Never Retire - 4 Ways To Eliminate Your Housing Payment

One of these strategies will cement my strategy into relative old age

For most of us who will Never Retire, we absolutely must establish and maintain a low cost of living. As in, find the floor and constantly seek opportunities to bring our expenses even lower. Never higher.

If you’re like me, housing is your biggest expense.

The key to living comfortably prior to relative old age is as low a housing expense as possible.

The key to living comfortably in relative old age is, if you can somehow swing it, no housing expense whatsoever.

While the core principle remains constant, how you go about this might look different than how I will go about it.

In today’s installment, we discuss several ways my partner and I consider housing as we enter the next phase of our semi-retired lives.

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No matter your situation, but especially if you’ll Never Retire and intend to rely on ongoing cash flow, not a large nest egg in relative old age, you need a low cost of living.

Not having a housing payment to cover—or at least not a big one—equals less worry about work/earning and less money stress. Taken together, this equation facilitates a fun and comfortable life.

Really the focus of this entire Never Retire undertaking. So…

Anyhow, with this in mind, we’re due for an update on how my girlfriend and I think about housing as we prepare for the next phase(s) of our life together.

You can read one of the original posts on this here.

Since then, our thinking has broadened a bit.

Consider our main possibilities, in order of attractiveness from least to most attractive.

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We can move to Europe and rent for less. This month my girlfriend and I moved in together, lowering our rent payment to $702 each. Still, we plan to move to Spain (maybe Italy) at some point in the next few years. It used to be Italy (maybe Spain), however that has changed. I’ll write more about this in the coming weeks and months.

Anyhow, even though our rent is super low by Los Angeles standards, we can rent an apartment in, say, central Madrid for under $1,000 total. Same in excellent Rome and Florence neighborhoods.

Bottom line—all else equal—we could cut our housing payment by almost 50% if we move to one of these cities from LA. Of course, all else isn’t equal. Also, another subject for another day.

The homeowner equivalent of this—if you’re sitting on tons of equity (as lots of people are) in a big house that could sell for at or near a record price, maybe it’s time to downgrade to a “starter home” or even condo or apartment (my preference) where you presently live, in a less expensive US city, or out of the country entirely.

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We can rent and cover our rent with income from a rental property. We’re currently exploring the possibility of eventually buying a vacation property in Italy or Spain that we could rent out. Very feasible, given the relatively low cost to buy in many Italian and Spanish cities and regions.

An income property that covers (ideally, more than covers) our rent payment in, say, Madrid, makes for an incredibly attractive option.

We could live happily ever after like that or—

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We can rent and cover our rent with income from a rental property as we save to buy a place to live in. Pretty straightforward.

Phase one—buy an income property.

Phase two—rent an apartment in Europe.

Cover our rent with our income property cash flow.

Phase three—save any excess cash flow from the income property and our earnings to buy a place—preferably for cash—to live in in Europe. Now, we own two properties and have considerably more flexibility, not to mention a super low cost of living amid nice cash flow.

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We could just buy a place to live in. While this is the most attractive option objectively, it’s also the most challenging.

Simply put, we will need to save somewhere around $300,000 to buy a small apartment in Spain or Italy. If we accomplish this, we eliminate our core housing payment, but also must cover taxes and the costs associated with home ownership in whatever country we happen to land. However, it’s the least labor-intensive, one-and-done deal of the four possibilities, making it the most attractive, even if not the most feasible.

Rome’s Trastevere Neighborhood — a definite contender for eventual relocation

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These core housing ideas are fun to write about. However, the nuance lies in the “all else is not equal” part of the equation.

Such as how do you make money when you move abroad? Exactly how much does it cost to live in Spain or Italy? What type of environment would you need to live in to keep your cost of living meaningfully lower than it would be in the United States. And how about any cultural/language barriers?

Domestically, you have to make similar choices, which we will also explore and illustrate going forward.

My partner and I think we have most of this figured out. Which just means our thinking—and we do a lot of thinking on this—continues to evolve. I mean today’s update is different and includes more option than when I wrote about this in April.

In addition to covering retirement-related research and writing about core Never Retire personal finance strategies that have little, if anything to do with moving, I’ll write about what we think we have figured out in the coming weeks and months.

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