How I Improved My Budget By Lowering My Housing Costs

 This is the true story of how I dramatically improved my budget – and my overall financial life – by figuring out a way to "hack my housing," paying $0 out-of-pocket housing expenses for five years.

I hope that this story inspires you to find ways to lower your housing costs, which comprise the single biggest expense category within your budget. Enjoy!


I’ve always been a naturally frugal person.

 I come from an immigrant family, and my parents pinched pennies out of necessity when I was growing up.  I learned at an early age that I needed to find ways to save money whenever possible.

We got our hair cut at Great Clips for $8 (plus tip). We purchased most of our clothes from Marshalls and T.J. Maxx. We didn’t vacation much – maybe once every few years. We drove 10-to-15-year old used cars. We considered a $15 restaurant entree to be an expensive splurge.

When I left home and started my adult life, I thought that I had every frugality tactic nailed. I wasn’t prepared for the biggest sticker shock I'd encounter: the jaw-dropping cost of housing.

The Cost of Housing is What?

As a child, you never think about how much housing costs. You get accustomed to living for free under mom and dad’s roof.

Reality strikes when you go to college and realize that housing gobbles up between one-third and one-half of your pay.

During my junior and senior years, I worked 20 hours per week at $13 per hour, which meant I had around $1,000 per month to live on. Rent consumed between $400 to $500 of that.

When I saw what a huge dent housing made in my budget, I pledged two things:

  1. I would try as hard as possible to bring my housing cost down to zero. I would essentially look for ways to have free housing.
  1. If I did have to pay out-of-pocket for housing, I would pay the smallest amount I could.

Throughout my twenties I held true to both of those goals.

How I Kept my Housing Cost Low

For a while, I worked for my university in exchange for free room and board (it’s not actually free, it was my form of compensation).  During summers, I'd work at summer camps, which also compensated me with a free place to live.

After college graduation, I lived in a tiny studio apartment. I could reach my kitchen sink from my bed. It cost $400 per month.

By age 27, I had moved to Atlanta. I rented a room with my boyfriend for $400 per month ($200 per person) in a three-bedroom apartment. We also lived with four additional roommates. 

The apartment was like a basement: half underground and half not. The kitchen was microscopic, but I didn’t mind the lack of space.  (We called it "European.")

I was satisfied with living in the cheapest place possible. This meant all of my spare income could go towards my top three priorities: building savings, making investments, and traveling the globe. 

Investigating the Value of Our Rental

Despite how small our living quarters were, I knew our landlord was getting a terrible deal.


I looked up the cost of the building we were renting using Zillow and Trulia. I then ran the price through a mortgage calculator. I assumed our landlord had put down 20% and was getting the standard market interest rate on a 30-year fixed loan. 

Even with these generous assumptions, our landlord was losing money. The rent on the entire building was equal to his mortgage. 

On the surface that might sound like a great trade. If the rent equals the mortgage, then the landlord’s getting the house for free, right? 

Wrong. I intuitively knew the truth was much more complicated than that. 

As a landlord, you have to pay for water, trash, landscaping, pest control, and big ticket items like appliances.

You’re on the hook for things like replacing the roof, installing siding, leaky windows, carpets being torn out and replaced, hardwood being finished and refinished, cabinets falling apart, pipes bursting, and well, you get the idea.  Plus, any time a unit goes vacant, the landlord has to pay for the vacancy out-of-pocket. 

When the rent on a property equals the mortgage, the landlord loses money. They have to tap into personal funds to pay the bills. 

It sounds like a raw deal, doesn’t it? It wasn't pleasant for our landlord, an ordinary guy who dropped by the building once a week to mow the lawn, because doing-it-himself was cheaper than hiring a company to mow at $25 per week. 

After analyzing the situation, I realized I didn’t want to enter the rental market unless I could find a house in which the rent equaled double the mortgage. 

Sounds impossible, right? I eventually found a property that would produce those results.

Buying a Rental as a First Home

We found a triplex (a house with three units) that rented for a total of $2,300 per month – that's $1,100, $700 and $600 respectively from each of the three units. We bought it for $225,000, and our mortgage came to around $1,300 per month, including taxes and insurance. While the rent wasn't exactly double the mortgage, it was close.

In addition, we saw that we could covert an unused room into an additional bedroom in one of the units, without incurring much expense. (It simply cost a few hundred dollars to put up some drywall and install a door). We moved into this room, which allowed us to live "for free" while still collecting the same $2,300 per month in rent. By definition, this meant we needed to live with roommates who were also our tenants. Many people would find this unappealing, but we were determined to get our financial lives started on the right track, so we went for it.

For five years, we lived in this three-unit building. We lived in one unit and rented out the other two. In addition, we also lived with roommates. This combination of factors allowed us to pay zero out-of-pocket expenses for housing, plus grow equity in our first home that's covered entirely by the renters. We fixed up the home while we were living in it, which allowed us to raise the rent and also resulted in finding longer-term, happier tenants.

If your budget is tight, I highly recommend lowering your housing costs as much as possible. Housing consumes one-third to one-half of your income, so getting this cost down can fast-track your financial success. Even if you're not willing to live with roommates, buying a duplex or triplex, rather than a single-family home, can help defray your mortgage costs and improve your budget.