Tag Archives: debt-free living

Career Loss Amplifies the Need to Be Completely Debt-Free

By Claire Posted in Debt-Free, downsizing, Personal, Retirement, Simpler Living, Small-House Living Tagged , , , , , , ,

We paid off our last mortgage when we were 44, one year earlier than this guy says you should pay it off.

His reasoning is this:

“The reason I say 45 is the turning point, or in your 40s, is because think about a career: Most careers start in early 20s and end in the mid-60s,” O’Leary says. “So, when you’re 45 years old, the game is more than half over, and you better be out of debt, because you’re going to use the rest of the innings in that game to accrue capital.”

I agree with him, but let’s take it a step further. For an increasing number of people, “the game” was over by the time they were 50 or 55 or 60. Their job went overseas, or they were let go in a downsizing, or younger people willingly to accept much lower pay were promoted over them and then they were sent packing. Now they’re working at a job beneath their capabilities and earning far less than they did in the career they spent most of their life on.

When you’re in that position, there’s no time to “accrue capital.” You’re in survival mode. And when you’re in survival mode, the very best place to be is debt-free. When you own your home outright, no one can kick you out unless you don’t pay your taxes (which is why if you’re forced to downsize your life, you should move to an area where you can afford the taxes). So you’ll always have a roof over your head.

We were forced to sell our paid-off house five years after we paid it off, because a career loss meant that “the game was over” for us, and we could no longer afford the skyrocketing property taxes. We did not reinvest all the money we made from the sale of that house in a new house; in fact, we spent less than a third of that money on the next house.

This worked out very well for us. But the point is, we had the option of doing this because WE WERE AND ARE DEBT-FREE. So whether your “game” ends at 50 or 80, pay off all your debts as soon as you can, including your mortgage, and you will be in the best position you can be.

The Questionable Value of a Top-of-the-Line Kitchen

By Claire Posted in Debt-Free, Simpler Living Tagged , , , , , , ,

I think it’s interesting that so many people will plunk down tens of thousands of dollars to create a top-of-the-line kitchen in their homes, complete with the latest design in cabinets and hip counter surfaces, even though they rarely cook. It’s all about having a kitchen that looks like it belongs in a magazine or on a cooking show, I guess.

Personally, I adore my hip cabinets. Check this out:

Those are genuine 1980s vintage cabinet fronts. Inside you’ll find sturdy plain old wood cabinets and shelves from the 1950s, when the house was built. I suspect that’s also when they installed my very cool counter tops:

That’s right, speckled Formica. We’re talking the height of luxury!

OK, so I’m being sarcastic. The fact is that I love my kitchen. It’s made of very sturdy materials that have lasted for years and still have a lot of life left in them. Since I cook from scratch every day, and we do a lot of dishes because we don’t have a dishwasher, we spend a lot of time in the kitchen. Yet it doesn’t bother me at all that I don’t have the latest cabinets or countertops.

You see, I’m a firm believer that there’s a trade-off between time and money. You have to give up one to get the other. Personally, I value time more than money, and the older I get, the more valuable time is to me. I can live without a $20,000 upgrade to my kitchen, because I don’t want to spend the time it takes to earn that 20 grand just to have a fancier kitchen. The one I have works just fine.

Some of my attitude stems from the fact that we’re debt-free. Most people will put a kitchen upgrade on their credit cards and think nothing of it. But we worked very hard to get debt-free, so we aren’t part of the how-much-a-month crowd. We also like to keep our expenses down so we can work part-time, which gives us more time to pursue other interests. Being able to live this way is much more important to us than having the latest kitchen upgrades in our home.

Besides, five years from now, today’s cabinets and counters are going to look outdated anyways.

Six Reasons Why a Young Family Might Want a Tiny House

By Claire Posted in Debt-Free, downsizing, Simpler Living, Small-House Living Tagged , , , , , , ,

Many of the commenters on this article wonder why a family would want to live in a tiny house. I can think of several reasons why; they all hinge on the fact that doing so would not be on a whim, but because it makes the most financial sense for a family that’s trying to stay afloat financially in an environment where many jobs are disappearing:

  1. Children need stability. If you have to keep moving to find work, it will be stressful on your children. But if you can take your house with you, as you can with a tiny house, they’ll always be able to sleep in their own beds at night.
  2. Living in a tiny house may be too much togetherness for some, but it beats having one parent with a job living in one state while the rest of the family lives in another. This is an increasingly common scenario and means kids only see one parent on the weekends. But a tiny house can be moved near the parent’s job so that the kids see both parents on a daily basis.
  3. Financially strapped families looking to lower their expenses dramatically (to get in balance with lower incomes) find that their expenses are slashed by moving into a tiny house. No more five-figure property taxes, no more high utility bills, no more expensive home maintenance; it makes a huge difference in your bottom line.
  4. A tiny house can be parked on land owned by relatives or friends; if the family pays a little rent for use of the land, they’ll provide extra income for the landowner. If the family can’t pay rent due to job loss, the landowner can help out the family by letting them live on his/her property until they find work again.
  5. As rent prices go up (an ongoing trend), a family with a declining income must struggle to keep a roof over their heads. But the family that buys a tiny home will never have that problem.
  6. The young couple that wants to start a family but can’t afford a mortgage will find that investing $30,000 in a tiny house (less if they do the work themselves) allows them to get started on raising a family when they want to, instead of waiting who-knows-how-long until they can afford a house.

Some commenters ask why the family doesn’t just buy a used R.V. Yes, used R.V.s can be cheaper, but a well-built tiny house will last far longer than an old R.V. that likely has (or will soon develop) a leaky roof, mildew, or cracked water or waste tanks.

Many of the commenters seem to think that moving to a tiny house is something a family would do for the novelty. But a tiny house is a great alternative for anyone who is struggling with unemployment, underemployment or a dying business. It can dramatically reduce shelter expenses until the breadwinner(s) can get back on their feet again. And it sure beats maxing out your credit cards so the whole family can eat on a regular basis!