Living Small and Saving Big

While I’n on the road, I’m featuring guest posts. Today’s comes from Owen over at PlanEasy.

In a past life, I had a 4500 square foot home. It was ridiculous. Why does a family of 4 need a home with 4 bathrooms (although I did kinda like having my own toilet)? Why did we need a bathroom/master closet that was over 150 square feet? We didn’t, so we moved.

We’re better off in our modest home of 1850 square feet, but it’s still not ideal. If I designed a home, it would be no bigger than 1500 square feet (sorry, I love that number). Maybe I’m still thinking too big though? In today’s post, Owen shows us how a family of 4 lives (and thrives!) in 1,000 square feet.

Take it away Owen!

Owen’s piece of paradise!

Believe it or not, our family lives in just 1,000 square feet. Two adults and two small children. We could afford much more but we choose to live small.

Why would we do this, you ask?!?

Well, housing is a major decision. One way or another housing will drive about 50% of your annual expenses. Approximately 35% of your annual expenses are for shelter and another 15% are for transportation, which of course is closely linked to where you live. Choosing the right home can help you save big in both categories.

We’re living small, but not living “tiny.”

With four people sharing 1,000 square feet we’re averaging 250 square feet per person. I’ve created a floor plan below to help you see how we do it.

Traditional “tiny” houses are between 100-400 square feet for 1-2 people. While I LOVE the idea of a tiny house this is way too small for us and not something that we could do with two children.

But when you compare our home against the median size of a new home built last year, we’re definitely on the small side. The median house built last year was 2,422 square feet and on average 2.58 people occupy this house. That’s almost 1,000 square feet per person! We’ve got that much space for all four of us. We’re living in less than half the space of new houses built in 2016.

Why did we choose to live so small? Let me share some of the reasons.

Living small is less stressful

Every day we feel stress: financial stress, work stress, family stress, health stress. Why not try and reduce that stress even just a little bit? Believe it or not, living small is way less stressful.

We own less stuff (there’s just no room). We have everything we need, but not much more. In our experience, less clutter means less stress.

We have less to maintain. There is less stuff to maintain and there is less home to maintain. Fewer things means we have fewer obligations. There’s a certain peace-of-mind that comes from knowing we have less stuff that needs to be done.

We worry less about home repairs. We’re in a one floor bungalow. We can access all the mechanicals from the basement or the attic. Even if things went seriously wrong the damage could be easily repaired.

Upgrades are easier and a lot less stressful. Rooms are small so cosmetic changes take less time and less money.

Living small is also less stressful because it puts less strain on our expenses. We live more efficiently and that gives us a lot of financial freedom. We worry less about our finances.

Living small creates more time

Living small also gives us more time. More time to focus on what matters. We have more time for fun activities with the kids. More time to hang out with friends. More time for vacations with family.

Cleaning takes a fraction of the time. We vacuum the entire house in 10 min. This also lets us use one of those fancy Dyson cordless vacuums which makes it even easier. We only have one bathroom to clean. We put the kids’ toys on rotation (toys are put away periodically and old toys are brought back out) so there’s less to put away each day.

Regular maintenance is easier too. Cleaning gutters? Under an hour. Painting a bedroom? It’s smaller and much easier. Washing windows? Simple, they’re all on one floor. This frees up more time for fun activities.

Living small makes frugality easy

Being frugal is integrated into our daily lives, there’s no room for meaningless “stuff.”  All the things we own are either very useful or have sentimental value. There is literally no space for meaningless things.

Buying something new becomes a decision about its value. Do we value this new thing more than we value that old thing?

This completely changes the want vs need dynamic. Unless we truly need something, there isn’t a reason to clutter up our home with extra stuff.

Living small doesn’t mean sacrificing

Even though we live small we don’t have to sacrifice any of the essentials. We have a full-size kitchen, bathroom and living room. We save a lot of space in the bedrooms which are ~80-120 square feet each.

Below is a basic bird’s eye view of our floor plan. As you can see our house is about 1,000 square feet but very well laid out. There isn’t much wasted space. Even the “hallway” spaces between the living room, kitchen and bedrooms become part of the rooms when not in use.

(I apologize profusely to any architects reading this for my poor-quality floor plan)

And just for fun, here’s our floor plan including furniture. As you can see we have all the typical furniture you’d find in a family home. Living small doesn’t mean sacrificing with tiny couches or tables that fold into walls.

We have a couch and two large chairs in our living room. We have a dining room table that can seat up to eight people, although its normally just set up for the four of us. We have a fully functional kitchen. No hot plates or mini-fridges like in those tiny houses.

Here’s a view of the exterior of the home. It’s a small one story bungalow. The exterior is entirely red brick which we love! In a few years, we’ll be upgrading the roof to black asphalt shingles or perhaps a fancy solar roof, if I can convince my wife!

A picture of the living room. We’ve been slowly making improvements here. We just finished painting the walls which is why they’re somewhat bare at the moment.

(Does anyone have experience painting brick fireplaces? We’re looking to paint our fireplace white and replace the tile. Let me know if you have any tips)

A picture of the kitchen too. Full-size fridge, stove, dishwasher and sink. We’ve also got a huge window above the sink that overlooks our large backyard.

The older, smaller homes in our area have large lots. This was another feature for us. We’re on a huge 60×190 foot lot. Newer homes have lots that are just 30×80 feet. This gives us more room for the girls to play outside. It also gives us room for a large vegetable garden and some fruit trees.

Living Small Will Reduce Your Expenses

One of the best parts about living small is that we save approximately $15,000 per year vs newer family homes in our area. We save on things like mortgage payments, property taxes, insurance rates, electricity expenses, gas/heating expenses and maintenance costs.

The news homes in our area range from 2,500 to 4,000 square feet and can easily cost an extra $150,000 – $200,000 vs our 1,000-square foot bungalow. With the extra cost to purchase, plus the larger size, these homes cost quite a bit extra per year in carrying costs.

Having a large home also makes it harder to save on utilities. My new obsession has been lowering our electricity bill. Because our home is so small we could quickly make some big changes. As a result, our electricity usage is down below 200 kwhs per month saving us about $360 per year.

My next goal is to reduce our water usage. Although we have a second bathroom in the basement our main floor bathroom gets used 95% of the time. This means we can save about 15-20% off our water bill just by installing one ultra-low flow toilet. This is a $150-$200 investment that should pay back within 2-3 years.

Location, Location, Location

By coincidence smaller homes in our area are also well located. We’re walking distance to groceries, banks, restaurants, coffee shops etc. We’re also just two blocks away from the public school. Newer and larger homes are typically located further away, in new developments, and require a car to get anywhere.

Because of the location, we’re able to be a one-car family. Most of the time car stays home and we bike around the city. My bike ride is 6 miles to work each way. My wife uses her bike plus a double bike trailer for the girls.

When need to go further than 5-6 miles, or the weather is shitty, then we take the car, otherwise we try and take the bike everywhere. Avoiding a second car saves us another $5,000-$7,000 per year.

In total, our annual housing and transportation expenses are just $13,220 per year.

Living Small Means Saving Big

Living small means less expenses, less stress and less demands on your time. When coupled with a good location this can also help reduce transportation expenses too.

This one decision will drive ~50% of your monthly expenses. Before you make your next housing decision think about how living small can help you save big.

Bio: I’m an avid traveler, father and personal finance geek. I founded PlanEasy Inc. to help make financial planning easy. PlanEasy provides inexpensive financial planning advice entirely online. I write about personal finance topics on my blog.

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45 Responses to Living Small and Saving Big

  1. Team CF says:

    Well done, looks like a nice place to live! Jealous of the massive garden, we really miss that. We currently live in a house of about 1450sft, which is still too big for what we need (and we already downsized from 3100sft!). Next house is likely to be around the size you have, but with a bigger garden.

    How about getting some solar panels? We have about 12 and use about the same amount of electricity as you do. The 12 panels pretty much cancel out the electricity consumption.
    Team CF recently posted…July 2017 Dividend UpdateMy Profile

    • We’ve actually talked about solar panels but our south facing roof is small (the side roof by the driveway) so we would need to put some on the front, unfortunately this is a deal breaker for my wife. I’m hoping the solar roof shingles evolve enough in the next few years to make it competitive with a regular roof (taking into account electricity savings of course).

  2. I need to check out some of the smaller houses in the area. I didn’t think about the proximity to grocery stores and such. What I’m currently looking for is a house with a bit of a yard. Nothing huge but something bigger than the postage stamp that we currently live on or at least close to the park so that we can stretch our legs and run around.
    Mustard Seed Money recently posted…20 Ways To Simplify Your FinancesMy Profile

    • Take a look around. From our experience the older homes in our area usually have bigger lots. All the new builds are on very small lots, maybe a quarter the size or smaller. The nice thing about the older homes is that they’re usually smaller as well (and in my opinion better built).
      Owen @ PlanEasy recently posted…Living Small and Saving BigMy Profile

  3. Jacq says:

    Wonderful! I plan to live small or tiny some day. My mom’s summer place is just over 1000 Sq foot, also with 3 bedrooms & 1 bath. Luckily we are close with out neighbors so if there ever is a bathroom urgency, we have a plan (how does my sister take showers that long?). I was glad to see you have a second in the basement.
    My current living situation is based on distance to work, vs affordability. Apartments close to work when I looked were $500 more per month than what I had been paying, but the reviews were very mixed about thin walls, too many people per unit and bed bugs, so I ruled that out. I like where I am, but know it’s not forever.
    There are so many advantages to living smaller, and that backyard sounds great!

  4. What an awesome way to not only save money, but time, energy and focus that would otherwise be spend keeping up a large house! Great job, Owen!
    Mrs. Adventure Rich recently posted…Are We Addicted to Savings Accounts?My Profile

  5. Mrs PoP says:

    Looks lovely to me! We live in a small house too – though our 3/2 is a little bigger than yours at 1100sqft! The funny thing is, people don’t believe it’s that small when they are in it, there just isn’t much wasted space and we try not to fill what space we do have with a ton of excess junk.

  6. I’m fascinated with the Tiny Home Movement. I often watch HGTV and DIY shows about building and downsizing into them. But Tiny Homes only make sense for 1 or 2 people. Sometimes these shows have a family of 6 move into a Tiny Home which seems crazy to me. Kind of like rats in a cage.

    After we FIREd, Mrs. Freaky Frugal and I sold our 2,100 square foot (4 bedroom, 2.5 baths) suburban family home that was nice when we had 2 sons living with us. We downsized into a 1,150 square foot apartment (2 bedroom, 2 bathroom) in downtown Philly.

    I really felt a sense of freedom when we got rid of stuff and downsized. And, as you say, it saves money and gives you more time. No more house maintenance for me!

    I think we could easily downsize another 200 to 300 square feet with just 2 bedrooms – we each like to have our own space – and 1 bath.
    Mr. Freaky Frugal recently posted…Bank bonus bonanza!My Profile

  7. Kyle says:

    I know a couple people who live in about 1000 sq feet with kids, my friend lives in a 1000 sq ft ranch with a third kid on the way.
    My home is a bit over 1000 square feet, but my house is also weird and doesn’t have a full basement, so it’s about equal in total space I think to most 1000 sq ft homes. I actually wish I bought an even smaller home with a modest yard. I bought a home with an acre of land and I just can never seem to keep up with the yard. The outside seems to go slowly down hill.
    I might get a drop in income soon and I’m not stressed about it because my home and car is low cost and I have some decent cash reserves built up. Love being stress free.
    Kyle recently posted…Losing 30 Pounds and Building WealthMy Profile

    • That’s great that you’ve been able to avoid that stress Kyle!

      The yard is tough. I feel your pain. We don’t have a full acre but we do have a lot of space. About a quarter of our backyard is in full shade and we’ve just got ground cover growing there. Its awesome because there is no mowing. We’ve just ‘cut’ a few walking paths through the ground cover for the girls to run around. The ground cover also seems to attract fireflies which is awesome to watch as they light up at dusk.

  8. Joe says:

    Nice job. Your house is very well laid out. Our condo is about 950 sq feet and it’s not as well laid out. There are some wasted hallway space. We also have 4 people, but it’s a kid and my mom. Our kid is 6 right now so he doesn’t mind sharing his room, but we’ll need to move at some point. Our condo only has 2 bedrooms. Living small is the way to go. Who wants to clean a huge house?

  9. Love this post, more people need to take a step back to simpler times. If you notice this is an older house and shows us exactly what was completed acceptable a few decades ago. The topic that isn’t often mentioned about living smaller like this is the environmental impact. Requires much less material to build and requires much less resources (gas,oil,power,water) for the utilities.

  10. Mr. Tako says:

    Nice house! For most families, anything over 2000 sq feet is unnecessary. Much of that space just goes unused!

    It sounds like you have some kind of finished basement. Is that included in the 1000 sq feet?

    Having a storage location for stuff not currently in use, (like a basement or a garage) is pretty nice.
    Mr. Tako recently posted…July 2017 Dividend Income And ExpensesMy Profile

    • Yes. Part of our basement is finished. We don’t spend any time down there though.

      We would like to refinish the basement at some point. We do expect to use that space when the girls are teenagers and need a bit more personal space.

  11. MrWow says:

    This is awesome. We live in about 1000 sqft with two of us. And we’ve decided that we want no more than that. The cleaning and maintenance alone isn’t worth it.

  12. Mrs. BITA says:

    That is a really good floor plan – no wasted space.

    Our home is just shy of 2000 sq ft (1970-something) and we are a family of three and a dog (a real dog, not one of them rats covered in fur). I think our house is enormous. Why? Because I grew up in India (I moved to the U.S. when I was 30 years old), and for the majority of my childhood our family of four plus dog lived in two bedroom apartments – the largest of which _may_ have been about 1200 sq ft. And our homes were BIG compared to some of my friends and cousins. When my husband and I started house hunting here in the bay area (we were living in a 1 bedroom in San Francisco at the time), the realtor thought I was a weird because every time we entered a 2000-ish sq foot home I would gasp about how cavernous it was.
    Mrs. BITA recently posted…It’s Time To Make A Shopping ListMy Profile

  13. The size of your house = my dream house, basically. It looks lovely inside and out!

    We’ve looked into tiny houses, but… the traditional ones are just too small for us. All of us need a little more personal space.
    The 76K Project recently posted…The Shame Trap: Why We’re No Longer Letting Financial Regrets Get The Better Of UsMy Profile

    • Thanks for your nice comments! We searched for a while to find this house. About a year. We had a very specific area in mind. The houses were small, the yards were big, and it’s close to amenities. We just had to wait a bit for the perfect house to come up.

  14. I grew up in a small house too. Although I have to say my parents (cough my mom) is a bit of a hoarder so the place was also cramped.

    I like living in a small place. Our house in Texas is 1500 sq. feet and we only used about 1000 sq feet. We moved to St. Louis last year and are renting an apartment (900 sq. feet). It’s perfect size since we’re renting. I wish there was a bigger closet, but oh well. We don’t plan to be in STL forever. As soon as my employer 401K match vests (July 2019), I will start looking for another job.

    Hoping to move back to Dallas, back into our house (currently renting to friends). The location is amazing and it was very affordable house.
    SavvyFinancialLatina recently posted…Corporate Gig WarningMy Profile

    • That sounds like a great plan. I can relate to your comment about closet space. We’ve made a few sacrifices in this home. Closet space is one. We’d love to have a bit more closet space, but it works fine as is. We’re not willing to spend $1,000’s plus more of our time just for a bit of extra closet space.

  15. GYM says:

    That’s a gorgeous house, love the simple design inside and the brick on the outside, super classy. I think I read somewhere that the average person needs about 250 sq feet, so 1000 square foot for 4 people sounds totally doable. I think it’s dependent on personalities too- I used to live with an ex-boyfriend in a 900 sq foot house and it felt too small at times. But I have been living with my husband for over a year in 450 square feet and it’s been no problem. Now, my husband and I and our recent addition, it’s doable so far but when the baby gets older we’ll be needing something bigger.
    GYM recently posted…Comment on July 2017 Net Worth Update: $620,800 (+0.15%) by genymoneyMy Profile

    • Thanks for your nice comments GYM! I think you’re right about the space per person. The funny thing is that we’re usually are all in the same room. Kitchen, living room, dining room, but it’s nice to have the space to get away if we need to. Even though the bedrooms are small they’re a nice separate space for us to read or for the kids to play.

  16. Jason says:

    I enjoy the idea of living in a smaller house. We have 1300 square feet for us and that is just perfect. Sometimes I do wish we had a bit more room. However, we owned a 2300 square foot in Atlanta (not my current wife) and we didn’t use two of the rooms. They literally sat unfurnished for 4 years. Cheers to you.
    Jason recently posted…Building Wealth? Own a HomeMy Profile

    • Thanks for your comment Jason. We also feel the urge for more space from time to time. When we have birthday parties or friends/family over it can get a bit cramped. We usually do more of that in the summers when we can be outside but otherwise we manage.

  17. Mao says:

    Beautiful home! A well-designed home is definitely more functional and would feel larger the same time. I don’t have kids yet, and I always joke that I wouldn’t know what to do with spaces larger than 1300 sq.

    I totally agree that having a smaller home not only helps with your wallet but also creates more inner space for what’s more important to you.
    Mao recently posted…The BEST Travel Hacking: Friends with Benefits!My Profile

  18. Tucker says:

    All of this! We live in 1200sq ft with two kids and a dog (and one room has to be a home office because Mr. Tucker works from home). Previously, we lived in a 510sq ft condo as two adults + a dog. Small spaces are ideal, imo.

    Honestly, I always loved rambling Victorians but it was convenient to trade homes with my mother who was looking to retire at the same time we started a family. So we decided to switch & now she now lives in the above-mentioned condo and we live in the post-war bungalow that my grandparents bought from plan in 1959.

    I never wanted to live here but now that I do there are so many bonuses on top of the ones mentioned in this post: this old community has wider streets with more greenspace, it’s 20 minutes from downtown by bus, and – as someone who found herself temporarily disabled this year – convenient for people of varying abilities. This means that as we age and our mobility changes we will be less likely forced out of our home or strapped if, say, we lose our ability to drive as amenities (library, ymca, groceries, parks) are all walking distance.

    I respect what people choose but honestly it always seemed strange to me when people buy these huge houses way outside the core. Your commute is super long, your bills are higher, and you spend all your free time cleaning and maintaining a large space. What are you enjoying exactly?
    Tucker recently posted…Want to save money? Be more like childrenMy Profile

    • I like that you live in your parents/grandparents house. That’s cool.

      Never really thought about how the house will age with us but you’re absolutely right, it will be the perfect house for later in life. We just need to get through the teenage years 😉

  19. Eliza says:

    Hi Owen! That’s about the size of our house and I couldn’t agree with you more about how great it is. That said, we’re expecting our second child and feeling a lot of pressure from family and friends about the amount of living space we have. The first question even before ‘when are you due?’ is ‘what are you going to do about the house?’ It’s nice to hearing your not just managing, but thriving.

    • We get that a bit. We’re pretty open about why we love our small home so we usually don’t get many comments. But it happens. Because it’s more than just a financial decision we also don’t come off as ‘cheap’ (at least I hope we don’t).

  20. Mies says:

    I’m a fan of this type of house too. Most new houses use inferior materials. They don’t have any real masonry. Maybe some concrete stamped to look like bricks and chimneys that are just vinyl sided plywood boxes.

    If money were no object, I would love to get my hands on a nice old orange or beige brick ranch, gut it, and bring all the windows, doors, HVAC, electrical, communications, lighting, and plumbing up to modern standards. Homes of this size are way more in scale with most people’s lives. Extra shitters are nice, but not essential.

    The only thing that bugs me about older homes is they never have overhead lighting in the living rooms. You always have to foo foo around with a lamp.

    • Hahaha. Very true about the lamps. We have access to the attic so we’ve though about adding overhead lights but even though we have access the mess and expense makes it hard to justify at the moment. Some things you just have to learn to live with.

      • Mies says:

        Thanks for replying! I’m glad to see you came around on smaller houses. We could put in some overhead lighting too, but like you said, it’s expensive.

        My house is actually laid out almost identically to yours except our big bedroom faces the street. I wish ours was in the back. There would be less light snaking in form the street lamps.

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