Saving My Home and $1200 monthly

The other day I wrote a blog post outlining how home owners can save their home by renting it out, downsizing into a smaller rental and using the net savings to pay down their debt. The idea behind writing that post is that I was trying to do just that.

Since my notary business fell by 50% recently when I lost one of my clients, I could see disaster coming if I didn't do something quick.

Within a week of deciding to rent my place out, I found some friends to take it for $1600 a month. My mortgage is $2150 a month so I'm taking a $550 loss each month (instead of a $2150 loss each month). I'm going to stay for free with friends for a couple of weeks, but then rent a room out of a house for $600/month.

Here's the bonus for me: I'm saving on storage costs because I'm leaving the condo furnished. They are happy because I have nice stuff. I'm happy because I know they'll take very good care of it, I don't have to move it, and I save on storage costs. My out-of-pocket cost will be $1150/month for housing. That's a net savings of $1000/month. That makes up for a lot of the income I lost. As I gradually work back up to where I was, I'll use the extra money to build up reserves and pay down debt... both of which were casualties of lost business.

The title of this post says $1200/month savings because my utilities, cable, and Internet costs will go way down because they will be shared. That, plus a couple of other cost-cutting ideas, will save me about $200 more per month.

Crazy times call for creative measures. Hopefully this kind of thinking can help somebody else out there. I'm fortunate enough to be single with no dependents. I know this will be more difficult for others who are married or have children. However, this can help anybody willing to bite the bullet and take drastic measures.

Out of all of this, I also have a new goal. In two years' time, I want to have my debt paid down and enough money set aside to put down on a house before the market recovers. I'll keep my condo as an investment. This could be the most productive two years of my life, even though they'll be two years of sacrifice to get there.

If you've ever read Rich Dad/Poor Dad by Robert Kiyosaki, you'll recognize this strategy. That book was a huge help to get me started thinking this way. I highly recommend it.

Dennis