When I moved into my tiny house, I was 100% debt free.
I still am. I have expenses of course, but I pay every bill when it arrives.
The first step was to get rid of our big house in the suburbs. When we moved down to Georgia we still had it in our minds that we needed a large house with lots of space. Looking back on it, I'm not really sure why. We tried to use the space as much as we could. We entertained a lot - we would host holiday parties and summer parties. We had a couple of friends over once a week to cook dinner and watch a movie. That was a lot of fun. But ultimately having that large a house cost us more than we got back from it. It wasn't just the mortgage payments but also the maintenance and the utilities. It cost us a fortune to heat in the winter. After having the house for some time we just decided that our personal goals were not in line with having that big of a space. We sold the house and moved into an apartment in a high rise at the north end of Atlanta.
I loved our apartment. It was small - I think about 800 square feet - and I could have gone smaller. (I did, in fact). It was easy to maintain. All of the living space was in one place. And, best of all, after living there for about a year I was 100% debt free. All of the money I saved from not having to pay for the bigger house or the utilities paid off all of my other debt.
I knew I was taking a big leap at that point. I intended to quit my job so we could move to Asheville and live in the tiny house full time. This was a pretty scary move. I was comfortable and made a reasonable salary, but I was emotionally tired and burned out. I came home drained every day. But I began to pursue my real passion and quickly found people interested in my work. I do consider myself fortunate, but it also required a lot of hard work on my part. Now I live quite comfortably and I am able to pay all of my expenses while making less than I was in the corporate world.
The key to it all is reducing my expenses to begin with. Living in the tiny house made that quite possible. With our power and water all off the grid my utilities bills were $0.00 a month.
And I didn't institute austerity measures, either. We very much enjoy going out to experience the local breweries and restaurants and we didn't limit ourselves on those activities. However, reducing my overall expenses was an important step to being able to afford my own life.
I'm really not here to give financial advice - in fact, I'm the last person you'll want to take actual advice from when it comes to money. What I am here to say is that profoundly changing your life can have many added benefits. If you're thinking of making any sort of transition to a different mode of living, consider what you really want and what you really need and figure out the steps to make those things happen. If I can do it, anyone can.