When Kim and I moved last summer from our riverfront condo to this country cottage on the outskirts of Portland, one of my primary aims was to slash our spending on both housing and food.

Although we owned our condo free and clear, living there still cost us roughly $1200 per month. Plus, there were the added costs that came from living so close to bars and restaurants. Sure, we didn’t have to eat out as often as we did — we understand that was a choice — but we enjoyed exploring what the neighborhood had to offer.

Well, I’ve now had time to gather enough data to determine whether we were able to achieve this goal, to cut our monthly costs. I’m pleased to say the answer is “yes”! But for a few years, this gain is going to be completely negated by our massive home remodeling project.

Let’s look at some numbers.

Saving on Housing

To start, here’s how my monthly housing costs have changed:

  • During the first four months of 2017, we paid an average of $1169.91 to live in our condo. Of that, $644.65 went to our HOA and utilities. The remaining $525.27 was spent on taxes and condo insurance.
  • During the first four months of 2018, we paid an average of $472.55 to live on our house. Of that, $187.91 went to utilities and $284.64 went to taxes and insurance.

Before we made the move, I estimated that it’d cost us about $500 per month for housing expenses. That was a good guess. My expenses are actually a little lower than that. And because Kim is paying me $500 per month to “vest” into ownership of the house, my net monthly housing costs are actually minus $21.45. I’m making money by living here! (Haha. I wish.)

Food for Less

Meanwhile, our eating habits have also changed. We don’t go out to eat nearly as much as we used to. When we do dine out, we choose cheaper places. (Our current neighborhood isn’t quite as hip as our old neighborhood.) Last night, for instance, we hit up our favorite pub. It cost us $54, and that’s expensive for this neck of the woods. In our previous neighborhood, we’d often hit a hundred dollars when dining out.

Here’s how my food spending has changed:

  • During the first four months of 2017, I spent an average of $568.42 per month on groceries and $554.14 on restaurants. That’s a total of $1169.91 per month on food. Holy cats! (And that doesn’t include money that Kim paid for groceries…)
  • During the first four months of 2018, I spent an average of $477.33 per month on groceries and $332.01 per month on restaurants. That’s a total of $809.34 per month on food.

Let me be the first to point out that I spend a lot of money on food. I acknowledge that. This wasn’t a weak spot in my budget back when I started Get Rich Slowly in 2006, but it certainly is today!

That said, moving to the suburbs did indeed help me spend less on food. My grocery bills aren’t down as much as I’d expected — only about 16% — but that’s still saving me nearly $100 per month. Meanwhile, my restaurant spending has been cut nearly in half! Overall, my monthly food budget has declined by 28% (which is more than $300 per month).

Creating Cash Flow

When we were planning for our move last spring, I wrote that I hoped my cash flow would improve by $1200 to $1300 per month. With the reduction in housing and food spending, I’ve saved an average of $1010.58 per month so far in 2018. When you add in Kim’s monthly $500 “mortgage” payment to me, my cash flow has improved by $1510.58.

That’s outstanding!

“But wait, J.D.” you may be saying. “Have other aspects of your budget ballooned because of the move? Are you driving more, for instance? And what about your outlandish home improvement projects? You’ve already admitted that you’ve spent roughly $100,000 on renovations since moving in!”

I am spending about twice as much on fuel as I was before. During the first four months of 2017, I spent an average of $25.79 per month on fuel. So far in 2018, I’ve averaged $56.69 per month on fuel. Other than that, however, the move has had no adverse effect on my finances…except for the very expensive remodeling projects we’ve been doing.

The Big, Fat Elephant in the Room

I haven’t included the remodeling costs in the above numbers because they’re not a regular expense. Trust me: I’m perfectly aware of how much I’m spending on home improvement, and it’s caused me plenty of anxiety. But those costs aren’t recurring, so I don’t include them when calculating average monthly expenses.

What I have been doing is some mathematics gymnastics:

  • My cash flow has improved by $1510.58 per month.
  • Our pre-deck (and hot tub) home improvement costs totalled $92,934.61. Of that, $59,000 came from selling the condo, which means we’ve had $33,934.61 in un-budgeted home improvements since moving in.
  • We don’t have a final tally on the deck and hot tub project (and won’t for several weeks), but I expect it to be close to that $33,934.61.

Based on these numbers, we can calculate how long it will take to recover the remodeling costs (compared with having remained in the condo). Dividing our $33,934.61 excess costs by my $1510.58 per month improved cash flow, we find that it’ll take 22.5 months — just under two years — to compensate. And, of course, it’ll take roughly the same amount of time to compensate for the deck and hot tub.

Translation for non-nerds: Moving from the condo to this house saved me just over $1500 per month. This savings has been temporarily negated by all of the home projects. But after about four years — assuming we find no further problems — we’ll pass the break-even point. At that time, the move will become a financial win!

Fingers crossed, my friends. Fingers crossed.

14 Replies to “April 2018 spending update: Did moving to the suburbs save me money?”

  1. J.D. Roth says:

    I want to add: Running these numbers was comforting to me. Both Kim and I have been stressed lately about how much money we’re dumping into the house. And yes, in an ideal world, this wouldn’t have happened. That said, it does look like monthly carrying costs are much lower for this place than in Sellwood. Plus, as I mentioned in the post, within a few years, the financial impact of the move will be mitigated by the monthly savings.

    We’ve talked, and we both agree that our challenge going forward — once all the final renovation is complete — is to establish a new “normal” where we’re not throwing around great gobs of cash. I think this should be doable. We’ll see!

    • Eileen says:

      Posted before your hiccup, but I’ll get right to the question I’m kind of interested in.

      I know you’ve written before that you don’t regret the decision to buy the house. What I was wondering was if you’ve looked at the purchase price + repair/improvement and compared it to other options that would have been out there (or since). Or is it like buying expensive airline tickets and deciding not to look at prices afterward so you don’t go mad seeing that they dropped. šŸ™‚

      • J.D. Roth says:

        Haha. And reposting my reply (also lost in the hiccup): I have NOT looked at purchase price + repair costs to see what we might have been able to buy for $600,000. That number was way outside my budget when we were looking. I’m almost afraid to see what’s available. But I’m going to go do it, if only for masochistic reasons. šŸ™‚

  2. lisa says:

    I’m confident in your calculations that the cottage home will be an asset and not a detriment for you. Sure, the renovations are costly but so what. The cost would come in to play no matter what- it was a matter of when.

    Is Kim’s contribution of $500/mth a payment to get her name on the deed?

  3. Jay Demmler says:

    JD, have you considered the money spent on the house as an investment vs a cost? With all the work you did, the value of the home has to have risen some. While it is not 100% money you will recoup, it might not be a bad idea to have your realtor rerun the value of you home when you are done with the remodel. Then the money would be a transfer of assets vs just a straight cost. I know your home is not an investment line of thought, but I look at it more like your “naked on the street with a bag of money” analogy.

  4. Frogdancer says:

    Landscaping is expensive. I’ll be dropping a cool 50K on getting the backyard paved with bricks, a wicking veggie garden setup done and a big roof over some of the paving. I’m doing this instead of getting a deck. Fortunately, I have the cash from the sale of my old home, but it’s going to hurt when the bill comes in.
    Enjoy the hot tub! šŸ™‚

  5. S.G. says:

    Out of curiousity, what have your changes done for the value of the house? Not that you can do anything with it, but I find it more satisfying if money I sink into the house improves it rather than just keeps it from decaying, lol.

  6. Coopersmith says:

    Yep. I would have a hard time living in a high rent area like you were in. Probably because my housing reflects my income and working on FI. My housing costs are similar to you new place and when I do get to FI ( which is soon) I will be in glad with my expenditures.

    Good luck with the new place.

  7. Christine says:

    It’s good to hear that the cash flow is working out as you’d hoped. I know you’ll love using that new deck and hot tub!

    One question I have outside of the finances is: are you happier with the suburban lifestyle? It’s definitely a big change going from city condo to fixer-upper on an acre lot – are you enjoying the space and change of pace?

  8. JDB says:

    The costs of a longer commute go beyond just fuel. Since you’re driving more miles, you’ll have to replace your vehicle sooner, and maintenance will have to be done more often. There’s also the opportunity cost of spending more time on the road vs. whatever you would enjoy doing more with that time.

  9. RayinPenn says:

    Actually Iā€™m a bit surprised you failed to include transportation costs in your calculation. Citiy dwellers often rely on public transportation and do not need to buy and maintain a car. That is usually a huge savings.

  10. Mr. Nickel says:

    As a fellow Portland resident, you may get a shock when you get your new property tax bill after all the improvements you made on your house. If not in 2018, wait until 2019. Under Oregon law, they cannot increase your property tax bill more than 3% per year, but if you add $10K in improvements in any year (or $25K over three years), the assessors will try to catch it up to real market value.

Leave a Reply

Your email address will not be published. Required fields are marked *

Close Search Window