The #1 Way to Substantially Impact Your Financial Situation

And no, it’s not deleting your Starbucks Rewards app and swearing off fast casual dining.

Today I want to talk about something we often write off as an immutable fixed cost: Housing. “But Katie,” you say, “I have to live in a place with an espresso bar and Peloton in the gym – it’s non-negotiable for my quality of life!”

Let’s take a journey back in time, shall we?

Finding my first apartment

Back in 2017, we revisit young, hapless, Dallas-obsessed Katie, on a hunt for her first apartment. Flush with cash from making $12/hour as an intern at Southwest, she was plotting her first Uptown apartment lease – because there’s obviously nothing amiss about someone who makes the equivalent of $24,000 per year signing a 1BR lease in the most expensive part of town.

Thankfully, my friend Rob swooped in and saved the day. He was moving to Dallas for work and made substantially more than I did. We decided to be roommates to cut back on housing costs.

Despite the fact he was a high earner, he was hellbent on not paying more than $1,000 for rent.

That may have been the first time I encountered anyone in Dallas who felt it was not only possible, but necessary to keep housing costs low. Every other young person I spoke with treated their apartment lease like their first home purchase: Unless it was in the best neighborhood, with granite countertops, stainless appliances, and walkability to the hottest bars, forget it. $1,500 per month? A bargain for a new graduate making $52,000 per year, right?

I’ve said it once and I’ll say it again: Thank God for Rob.

We ended up signing a 2BR lease at an older apartment complex in Victory Park for $1,785 per month, or $892.50/each.

The countertops were plastic, the fridge was the same one I had when I was in the third grade, and there were always rowdy pool parties happening at the most inopportune times – but thanks to that one decision, I was able to save hundreds of dollars more every month than most of my peers. (And I owe it all to Rob, because otherwise, I would’ve been in an Uptown 1BR apartment spending one entire paycheck on rent.)

And I didn’t sacrifice location to do it – we were up the street from the American Airlines Center and across the street from Happiest Hour, two major attractions in the Uptown/downtown mix.

At $892 per month compared to the average that most of my friends were spending (between $1,200 and $1,500), I was saving between $300 to $600 more on a monthly basis because of one simple decision that I almost didn’t make.

The worst part is, I can’t even take credit for it. I would’ve made a horrible choice if it weren’t for this singular positive influence (and now, I hope I can be that singular positive influence for you).

Not long after, I encountered another high earner – a software engineer who made $130,000 per year – who lived in the same apartment complex as me. I was shocked to meet someone who made more than twice my income slumming it with me at the only old apartment complex in a sea of hastily constructed high rises. “I just don’t care that much,” he’d say, “I’m trying to invest instead.”

Again, another impactful encounter. Maybe it’s not weird to live way below your means, I’d think, after witnessing most of the people I knew doing precisely the opposite.

I’ve never had a 1BR apartment or paid more than $892 per month for rent in Dallas.

…and I’ve lived in both Victory Park and Knox Henderson, two areas that are walkable to bars, restaurants, and offer ready access to the highway and grocery stores. The next apartment I lived in actually cost less; we paid $1,741 for a 2BR (and that time, it did have granite countertops, stainless steel appliances, and other fancy amenities that used to matter a lot to me).

How I always found “cheap” housing in good areas

My method has always been simple: Visit leasing offices of places that are clearly not attempting to replicate a shiny hybrid of Vegas pool party and NYC high-rise style. They’ll see you coming.

Typically, the older complexes tend to have bigger units, because they were built in a time when Dallas housing wasn’t priced at a premium (you can spot these by looking for places that are only a couple of stories high). Because they’re older, they usually rent more cheaply, and a lot of them have been renovated to keep up with the flashy newcomers that boast weird perks like eucalyptus towels in the lobby and valet parking.

When I found our previous apartment, I knew I wanted to live on Henderson Avenue. I simply walked into every single leasing office of every apartment complex between 75 and McMillan, stretching a solid few blocks, and asked what specials they had. It took approximately one afternoon of light research, and when I saw this place and its price, I knew I had a steal on my hands. Price-comparing is a necessity. Don’t just sign the first lease someone puts in your face.

I visited four complexes (which took a few hours) and was feeling dejected and disappointed before walking into that one, so I had a good sense (rooted in reality) of what the “market value” for apartments on that stretch of land was. I didn’t really use the internet at all beyond the basic pre-research – it was all done on foot, in person. People are more willing to strike a deal when they’ve got you, a potential tenant, standing in front of them.

The price range – even in the two-block stretch I was traversing – was wild. The units and amenities weren’t even that different (and obviously the location was the same), and yet I was seeing differences of between $300 and $400 for very similar units.

Don’t take the leasing agent’s word for it that you won’t find anything cheaper or better – remember, they’re trying to sell you something.

With the exception of San Francisco and New York City, affordable housing is easier to find than most people think – living just a mile away from the hottest neighborhood can save you hundreds of dollars per month (if not more), without sacrificing much.

And while it’s not impossible to save an extra $400 per month by cutting back in other categories, nothing will have more of an impact on your finances month to month than where you choose to live.

Your housing costs are likely the single-most impactful influence on your monthly costs

This is simply the byproduct of the fact that rent is usually the single-most expensive thing you’re on the hook for on a monthly basis.

And it’s even more impactful when considered as a percentage of your total income – the difference between $900 per month and $1,200 per month isn’t crazy if your total take-home pay is $6,500 a month. But if you’re making $3,000 a month, that $300 difference represents a full 10% of your monthly take-home pay.

It’s almost insulting to think giving up your cold brew a couple times a week could ever make a dent in a budget that’s bloated from an inflated housing budget.

Think about how many happy hours you’d have to give up to compensate for an apartment that costs just $400 more per month.

It’s that weird phenomenon where we anchor to a price and then view deviations from it relative to the whole (yeah, I passed calculus once – what of it?).

In other words, it’s way easier to reason with yourself on high-ticket items because the differences don’t feel that big by comparison:

“Well, this place that’s pretty good is $950, but this other place is $1,150… that’s not that much more.” When in reality, it’s a full $200 more – and that $200 difference would probably feel stark and shocking if it were tacked onto anything else.

“My car insurance went up from $100 to $300 this month! I’m not paying for that.” Why does this feel so much more egregious? It’s still $200.

We don’t consider it as an absolute, we consider it relative to the whole. But it’s still $200, or $2,400 per year.

The alternative to finding reasonably priced housing is paying through the nose and finding another way to make up that savings difference every month, which usually ends up going one of two ways:

1. Cutting out fun stuff that actually improves your quality of life

2. Not saving at all and compromising your financial success

Neither are great options, and I’ve been shocked by how arbitrarily things seemed to be priced in a medium cost of living city like Dallas. I’ve seen friends inexplicably pay $1,800 per month for a 1BR apartment in a good part of town, and other friends (who live literally a mile and a half away) pay $750 a month for a bigger place.

(And this isn’t a slam on renting – I am a HUGE proponent of renting – but renting wisely counts.)

Where you live in your city will have less of an impact on your quality of life than the amount of money you have to spend on entertainment and fun with your friends. I’d never tell you to live anywhere unsafe, but moving just a mile or two away from the fanciest, trendiest neighborhood can change your financial trajectory more than just about any amount of cutting back or cooking at home.