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The insane cost of living

How much of your budget is eaten up by your living expenses? Seriously, just consider how quickly we could pay off debt and achieve other financial goals without the costs of living expenses. For most of us, housing is the biggest expense that we have. My mortgage in 2018 was $846 (including my HOA fees) and my monthly salary was roughly $2900. Look at a staple budget using this income and my mortgage/ HOA fees.  

As you can see, this is ridiculous. I’ve highlighted where it shows that my mortgage was 55% of my expenses. This is extremely too large in proportion to my income. It was while paying this mortgage and housing expenses that I felt the most financially strained. My mortgage did since I originally purchased the house due to an increase in my taxes, but still, it just wasn’t the best financial play.

However, this is probably a frequent mistake and common narrative among many people, and especially first-time homeowners. While your housing may not be 55% like my money-munching townhouse, it is probably a significant portion of your income that could be trapping you in debt, preventing you from saving and investing your money, and keeping you from your financial goals. What is the percentage of your housing expense?

You can use this link to go to the budget template that I found or calculate it manually.


Living vs. my life goals

I make a little under the median, regional income of $50,000 per year. Just one of the glorious teacher appreciation gifts. For the average person in this income range, paying typical expenses like housing cost, car payments, student loans, utilities, child care, and more, can easily leave $500 and less flexible money to spend. What this meant for me was that I was very restricted with my salary and had little money to pay off debt (this was actually around the time that I started missing some of my student loan payments), put toward savings, or find investments that made me money. This is not how I wanted to live. 

To achieve goals like debt reduction, investments, and savings, have you considered first tackling your larger expenses, which is probably housing? It is draining to me, to cut down on smaller expenses like occasional movie tickets and the like, which may take up 4% of my budget, if my 55% housing expense is still eating away at my income.

So here is what I did.

Get your housing expense paid… by someone else

Enter the term “house hacking.” I learned it on Bigger Pockets from Scott Trench and it is perhaps one of the top 5 most powerful financial concepts that I have learned thus far. House hacking is a way to drastically offset the cost of living. Essentially, the concept is that you purchase, or even rent, a home that is a multifamily property or one that can be rented out while you live in a unit. This can look different for people and families in varying cities and situations, but I believe that it is definitely possible for everyone and every family.

A family can buy a duplex or triplex and live in one unit and rent out the other(s). A single parent in a single-family house could rent out a spare room or even garage space to someone looking for storage. Or, in my case, someone could buy a condo and rent out the additional rooms.

Here is what I did. I found a condo with 4 beds and 4 baths for 126k. (Yeah, I know how crazy that sounds. It is economic, student-style housing, in a mid-range southern city that was a rare find). I applied for a loan through the State Employees Credit Union. For teachers and government employees, the SECU is one of your best friends! I got a conventional ARM loan at 5% interest and no mortgage insurance. This bring my monthly payment including taxes and my HOA fee to about $910 a month.

How much will I make?

My plan is to rent out each of the rooms at $530 including all utilities, which is an average to good cost for a single room in my area.

The following shows a breakdown of my expenses and income related to the condo (some are estimates).

Mortgage & HOA Fees
Housemate #1
Cable and Internet (AT&T bundle with 4 boxes. I will not have cable in my room and will just use Amazon stick.)

Housemate #2

Energy (average from previous owners)

Housemate 3


Water (rough estimate)

Vacancy/ Maintenance fund

Total Expenses

Total Income


Leftover= $150. Y’all, I’m earning money just by living in my house!

My house goes from being a negative expense to an income generating machine! First the first time in my life, I feel able and prepared to reach my goal of financial independence.  How could you offset your living expense? What would you do with the saved money? 

Look at the extra $846 in my budget that I will put toward investing. If you can, consider significantly reducing your housing expense by either house hacking, or, if this is not possible, creating a shared-living experience. I hope you join me on my journey in my first house-hacking experience.


  • Reply Maureen |

    It’s exciting to see the numbers. The spreadsheets are very small, so I can’t see the actual numbers. Did you account for taxes, maintenance, etc. for the rental? Do you expect a high turnover from year to year?

    • Reply Ashley L |

      Hi Maureen! The numbers for my rental are in the table toward the bottom of the post and I’m realizing that it seems to show up when viewing on a desktop site, but if you look through a mobile app like I was, the numbers are not in the table. For my rental, I’ve included taxes in my mortgage because it is escrowed into my account, so that amount is included in the $910. I accounted for maintenance by setting aside $165, which is 10% of the income.

      I also accounted for insurance= $35, cable and internet= $95, Energy= $140, and water= $115. This bring my total expenses to $1460. My income is $1610. So I (should) end up with $150 after everything is paid. We shall see. Did this answer your about the expenses?

      And as far as the actual spreadsheet, I’m not sure why it’s showing up so small. I’ve tried to enlarge/click on it and it wont adjust the size. Just to let you know, the spreadsheet shows my budget for the month. But I’ll try to play with it because I definitely want it to be readable! Maybe I can make it into a link? I’ll try some things!

      Lastly, yes, I do think everyone will leave next year. They have pretty much said so and there are also many students in the area. This will be one headache that I have not figured out yet but definitely hope to do so!

    • Reply Ashley L |

      Thanks for the reminder! This will be my first time filing and I will look more into how it will work since I’m living the house as well and set the cash aside for that!

      • Reply Maureen |

        This answers my question about re: taxes. I was thinking about income taxes owed. You do get deductions for utilities, expenses, etc. but you are bound to owe some taxes on the income earned. Don’t let this catch you off guard.

  • Reply Louise |

    Small note: I would love for a mortgage to be 55% of my income! I rent a tiny 2 bedroom house for me and my child, in the outer suburbs, and that is 60% of my income. Australian rental prices are insane. Purchasing a house is out of my reach as to buy even a modest unit would result in a mortgage payment that would be at least 90% of my income. Australian house prices are also insane!

  • Reply M |

    Ok, I have a few questions:

    1) Is this the property you currently own, as mentioned in the first paragraph? You state that your mortgage “in 2018 was $846.” Is this a typo?

    2) If this is a different property, have you sold your first place yet?

    3) You have an ARM. What will the mortgage rate adjust to?

    4) Have you actually rented out the rooms yet? Spent time living with three other people?

  • Reply Katie |

    I see that others raised the rental income tax question. Also, I would put some money away to cover those months when one roommate moves out and you haven’t found a replacement. That is bound to happen, and in a “group” house, it happens a lot. The time in life when people live with 3 other non-related roommates is pretty short. Additionally, have you looked into refinancing? Interest rates on 30-year conventional loans are around 3.75% right now. Knocking an extra point off your mortgage will save you a lot of money in the long run.

So, what do you think ?