6 people on how living in a tiny house has changed their finances, from going debt-free to saving six figures

TinyLittleLife bekahCourtesy of Bekah Taylor

  • Tiny house living changes your finances for the better, according to six people who live in tiny houses.
  • Many were able to significantly reduce their housing costs, thereby doubling - or even tripling - their savings.
  • The extra money has brought them new opportunities to enrich their lives, they said - with experiences like traveling or starting a business.
  • Visit Business Insider's homepage for more stories.

Life tends to gets smaller when joining the tiny-house movement.

There's the 100 to 400 square feet of space - defined as the criteria for a tiny house - that makes up your home. There's the downsizing of possessions so you can live comfortably. And there's the overall minimalist lifestyle that comes with both of those things.

But the one thing that doesn't shrink, according to many tiny house dwellers, is your bank account.

Business Insider talked to six people who went tiny about how their finances changed after making the move. Turns out, going tiny has made them richer in more ways than one.

Many have significantly cut the cost of their rent or mortgage and thus doubled their savings, which has yielded them more opportunities to take advantage of - like traveling or starting a new business.

Here's how going tiny has changed people's finances for the better.

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Couple Bela and Spencer cut their housing costs in half when they downsized to a tiny home — and they earn income of it by turning their tiny house into a vacation rental.

Couple Bela and Spencer cut their housing costs in half when they downsized to a tiny home — and they earn income of it by turning their tiny house into a vacation rental.

Bela and Spencer of thisxlife in Boulder Creek, California, were renters before they bought their 300-square-foot tiny house in 2007.

After including rent for the land, depreciation on the home, and loan interest, they cut housing costs by half, down from $30,000 to less than $15,000, they told Business Insider. They did that without a down payment or any first-time homebuyer incentives.

Because most banks don't consider tiny houses as "homes," many tiny-house buyers can't take out a mortgage and instead pay for the home through personal loans, they said. They did just that, but will have paid off their tiny house in just seven years — or less.

They also convert their tiny house into a vacation rental while they travel, which allows them to make a little income on the side, they said. "We could not have afforded to set up such a luxurious rental if we had continued to rent or even bought a starter home — and renting our house for a handful of months a year covers the costs of ownership," they said.

"There's no way we can really know the full financial picture of our tiny house, but it's easy to say that it's been a valuable investment," they said. "Much, much better than renting, as long as you can stomach the adventure!"

Bekah Taylor said her housing expenses are half to a third of what she would be paying if she lived in the city.

Bekah Taylor said her housing expenses are half to a third of what she would be paying if she lived in the city.

Bekah Taylor of Tiny Little Life said that getting into tiny living can be complicated. There are parking restrictions, insurance can be expensive depending on where you live, and if you can't finance your own home, it restricts the companies you can buy from. She and her husband Paul went to the bank and were offered the option to refinance their home or take out a personal loan with 14% interest rates.

They ended up self-financing and building their 250-square-foot tiny house, located in Portland, Oregon.

"We have amazing friends and family, who gave us a lot of free labor, which made the cost significantly less," Taylor told Business Insider.

She said their monthly housing expenses are half to a third of what most of their friends are paying for in the city. "It has allowed us the freedom to live where we want yet still do all the traveling we had hoped for," she said.

Couple Tim and Sam have cut back on unnecessary expenses because living in a tiny house has forced them to downsize.

Couple Tim and Sam have cut back on unnecessary expenses because living in a tiny house has forced them to downsize.

Tim and Sam of Tiffany the Tiny Home bought their 270-square-foot tiny house, which they live in in Florida. Downsizing for the move wasn't "terribly hard to do," they previously told Business Insider.

"Besides being able to have a three- to four-year mortgage, which will give us an extra $1,000 a month back into our pockets, living tiny has changed our finances for the better," Tim told Business Insider.

He added: "Since we live in such a small space we think more about what we bring our home than we used to. That mindset alone will cut out a lot of unnecessary spending we used to do on a day-to-day basis. We evaluate what we buy a lot more carefully, which in turn ends up saving money from those 'I need to have this' moments. This allows us to invest back into our lives."

Ryan Mitchell has saved six figures since moving into his tiny house.

Ryan Mitchell has saved six figures since moving into his tiny house.

Before Ryan Mitchell of The Tiny Life moved into his tiny house, he was spending about $1,500 a month on rent, utilities, insurance, and the like, he told Business Insider.

He said it cost him about $30,000 to build his 150-square-foot tiny house, including the solar panels. "Even after accounting for the cost of the house, I've saved over $100,000 going tiny and it's been a great experience," Mitchell said.

With that money, he started a new business, which he then sold, using the profits to buy land of his own. He's also been doing a lot of traveling, sometimes spending up to a few months in a country.

Ultimately, tiny living has afforded him a low cost of living: "I only have to work about five hours a week to cover all my needs, so I have a really great lifestyle while still meeting all my bills, savings, and retirement needs," he said.

Laura LaVoie said going tiny has opened up new opportunities for her and her husband.

Laura LaVoie said going tiny has opened up new opportunities for her and her husband.

Laura LaVoie of Life in 120 Square Feet told Business Insider her tiny house experience was about changing her life and finances. In 2009, she and her partner Matt began building their 120-square-foot cabin in North Carolina while living in Atlanta and working in corporate jobs.

"We spent weekends and vacations working on our tiny house, which was a symbol for the things we wanted to outside of full-time jobs," she said. "When the tiny house was finished, we could take the leap."

She quit her job and began writing full time in 2012.

"Since then, our financial choices allowed us to do so much more," she said. "We bought a 700-square-foot bungalow in a city we love and last year my husband decided to go back to school and is attending law school in Atlanta. We couldn't have done any of this without the experience of building a tiny house."

While they moved out of their tiny house to live in the bungalow for several reasons, including some big life changes, they plan to move back in this summer.

Jenna Spesard is now debt-free because she lives in a tiny house.

Jenna Spesard is now debt-free because she lives in a tiny house.

Jenna Spesard of Tiny House Giant Journey built her 165-square-foot tiny house from scratch — there weren't many resources available and most of the planning and building was achieved through trial and error, she previously told Business Insider.

But it was worth the financial freedom. After downsizing, she was able to save so much money that she paid off her $20,000 student-loan debt and car loan in just a few years with a part-time job, she told Business Insider.

"I have now been debt-free for more than a year and I'm saving enough money every month that I can travel all over the world a few times a year while working on my own business," Jenna, whose tiny house is currently parked on Whidbey Island in Washington, said. "I never would have been able to do that before going tiny."

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