Issue 6: Housing Costs

Issue #6 - February 10, 2010
http://www.financial-freedom-guide.com/

This issue is the launching point of a series of issues about housing costs and some of the choices we have in taking charge of them. But first, an announcement about the Mastermind group with Coach Karen Burke. The group did not get started in January due to a family issue, and is now expected to start some time in March or April.

Mastermind Group Forming!

My Trip

We just got back from a great vacation in India. We landed in Mumbai and headed straight to Pune, a 3-hour drive inland. I grew up in Pune and I love going back to visit. It was a relaxing visit. We like to chill and hang out with friends and relatives at leisure, and that's basically what we did for 3 weeks. It took us about 5 days to get over our jet-lags. Then my wife and the kids flew out to Nagpur where her folks live. I flew out a week later.

We made a trip to Pench National Park and stayed overnight at a great little place called Baaz Jungle Resort. We took the overnight train back to Pune. My kids call it the "bunk-bed train" and we always make it a point to ride it.

So why am I telling you about our trip to India? There is a very good reason of relevance to you as a reader of this newsletter: some day you might want to move there! Read on and you will understand why.

Non-discretionary Expenses

One of the keys to financial freedom is a strong financial defense, and a big part of financial defense is controlling living costs. In particular I am talking about the fixed costs. Economists call this your non-discretionary expenses. We all incur these costs in order to live our daily lives. We can control them and even limit them to a large degree, but we cannot avoid them totally. It includes items such as:

• Housing expenses (mortgage/ rent, property taxes, property insurance, utilities etc.
• Food-related expenses (groceries, eating out etc.)
• Medical expenses (insurance premiums, co-payments, medicines etc.)

A Sampler

Here are a few ideas for reducing your housing expenses:

• Move to India: India offers many positives. The low cost of living is of course the main attraction. Here are a few more: warm weather, widely spoken English, low tax rates on income and of course great food. We will look at this in detail in the next issue.
• Buy a foreclosed property in Florida: Central and South Florida are Ground Zero of the global real estate bust. There are bargains galore. This is a great opportunity to buy a decent piece of property that you could retire to in a few years. Or better still, buy two while you are at it: one for yourself and the other to rent out.
• House-sit: The US has millions of second and third homes bought as a investment properties. The owners use them for weeks or months every year. The rest of the time they sit there vacant. They still need to be maintained and cared for. Having it occupied also decreases chances of it being vandalized. The solution? Offer yourself as a house-sitter! Live there in return for taking care of the property. Think this is far-fetched? Check out this site as a example! It can be done.
• Become a Live-in Landlord: As I write this, there are many multi-family properties on sale in the neighboring city of Worcester. A friend of mine actually did this recently. He bought a triple-decker with the help of his father. He lives on one floor and has rented out the other 2 floors. His net housing cost is close to zero!

Do Your Due Diligence

If you are thinking of using any of these methods, make sure you spend a lot of time educating yourself. It takes a significant lead time to do any of these deals.

It also takes a network to do these kinds of unusual deals. There are lots of opportunities out there. Once you plug into related networks, a whole world opens up.

Recap

Update on My Progress

• I earned $416.66 last month from dividends. My running average of passive income over the last 3 months is $232.86, all from dividends.
• Our basic living expenses are $6000 per month. We are working on bringing this number down.
• Thus our passive income was 3.9% of our current basic living expenses.

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