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Would You Live In A 150-Square-Foot Home?

Northwestern Mutual

When Ryan Mitchell was downsized from his recruiting job in 2008, the experience caused him to rethink the way he approached his life and everything in it. "I had a nice car, nice clothes, a nice place to live; I was the poster child for conspicuous consumption," said Mitchell. "But after losing my job, I began to realize that this might not be the only way to live. I had a lot of possessions that I didn't really need, and those things, in many ways, were getting in the way of what I wanted to achieve in my life."

So after being downsized from his job, he began to downsize his surroundings. Literally. And in January 2014, Mitchell moved into a 150-square-foot tiny home he built with his own hands. "It doesn't feel like a sacrifice. In fact, since my expenses will be cut so drastically, I'll have money saved and can sleep at night. I'll have a rainy day fund. And I can go on vacations and have a great experience. That's empowering for me."

Unconventional? Absolutely. But tiny homes are no longer a fringe curiosity.   Mitchell is now fully involved in the small-house movement as a consultant and builder of tiny homes. He says people from all walks of life are voluntarily choosing to reduce their living space to live more simply, live debt-free or reduce their carbon footprint. In recent years, according to Mitchell, the phenomenon is increasingly being embraced by professionals and retirees. "After their 401(k)s took a hit during the recession, they're looking at the financials and realizing that living in a tiny home will allow them to retire."

So what exactly is a tiny house? While they vary in size, shape and design, a typical tiny home is between 150 and 400 square feet. Also known as micro homes, mini homes or small homes, these tiny dwellings are designed to be fully livable with kitchen and living areas, a bathroom (typically with a composting toilet), a closet and sleeping loft. "People build tiny houses with a great design aesthetic and using high quality materials that, in many ways, surpass traditional houses," said Mitchell. "The creative design allows us to compensate for the small space."

Mitchell estimates there are currently between 1,000 and 2,000 tiny homes in the United States. Many are built by homeowners based on plans available from a growing number of tiny-home design and build companies. Do-it-yourself construction of a well-appointed tiny home, he said, will typically cost between $15,000 and $25,000. Most micro homes are built on flatbed trailers, which are then parked on land the homeowner either owns or rents.

Of course, tiny house living isn't for everyone. But, according to Jay Shafer, who co-founded the Small House Society in 2002, the movement isn't just about square footage. In a recent documentary produced by faircompanies.com, he noted, "I want to make it clear that I'm not talking about trying to shove every family of four into 120 square feet. When I talk about small houses, I'm talking about houses where all the space is being used and used well. When you get rid of all the stuff you aren't using or don't need, it's easier to see where your happiness lies."

The 'bigger isn't necessarily better' shift in thinking is one that seems to be catching on, according to Mitchell. "More and more people are waking up to the fact that they want to live lives that have meaning," he said. "They don't want to be saddled with a huge mortgage, and living simpler is one way for them to achieve more of what they want in life."

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The Northwestern MutualVoice Team is a group of professionals who share insights and opinions from experts and industry leaders across the enterprise. Our vision is to inspire others to take action and plan for their financial future through topics ranging from financial planning, retirement planning and distribution strategies, wealth accumulation and preservation, to leadership, philanthropy and innovation.