Mobile work situation - How to save when you're forever renting

[IdahoMMM]

Hi -- I stumbled across the MMM blog about a month ago and have been reading posts oldest to newest ever since (I've just gotten as far as early 2013).

Backstory: The concept of minimizing consumption and increasing happiness is amazing and liberating. So many posts (and comments) have me motivated to go out and renovate a rental house or get a reel mower. Just one (well, probably a lot more than one, but here's the big one) obstacle: my job is as a consultant, where my assignments are short term (1-3 years) and posts can be all over the U.S. as well as other countries. In my 10 years with the company, I've worked and lived in five U.S. states and one Caribbean island. Along the way, I've tried to live frugally and build the stash (didn't know at the time what that the pile of money was actually called!), but I've found a new sense of urgency after soaking up the MMM lifestyle.

Facts - yeah, it's not a case study, but hopefully this helps to paint the picture:

• I generally love my job. Great benefits, paid OT, free health insurance, covered relocation, generally a great work environment, salary nearing 200k/year.
• 33, married, with a baby on the way in a few months (yeah!). Wife does not work, and plans to stay home with the baby.
• Savings rate of about 50%, which goes into a single family rental, 401k, IRA, and general investment accounts (Vanguard index funds). I'm trying to buy a duplex to ramp up the RE investment percentage.
• Have generally rented lower-cost, but nice apartments. I've been able to bike or use public transit to get to work most of the time
• We usually live pretty frugally: no cable TV, minimize eating out, share one car, etc.

To summarize, I'm in a fairly high income, high expense situation - in large part because of my job. Many of the awesome things I'd love to do (start a compost pile, stockpile groceries) are tough since I'm constantly in a "could be moving in a few weeks" state.

Here's the question: for people who have been in my shoes or might just have some ideas... What are you doing to implement a MMM-approved lifestyle when you're "forced" to rent, move around, and otherwise incur expenses that are sort of beyond your control? I think the safe answer is to save tons of money and retire as soon as possible, but I'm searching for practical things a transient renter can implement to get ahead. I believe the MMM philosophy is that anyone can adapt the principles to fit their situation. Anyway, I know there are probably a lot of people in a similar situation to mine, and I'd love to hear your experience or ideas!

[IdahoMMM]

Thanks, lhamo, those are good suggestions. On the housing subsidy, my company used to give a foreign housing allowance, but has more recently decided to just provide housing by renting the apartments directly, eliminating the possibility of using that to save money. I like your suggestion about not trying to just replicate the suburban expat lifestyle. In my experience, you can live a lot more cheaply and have a better time if you live like the locals!

I think what I'm struggling with is the feeling that I'm spending too much money, when a lot of the spending is necessary because of the job choice. Maybe that's just a mental thing I have to get over. :)

[CrochetStache]

I second llamo's recommendations of "go local." We are in a similar situation, living in our 9th place in 14 years =0

Each place we live we learn a new and better habit we wouldn't have if we had stayed in the same place. Such as hanging our clothes out to dry, new recipes from new ingredients, new skills. These small money savers can really add up over time.

Renting a place that doesn't require yard work saves money on yard tools, even those frugal reel mowers cost money, maintenance and time away from family/work to do the mowing.

Your spouse should be a big help to search for the best deals on food, clothes, etc.
Definitely learn the local language! This has made a huge difference for us.

Experiencing these different areas will help you decide where the best place to make that final home purchase for your family. You are already off to a great start but I think you are underestimating what you can gain by experiencing different cultures, even within the US.

[IdahoMMM]

Hi Crochet!

Thanks also for your thoughts. I do really like the perspective that living in lots of places gives you. Sometimes, I talk with friends who never left the area they grew up in, and their "world" is just so much smaller. Learning new things and meeting new people definitely has a lot to do with growing your world/perspective.

Thanks for the reminder that benefits aren't always tangible! I also like your idea that the moving around is really kind of like an extended home search -- you're experiencing different places and deciding where you ultimately want to end up. Good luck to you on your future moves!

[StarryC]

I guess I'm not sure what you feel like you are spending money on that is due to your work situation.  You said they pay your relocation.  It sounds like they might pay your rent by selecting apartments.  Is it just that you are sometimes "spending" money on rent instead of a mortgage?  Is it travel back to "home"?  Or more expensive utilities etc. because you can't do things that you could as a homeowner?

I am a renter, as are many people on this board.  I think that for many people/ in many communities renting is a better financial decision than buying.  If you move a lot, buying stuff on craigslist and then selling it for about the same price is usually a good plan.  There are lots of things you can do inexpensively to temporarily decrease utilities. 

[nereo]

Hi there

In some ways I've experienced your situation; six US states plus Canada in the last decade, and I've had 14 seperate addresses in the last 20ish years.  Filling out those occasional forms where you have to list every address you've lived at is an interesting challenge.

My first impulse would be to shy away from RE.  Renting in your situation makes inherent sense.  One trick I've used extensively is serially buying and selling the same ikea furniture.  I'm not sure what it is about Ikea stuff (maybe how it packs flat?) but every time I've moved I've been able to sell my furniture for over 80% of what I paid.  Saves on a bundle on moving costs and when I'm willing to be patient I can usually furnish my new apartment with the same money I got from selling my old furniture.

If you're really wanting to jump in the RE market, then I had two thoughts; first could you wife get her real-estate license (like MRs MMM?) I'm sure that would help.  Also, how handy are you (and her)?  you could buy distressed properties (with your wife's new real-estate license), live in them while fixing them up, and then either rent them out or sell them when you have to move next.  A warning; this is only good for people that don't mind being in a place that's perpetually covered in a work in progress.  If you aren't that sort of person, i would not recommend it - seen too many relationships tarnished by living in a fixer-upper.

congrats on the little one on the way.
best
n

[IdahoMMM]

Starry and Nereo -- thanks for your comments.

Starry: I think my problem is that as a renter who moves around a lot, there are just expenses that happen. Like, the inevitable first trip to the grocery store to buy new condiments and stock the freezer. Then there is the car registration, restaurant meals while in hotels, etc. Adds up really fast!

Nereo: thanks for the Ikea tip. I love Ikea, but the furniture never seems to last. I sympathize with dreading the "every address you've lived" forms. :) If there's one thing I've gotten from hours of reading MMM, it's that Craigslist is your friend for almost everything!

If I can redirect this question a little bit: if saving money by improving your home or managing your own rental properties is out of the question because of a transient lifestyle, what other things are you doing to invest the stash? Index funds, stocks, REITs, buying rentals and having them professionally managed, Lending Club?

[nereo]

If I can redirect this question a little bit: if saving money by improving your home or managing your own rental properties is out of the question because of a transient lifestyle, what other things are you doing to invest the stash? Index funds, stocks, REITs, buying rentals and having them professionally managed, Lending Club?

I'd probably characterize my investing as "incredibly boring but effective".  I max out my IRA every year and make weekly contributions to my index fund.  I try to challenge myself by figuring out ways of increasing that weekly contribution, even if it's just increasing it $5 or $10.  When I started five years ago $25/week seemed like a lot.  Now it's a question about whether i can go from $240 to $245.  I get some sort of irrational thrill to see the # of shares increase (and I ignore the fluctuations in share price, knowing in time $-cost-averaging is a solid stategy).  I also judge everything I buy based partially on how much I can sell it for when I move next (like my Ikea furniture, which inexplicably holds its value.  Also, some pieces seem to hold up very well over time - Hemnes for example).  It's proven so effective that during my last two moves I've furnished an entire apartment with the money we got from selling our past set of furniture.  We were able to move everything we owned in our one car, plus a few boxes we shipped UPS.

[Fuzz]

200K in Idaho is a lot! I remember getting a "country-club" like lunch on the river in Boise for about $8 an entree. You have a coastal income in a low-cost state, so you should be able to save a ton.

I'm not a tax guy, but I wonder if there is anyway for you to designate a no income tax home state, where you're a resident. I know Idaho's income tax is 6%, if you could have the company treat your permanent residence as Wyoming (0%) or Washington (0%), then you'd have some savings. That's probably not possible when you're in the States, but if you move abroad again, that may be advantageous.

If you're making $200K as a consultant (which is awesome, BTW), my guess is that you're surrounded by a lot of people with high-income high-expense lifestyles. If you can avoid that as much as possible (hopefully your car is sub 5K, for example), then you're going to rack up huge savings fast.

Is there any way to shelter some of your income in your wife's tax-advantaged accounts? Maybe you're an independent contractor and your wife can be your bookkeeper who makes $17.5K a year which goes into a 401K? I don't know.   

I think people get these ideas (Ramit calls them scripts), like "I move around a lot which means I have extra expenses" and those ideas don't alway match reality. So what if you buy extra condiments every 2 years? That's what? $20? That's a little bit like saying you have credit card debt because gas prices are so high. I get that there are expenses associated with moving, but most of them are in terms of time and mental energy, i.e. setting up a new internet provider, or buying/selling furniture, and in figuring out new ways in doing things efficiently. Maybe the next place you move you buy a 4-plex? Idk. It seems like you have enough on your plate without adding in the headache of managing a rental.

You're in an awesome situation. Keep us posted.

[IdahoMMM]

Nereo and Fuzz - thanks for the insight.

In the past, I had tried to find the in-fashion investing ideas and replicate them, with terrible results. In the past two weeks I've shed the actively managed funds and am moving toward a 5-fund Vanguard split (500, Europe, REIT, Bonds, Small Cap) that I intend to rebalance every 6 months or a year. Then I can just watch the shares (and hopefully eventually the income and value) go up over time.

On the income/expense front, I'm acutely aware that I'm in an unusual situation for Idaho, which does have a very low cost of living compared to other places I've been. Part of the challenge is to avoid the lifestyle creep that my co-workers have (the 35-foot liveaboard motoryacht, the second house in Central America, kids who are trying to decide between Princeton and Harvard, etc). Those things don't interest me, but I think there is a little bit of competition to prove who's "doing better". First world problems, eh!

Good idea on bringing the wife into the savings/earning plan. She currently does an IRA, but nothing more. We'll be looking at options for her to "earn" income that can help boost the savings. I know some people have had luck moving their domicile to a non-income-tax state, but I don't think that is an option for me. Maybe if I were gone for longer periods of time...

Thanks for the ideas and encouragement. I feel like I've found wisdom and experience on MMM that is not present in my "real life" relationships and interactions!

[Catbert]

Nereo and Fuzz - thanks for the insight.

In the past, I had tried to find the in-fashion investing ideas and replicate them, with terrible results. In the past two weeks I've shed the actively managed funds and am moving toward a 5-fund Vanguard split (500, Europe, REIT, Bonds, Small Cap) that I intend to rebalance every 6 months or a year. Then I can just watch the shares (and hopefully eventually the income and value) go up over time.

Don't re-balance your taxable account every 6 months.  Every time you do you'll pay capital gains.  And if you taxable income goes over 200k you'll be paying and extra Medicare tax on top of 15% cap gains.  Instead:

re-balance inside your IRA/401k
re-balance every 2 years instead
direct new money to assets you're underweighted in rather than moving existing money

[IdahoMMM]

Mary: Thanks for the tax tip. I'll be sure to space out my rebalancing of the taxable accounts to minimize the tax burden!

[greaper007]

I used to be in your situation, and I came up with a crazy idea I never implemented.   Live in an RV or a van.    Granted, this was going to be for half the week and I'd spend the other half at home.   Also, my wife and kids would be living in our house. 

Still, if you found an older model that you could get for a decent price it might be doable for a few years until you hit FI.   I've seen some decent looking ones in the mid 20s that a small family could probably live in for a couple of years.    Pay it off right away and  you're looking at some extremely cheap cost of living.

[IdahoMMM]

Greaper: my hat is off to you for wanting to live in an RV. I had thought about that before, but that was back when I was imagining a 50-foot motorhome towing a jeep. :) I guess you could say I'm just not committed enough to live in an RV yet. I do have a friend that lives on a sailboat, and he swears by it. Plus, with a boat you have easy access to cheap recreation -- you can go for a sail whenever you want. Nice!

[greaper007]

Ha, I'm not committed enough either.   Living on a sailboat is one of my goals for post kids retirement though.   I'm not really interested in blue water sailing as I've had to fly through enough storms in my pilot days, but I think it would be fun to sail up and down the coast for a few years.    Just drop anchor and row to the grocery store.