[nth]

I have seen a lot of articles and books that are teaching people to save money. Many claim you can save your way into millionaires.

One thing they all failed to do is indoctrinate the reader that the biggest saving one can do is to live in a cheaper house. Yes, house is an investment and can give you big returns, but if you consider the interest payments and the loss income from these payments, you are much better off buying a cheaper house that gains less.

Don't get me wrong. Buying a house is a must to take advantage of tax breaks. But paying over 20% of your income into payments when you can buy a place that will cost you only 10%, then you are better off buying the cheaper house.

We spend way too much on housing. Our houses are way too luxurious and big for our own good.

Most of the books I have seen do make a comment or two about big houses, but they rather concentrate on not eating out, not buying things, etc... Like saving a cup of coffee will make you a millionaire versus living in a cheaper house.

[Ludi]

Good luck finding a small house to buy, do they even build them anymore?

[Falconoffury]

An even better way might be to just rent out a studio apartment. Keep the down payment money you would have put into a house to invest in precious metals and other commodities.

You could also possibly live with your family. Just don't be a burden. Support them financially, and clean up after yourself.

If you still want a house, you might be able to find a bargain in economically destroyed towns, such as Flint, Michigan.

[Peak_Modernity]

$this->bbcode_second_pass_quote('Ludi', 'G')ood luck finding a small house to buy, do they even build them anymore?

[presidentsherrill]

Move to Kahoka, mo where houses on 2 lot size properties start at only $18,000.00


2 Bedroom
1 Bath
Fenced-in Yard
1800 SQ FT $22,950

[nth]

I live in San Francisco area and plenty of small houses here that people can buy instead of the big houses, they bought.

The point here is to live within your means. If you cannot afford a house, then buy a studio or condo as one of you alluded, too. You do want to buy a property and not simply buy precious metals. Property gives you tax advantages.

[Chaparral]

BTDT. Bought a 1920s fixer upper. I occupy the top unit which is around 550 square feet. My tools occupy the first floor unit which is another 550. The lot is 7500 square feet. That's about as good as it gets for Southern Cal.

I expect to own the place free and clear within 12 months. All the neighbors are getting second or third mortgages to remodel, expand, build up and out and get brand new hypertrophied trucks.

Never ever bought a new car for myself either. Never will, peak oil or not.

[TommyJefferson]

The way to really save money is not to borrow money.

I know this sounds totally crazy to an average American, but I know people who save up and buy cars and houses.

I work with a Filipino lady who does this. Every month she puts $300 in the bank. When her car wears out, she goes down to the dealership and plunks down cash for a new one.

The very next month she has the self-discipline to put $300 from her little paycheck in the bank.

She also paid cash for her new house a few years ago.

That equals THOUSANDS of dollars every year that she can spend on herself instead of giving it to bankers.

Crazy stuff huh?

[nth]

I agree with the car.
I disagree about the house.
If you don't buy a house/condo aka property, then you are losing in taxes and rent. If you live rent free, then do NOT buy a house. If your rent payment is anywhere close to your housing payment, then you should buy. The actual calculation is based on how much tax you would save, etc.... Also, don't forget that housing properties rise faster than inflation and since you are only paying down payment of 20%, the return on investment becomes quite large. That is why all these advisors on how to be a millionaire talks about buying a house.

[marko]

$this->bbcode_second_pass_quote('nth', 'I') agree with the car.
I disagree about the house.
If you don't buy a house/condo aka property, then you are losing in taxes and rent. ... If your rent payment is anywhere close to your housing payment, then you should buy.

[strider3700]

Saving money is easy.

Do a budget and figure out how much you really need to live. This covers housing rent/mortgage, reasonable food with no eating out, reasonable clothes and reasonable gas. Find out how much that works out to each day.

Next take a look at your paycheque and figure out how much you bring in each day. You should be making more then your budget you worked out to if not you're in a lot of trouble.

Assuming you're making more then your buget( this is pretty easy to do since we skipped a lot of things people normally spend on in the budget) figure out the difference. Now depending on how comfortable you are figure out what 20% - 50% of the difference is. 20% if you think the original budget is sadly lacking 50% if you're wondering how to spend that much.

Go to a bank that has automatic savings programs. I use INGdirect open an account and set up a savings program that will automatically transfer that amount over each night or each week, I do weekly because It's annoying on the statement to see 90 transfers out. Assuming it's weekly and interest is at the current 3.35% $50/week which is pretty trivial for most nets you $2644 by the end of a year. $7/day is one fast food meal, or less then 1 movie ticket here. real easy to save. Bigger amounts add up way way quicker and since they are taken from the account automatically you never really notice them.

[nth]

$this->bbcode_second_pass_quote('marko', 'T')he thing is, nth, these days in many parts of the US, you can rent a given type of unit for MUCH less than you would spend monthly if you bought it.
[...]
Did you say you live in San Francisco? The situation is similar there, or even more biased in favor of renting.

[nth]

strider3700,

I like your automated deposit to savings program.

I am not sure if I understand what you are budgeting out of your spending. It seems like you will have less money to eat, drink, travel and buy things. Your cost of shelter and daily transportation stays the same.

From what I have seen, most people's budget will be mostly housing and maintaining a car. Then follow by utilities, food, travel, other entertainment expenses.

[smiley]

$this->bbcode_second_pass_quote('', 'I') disagree about the house.
If you don't buy a house/condo aka property, then you are losing in taxes and rent. If you live rent free, then do NOT buy a house. If your rent payment is anywhere close to your housing payment, then you should buy.

[marko]

$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('marko', 'T')he thing is, nth, these days in many parts of the US, you can rent a given type of unit for MUCH less than you would spend monthly if you bought it.
[...]
Did you say you live in San Francisco? The situation is similar there, or even more biased in favor of renting.

[nth]

$this->bbcode_second_pass_quote('smiley', '
')We are on the positive side on the rent/interest curve, so we keep on renting and putting money aside to buy a house lateron. Of course we miss out on the housing price increases. But for me that is an acceptable tradeoff for the security gained.

[strider3700]

$this->bbcode_second_pass_quote('nth', 's')trider3700,

I like your automated deposit to savings program.

I am not sure if I understand what you are budgeting out of your spending. It seems like you will have less money to eat, drink, travel and buy things. Your cost of shelter and daily transportation stays the same.

From what I have seen, most people's budget will be mostly housing and maintaining a car. Then follow by utilities, food, travel, other entertainment expenses.

[nth]

strider3700,

Sounds like you got your spending under control.
My point is that what you did is what most advisors tell people to do to save. It almost sounds like living in a spartan society. Plus, they only pay lip service to housing costs. Housing and transportation costs like buying several cars are the number spending, and this is what needs to be cut first and foremost. Before you cut your lattes and shopping.