Thursday, September 19, 2013

Live Deliberately: Thinking About Money

I talk to so many people who are looking into to tiny living as a way to reduce their expenses and change their relationship with money.

I love this car.
I am, by no means, an expert when it comes to financial planning but I did quit my 15 year career to pursue something I love and the tiny house is what gave me the opportunity to do just that.

I jumped without a safety net. 

I didn't have much in the way of additional savings before quitting my job. I just knew that if I didn't do it right then I may never have the courage to try again.

The first step to financial independence is to reduce your debt. While we lived in our large suburban home I knew this was not going to be possible. My income and my monthly expenses were not compatible. We put our house on the market and with a combination of a great realtor and the right buyer we were able to sell it quickly.

I think it is important to note that during this time I did not have a car payment or student loans. My debt was lower than that of many Americans, and yet it weighed heavily on me. I felt that I needed to keep working to pay them off but the more money I earned the more money I would feel compelled to spend. It was a vicious cycle.

We moved into a modest apartment that was less than half the monthly cost of our mortgage. (This also helped us in our downsizing process.)

Our apartment decorated for the Holidays.
We lived in our apartment for two years while we finished building our tiny house and during that time I paid off my debts completely. This gave me the courage to begin building freelance business before I quit my job. I established a budget that would help me keep my spending in check. I knew it would do me little good to quit my job only to end up with more debt.

Moving in to the tiny house, especially without utility bills, gave me an opportunity to lower my expenses. I do not have rent. I do not pay for electricity, gas, or water. I do not have a car payment. (In fact, when my 10 year old car decides to give up the ghost we don't plan on replacing it and will only have one car.) My only expenses are my phone and Internet, groceries, health insurance and prescriptions, my quarterly taxes, and whatever fun plans we have each week. We don't hermit in our tiny house; we love being out in the community enjoying the beer and restaurant scene.

The steps were simple. 
1. Pay off debt.
2. Reduce Expenses
3. Create a budget.

One day my book will be finished, I promise! 
By doing those three things I was able to leave a comfortable, good paying job that didn't make me happy to being able to do something I absolutely love. Still, a year and a half later, I am happy with what I have accomplished. I make enough money to keep up with my expenses and business continues to grow. I could have taken the easy road and stayed with my job but I knew that I couldn't live that way. And don't think this is the naivete of youth, I'm not as young as you think I am. This was necessary for me and I believe that it is necessary for many people. Deliberate living can lead you to a place where it becomes possible.

What do you want to accomplish? How can you reduce your expenses to change your life?


21 comments:

  1. I am looking into doing this, but in a slightly bigger place. I want a more permanent solution in regards to being able to place this on my own land, having a septic system, electricity, plumbing and such. Also, i would like to be in compliance with the state and towns. What state is the perfect place to have one of these homes? I am on a retirement pension.

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    1. Someplace that is warm year round sounds good for you. It really depends on where you want to be and what land prices match your budget. Have you considered a composting toilet? A propane tank for showers and stove? Candles for electricity? A well or creek pumping system for water? These would all make a world of difference in your expenses! Best of luck in your endeavours and don't give up! :)

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    2. South Alabama right on the Florida line makes for a great location to the Gulf. Any direction within 1 1/2 hours you have all kinds of things to do. Costs of living is low and land is as well. Escambia County Alabama. Easy permitting!

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    3. Check out the upper peninsula of Michigan.

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  2. I couldn't agree more with you.So much of our precious time here on earth is spent working for all the stuff we are led to believe we can't live without.I recently said goodbye to the rented apartment,stashed my must-haves in a small storage unit(still can't say goodbye to some things),and bought an older 5th wheel.I have dear friends that enjoy having me as a neighbor and I pay them for the kindness to park on their property.I now am debt free and starting to see my dream of a tiny house in the horizon.Thank you for your post.

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  3. I think you forgot about your car insurance, registrations, gasoline, auto maintenance and repair costs, homeowner's insurance (if you have any), laundry expenses as well as whatever it costs to heat your home. This isn't a criticism, just a note that your expenses are more than what you listed.

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    1. You're right - there are always a few more expenses. I hadn't calculated these in because, in the grand scheme of things, they are minimal. Laundry is the only other reoccurring cost and since our laundromat is also a bar we put that cost in our entertainment fund.

      My car is old so my cost of registration is minimal and only once a year. My insurance is also not expensive and my car has cost very little to maintain. For a 10 year old car it has never needed more than general maintenance and the occasional tiny tweak. No critical systems have been repairs and, as I mentioned, when one does go we will simply become a 1 car couple. We live in the south so heat is not much of a cost consideration and we also travel to visit family throughout much of the winter holiday season. Thank you for pointing this out.

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    2. I AM ALSO CONSIDERING A SIMPLER LIFE. MORE MONEY TO SPEND IN THE RIGHT PLACES AND MORE TO SAVE. I HAVE BEEN INTERERSTED NOW FOR SOME TIME. ALL THESE ARTICLES GIVE ME THE BOOST I NEED. SO THANK YOU AND KEEP ON KEEPING ON.

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    3. my question is... how are you living rent free? where is your house? is it a barter agreement? you do work on the land for free rent/utilities? just curious.

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    4. Thanks for your question. We own the land where our house is built so there is no rent or mortgage. Our house is off the grid and our powe is solar so there are no utility bills.

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  4. i have a dream... of a tiny off the grid house on a gorgeous piece of land.. but alas, i'm disabled and hubby is no handy man... and land would cost hundreds of thousands where i live... so i have given up on the dream... but it went kicking and screaming

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  5. Thanks for sharing! Are there places to live where the land is free, what do you do for water and electricity? Is there any land taxes? I live in IN and may live again in IL....where can you build these that is affordable?? Please e-mail the answer to : hisownlamb8@yahoo.com Thanks!!

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  6. Thank you for sharing! I have a few ?s 1. Where in Indiana or Illinois would I be able to build one with affordable cost. 2. Do you have land taxes, electric hook up or water expenses? 3. Does you dwelling have to have septic, etc.? 4. How would I research the costs and options?

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    1. if you have land in indiana somebody will be taxed. actually you don't have to have a septic system. there are people that put i port-a-jons. there is one we drive by that is doing that. they have been there 2/3 years. pap disappeared and martha wondered where it went. my guess is that the homeowners got rid of it. the county dose not have time to watch. the usual mo here is to build a nice fence around it. we are master plumbers and we know what a septic system job looks like. they aren't putting them in.

      i don't know if you need a license to install your own system but i'm sure you will have to have it inspected. so don't get a permit. each county has a board of health with a sanitarian. each county has their own rules. call the sanitarian in what ever county you are looking at and ask the rules.

      if you are permitting you will need a soil scientist then a septic contractor. the septic cons will probably know the "best" soil scientist because the septic cons want to install the system. if you go it yourself with permit then do yourself a favor and have the soil scientist do the layout.

      just call them all up and act dumb. i'm not saying you are. just pump then for info. write it allll down. get all printouts that are available. read and digest this for a few days and call them back with you new questions. do this until you run out of questions.

      my advise is to buy a woodlot in a rural area and just do as you please. where to find your home well the most successful people just drive out and around here to look. our sanitarian covers fulton and marshall counties. actually fulton county subs from marshall. i'm no tea beggar fan but when they cuts the fat they cuts the inspectors. lol. breid44atlive.

      peaceup billy

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  7. This is what I want when our kids leave home. I wish I could do it now!

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    1. My children are young teens (13/15) and I decided not to wait. My kids are actually excited about or new tiny house which I am currently building by hand. We each have our own private loft and even a reading nook that doubles as a guest bed.

      A couple years ago I had a health scare (series of mini-strokes) that were a blessing in disguise and helped me realize that life is short and you need to realize your dreams today. There is course a planning period and building time but I began living my dream realization opposed to waiting years then beginning the process.

      I think the most important aspect of my tiny house living plan are the life concepts I am modeling for my children:
      1. You don't need to 'consume' to live a fulfilled life
      2. Modest living can afford you the opportunities to do the things you enjoy
      3. Home is where you are as a family
      4. Follow your dreams today
      5. Above all, be respectful and be happy
      5. Finacial and life planning will assist you in realizing the life you desire

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  8. Money. The topic we all hate to discuss but love to fuss about. Thanks for sharing your story, Laura.

    I have been whittling away at debt and reducing my expenses since starting my own small business a couple of years ago. Like most entrepreneurs, I started the business on a shoestring and times were very tough for a good year as I built my client base. This period forced me to be more frugal.

    After one and a half years working on the coalface with the business I decided to step down, manage it, and hire my first staff member. Reason for this was that I got offered a well-paying position working on a project with a former manager of mine. From a financial perspective it was too good an opportunity. It would allow me to pay down my debt, pump more money into the business, buy land and build my dream. I am currently half way through the project and have paid down most of the debts - save one which I am continuing to pay off over time as the interest rate is low and I wish to preserve cash flow for now in case I find the perfect block of land. I should be debt free in the next couple of months.

    As the expenses to build my dream begin to grow - as I learn more about what is required to buy land and build a house on it - I am becoming more and more frugal, even though I am earning more and more. I can't wait until the end point - where I can leave this job that I am doing for all the wrong reasons and I can start to realise the dream.

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    1. pavel. no no no you are doing it for the RIGHT reasons. you are contract labor. you are a subcontractor. this has an end and it ain't your grave. take the money and run. i had one real job out of high school i got out of there in 1965 and haven't looked back. i'm 68 and will not work anything that last more than 2 days. we are paid off. we call it living by your wits.

      i turn down very few 2 day jobs. if we are not in the mood we just charge more, lots more. we are the most expensive around. martha answers the phone and i do the work.

      when you have to much work raise your rates. never assume that your customers don't have more money than you. they do. they hired you. there is an old saying that you can work 40 hrs @ $15.00 or 20 hrs @ $30.00 or 10 hrs @ $60.00. i moved right to plan c. i like to work 10 hours and take the rest of the week off with pay. lol.

      peaceup. billy

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  9. I love this deliberate living series. I'm trying to be more mindful about how I spend my time and money. Your posts have been thought provoking and motivating. Thanks!

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