House Hacking to Defeat Credit Card Debt

Being in credit card debt is one of the worst situations in the world. There is nothing fun about the incredible power of compounding working against you.

We must employ extreme measures to get ourselves out of dangerous credit card debt. We will struggle if we are trying to “work more hours” to clear our name.

My debt story. My wife and I lived an ordinary lower-middle-class life when we had our first child. My car cost $2,800 and hers $3,800.

Passive Income Road Trip #1: Financial Mindset

We paid too much for our house in 2008, which started our downfall. We lacked financial guidance and assumed a massive mortgage on our home.

We didn’t realize the true costs of owning a home until it was too late. As we raised our kids, the costs of having fun, maintaining a home, and working our jobs slowly eroded our savings.

As a military family, my wife would lose her job every time we moved. This caused additional strain on our finances.

Eventually, in 2019, I reached my breaking point. My car was in the shop, costing $2,000 to repair. My credit card had a $25,000 limit and a $23,000 balance; enough was enough.

Successful People Need the Most Help

Turning it around. After struggling to pay for that car repair, I explained to my wife that something had to change. I recommended getting a roommate, and this conversation changed our lives.

We tallied our total debt, and it came to $77,000. Luckily, we didn’t have any student loans or other nasty debts. We had a couple of personal loans and credit cards.

Within two years of renting rooms, we went from -$77,000 to +$150,000 in our bank accounts. That’s the tremendous power of renting rooms.

The magic of house hacking. The magic of house hacking is that there are many ways to achieve your goals.

Dividend Investing in Your 40s

Before house hacking, I recommend reading “The House Hacking Strategy” and “The Book on Managing Rental Properties.”

“The House Hacking Strategy” discusses the math behind renting rooms and hacking. The numbers don’t lie. When you house hack, you are essentially earning double returns.

Doing the math. For example, let’s say your mortgage is $2,000, and you rent two rooms for a total of $2,000. The fact that you are living for free increases your returns significantly.

It may sound strange and hard to describe, but you’ll feel it instantly. You’ll see more money in your bottom line than you can imagine.

Managing tenants. “The Book on Managing Properties” will help you organize your books and prepare to handle tenants.

Saving for a House Down Payment #1: Single Person, Small City

There is nothing fun about becoming a landlord, managing tenants, and caring for rental rooms. However, it’s all part of the game if you want to be debt-free and stress-free.

You will want to learn how to deal with late payments, evictions, and destructions. Don’t be intimidated by these terms; you’ll get the hang of it.

Many ways to achieve your goals. There are many ways to house hack, even without having tenants. Let’s review some paths you can take.

1. Renting rooms. This is my favorite way because it is the most accessible. You can also rent spaces to family members or friends to achieve better results. Ensure you establish the rules ahead of time.
2. Multi-Family Properties. Buying a multi-family property is more complicated than renting rooms because finding these 2-4 unit homes is tough. Read the book “The Multi-Famly Millionaire.”
3. Airbnb rooms or homes. You can put your house or individual rooms on the short-term rental market via Airbnb.
4. Renting storage space. You can rent your garage, parking spots, land, or barn houses for additional cash.
5. Adding tiny or mobile homes. If you have a decent-sized lot zoned appropriately, you can add mobile, tiny, or shipping container homes.
6. Accessory-dwelling units. California is one state that wants you to add an accessory dwelling unit (mother-in-law home) to your house.

Renting rooms to pay off debt. The trick to renting rooms is not to add the additional money to your budget. 

Don’t Fumble the Bag

You first want to pay down debt as you receive your sweet rental income. Once you finish your debt payoff journey, then you can fund your income-investing portfolio.

The magic of rental income. The house hacking income will defeat your credit card debt faster than you can imagine.

I especially like renting rooms because it doesn’t require additional work from you. As long as you find a good tenant, this is free money from heaven.

Treat your house hacking as a business. Many people rent rooms but don’t take it seriously. The higher quality of your room, the more money you make.

How to Buy Expensive Homes Safely

You must keep your common areas clean, ensure the room has nice extras, and give your tenants some cabinet space in the kitchen.

Most people will never have roommates, but then again, most people will never become rich. My wife and I own three homes and have $300,000 in the bank.

All this is possible because of the decision to rent rooms. As housing becomes more expensive, only the rich will be able to afford single-family detached homes.

Changing your mindset. You must adjust your mindset to take part in the sharing economy. The more people you serve, the richer you become.

The Magic of Remote Work

The good part is that you don’t need roommates forever, only for a season. Within five years, you will have at least $100,000, on top of being debt-free. Chances are you will have much more.

You may be embarrassed to have roommates, but people will be jealous of your cash flow. To get different results, you must take different actions.

Conclusion. Renting rooms is not for everyone, but there are other house hacking methods to suit your needs. You must think outside the box to get out of credit card debt.

Passive Income for Everyone!

You can start a community garden on your free land or run a dog park. There are unlimited ways to turn your home into an income-producing asset.

The only thing holding you back is your mindset. Keep reading books; eventually, new ideas will spark inside your brain.

Credit card companies use complex formulas to add more money to your balance. Therefore, you must use your brain to find simple solutions to overcome debt.

I’ve been under the tremendous weight of credit card debt, and it’s not fun emotionally or spiritually. To get free, you must serve others. You can do this! Good Luck!

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