Why We Bought A Studio Apartment Even Though We Could Afford Something Bigger

My husband and I live in the San Francisco Bay Area, where all the homes are ridiculously expensive and you don’t get much for what you pay. So instead, my husband and I chose to buy a home in a city 20 minutes outside of San Francisco that is more reasonably priced.

When we first decided to buy a home, we attend few open houses. All the realtors basically told us that if we don’t plan to bid above the offer price, which was already overpriced to begin with, we might as well look elsewhere. Annoyed and shocked, we gave up for a few months and talked about other options such as moving to Southern California or leaving the state altogether.

Luckily, a complex near where we were renting started to turn rentals into condos furnished with all-new appliances. After walking through a few model homes, we talked prices. We already knew we didn’t want a two-bedroom, because it would be difficult to sell and/or rent should we decide that later on. The one-bedroom was roughly $310,000 for 700 square feet, and the studio was $240,000 for 565 square feet.

The Decision to Buy Small

That night, we discussed for six hours straight! At the time, we were renting a one-bedroom apartment and had a hard time filling the spacious 900 square feet. So, we thought that downsizing to a studio wouldn’t be that big of a deal, and we weren’t planning to stay long, at most five years. Plus, the location was perfect, since it was a 20-minute drive to San Francisco where we both worked. Lastly, we could rent this place out for a fairly decent return after we moved on. If we didn’t want to be landlords, we were certain this place would appreciate enough for us to walk away with something after closing costs based on the stats we found online. There was almost nothing to lose, and we really saw this place as an investment over the next few years and potentially long-term.

As part of our analysis, we went with a seven-arm loan at 3%, with the understanding that at the seventh year, we would know for sure what we would end up doing. We moved in a few weeks later and started our lives in our new apartment!

It Became Part of a Bigger Plan

Things started to change after we got married, which was three years after we bought our condo. By then, both of us had been in the workforce for seven years, and while we liked what we did, we didn’t necessarily appreciate the politics of a workplace and the competition to move up. We realized that there is a whole millennial movement where people were financially independent before 40, sometimes even before 30, and pursuing other things in life that make them happy without having to worry about money. People were living abroad, blogging, and doing things that we wanted to do.

We wanted to live an Interesting Life

So, we decided that instead of competing in the rat race for the next 30 years to buy a pretty house with lots of space, drive shiny new cars, and live the “expected life” — go to college, get a good job, have a family, and retire at 65 — we would live minimally and make ourselves financially independent before 40 so we could spend time doing what we truly enjoyed instead.

Now, this condo has turned into a more permanent space. We are able to save over 50% of our after-tax income while maxing out on 401K. We’ll do it for the next 5-10 years until we reach our financial goals. 

This Life isn’t for Everyone

We have made sacrifices by living in a smaller space and not accumulating stuff. Not surprisingly, all of our stuff can be packed up into two cars. Our hobbies are more on the intangible side such as food and travel. So, we don’t need much space. Our condo is 565 square feet, which is just enough space for all three of us (my husband, our dog, and me). Sometimes, this amount of space feels like not even enough for one person, but it’s enough for us.

Everyone has their reasons for why they do what they do. Our goals in life are to live abroad and travel the world sampling all the different types of cuisines life has to offer. To us, the way we live to get to early financial independence works for us. And we’re satisfied.

Jennifer is the founder of the blog, The 40 Year Retirees, which showcases a millennial’s journey to financial independence before 40. She loves traveling and trying new cocktails from every city she visits. She currently works in business operations for a Fortune 500 company in San Francisco, California and holds an MBA from Saint Mary’s College of California.

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