to resent, but an alternative requires careful planning, consideration, and resilience against the many challenges of doing something different (ever had the idea of building a tiny home in a rural paradise then come up against Council planning regulations?).

Understanding our true values and mustering the courage to live by them is as much the lesson from the tiny home as is planning our future in a financially responsible and efficient way. The world is full of people who will discourage you and tell what can and can’t be done. Many of us will have to shake off the shackles of unsupportive people to achieve a better life and this is a significant life lesson in itself; don’t become trapped by the expectations or opinions of others.

We’re not all cut out for a life of self-sufficiency in the woods, but it is critical to understand what makes each of us tick and what success really means. We're all different and must understand what works for us.

F.I.R.E, minimalism, and the pursuit of a tiny (or moderately-sized) home are ways of thinking differently, and if your life is not fulfilling you in the ways it should, then they're certainly worth a look.