ETF Trends
ETF Trends

For about the last year we have been blogging about the concept known as tiny houses. In that time interest has proliferated in terms of new websites devoted to the concept as well as at least four TV shows about tiny houses. The show Portlandia just had a bit making fun of tiny houses in a sketch where the toilet and the office were the same space as was the bathtub/shower and TV area.

A true tiny house is on wheels, on a trailer so it can be mobile which allows for, ahem, mobility and in certain places allows for bypassing property tax because something on wheels is not a house. Building tiny houses can be very cheap in nominal terms ranging from $15,000-$20,000 on the low end, $30,000-$50,000 as what I believe to be mid-range and like anything else the upper end may know no limits.
I routinely say that moving into a 150 square foot trailer on a full time basis will not be the solution for too many people but there is a lot that can be learned here. The Tiny House Listings website had a blog post with three brief anecdotes about how tiny living changed people’s lives financially.

A common thread to these profiles (not just this article but many such profiles) is that the tiny housers don’t want to live on the treadmill of working for the almost sole reason of making a big mortgage payment and generally maintaining a materialistic lifestyle. They are also often interested in having more free time to pursue their interests. Other, younger tiny housers view tiny houses as their only realistic shot of owning a home anytime soon.
You may or may not relate to that last paragraph but that does not mean there are not takeaways from what these people are doing.

The folks profiled in the above linked article feel as though they have flexibility now that they did not have previously because they have no mortgage and their other monthly expenses are very low. While we have only been discussing tiny houses for about a year we have been discussing living below your means for more than ten years.

Obviously living below your means is likely to result in saving more money but more than that it can become the difference in how successful whatever your definition of retirement will be. You likely have read plenty about the 4% rule (4% is viewed as the optimal withdrawal rate in retirement to avoid running out of money) but lately I’ve seen references to the 3.5% rule with the idea being that 4% might be too high in a zero percent interest rate environment.

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