Living in a tiny house lets me live out my dreams

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Oliver PariniEthan Waldman's house cost $42,000 to build; his utility bills cap at $150 a month.
By Ethan Waldman as told to Meghan Rabbitt

In its Money Mic series, LearnVest hands over the podium to people with controversial views about money. Today, one man shares how downsizing into a 200-square-foot home helped him achieve the life -- and career -- he longed for.

My quest to start living in a tiny house wasn't borne out of a need to downsize or drastically cut expenses, although both happened as a result. Rather, it fit into a larger game plan of mine to have a more flexible lifestyle that kept me from being chained to a desk all day.

It all started in the fall of 2011, when I took a month-long sabbatical from my job and life in Vermont to ride my bike from British Columbia into Washington State and along the Oregon coast.

At the time, I was working for a corporate tech-training company, creating online courses and aids that helped employees learn software. It was a good job and I worked with wonderful people. But I hated being stuck in a cubicle, and riding through such a scenic part of the country made me realize I needed more time to enjoy life.

On top of that, I'd always wanted to work for myself. I remember my manager once asked me where I saw myself in five years. She thought I was management material, but I honestly told her I wanted to start my own business. So when I got back from my sabbatical, I knew it was time to speed up that five-year plan -- but I needed to get my ducks in a row first.

Building Up My Tiny House Fund

Ethan WaldmanEthan Waldman

I went on the bike trip with my cousin, and all along our route, we camped and couch-surfed. Some of the people who took us in or let us pitch tents on their property lived in tiny houses. I thought they were cool, but it didn't occur to me to build one of my own until I decided to quit my job.

I knew my income would vary greatly as I launched my own business -- and rent and utilities were my biggest financial burden. If I could reduce the $750 I paid in rent (my portion of a two-bedroom house that I shared) and $250 in utilities (cable, Internet, and high heating and electric costs to run that big house), it would mean a lot more breathing room. If I built a tiny house, I could live rent-free and seriously reduce my utility bills. But I'd have to first save up to build my tiny house. I estimated it would cost me about $20,000 for the materials and design plans -- but I only had about $5,000 in savings.

I was making $60,000 a year, and while I never got into credit card debt, I pretty much spent what I earned. But now I had a goal to work toward. I called it my "tiny house fund," and I began funneling as much money into it as I could. The first big chunk that went into the fund was my $8,000 year-end bonus. I also generated a little side income by doing tech consulting work, which would eventually evolve into my business now. And I temporarily stopped contributing 5 percent of my pay toward retirement, with the intention of saving again once my goal was met.

'Hobo Mode'

I also moved in with my girlfriend, Ann, to save money on rent -- we joke that she was my "tiny house sugar momma" -- sold a couple of my old guitars, and limited my expenses to only what was absolutely necessary. Ann called this my "hobo mode." But cutting out even the small luxuries helped build up my fund little by little. For example, rather than eat out, I'd put that $60 into savings -- it was so satisfying transferring money from my checking account to my tiny house fund.

My strategy paid off: By March 2012 I gave several months' notice at work, knowing I'd reach my savings goal soon. And by June, I hit the $20,000 mark. Before I left, my boss asked if I'd be willing to take them on as my first consulting client. Not only was I ready to start my new life, I already had business lined up!

After my last day at work, I drove straight to an empty airplane hangar in my town of Morrisville, Vermont, to pick up a 22-foot-trailer loaded with about $1,000 of lumber. Next stop: A plot on my cousin's property, where I could start building my tiny home. In exchange for helping to maintain the grounds, he agreed to let me live there for free.

The Financial Nuts and Bolts of Construction

Although I had bought ready-made plans for my home, I never ended up using them because a family friend who owned a design firm thought he could do a better job -- and offered to do the work pro bono. He helped me to envision the tiny house I really wanted, while working within some pretty limiting parameters. For example, in order to keep the house on my cousin's land without paying property taxes, the tiny house had to be on wheels, and couldn't be taller than 12.6 feet in order to clear bridges, overpasses and electrical wires.

I had also underestimated the cost and difficulty of building the home: The materials exceeded my estimates, and I quickly realized I couldn't build it alone -- the way I originally planned. So I hired a carpenter to help. All told, these added another $22,000 to my bill. Luckily, I could afford it because I was already making money from my new business -- plus, I was still living with Ann rent-free, which freed up money to put toward the costs.

In November 2013 construction was finally finished, and I moved into my 200-square-foot house. With no mortgage and no debt from the cost of building the home, my only real expenses became my utility bills -- and those are a fraction of what they used to be.

I have no water bill because I'm connected to a spring. And even this past winter, when Vermont was covered in snow and experienced record low temperatures, my energy bill averaged just $30 a month when I used propane to heat the house, and between $100–$150 when I used electricity. My electric bill is just a few bucks during the warmer months.

My tiny home has benefited my girlfriend, too. She grew up in Vermont and has always romanticized about having a cabin in the woods. Because we split our time between her place and mine, she decided to rent out the extra bedroom in her condo -- which means extra income for her every month. To be sure, I've had to make some sacrifices, such a no washer and dryer and no room to be able to host a lot of guests. But I consider these small trade-offs for what I've gained in return.

Tiny Home, Big Financial Freedom

For a lot of people who build tiny houses, it's all about leaving a small carbon footprint. But, for me, it's much more than that. My tiny house enabled me to launch my own business, which gives me a newfound flexibility I never had working for a company. I'm doing work that I love -- and on my own terms.

Now I can take a day off whenever the snow is right for skiing -- something I did plenty of times last winter. And I recently took kite-surfing lessons, which inspired me to buy all the gear so I can surf on Lake Champlain this summer.

And guess what? Between my consulting work and sales of "Tiny House Decisions," a book I wrote to help other people understand what goes into building a tiny home, my income is the same as what I was making in my old day job.

Plus, since I don't have to pay rent or a mortgage, I have more wiggle room to spend and save on the things that make me happy. For instance, I've built up about $5,000 in emergency savings, am contributing 10 percent of my pre-tax salary to retirement and have other small savings goals I'm working toward, like a new car fund. I'm also able to travel more often and visit family and friends without worrying about what it will do to my budget.

The process to build my tiny home wasn't always smooth, and there were times when I felt overwhelmed by all of the decisions. But I can confidently say that downsizing my life in this way was worth it. Ultimately, what my tiny house gave me was financial freedom in work and in life -- a bigger payoff than I could have imagined.

This story originally appeared on LearnVest.

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