The difference between having financial freedom and having to grind it out at a 9-5 for the rest of your life often boils down to how well you can optimize your personal finances.

In other words, how good a person is at minimizing the cost in their life, and squeezing as much as possible out of the things that can improve their financial picture.

It might seems like this would require huge compromise or a significant adjustment to lifestyle to make this work, but not so fast.

The highest cost that most people incur throughout their lives is housing.  So it would stand to reason that if someone could find a way to drastically decrease or eliminate this cost entirely, the journey to financial freedom could be expedited big time!

For this reason, the term “house hacking” has become very popular recently.  Essentially this is where a homeowner figures out how to eliminate the cost of housing by living in a multi-unit and paying the rent with income from the other units, or renting bedrooms in their home or a separate section of your primary residence.  For more on this concept, I recommend checking out the book Set For Life by Scott Trench.

With the advent of AirBnB this has become much easier and lucrative than it used to be.

Imagine how different your budget would look if you could delete the housing entirely from your spreadsheet.

It’s possible and you don’t have to compromise.  You just have to make conscientious choices.

Here is my step-by-step personal example of how house hacking is paying for our dream house on the beach.

After getting married in 2015, my wife and I talked about leaving the suburbs and living in a house in the woods and on a lake.  So we started looking at all the options close enough to civilization that we could still manage our properties and I could work at the non-profit I work at in the city, but far enough to feel like we were on a nature vacation every time we pulled into our neighborhood.

Since it’s impossible to turn off the real estate investor sickness, I mean gene, once you have it, I viewed every house we looked at through the lense of “is this the place we want to live,” AND “is this somehow an incredible deal.”

Eventually we came across a vacant house built in the early 70’s with original paneling, no flooring, that old house smell (imagine the opposite of a new car smell), and had been listed for the past year and half with consistent price drops.

These are all the ear markings of a great deal, because the price had fallen to a point where the deal made sense, and the seller had become motivated enough to bargain.

The best part about the deal is that through the overgrown front yard, there was a great view of the water that we knew we could improve with some TLC and lots of tree trimming.

Because of the location we knew it was exactly where we wanted to be personally and that every dollar we put into the property would return at least two.  This is because the cost of materials are the same whether you install them in the hood or on the beach, but the return on those materials is much higher when there is a view.

The other aspect of the house that had a ton of potential was the basement.  The basement mirrored the size of the upstairs living area, had high ceilings, and a separate entrance.

The layout was very choppy with the mechanical located right in the middle of the room, but with some rearranging, we were able to make room for the perfect little one-bedroom AirBnB getaway on the beach.

We renovated the house and then the basement just in time for the summer vacation season.  We moved into the main house and we took professional pictures and listed the apartment for $150+ per night, depending on the date and demand.

We were pleasantly surprised to have the apartment booked almost the entire summer within the first few weeks of listing, and because it’s a completely separate area from our main living area, it has almost no impact on our day-to-day lives.

Financially however, what we realized is that if we rent the basement apartment for most of the summer, and rent our entire home for a few weeks while we are gone on vacation, almost our entire mortgage could is paid for, allowing us to live in our dream home for free.

One of the best parts about the pursuit of financial independence is that no two journeys look the same.  You can get as creative as you want, combining all the resources and lessons learned from your real estate investing experience with your personal finances to optimize each aspect of your budget as much or as little as makes sense for your individual situation.

It all starts by tweaking one aspect of your budget at a time from non-optimal (high cost of living, consumer debt payments, lots of expensive restaurants, etc) to optimal (low cost of living, no consumer debt, and more healthy home cooked meals, etc).  If you just take one step to start the process, it is incredible how quickly financial freedom starts to become a reality.

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