downsizing housing

How cute is this?! £100k and it’s yours!

 

On our recent foray to the Wight Isle (no not Ibiza, the one just off the coast of Portsmouth 🙂 ) I noticed there were a few “For Sale” signs around the caravan park we were staying in. This intrigued me so I noted the estate agent name to have a look when we got home. I was then talking with Mrs T last night about possible options (purely theoretically speaking, for the time being at least 😉 ) of how you could go and live in one of the cheaper housing options over there and super charge your retirement plans.

This idea is in no way novel, we all know Jacob lived in an RV to minimize his housing costs and retire early. However it is worth exploring some of the other ideas out there to downsize or otherwise reduce your housing costs. This will not only boost your savings rate but reduce the amount you will need to retire on, because you’ve cut your monthly expenses.

1. living in a mobile caravan

As highlighted by Frugal Freelancer here the couple featured in this BBC article ditched their teaching jobs and decided to take the kids on an extended holiday in a caravan. Sounds sweet! It’s not totally clear what the couples plan is after they finish their year long holiday but I guess there is nothing stopping them parking it up, carrying on living in it, and putting the kids back into school. Alternatively they could just keep going and home school the kids? It’s a very alternative lifestyle that is for sure, and one that might raise a few detractors from both family/friends or even random strangers (I wonder how many idiots have called them “Pykies” so far!?) but you have to salute them for having the balls to just get out there and live life on their own terms.

Good luck to them I say!

The only thing is that there isn’t much financial information in the story so I did some very brief research to see how it might work out if we were to do the same. (All costs very roughly estimated!)

Caravan: £5k – Used off eBay et al. £5k seemingly gets you a pretty decent one

New (used) slightly bigger car to tow it around: £2k

Our Net Worth after selling our house* (probably over estimate on fees etc at £10k here): £93,258.00 1 – 10k = ~£93k

Total pot after car and caravan purchase plus a few other unthought of expenses: £85k

*We’d also have to make the choice of either getting rid of/selling a lot of our stuff, which would actually increase our pot, or putting it into storage, which would severely decrease the life of our living expenses pot.

How long could we survive on £85k?

This is the big question then! The only thing that I can imagine that might go up as a monthly expense would be petrol, and I guess the fees for parking up the van at a proper site. According to this the expenses would be roughly 2:

£15 per night for pitching = ~£5,500/year

Caravan insurance = £300/year

£30 per month on gas = £360

So the total base expenses would be ~£6,500/year

I reckon we could easily get by with another £10k of fun money when you are permanently “on holiday” and don’t feel the need to do the usual holiday type stuff that costs money (eating out, going to attractions, etc…). We could just engage in cheap or free pursuits such as seeing nature, walking, biking etc…

But to be on the safe side let’s round that up to £20k/year on the expenses. Our current pot would therefore net us at least 4.25 years of totally work free living 🙂

That’s also assuming that we might not get a little bored and maybe pitch up somewhere a bit more permanent for a while to engage in some job like activity, or even be earning some money as we go if we could score a remote working opportunity or earn some money on line.

I am sure I’ve been way overly cautious with those expenses figures but overall this idea does not excite me all that much now I’ve put some numbers into 🙂

 

2. living in a static caravan

Same deal as above but you would obviously be stuck in one place. However this would mean it would be much easier to score at least some part time work to keep the pot going for longer.

This strategy also obviously works much better than the mobile caravan one if you are still in the accumulation phase of your FIRE journey, again because you can hold down a job. Location will be key here of course and a caravan on a site near London will again be a hell of a lot more expensive than one on the Isle of Wight.

So overall I think I prefer this strategy to the mobile one, as it’s more flexible and probably all told a lot less faffing about finding new pitches all the time. The ‘vans are also a lot nicer to live in, no doubt.

To compare it fairly to the above let’s assume the plan is similar, sell up and see how long we can last for.

My in-laws seemed to score the deal of the century when they bought their caravan on the IOW and got it for just £4.5k. This is actually amazing for what it is, a two bedroom static caravan that looks like it’s been barely lived in! Let’s assume we wouldn’t quite get the same sort of bargain but will also go for a cheaper location, we won’t be looking to keep our jobs and the rolling hills and coast of the Isle are a beautiful place to spend time relaxing and engaging in thoughtful pursuits and physical activities!

Total pot after caravan purchase and other expenses (£10k) = £83k

Yearly costs

Caravan pitching costs = £3,500 (rough estimate from questions to father-in-law)

Other running and insurance costs = £1,000

I may be wrong but I think living in a static caravan would mean you spend less money than a mobile one. You know where the cheapest shops are, you would surely be forced to eat out less, and there would be less constantly new fun things tempting you to blow all of your money. I will therefore go with a total of £15k/year estimated spend in this living situation. Again I’m sure this could be a fair bit lower if we really put our mind to it!

This would last us ~5.5 years so even though the initial costs are higher, I think we’d get a longer “mini retirement” out of this one! If we managed to score some part time work it could even sustain us ad infinitum, living on only £15k/year between two people it doesn’t take much work to earn that amount.

 

3. living in a small house/chalet

This would mean finding a little “alternative” style house such as the one pictured above but instead of using it as a holiday home like most people would do, you are actually living in it full time. Prices in the small sample I had a look at were between £50-£100k but the one that I fell in love with was the pictured cottage/chalet which was £100k. If we bought that place for the asking price 3 then after fees I reckon we’d be left with a mortgage of £7k.

Obviously a mortgage of £7k sounds brilliant but we’d have no jobs to go to and I can’t imagine the employment sector is bulging down in a fairly remote corner of the IOW!

Let’s say we could get a job each that would pay around £10k per year, which would be tax free as below the personal threshold. I reckon that would cover the mortgage and living expenses quite comfortably. Let’s say we could work for an average of £10/hour we’d have to work ~26 full time weeks of 37.5 hours or 40 weeks of part-time (25 hours).

It doesn’t sound too bad a life to be honest 🙂

 

4. “other”

Some other ideas that are probably not worth spending much time on:

  • Living in a tent/on a camp site
  • Living in a tree house or self made shack
  • Escaping to the wild and building your own – see Kevin McLeod’s 4 part show here if you haven’t watch it yet, very interesting!

 

downsides and possible solutions

The major downside I can think of for the final two options is what would you do in the winter time? I am surely living in effectively what is a holiday caravan park in the winter is pretty miserable (or may not even be allowed as they might turn off the utilities). Same goes for the holiday cottage, it is fairly remote and would get very lonely during those dark winter months!

You could alleviate this by moving back to your home town for 3-6 months during winter to catch up with friends and family and also get a short term work contract to fill the coffers? This could work out well and then you’d have 6 months of the year off to spend on whatever you wanted to do.

One other major downside of this: if you have children then uprooting them once or even worse, every 6 months would be unfair, and obviously if they are school age then it would be even more of a nightmare. I guess you could homeschool but I have no idea on how you would go about that in the UK!?

The second downside is that it would mean moving away from friends and family, unless you already happen to live in the IOW or anywhere that has such cheaper housing options close by. There is really no solution to this apart from “Skype” plus “come and visit us any time”. Obviously you could go back to visit a few times a year as well. I am sure that it wouldn’t be as bad as it first might seem, people in America seem to move far across the country almost as a matter of course for example!

 

over to you…

As usual I’ll finish on some questions for you.

  • Have I missed any other ideas out (I am sure I have!)?!
  • Has anyone ever done anything like this and what were the major issues and solutions you came up with?
  • Has anyone done this with kids in tow, and/or tried home schooling?

I would love to hear more in the comments if so or you have anything else to add I haven’t covered.

Cheers!

 

Notes:

  1. This is total Net Worth including the house, as we’d sell it off, minus the parts of it we cannot access right now, i.e. Pensions and SIPP value
  2. I’ve added a little bit on for inflation and to be on the safe side
  3. It’s already under offer unfortunately so I won’t even bother giving out the estate agent details! 🙁