Takeaways from TinyFest: Why Tiny Living is the Future

In this episode, Laura reflects on her experience at TinyFest in California, discussing the growing interest in tiny living as a viable alternative to traditional housing. She emphasizes the importance of financial planning in making the transition to a simpler lifestyle, highlighting the benefits of reduced financial obligations and increased freedom. Through a case study of a woman named Liz, Laura illustrates how tiny living can align with personal values and life changes. The conversation also touches on the need for community and resilience in the face of economic uncertainty, ultimately advocating for a rethinking of the American dream.

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Transcript

Less House More Moola Podcast (00:40)
Hey everybody, Laura here. I have just come back from TinyFest, California, which was in San Diego, a little north in San Diego County near Del Mar. It's always fun for me when I get to go back to California and see a place where I lived years ago.

It seems so unfamiliar and Mediterranean, all those houses built on all those cliff edges and hills. It was really beautiful. was a great event. Very optimistic for me to see so many people in the industry, people out there making tiny living possible for others. Also so optimistic to see so many people.

exploring their options and considering an alternative living solution for them. And why wouldn't they? We all know the numbers, right? Housing continues to remain incredibly unaffordable. We're all worried about prices continuing to increase. And all around, we are in an environment where we have to be creative.

and more resilient because structures and institutions that maybe have provided security in the past are not so secure anymore. And so we have to think differently about how we live our lives. And what a great moment to be doing that and what a great moment to have these new options on the table.

I don't know about you, but the single family home, corporate ladder, American dream, well, it seems a little stale and it seems to not be in good alignment with how we want to live our lives. So how awesome that we have these new ideas and creative options out there. And for folks who want to maybe explore or live somewhere different.

or really don't value collecting stuff that much, then how great that we get to move past the American dream, single family home, suburbia, corporate ladder thing that we all focused on for so long. Maybe we're just finally coming back to ourselves. Maybe we're finally coming back to the way that humans have lived in community.

Maybe we're finally coming back to what feels good to us and walking away from what never was all that great a fit.

I thought I would give you a couple of highlights from my talk. So I got the main stage on Sunday at one o'clock and had the great opportunity to share my nerdy financial planning thoughts and also to answer questions on the financial planning side of tiny living. And so this is a talk that I am refining and always giving.

at new places and it's always exciting to be able to give folks a financial permission slip to choose something different because we are all really clearly instructed over and over and over again to focus on home equity, that housing debt is good debt and that we should, get our degrees and climb the corporate ladder and sacrifice ourselves for 30 or 40 years.

to pay off our house and then go into a time of relaxation in retirement. And I don't know about you, but I'm really not that interested in that path. I'm really not that interested in sacrificing 30 or 40 % of my income for my roof for 30 years. I'm certainly not that interested in staying in one corporate ladder path.

for 40 years, I'm really not that interested in supporting a big corporate mission statement for that long. I really like change and I really like to have exploration and see new places. I like to grab new concepts and learn new things. I like to feel a little bit more freedom to move around. And so...

I am excited that we have this opportunity now to consider our different options.

So of course I talked about the why of tiny living, which of course we all have our own whys, but there's some constant themes that we see with people that are interested in tiny or alternative living. Of course, complexity versus simplicity is one we all feel how our lives are tremendously complex and the more things that we own and the more.

balls we have in the air, the more we are constantly dragged back into managing our own lives. And so anytime we can simplify anything we can cut out gives us a little bit more time. And time is essentially what we're all looking for. We're all looking for more choice about how we spend our time. And so that simplification element is a huge why for folks. I like to talk about how tiny living enables families. We've definitely

been sold on the idea that the single family home is family centric, but when it takes people away to work so many hours in order to pay for that house and often requires two incomes to pay for that house and when ultimately kids move away and so people are left in these big houses that don't serve them anymore, it's not exactly drawing people back together when they would rather be

flying to somewhere together and going on a vacation somewhere together, or they'd rather be gathering somewhere else, maybe where their grandchildren are, that single family home thing. Maybe it worked when there were multi-generations of agrarian families living together, but now it doesn't seem to make as much sense. So I love the way that tiny living enables families.

whether it's bringing together multiple ADUs on a residential lot so that we can see some family transition between elders and kids trying to get off and, you know, just providing that additional support plus enabling some family wealth building there or whether it's a tiny home on wheels that's able to travel to park.

with different family members. see that with like Kristen, who was in a recent podcast, how she gets in her van and she goes and spends weeks and weeks and weeks with her family in Minnesota and Oregon. And how great that we can choose that mobile lifestyle in order to spend more time with family and be less fixed in place.

or whether we're talking about building community with chosen family. A lot of us are talking about that now, buying land, having multiple friends, families living together and sharing resources. I really think that tiny homes are more family-centric than the single family home model that we have all understood.

Obviously, tiny living when you choose a smaller package of a house, you have less financial obligation overall, less potential for long term debt there. And being debt and mortgage free faster enables our freedom of choice of how we want to spend our time, how we might want to be creative, how we might want to start a business, how we might want to solve a problem, how we might become artistic, how we might want to volunteer.

Like all of these things become more possible when we don't have to worry about paying for the single family home mortgage. So freedom of choice is a key why.

Another one that I like to highlight and sort of beat the drum on is that our life decisions have a bigger impact on our finances than the extra 2 % that we can save in our 401k. We have been told over and over and over again that people are not saving enough for retirement and that they're not putting away enough savings. And yet no one seems to call the bluff on the American dream house and how much financial expense that adds.

to a person's life, therefore restricting their savings. when interest rates are at 6 % or higher, we're spending just as much on interest as we are on the principal for the house. And so that's doubling the cost of the house over 30 years. And if we think about a $430,000 average home, and then we're spending $460,000 on interest, that is $460,000 that is not being saved.

not being saved. So therefore our life decisions have a much bigger impact than the extra 2 % that we might be able to crank out of our latte and save in our 401k. As you can tell, I'm a little wound up about this topic today.

So I talked to you about the how. Obviously, I have a path that I think that is useful for many folks. First, understanding values. What is most important to us? What lifestyle do we want to experience? Is it mobile? Is it fixed? What is the square footage that's going to make us feel like we have taken care of everything that we need to? Is it rural? Is it in community?

Is it urban? all of these things we have to figure out before we move forward with a lifestyle change. so understanding ourselves and our values is first and foremost. And from there, we have to do a lot of research because tiny living of any type takes more research than just picking a realtor, going around and looking at homes and buying one that makes sense and is in the right school district.

When we do tiny living, we have to do a lot more research and understand a lot of things about building codes and zoning and geographies and weather patterns. Also, we have to do research about perhaps certifications of our home, or if we're doing van life or schoolie about how to run solar and what to do in breakdowns. Like there's a lot more that we have to understand when we choose tiny living. So we have to give ourselves.

time for research. We also have to be determined. We have to stick it out because it is not going to be as easy as we think. And we have to be willing to endure all the bumps in the road. We have to be problem solvers. We have to be creative. We have to figure out what is it that we can get out of this problem because essentially we learn nothing unless we have problems. So it's a great learning opportunity.

And so I love that we get to craft a beautiful path that's so unique for ourselves.

Understanding our numbers, cash flow, balance sheet, income, expenses. What assets do I have? What does my income look like now? What is it going to look like on the other side of this change? What about my savings? How does that differ? What about my expenses? They're hopefully going to be less. And so how does that impact the plan? Lots of number crunching to be done in this project path.

So I think that that is another important step in the how. And then mapping a realistic, logical project plan and getting on the plan. Getting started is the hardest part and then just keep on going. This is an important part of the how because many times we start things, we have a rush of excitement, a rush of emotion at the beginning, but we have to wake up for this project.

day in and day out until we get to the other side and then we can really enjoy what we have created for ourselves.

So I went into the money part. I'm not going to break it all down in this podcast today. I've covered this on other podcasts or we'll continue to cover this and other topics. But basically I looked at two scenarios. We looked at the American dream house purchase scenario and we looked at the tiny house purchase scenario and we broke down the ownership cost difference between the two over a 30 year period.

So looking at if we bought the average US home based on average US home prices and current interest rates, the total cost over 30 years of the principal, the interest, the taxes, insurance, the maintenance, and understood what that costs us when we have say a finite number of dollars that are gonna pass through our household. We all throughout our life are gonna make a certain amount of money.

It's going to come into our household, what we do with it, our life decisions can really make a huge impact, as I said before. And if you're spending this large chunk of money on the American Dream House over 30 years with that huge chunk of interest that I mentioned that adds no value to equity, it doesn't add to our savings account. It's just money that we're paying somebody to use their money.

It really makes a big difference in what we have left over to save for our future, to create financial freedom, to create time freedom, to do the things that we wanna do. So that big number of that American dream house purchase is much bigger than the sales price. And we really need to understand the total cost of that.

versus the total cost of say a really nice tiny home these days, which we could pay off a lot sooner, pay a lot less in interest, pay a lot less in utilities, pay a lot less in taxes, pay a lot less in maintenance. And so then over the course of 30 years, what does that cost? And what does that free up from a resource perspective, our time, our money? What does that allow us to accomplish in this one wild and precious life? So.

went through those numbers very thoroughly and then looked at those numbers in the course of a financial planning scenario. So as a financial planner, I have these great tools to allow us to project into the future and see how people are going to do over time and when they are possibly going to run out of money. When we talk about what's going to go on with their career or their retirement. And so when we

create two scenarios where the only difference between the two scenarios is the purchase of an American dream house or an average US house versus a tiny house. You can see very clearly what that does in the long term. So we went through those two financial planning scenarios in that talk and you can guess, you know what the outcome is in general. the tiny house purchase is a lot better financial decision. So,

That is the financial permission slip that I'm hoping to give everybody. Consider tiny living as a very smart financial decision.

I did do some beating up on home equity as I have done in the past. In fact, I have a whole podcast episode about home equity. And the simple fact is that home equity is not something that we can ever cash into like a savings account without paying more interest and fees. It doesn't matter if it's a home equity line of credit or a home equity loan or a reverse mortgage or a house refinance with cash out. We are always going to pay.

interest and fees when we tap into our home equity. And so this notion that home equity being such an important building block of people's wealth forgets the fact that accessing home equity requires more interest and fees paid to somebody else to get access to the wealth that you have created by purchasing a home as an asset. And so therefore I talk about that and I also talked about

how that we can't just break off the fourth bedroom and cash it out. We have to use the vehicles that exist, the financial vehicles that exist in order to get at that home equity, which of course, as I mentioned, requires more interest and more fees.

I also made mention of the fact that so many times I have seen widows in particular locked in their home, they've paid off their house, all of their wealth is in their home equity and maybe they're house poor and they don't have access to the income that they need to take care of themselves because as we know, women live longer, women save less, women have less in social security benefits, women have to work a little harder to stretch.

their resources throughout their lifetime. And when all of those resources are locked up in their homes, it makes it a little bit more difficult to figure out what the plan is. And if the plan is to take equity out of the house, then they're going to be paying somebody to access their own wealth.

I also talked about being in times of economic uncertainty. We're all feeling a little bit of uncertainty right now. We're feeling the winds of economic shifting around us. And so this is a great time for us to recalibrate what feels like certainty, what feels like risk, what feels like safety to us and to me.

Safety is about having less obligation, less financial outlay, less debt. so creating a world in which we are a little bit more secure on our own two feet. And we're looking around our community for those that can help us and those we can help and creating those relationships within our own community, families, friends, networks.

These are all important steps that we can take in these moments to feel like our feet are still on solid ground. And so this is a great opportunity in these moments of uncertainty to rethink the structures and the life that we have built for ourselves and reconsider what we might be able to do to create some more certainty both within our own household and also within our community.

I talked about an example of a case you can see on the tinyhouseadviser.com I talked about Liz. Liz is in her late 50s. Liz is recently divorced. All of her kids have moved away. She doesn't want to maintain her big house anymore. She feels unfulfilled in her career. She wants to do maybe some consulting and maybe some volunteering. She wants to see new places. She wants to be closer to her kids.

basically her values have shifted. It's no longer about that, you know, one single family home. Maintaining that is no longer in alignment with the life that she wants to live. And so tiny living is a great solution for Liz because it allows her to move closer towards her kids when she wants to. It allows her also to see new places. It allows her to reduce her cost of living.

in order to make that transition into some consulting. So with Liz, we worked on a roadmap into her out of corporate and into her new consulting gig. We figured out how much savings she need, what are her travel costs were going to be, what her parking was going to look like, all of those things in order to allow Liz to overcome the fear of making so much change at once. Because we all know that right after a divorce or being widowed or some other major life shift,

It's kind of scary to take on even more change. And so you often need a cheerleader, a thinking partner, someone to be there with you to help you feel confident to move forward. And so this is a great example of how financial planning can help and how Liz was able to be successful. You can see Liz's full story on thetinyhouseadviser.com. So I covered all those topics while talking at Tiny Fest. There were a lot of great questions, questions about

Solar and off-grid living questions about, you know, what it is like to downsize. I talked about the emotions of going through all of your stuff. And of course, this is a huge hurdle for folks. have a great guest who's scheduled to record with me for this podcast. We're going to talk about the psychology of downsizing. So make sure you don't miss that episode. It's going to be awesome and really helpful for all of us that are stuck on the stuff part.

And so it was great to be around people who are working on making this change in their life or considering this change in their life. They all had different formats, right? Some folks were, you know, trying to put an ADU in their backyard. Some folks were considering van life. There was lots of different ideas and needs going on at TinyFest, but all of them have some of these same themes in that we're trying to bring family or friends closer together.

We're trying to create more financial resources or resilience in our life. And people are willing to think outside the box in order to do so. So it was a great show. had some great, you know, connections with some of the folks that have been in the industry for a long time. Some of the influencers out there on YouTube, I got to talk to the tiny home tours and I got to talk to tiny home nation.

And so it was great to see everybody come together and be in support of this change and movement that is happening. And why wouldn't it? Right? Humans are resilient. We're creative creatures. And when faced with the economic resistance that we are in this world about continuing on with the path of the American dream of the get the college degree.

get married, have the kids, climb the corporate ladder and retire at 65, that simply isn't working anymore. And so therefore we have to think creatively. And that's exactly what we're doing. And that's exactly what Tiny Fest was all about. So thanks for listening to my recap. Great guests coming up, looking forward to sharing their expertise with you. Make sure that you share this podcast with someone you care about who's thinking about this.

And if I can help you in any way, you know you can hit me up at the tinyhouseadviser.com