I think if there is anything that is holding people back from realizing their dreams it is living in a place that is too big or too expensive, unless of course that is your dream. Of course home ownership is part of the American Dream, but so is liberty and the pursuit of happiness, and if the home is too big and mortgaged to the roof, it will make the pursuit of liberty and happiness quite difficult.
I think there is a deliberate choice to make between early retirement and the standard sized house for your “socioeconomic status”. You can have one or the other, but not both. In other words, living in something significantly smaller than what your peers are living in is key to early retirement.
Again, unless you enjoy spending money on a large home and the things that come along with it, a home is basically only a place where you sleep and keep your stuff (more on that later). Realize that you could in principle choose between having no kitchen and paying, say $400, more per month. Those $400 could be spent on eating out every day. Now this is not a realistic example, but consider a that an extra bedroom might add $200 a month to the rent.
To become financially independent of a $200/month expense requires investments between $60000 and $80000 (see here why). This is the so-called latte-effect at the large scale expect that instead of a daily superfluous cup of luxury coffee, we are talking about a superfluous bed or bathroom that is rarely used. How many years will it take you to save this much more money?
I think that a good guideline per person for living arrangements is $200-300/month/person. In some places this buys more than other places. As far as I am concerned, the number is absolute. If I want to live in a “nicer place” it simply translates into a (much) smaller place and vice versa.
When I started out, I was paying about $275/month for a small room with a sink (I shared the kitchen, toilets, and showers with 18 other people). This was close to downtown of one of the more expensive cities in the world. When I moved out of that place, I moved into my very own apartment for $400/month. Then I moved together with DW for $330/person/month. We then made the mistake of moving into a house at $700/person/month. That lasted a year with stagnating savings as a result. We currently live at $237/person/month.
On the first day of the challenge, the idea is, therefore, to seriously consider whether your current living arrangements are optimal for early retirement. I put this on the first day, because it takes about a month to find somewhere else to live and move.
Of course some may be bound by mortgages (which may be underwater) or not having sufficient ready funds for making a deposit, and they may resort to just considering the move and start looking at a longer time frame.
For the rest, I think there are three things that matter.
- Location relative to your work.
- Location relative to your grocery outlet.
So, the real estate motto is 2/3 true: It’s location-location-cost.
The method I tend to use is to go to craigslist and click on housing. Then I put in my limits: $200 minimum (because that removes a lot of useless search results) and $350 maximum. If you are two persons, you could put $400-$700, say. Also consider cohousing, room mates, etc. In particular, consider radical alternatives. We live in an RV for example. In addition some of the cheaper places may not be heavily advertised. We lived in the same place for 2 years before discovering an option that was $400/month instead of $660/month. Ask around!
What about buying? In that case I would use the same limit for the monthly payment. I do not think it is a good idea to consider the house you live in an “investment” unless you know more about real estate than the average person and in particular enough to speculate on its direction.
I would also not be too tid down to a particular city. Indeed, a frequent excuse is that “I need to live here”… Actually, unless you can document some need for a particular climate, say, you only want to live in a particular place. This want, then, comes down to paying extra vs retiring early. I pick the latter… to a degree. The one place I don’t want to live is Table Rock, Wyoming ; mainly because we got stuck there on the interstate during a winter storm once.
Now that you have a bunch of potential addresses, it is time to find routes to work and groceries respectively. I use google maps. Enter the address of your potential new home and then click on from here and enter you work address. Google maps should give you a route. You can actually drag this route around to avoid certain streets, etc.
Since we are going to get rid of a/the car tomorrow , I recommend checking to see if those streets are walkable or bikeable (e.g. no disappearing sidewalks or killer intersections). Satellite view at maximum resolution or the street view option is helpful for this.
If you live in a region with heavy winters, you will have to walk rather than ride a bike. In that case limit your maximum distance to 3 miles (will take about an hour to walk). Otherwise, I would say 7 miles tops. Perhaps you are tougher than I am. Walking a 6 mile round trip daily is certainly doable — I did it for half a year once, but I wouldn’t want to walk much further than that.
An alternative solution is to check out car commutes possibilities or public transport. While these cost money, something which is to be avoided, they may significantly expand your options. In that case use google maps to look for bus stops instead.
Even if you are not going to move, try going through the craigslist/google maps exercise anyway just to realize that it is possible. Don’t worry. There are other ways to self-actualize than living in an expensive place