Tuesday, May 15, 2007

How To Keep Your House

Well, it has been a few weeks of really nasty economic news for poor folks. To recap, we've been told that gas will probably go to $4 per gallon (which many of us laud as a good thing, but is effectively the 'screw the poor' method of encouraging conservation), with a decent chance of shortages, that Con Ed here in New York will raise its electric prices by 12%, that a minimum of 1.1 million additional foreclosures are expected next year, that the price of food is up 12% in the US (and more than 25% in poor nations where people already spend 60% or more of their income on food), that in Boston 8,000 people stand to have all their utilities cut off for non-payment and that pretty soon the Southwest is going to choose between having power and water to drink. Plus, of course, there's the IPCC mitigation report, which does not quite add up to "we're all gonna die" but given that the world target figures of even the most ambitious nations don't come near making the full cut in in the full amount of time, are not good news. Oh, and guess what - clean coal, always an illusion, just got a little more illusory, with coal peaks in the next 10-20 years according to two seperate analyses

A few months back, I wrote an essay about how likely it is that many of us will not have grid-supplied electricity in the future, not because I'm prognosticating the apocalyptic end of the grid, but because we won't be able to afford it. The essay is here:

http://casaubonsbook.blogspot.com/2007/02/it-isnt-gridcrash-that-makes-lights-go.html if

anyone is interested. Unfortunately, I think this is one of the predictions I've made that is turning out to be right - as energy costs rise, a (at first) small but increasing number of people will be priced out of fossil fuels altogether in the US, just as many of the poorest people in the world are losing their access to fossil fuel due to rising prices. Most of the people who read this blog probably haven't been affected yet. But give it time.

You must be wondering why I'm going on about utilities when this post is titled, "how to keep your house." But the two are connected. When people lose property to foreclosure, they've often already gotten themselves in deep in other ways as well. And sometimes, the problem ends up being that you have to pay so many other high priced bills that you can't pay the mortgage. But there are ways to reduce the sheer number of bills you have to pay, including turning off your utilities.

Now on to the official subject - what happens if you are one of the million (s) of people who stand to lose their homes in the next year or two, due to rising interest rates, a stumbling economy and inflation for everything else? Even if you don't think you fall into this category, you may yet be surprised. So far, job growth has merely slowed - we're not seeing large scale layoffs. But it doesn't take much to tip the economy into a real recession, and most of the major economic figures are now starting to predict one. Given the confluence of unpleasantness facing us, do you really want to bet your life that you'll keep your job? And how long could you keep up your mortgage payments without a salary? Or what if your employer drops health insurance and other benefits - how long before the costs of meeting basic family needs made it impossible for you to keep up with everything else? Americans are very poorly prepared for the coming crisis - they are overwhelmingly in debt, have little or no savings (the average Baby Boomer has less than 10K saved for a rapidly approaching retirement - and they have more than the rest of us), and has a large mortgage. American national savings rates are at -.5, but that's actually misleading - the savings rate doesn't count in the costs of housing, which are wildly inflated. So the amount we're overspending our income, some analysts estimate is really more like *5%* annually - that is, Americans are spending significantly more than they earn every single year. With the dollar falling, we can expect to see prices rising for a good long time. That's the makings of a real mess. So none of us should be too complacent about what we have.

First of all, I hate to say this, but you should think seriously about whether your house is worth saving, or savable. That is, before I offer any suggestions on how to avoid being foreclosed upon, take a clear eyed and hard look at your life and think about whether you want to even try. Because there are some people who are going to lose their houses anyhow, and others who may be pouring good money after bad to keep something they don't need.

The questions you should ask yourself are these. Did I buy my house at the price peak? Because if you did, sorry to say, there's a good chance you'll never regain your equity. So you need to ask yourself, do you want to spend 30 years paying off a house that cost too much? Will you be able to pay it for the next 30 years? Can you afford this house? Think seriously about this one. But, you say, I can't get my house price back. Well, but if this is a long term decline, you won't be getting it anyway. Are you prepared to see equity drop even further, to stay in your house for a decade or more, or to take an even bigger loss? Sometimes it is better to cut and run.

Did you put much money down? Do you have an ARM (adjustible rate mortgage, or g-d forbid, an interest only loan?) And how much of your income goes to this mortgage? If it is more than 1/3 of your household income, and you absolutely need both jobs to pay your mortgage, while having little or no equity, you should start looking for a buyer today. Because the odds are good that sooner or later you'll lose your house - or be trapped in it forever, scrimping and struggling to own a property that will never be worth what you paid for. It is always better to get out on your own terms than to have the bank foreclose on you. Even if you lose some money, it is better than your losing everything you've paid into the house up until now.

Remember, banks don't really want to own houses. They don't like foreclosing (although they don't dislike it so much they won't do it, unfortunately.) And they also know that the longer they can keep you paying for something, the better off they come out in a foreclosure situation. So they are likely to be extremely "kind" for a good while, offering to lower payments or help you out with late ones. But only you know if this is real kindness - there's nothing helpful to you about you paying a lot of money to the bank that you'll never see again, only to lose the house later. Again, if you think you will have to get out, do it on your own terms.

Do you want to live in this house for the long term? If you bought this house in the hopes trading up, if it has no yard, or is in an area with restrictive covenants and high property taxes, if it is house that shows off your lifestyle more than meets your needs, perhaps getting out and buying a much cheaper property somewhere else is worth it.

Remember, there are areas of the country that are not overvalued. And even if that means changing jobs or careers, you might have a better, more secure life if you lived less on the financial edge. We tend to think that our jobs and careers are non-negotiable - "I have to live here - that's where the jobs are." But there's no need to fetishize your job - it is, presumably, mostly how you manage to keep body and soul together, not the whole reason for your existence. And if that is true, consider carefully whether you might not be able to live as well somewhere else, being paid a bit less or doing something somewhat different. Obviously, this won't work for everyone, and there are those for whom a job is a passion. But if your job isn't your life, and you live in an expensive place, and are already concerned about keeping up, think seriously about going somewhere cheaper. Salaries will be lower, but then, so will costs.

But assuming that you do want to stay in your house, but that you are already struggling or forsee difficulties, how do you do it? Of course, the first thing is to get the heck out from under any other debt you have if possible. If you can see this coming while you still have an income, then the first thing you do is cut *WAAAAAAYYY* back on everything. That means no more meals out, no more cable, no more keeping the heat and a/c at 70, get rid of the car with the payment and replace it with a junker or take the bus, buy everything used that you can, and don't buy much of that. Get rid of the dryer and line dry your clothes Plant a garden and eat that instead. For many of us, this isn't news. For the rest, this will be hard. You won't die from it, though. Divide the money you save (track it!) into two funds - one savings, one debt reduction. Pay off the highest interest rates first. Consider consolidating to a short term 0% interest credit card, and then paying it off diligently.

Are things more urgent than that? Are you starting to feel the pinch already? Well cut back some more - sell the computer, and give up the internet - go to the library instead. Find a carpool and give up your car. Dump the tae kwon do for the kids, and teach them to cook from scratch and play pick up soccer instead. Go vegetarian. Give up luxuries like coffee and beer. Make your fun at home. Turn the thermostat way down (or up, depending on whether we're talking about heating and cooling), cut the water bill by limiting showers to 3 minutes. Again, use the money to pay down debt and build some savings.

But what if you are already in trouble - the utility people are threatening to shut you off, the mortgage people are threatening to foreclose, the bill collectors are calling day and night? What then?

First of all, the bill collectors can't call you if you tell them not to. Tell them not to. And don't panic or go into denial. It is easy to feel that you "just can't deal" with all of this, or to be so ashamed that you can't focus on fixing it. Right now, people are getting poorer - real incomes are falling, inequities are rising. If you are one of them, you should not buy into the notion that you are a bad person, who is making bad choices. And if you have made bad choices, remember, all of us have. So forgive yourself, resolve not to do it again, recognize that this isn't your fault, or wholly your fault, and get your butt in gear and concentrate on ensuring yourself a stable place to live. One of the most remarkable things about American culture is how much we blame poor people for being poor - we isolate them, tell them it is a moral failure and that they are scum. DON'T BUY IT! This is the beginnings of a systemic failure, and if it is hitting your before your neighbors, that's probably mostly bad luck. Even if you made mistakes, everyone does - yours just hit you harder.

Second of all, if things are that dire, make an order of priority. First is food. Get the cheapest healthy food you can - don't live on ramen noodles. But buy whole grains and beans and live on bread and bean soup, along with the dandilions from your yard and produce you buy at the very end of the day for bargain prices at the farmer's market. Second, is needed medicine. Every state now has insurance programs for poor children - get your kids on them. Check out drug company programs if you are genuinely dependent on some medication. But also think about whether you really need what has been prescribed for you - we are the most overmedicated people on the planet. Yes, I know that you are about to say that you really, really need your drugs. And maybe you do. But think about whether if you could rest more or live differently or relax a little more you might not be able to get away without things. Remember, Americans use the health care system more and take more drugs than anyone in the world - but other places have longer lifespans and higher qualities of life. It may be that a little less medication would help. Or perhaps you could choose a cheaper, older drug. Talk to your doctor about this, and don't mess with it on my advice alone, of course.

The next thing should be your house - the reason you should keep your house (assuming it is worth keeping as above) is that the land you are on allows you to grow food, the house is shelter, etc... So you need to keep your home and garden going. Make sure you are planting every inch of lawn with fruit trees, bushes and gardens. You'll want to eat that food. Call up your extension agents and ask if they can help you find sources for divisions and inexpensive seeds, or hook you up with a garden mentor. Every dollar you don't spend on food is one you can put towards the mortgage. If you are older, and can't do as much, call your local garden club or 4 H and explain your situation - tell them you need to garden, but can't put one in, could some nice strong teenagers help you out.

Consider adding more people to your house - allow a friend, college student or relative to come live with you in exchange for a small rent. Or perhaps you could take in a local elder who can't live independently, but can meet most of their own needs. Those giant houses we've been building all these years of the boom - the problem is that there aren't enough people in them

If you have children, talk to them about what's going on, and enlist their help. Any child over 10 can work to meet some of their own needs, or even give a little money to the family to help. I know, you don't want to do that - you don't want to worry them, you don't want to ask your kids to help support the family. Well, I'm going to be blunt. First of all, they already know things are dire - they aren't stupid. What they may not know is exactly what's wrong, but unless you are very, very gifted at denial they've already felt your fear, seen your stress, heard you fight, etc... So sitting down and talking to them (at an age appropriate level) can only make it better, and help them work out their own anxieties. And giving them something productive to do, while valuing their contribution, is actually good for them. I don't mean that your kids should quit school, but saying, "It would be a big help if you would mow lawns for your snack and activity money" or "If you could watch your sister so that Daddy could look for a job, we'd be grateful." One of the real problems our society has is that children don't do enough work, and they don't feel valued. Let your kids help you out of this one. You may worry it will scar them to have to give up activities and go to work - once upon a time, we used to call this "building character." I suspect we will again.

Sell stuff. Don't just turn off your freezer, sell it. Get rid of the big appliances. Get rid of fancy, newer stuff and replace it with cheaper older stuff. It may not seem like selling those new sofas would be worth it, but if you can get $250 off of Craig's List, and then get another for $50, you are $200 ahead. To be blunt, the whole nation got into an economic mess by looking at pretty pictures and thinking "I want that. I should have that." Well, we need to go back to houses that reflect our real standard of living - poorer. That's no shame and we'll have to get used to it. And while we're at it, stop reading the catalogs, the magazines and watching tv - don't look at the pretty pictures that create desire.

Because mortgage payments and property tax assessments are such a large part of your costs, the idea is to cut back wherever you can elsewhere. You may be able to reduce your tax assessment if property prices have fallen in your area. Consider requesting a new assessment.

And you can (you may not like it much) cut back in a myriad of ways. That is, it is perfectly possible to continue living in your house without electricity or heat in many cases. It won't be easy. But if you consider you consider your house worth it, think seriously about it. The average American could save more than a thousand dollars a year by giving up utilities. First you minimize, but if things get tough, turn it off. You can keep cool by sitting outside in the shade with your feet in a 5 dollar kiddie pool, and turn off the a/c. You can keep warm by bundling up, moving around a lot and drinking hot tea. There's no reason for anyone to ever die of heat stroke or cold in a house - I know it happens all the time, but it doesn't *have* to.

Most people who die of heat stroke are elderly, small children or disabled, and they don't realize they are becoming stressed and confused. But with simple attentions, things as basic as cool cloths and a footbath can keep someone from overheating in very hot weather, and warm clothing, moving around, hot stones or hot water bottles and blankets can keep you more than adequately warm in the cold. It takes preparation and thought, but you do not need either heating or cooling to live - as evidenced by the billions of people who live without them.

You do need water, and that may mean electricity. It also might mean a hand pump, if you can get ahold of one. They cost a few hundred dollars, but can pump water up from 200 feet down by hand. Or some rainbarrels (food grade only), or even a hand-dug cistern (dig a deep hole, line it with stone or cement, let the water wash off your roof into it. Don't drink it without filtering. Consider a handmade composting toilet. John Jenkins's _The Humanure Handbook_ is available for free download online - google it, and try building one. It really requires only a bit of scrap wood and a five gallon bucket, and is easy to do. I would reccomend being quiet about it, though.
And *do not* skimp on water for washing hands - your health depends on this, and you can't afford to get sick.

I'd keep lights and a stove as long as possible, but it is possible to do without even these things. A simple solar cooker can get you through the summer, and you can build an outdoor oven for the winter - make it with bricks or cement, and use little bits of wood and kindling to get it hot enough to bake/cook stews and casseroles in.

Get a push mower for your lawn, so that the neighbors don't complain too much, if you can, or quietly go to a neighbor and work out a barter arrangement to borrow their mower. I mention this not because I care about your lawn - personally, I'd rather see it turned into food plants - but because your neighbors are more likely to remain your allies if they are aware you are paying attention to their property values.

This will not be easy or pleasant. The one thing I would do is caution you to avoid letting people know that you have turned off your utilities. There are a few cases of over-zealous social workers taking children out of homes without power because this is a necessity. A Mennonite family I know approached a social worker in my state about wanting to adopt disabled kids, and were told that they could lose their own children for not having running water. Later on, they were told this was not true, but this isn't something you want to mess with. Try and avoid making a big public thing about this.

On the other hand, feel free to make use of support programs and other resources if necessary. If your kids need school lunches or breakfasts, get them. If you can't buy clothes, check the free bin. If you need food, don't be ashamed to use the food pantry. Just remember - pay it back and then some when you can. Because the next time, it will be your neighbor.
Ultimately, the moment you know your house is in danger, you should go into triage mode - first, decide whether to keep it. If you are going to keep it, make your focus ensuring that that can happen, and recognize that everything else is secondary. You can do this - the life you are changing towards is likely to be familiar to many of us in time. And it is eminently doable.

I hope this helps someone.



mimulus said...

Hi sharon,

I have been a lurker for some time and really enjoy the blog. I gotta say though i think selling your freezer is a bad idea....providing it is a modern energystar model that is. We have a smallish chest freezer that is always loaded with frozen tomato sauce, freezer jams, berries, soups etc made from the organic produce from our garden. We also buy grass fed beef and lamb from our neighbor and it goes in there too. Our electric bill total runs $10-15 a month for everythign (computers, lights, appliances)...so teh freezer I think more than pays for itself.

But on the whole you are right on about all else (although I hope I can keep drinking my daily cup of coffee.) Many households have alot of "fat" they can cut from the budget and direct those savings to real necessities: paying down their debt, investing in better insulation, more energy efficient appliances, etc.

Anonymous said...

I've been a lurker too and, coming from a totally different background (small country in Europe), specially enjoy your opinions and solutions. I'm not well educated into peak oil or most related topics, but am astonished at how most things you suggest we should do were things we generally and naturally did when I was growing up (I'm 37). It was a much poorer, closed country than it is now, and although the quality of life has generally improved, somethings are definetely worse now than in the 70's.
Some other things remain. I liked this post specially when you suggest all those "alternative" activities for children.
I mean, pick up soccer is the rule here. Nobody has soccer classes or practice or whatever you call it in the US. Also, kids walk to school, take public transportation etc; work on their holidays (well, some do work and go to school since 7 or 8 years of age, because of poor economic situations) etc.
Somehow I think we still have a lot to go in the wrong direction before we turn back to these old practices, that nevertheless are being exchanged for more modern, US-like ones.
So you think it is possible to tottally overstep this stage and, before things get really bad, prevent them from stating to go bad?

Marta from Lisbon (Portugal)

Anonymous said...

This subject keeps me wide awake at night, saucer-eyed, listening to my husband's snoring. Our course of action is to bulk up our savings. Bye-by health club membership (gardening and walking will keep us in shape), trips to Borders (why not the library) and the mall (oh the treasures of a second hand store!). We got a deal on our house, put twenty percent down, and STILL have a substantial mortgage. I can't imagine being upside down on a mortgage or anticipating an ARM reset--how incredibly stressful. Everyone who reads your post could take something useful from it. I don't see how someone could read your post and not take some type of action. Thanks.


Anonymous said...

Good post, as I was reading I thought take in a boarder but of course you thought of it too.
Dh and I are naturally cheap almost an embarassing thing to be in the 80s, my kids were often not pleased with no name shoes :).
They are both adults now showing some signs of sensible money management :).
I read something somewhere something like "how to have lots of money", "keep it". In other words don't spend the money you worked hard to get. I know we all have to spend some. It still boggles my mind the money folks spend on coffee and purchased meals daily! I'd be lying if I said I never buy those things but not daily, usually not even weekly.
I spent most of my children's growing up years with two good friends who could/can outspend me, honestly I was never really threatened by them. One sort of got her big financial picture in order the other would be so on the street if tshtf its not funny.
One Christmas I spent most of my shopping days with one of these gals she had one daughter at the time I had my two sons.
I felt like I bought way way less felt maybe too little. On Christmas day my oldest approx 6 at the time said "I think Santa emptied his bag here" That was an eye opener, kids can get used to having it all. My kids never got much extra stuff during the year so Christmas seemed like a big deal.
One of my tricks when shopping is to "think about things". Then prior to purchasing think do I really need this? I have not bought a lot of stuff this way and yes I have bought stuff I should have thought harder about :).
ps I keep trying to sign in with a user name and it keeps erroring my password. I should be greenhillfarm :)

Anonymous said...

Second the comment re: user name- I look ago gave up trying to sign in-being rejected all the time is bad for my psyche;), and have just become anonymous......

anyway- great post as usual. Lots of "meat"there for everyone really. It has been said that the best way to double your money is to fold it-and stick it in your pocket! a certain amount of truth to it- the whole "a penny saved is a penny earned" bit. I have found that the only way I can actually "save" money is through automatic investment. If your employer offers electronic payroll payments- you can likely arrange for a regular amount to be deposited in a savings account, credit union, etc. Or- if not- or self-employed as I am, I use an e-bank- there are several good ones now-and have money removed monthly from my checking account and put in an e-bank savings account. You won't miss the money- especially if it comes straight out of your paycheck. And the savings will accumulate- even $100/month adds up to $1200 in a year, plus interest. This was how I was able to buy land and build a house as a single Mom. Also- I adopted many of the behaviors you described- I didn't eat out, brought my lunch to work, made my own coffee even at work, didn't shop for clothes, etc-

Don't go shopping is a really good idea btw- only go to a store for something specific. Don't go for something to do-weed the garden or take a walk or read a book if you need something to do. Talk to a friend for "therapy"instead!

I also found incredible help from "Your Money or Your Life"- I followed many of the steps in this book- it was amazing what I found- I did the one where you record every penny that you spend and every penny you earn in a little book- fascinating. I reccommend it highly- it changed my spending habbits and the whole way I related to money.

I think the average American has a great deal of "fat" they can cut out of their budget- most people buy stuff because they think they need it or their kids whine for it(ditch the TV too- less exposure to ads). It takes a certain amount of backbone and willpower to swim against the tide of our cultural consumerism-but it's worth it. My house was paid for years ago- I still have maintainance expenses and it will never be "finished" but so what? I know that some of my neighbors look down on it as it's not as fancy as theirs but I have the luxury of doing work I believe in-and not scrambling as much to pay the bills. It's a good feeling.


Anonymous said...

What get's me worried is that the housing market is still inflated at the moment, so that if we buy a house with some land (max 1 acre, land is very expensive in my country) we will have to pay an enormous amount for it. That scares me. On the other hand, staying where we are with our tiny garden is also scary, considering PO. And yes, we have savings and no debt other than mortgage, we live frugally. Still, we feel stuck.


Anonymous said...

Why not just blow your brains out and get it over with.

Anonymous said...

Do you have any thoughts on how to be not completely doomed when housing and energy get tight if one rents? We're both still in grad school (though luckily my boyfriend is at the stage where he gets paid to be a doctoral student rather than accumulating more debt), so while we could blow our combined savings on a house payment, that just doesn't seem like a sensible idea given that we don't have actual careers yet. We get along well with our landlord, who lets us grow stuff in the front yard, and don't have any debt other than my student loans, which I figure puts us somewhat ahead of the game for grad students. And we're eagerly awaiting our first harvest share from the CSA next month, so I figure we wont't starve any time soon :-)

RAS said...

Hey Sharon,
Good post. I hope you don’t mind me adding some tips to yours. I grew up in really deep poverty (including being homeless for long periods of my childhood) so I knew how to survive. I’m also fairly poor now, having given up a good-paying career to go back to grad school. So here’s some ideas:

-What can you do to make some extra money? Pretty much everyone can make/sell/do something off grid to make money, at least while the economy is still humming along fairly well. Can you mow lawns? Start a lawn mowing service in your neighborhood. House or pet sit? You’d be surprised what people will pay you to water their plants and bring in the mail. What about crafts? Can you make anything, and if so, will people buy it? I make homemade, all-natural soap and lotion for my own use. The commercial stuff is icky. After I went back to school I started trying to sell it, and guess what? People buy it. I don’t make much off of it, but it buys my groceries.

-Garbage dive. No, I’m not suggesting you should hop into dumpsters. (Unless you want to, that it is.) I’m talking about picking stuff up off the side of the curve, and either selling it or using it. You would be really surprised what people throw out there days. A short list of stuff I’ve gotten in the past month or two: living plants, patio chairs, shelving, paintings. I’ve also seen shelves that were two big for me to carry (but perfectly fine), a 48” plasma tv (thrown out by a couple down the road who got a bigger, 60” plasma –and the 48” was carried off by a couple of guys in a truck), an antique chest, a big, old-fashioned coat rack, etc. Much of the stuff is in perfectly good condition, and doesn’t even need to be cleaned up.

-Lights and cooling: Open the windows, and use a lot of fans. I haven’t had to turn on the AC yet and we’ve had a lot of 90 degree days all ready here in Alabama. Stop using the dishwasher. Limit your showers, and don’t take one if you’re not dirty. Wear clothes until they’re actually dirty before washing. Change out all your bulbs to CFLs, or better, limit the amount of lights on at night –I only turn on one at a time, and that’s invariably a lamp on my kitchen table, unless I’m cooking and need to see. My utility bill was $55 this month –that’s for power, water, sewer, garbage pickup, and taxes. And guess what? Twenty bucks of that was the garbage pickup and the taxes. If my bill goes any lower, the TVA is probably going to audit me.

-Cooking: one pot meals can be really, really healthy. Check out the recipes on Hillbilly Housewife. http://www.hillbillyhousewife.com/ (For my fellow non-Christians, ignore the religious aspect; the recipes are good and cheap.)

-Transportation: If you absolutely have to have motorized transport to get around, why not look into a moped or a motorcycle?

Anyway, that’s my input. Thanks for another good post Sharon!

Correne said...

I just have a question about reducing electricity or going "off-grid". Everyone around here uses natural gas to heat their homes (and yes, we really DO need heat here - for at least 5 or 6 months of the year).

If everyone switched to using wood stoves to heat their homes and cook their food, wouldn't burning wood cause a lot of pollution, and the loss of A LOT of trees? I know that forests are technically "renewable," but I don't think it would take long for us to destroy most of what we have left.

BoysMom said...

A really easy way to make some extra money, if you are home with children, and your state permits, is to watch someone else's child with your own. If the child is reasonably close in age to yours, it is no extra work (except for extra diaper changes if a young one, or bottles for a baby), the child will just do what yours are doing.
This service is probably going to be even more in demand as times get rougher, unfortunately, all the single parents out there have to have childcare in order to have jobs.

Alan said...

Here is a link to a great Saturday Night Live skit that is perfectly apropos of this discussion of getting out of debt:

Paula said...


Thanks Sharon--I really enjoyed this post. I think that we've made a good decision not to plunge into a mortgage right now.

When this housing bubble started a few years back, my husband and I began looking for a "starter" home. We couldn't touch a house for $100,000 and we live in an economically depressed area (average annual salary per person is under $30K). Now I don't call $30K a drop in the bucket, but a mortgage on that income is literally a joke unless you've put down 20 percent at closing. I personally know just one person who had this much saved up when he bought his home.

The housing market here in Wisconsin has not cooled one bit. And unfortunately, my area of the state is aquiring the overflow of St. Paul/Minneapolis. People are coming out here, building $300,000 and up homes, and driving into the Twin Cities for work. As a result, property taxes are skyrocketing and the average price of real estate has doubled over five years' time.

We are saving diligently and hoping we can purchase land from a family member one day. At that point, we may do some "green" constructing of a home. We will only do this with cash--no borrowing. We have gardens per our landlord's permission and have began an additional community plot with other renters. It's great!

If I could give any advice for someone trying to save money/get out of debt/buy a home/save a home, I would say, read "Your Money or Your Life," by Joe Dominguez and Viki Robin. This book saved my life and taught me many valuable lessons. (I was once a senior in college with $27,000 in student loans and consumer debt). I also would recommend any/all of the "Tightwad Gazettes." These are great reads if you are looking for innovative, money-clutching ideas.

Gotta go. We're planting squash and cukes today!! It's going to be a nice warm day in northern Wisconsin!

jewishfarmer said...

Thank you all for the good suggestions. Mimulus, I think the value of a freezer depends on your situation - freezing may well be worth more than the electricity, but there are lower energy ways of preserving food that would allow you to sell the freezer and turn off the power. It all depends on how dire the situation is.

Paula, I did want to comment that I'm actually not opposed to all mortgage debt, and I'm not convinced that the "pay as you go" scenario is always the best one - which isn't to say it is not much better than getting into massive debt. My personal recommendation, though, if housing prices aren't insane, is to take out a reasonable mortgage and pay it down faster. Here's my reasoning - the sooner you get on your land and into basic shelter with water and basic needs met, the faster you can start improving it. All the stuff we're doing takes time - garden soil improvement, seeing perennials and fruit trees mature, getting to know the lay of your land, building community and barter relationships. So while I agree with you about not buying at high prices (and sympathize - I live in a similarly poor area that has seen price rises for the same reasons,) I'm not sure waiting until you have enough saved to do it without borrowing is always a good thing.

BTW, my area seems to be considerably cheaper than yours. If you aren't too tied by family connections, you might consider relocating. A small but quite usable house on a few acres can be had near here for well under 100K, if you are willing to live in a rural area.


Pat Meadows said...

Hi Sharon,

From the title I thought this post was going to be about housekeeping - i.e., how to keep your house tidy, clean, etc. Noooo. Wrong again, Pat. :) (Just thought you'd enjoy this thought.)
Pat Meadows

jewishfarmer said...

Pat, I'm about to shock you, I know ;-), but I am pretty much the last person who should ever tell anyone how to keep their house tidy.

Sharon, who has an official nickname for the cheerios on the floor ("floorios")

Paula said...


I must have sounded a little anti-mortgage back there. Actually, I think a mortgage is an good debt to have as long as you can live within your means. Unfortunately, many households around me have two people working and still live house poor.

We may take on a mortgage if the conditions are right. That is, if we have 20-30% down plus some fixer-upper cash. In Western Wisconsin, however, it is tougher to get a country home on an acre than a house in a small town. I haven't seen much of anything decent sell for under $160,000 in the country. And then you have the commuting issue; gasoline is ruminating at $3.29 per gallon. The further out we are, the bigger our wallets are hit in the transportation category. So do we really want to live way out there with limited job prospects?

This all brings me to my point. We want to buy land for cash (within two years) and start planning, planting, camping on it, etc. When we have saved a bit more, we will go ahead and slowly build a home to our liking. This will take some crafting and manipulating, as zoning laws can really suck these days. What's nice is, as long as we own the land free and clear, the bank's jurisdiction of our property is eliminated. No PMI (mortgage insurance), no contruction time limits, etc.

We've determined that if we can build a home this way, our outside employment requirements would lessen over time. We could then be working and producing right off our own land.

Thanks for all your encouraging posts.


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Thanks so much for always giving me lots of food for thought. I wanted to suggest a housing alternative to people. My husband and I sold our too large house about 2 years ago. We bought five acres and a travel trailer. We then put up a metal building so that we could do rainwater collection. We built a small apartment inside as we had the cash to do so. Metal buildings are relatively inexpensive. In some areas you can buy 1000 square feet for about $4000. You will have to pay for a foundation and plumbing, etc. A septic tank will set you back some money and it varies depending on the area. If you can erect the building yourself you will save around 10K. When we began this journey, we had grand ideas of building a large "dream" home, but now we have become addicted to our simple lifestyle. We love not having a mortgage and we only build when we have cash. In the beginning we built a tiny apartment inside the metal building . We thought this would be the guest house, but we decided to add another bedroom and call it home. We have only one child so having one bathroom is not a hardship for us. I grew up in a home sharing one bathroom with my parents and two other siblings so having 3 bathrooms in our house was a luxury that I find I don't miss. Unfortunately, we will need to wrap our metal building in limestone because our home owner's association is getting peeved with us, but we wouldn't do it if it was left up to us. The upside to this is that it will provide even more insulation from heat and cold. I quit my job to stay home with our daughter and this lifestyle enables me to do that without feeling a pinch in our finances. I no longer miss wearing suits to work each day and trying to keep up with fashion, spending hundreds of dollars on my hair, etc. I love this life, it gives me many more gifts than our yuppie lifestyle ever did. I hope more people consider giving some of your suggestions a try. I think after time, they will realize many rewards.

Paula said...


I like your idea for a housing alternative. I have heard of people doing this, and there are a few built like this in our county. My husband mentioned doing this very thing a few months ago.

We have a chain home improvement store around here called Menards; I'm not sure if it's all over the US or not. Anyway, they sell garage and small pole shed kits from about $6,000 to $40,000. My husband said someone he works with bought a $12,000 garage kit, put in septic, a foundation, and a well for about $60,000. This includes the land. It looks like your average ranch-style home. Definitely sounds easier than the national average price for a home!

We are looking into many alternative housing projects to see what would suit best. You kind of have to take the land into consideration, aesthetically and utility-wise too, I think.

Congrats Pea, too, on converting to a simpler lifestyle. This is my goal as well. We have kids and don't enjoy daycare centers. We will do anything to avoid losing time with our children.

Search Engine Leicester said...

Very Good Article!

Just to re-iterate a good question someone asked: Do you have any thoughts on how to be not completely doomed when housing and energy get tight if one rents?

Philip said...

Your readers may be interested in the launch of CardIt. It's a new website that enables responsible homeowners to pay their mortgage with a major credit card. With some breathing room, they can hopefully avoid selling their essentials while getting time to find a new job, get into a better mortgage or find a buyer for their property.

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Hi there,

I just wanted to say that this post really gave me food for thought. I'm only seventeen and my family is secure, but I've always been paranoid about paying for college, or living on my own with bills and everything. My mother's family grew up very poor, and she's a little worried about what will happen if she's laid off. After reading this I think I have a better understanding about what that might mean, what sorts of things we can do to minimize the hurt if it does, and what habits I can adopt when I leave my home to keep from falling too far into debt. I know I'm not really you're desired audience, but I was really glad for this.

Thank you.

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