Ryan Mitchell, age 35, completely underestimated the positive impact moving into a tiny house would have on his life.

Mitchell, who runs the blog The Tiny Life and is based in North Carolina, told Business Insider he began building his 150 square-foot tiny house seven years ago. While he spent $30,000 on building costs (including solar panels) over the first two years, he’s since netted more than six figures during the following five years.

“Even after accounting for the cost of the house, I’ve saved over $100,000 going tiny, and it’s been a great experience,” Mitchell said. When asked about his savings strategy, he said: “It really was as simple as moving into the tiny house.”

Before moving into his tiny house, Mitchell, who previously worked in non-profits and human resources, was spending about $1,500 a month on rent, utilities, insurance, and other standard living expenses. He said that most Americans spend 30% to 50% of their income on housing costs, including rent or mortgage, upkeep, utilities, taxes, insurance, cable, and internet.

“I knew if I could eliminate housing costs, I’d win big,” he added. “When people think about saving and budgeting, too often people try to ‘cut out the lattes.’ You saving $4 on your coffee isn’t going to move the needle; you taking your rent from $1,500-plus down to $30 per month — that’s huge.”

Mitchell’s total living expenses right now are less than $1,000 a month.

“It’s hard to put into words how different this life is when your bills are so low; it’s life-changing,” he said.

Increasing your paycheck and creating multiple streams of income can go a long way
By reducing housing costs, Mitchell created a lower cost of living — ultimately putting more money in his pocket. He estimates that he has saved about half of his total income every month to reach $100,000. But in addition to aggressively saving, he also used some of the extra money he shaved off his living expenses to start up a new business. He later sold that business, further increasing his income. He used the profits to buy his own land, he explained.

But creating and selling a business wasn’t Mitchell’s only source of income. Running The Tiny Life earns him a little more than enough to cover his monthly expenses and allocate about half of his overall monthly income to savings, he said, adding that he only has to work about five hours a week to meet all his bills, savings, and retirement needs, which gives him “a great lifestyle.”

But he wouldn’t describe this revenue as passive income.

“I will say that the notion of truly ‘passive’ income is generally a pretty false representation,” he said. “I still have to manage things; I prefer to look at it as I’ve leveraged my time very well so my effective hourly is super high, so I don’t need to put in so many hours.”

Mitchell, author of the books Tiny House Living and Tiny Houses Built With Recycled Materials, loves that he can run the website from wherever and whenever. But he also doesn’t like to sit idle, so he picks up freelance work on the side.

“I don’t actually need the money (which is not to say I don’t earn well from those activities),” he said. “They keep me engaged and earn me extra for investments and ‘fun money,’ as I call it, allowing me to travel a lot and take time for myself.”

This article originally appeared on Business Insider.

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