This post is from GRS staff writer April Dykman.
I’ve been thinking a lot lately about a quote from J.D.’s review of The Total Money Makeover:
Printed on the bottom of every page…is the book’s motto: “If you will live like no one else, later you can live like no one else.”
My husband and I recently made an unusual decision, and I’m in need of a motto that I can repeat to myself every time I question our choice, which I probably will at some point.
A loan story
I’ve mentioned in previous GRS posts that my husband and I are building a house. As we started on the final construction documents, we began working with a lender to sort through the construction loan. It’s not a fun process, let me tell you. Half of what the lender said went right over my head, despite my short-lived foray into the real-estate industry.
The first issue that arose was that we’d have to have a two-time closing. This means there’s one closing at the start of construction and a second closing after the home has been built to refinance into a permanent mortgage. Apparently one-time closings, which are loans with a single close for both the construction term and the mortgage, are a thing of the past.
The problem is that my husband and I couldn’t have a change in employment until the house was finished and the second closing was complete. But he’s planning to start his own business. Also, if one of us happened to lose our jobs, we’d be at the mercy of the bank. Even if we could easily make our payments from my freelance income, the bank wouldn’t recognize that income source until I had two years of tax returns on the business. It was a concern, but we decided to move forward.
Charges, interest, and fees
The lender sent the estimates for interim and permanent loans. As I sorted through the initial fees worksheets, I saw the standard stuff:
- Origination fee
- Appraisal fee
- Processing
- Underwriting
- Closing
- Document prep
- Title insurance
- Recording fees
- Survey costs
And on and on and on…
It’s not that I didn’t expect these fees, but they were sure adding up quickly. Also, we could expect a good interest rate on our mortgage, but the interest we’d pay for a 30-year loan would double the total cost of our home. Again, not unexpected, but still disconcerting when I was plugging in our numbers.
Closing delays
Another issue was that we’d need $15,000 to close the interim loan. With an interim loan, the bank requires 20% of the total value of the land plus improvements (i.e., the house). We have a lot of equity in the land, but not enough to cover 20% of land and house value. Since we were unwilling to tap our savings, we’d have to wait until autumn to start building.
I was getting a sinking feeling in my stomach, like we were going to be trapped. My husband couldn’t start his business. If one of us lost our jobs, it would be the bank’s decision whether to work with us, on their terms, or not.
Finally, the relationship with our architect, who also was to be our builder of record (another lender requirement), was deteriorating, causing us to reconsider the arrangement.
Assessing our situation
My husband and I are in a unique situation. My parents own land in the country, and we live next door to them, rent-free. This has allowed us to build a lot of equity in the land we purchased, which is five minutes away. My dad also is in construction, and he’s able to do the majority of the work to build what he can for us and subcontract the rest.
It might sound crazy not to take advantage of our situation, but there’s something to be said for having your home finished with all of the amenities you want, such as a dishwasher, carport, bigger kitchen, laundry room, and more space to host guests. I have this dream of what our home will look like, of what it will feel like to wake up in it every day, and it’s hard to be patient.
Number crunch
I started to run numbers on how long it might take to build our home if we paid in cash; assuming no change in income, it looks to be five years — six if I’m being super conservative. I assumed a completion date of April 2015. If we went with the loan, we’d probably complete the home in September 2011. By waiting about four years longer, we’d own our home and land outright, as opposed to paying on it for 30 years. Even if it takes longer than expected, it’s still a good deal. Owning our home sooner would give us so many options:
- We could scale back on work hours.
- We could travel more.
- We could put more into savings.
The point is that we’d have those choices. Our decision came down to having the home now, or having more freedom later. Again I thought of Dave Ramsey’s quote:
“If you will live like no one else, later you can live like no one else.”
You can probably figure out what we decided to do. We’re going to pay in cash, building as we can. Impatience is not worth the headaches, fear of losing a job or the house, and the interest we’d pay if we continued with the construction loan.
Patience and resolve
I realize we’re in a fortunate position. If our circumstances were different, this might not be an option, however, I believe our choice and Ramsey’s delayed gratification advice is relevant to everyone.
Every time I’ve put my impatience aside, the outcome has been positive. This was the case when we put off buying a second vehicle and when we moved out to the country, originally thinking we’d buy a house in the city as soon as possible.
Besides patience, delayed gratification also requires resolve. When you make choices outside of the norm, friends and family members might think you’re nuts. They mean well, and they’re only thinking of you, but some of them will definitely think you’ve lost your mind. One car for two people?! You’re just asking for a divorce! It can be hard when you’re already questioning yourself. The trick to not letting these comments derail you is to remember the reasons why you made your decision, and maybe find an affirmation, which is why I’m going to print Ramsey’s motto and read it often.
Delayed gratification isn’t easy, but it usually brings the most rewards.
How has delayed gratification benefited you? How have you exercised patience and resolve? Share your tips — I’m probably going to need them!
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Let me recap this to see if I got the story right:
You own a piece of property, but don’t have very much equity in it, and as such can’t take out a home equity loan to finance your construction project. You intended some sort of convoluted mortgage arrangement to finance the construction project, but it has too many drawbacks, so instead you’re saving up the money to pay for the construction project over the next four years, then paying cash for it?
That’s correct, right?
Sounds reasonable enough. But at the top of the post you say: “If you will live like no one else, later you can live like no one else.” And then later, you say “your home finished with all of the amenities you want, such as a dishwasher, carport, bigger kitchen, laundry room, and more space to host guests”.
That doesn’t sound like “living like no one else” that sounds exactly like everyone else.
As a kid, I had a friend who’s parents had bought about 15 acres of land, and their whole family lived on that land in an airstream trailer for several years until they built a house on it. The house they eventually built didn’t have many (maybe not any) of the features you list in the house you’re building, but it was a beautiful house.
My dad built a second building on his property. It’s supposed to be a garage, but it’s two stories and the top half is set up to be a self-contained apartment. It wouldn’t be a huge house, but he spent less than $30k building the whole thing. It seems that’d be more than doable in four years.
I’ve certainly got no problem with your decision to pay cash for your construction project. It’s a solid financial decision. I’m just not sure it’s quite so unconventional as you think.
When I think of “live like no one else” in the context of home-building, I think of projects like this: http://www.simondale.net/house/ Not a carport and a dishwasher and a laundry room.
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The past 7 years has been a test of having patience and delaying gratification. My Mom had a stroke 7 years ago (I was 26). Her house is in a good neighborhood and was mortgage free but was in need of renovation, so I rushed ahead and took a HEL out on my house to fix her house. That money didnt go very far, not as far as it went in my dreams. So that taught me to go slow. By going slow, we found out the house never went through probate and had 2 medical liens on it (from my Grandfather’s illness and subsequent death). Through patience we found a great lawyer that waded through the probate court system with us, charged us very little, helped us negotiate one lien back down to the orginal amount and one lien was removed because my Mother was declared permanently disabled. Now for the gratification, we are now selling her house on our own terms(admittedly, not for the high prices of the housing boom,) but for a decent amount and I am able to sleep well at night. If I wouldve sold right away, I would have been paying money on liens that I didnt have to pay but now most of the money goes into our pockets! So yes, there is something to be said of patience and delayed gratification.
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“Every time I’ve put my impatience aside, the outcome has been positive.”
So, so, so, so true.
@Tyler T: about the building code: this is CRUCIAL and mostly overlooked. My parents lost the chance to build my dad’s dream house – carefully designed to preserve big, old trees on the lot – on the inter-coastal waterway in Florida because somebody who wanted their lot pressured the local planning commission to change a code.
They were going to be required to sink pilings 2x deeper than any of the other structures in their area, adding years and many thousands of dollars to the cost (this after they had already sunk pilings to the code in effect when they bought the lot, built a seawall, drilled a well, brought in electric … ).
What happened next STILL makes me furious: the guy who wanted the lot got it when my folks decided to give up and sell. He dumped 5 feet of dirt over the entire lot to kill the trees (which it’s illegal to cut down, as long as they’re alive, because it’s a conservation zone).
Get everything in writing and don’t do ANYTHING if you feel even slightly uneasy. I think April’s misgivings about the architect probably swayed this decision as much as the potential financial problems. It’s always better to walk away from a bad deal than to try to fix it later.
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I realize this is a tangent, but: cheers for the single-car family! We’re doing it while we can (no kids; I understand it’s harder then) and reaping the rewards in $$$ and fitness from biking to work.
If anything, having one car has forced us to learn to be patient and communicate effectively. If those are absent from a marriage, a second car (or any other item revealing the friction) isn’t going to prevent divorce.
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We are doing the 1 car family as well, and we have 2 children. Definitely possible. We know a couple with a small child who does all their transportation with bikes. Now that’s hardcore (especially as we live in a mid size spread out town).
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Awesome post! Congratulations on finding a better way to build your home!
There’s a book, Housing Ourselves, that talks about how truly affordable housing is housing that can be built a little at a time, as time and money can be found to do the work. But so much of our current society is based on building everything all at once, and then paying for it over time, with interest….
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“building while you can” wouldn’t work for me. I would just save the cash and then build the whole thing at once in 4 years instead of doing it incrementally.
I would hate to be halfway through and have some sort of life change that left me with half a house. Rather have the cash in that situation.
Also, my values have actually changed quite a bit over the last 4 years so the house I would have built 4 years ago would be quite different than the house I would build today.
4 years of building also seems like a lot of time/effort to invest in what really is a material item. We did a big addition to our house a few years ago and it was great but extremely time consuming. After 6 months we were ready to be done though – can’t imagine 4 years of all those decisions.
I do agree with your your decision to wait though.
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Great Post ! And even greater decision ! I admire your resolve and level headed thinking. Its an inspiring story.
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This post is a perfect fit for the site…it’s all about getting rich SLOWLY. Be glad you’re the tortoise!
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Delayed gratification has played a huge role in my life. I put off sports and the party life in high school to do dual enrollment at a local college and by the time I had graduated high school I was in my Junior year of college with no debt. Immediately after graduating I got a full time job at the college in the IT department. Because I had such a head start and a lot of momentum I was able to go to school year round for free and a month after my 19th birthday I graduated with my bachelors degree in computer information systems. Not having any debt to worry about I was able to take a couple of big risks moving into higher positions and eventually going on my own doing independent IT consulting. During these moves I got married and built a house and currently have no debt outside of the house and we currently have 100k in the bank so paying off the house could become possible for us very soon! Delayed gratification certainly pays off!
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Tyler @51,
Thanks for that link. What a charming home!
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We live in a much smaller home than most of our peers. It’s small – makes for a tight fit for all of our “stuff” (one of JD’s favorite words these days), but right now we are willing to make this small sacrifice so that our family can be financially stable. We could “afford” a bigger home, but that would mean potentially a lot more risk that we are not willing to take on.
I’m inspired by your choice to wait and pay cash!
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For those asking why April did not just get the 30-year mortgage and then make extra payments: It is not only the mortgage payments with interest she is avoiding but all the expensive ($15,000 !!) closing costs she is avoiding. That money is better spent on materials and labor for the house.
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This was a great post. Seems like a well-thought out decision. My only question would be if you save and then spend all your money on the house in 4-5 years, will you then have nothing left (hypothetically)? Remember to leave at least enough liquidity for an emergency fund. You don’t want to be house poor even if you won’t have a mortgage payment.
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If I would of done the “delayed gratification” thing with my career back 5 years ago and NOT moved for a better job fast I would of:
- not met my wife
- not almost doubled my salary
- not found the creative job I was meant to do
- not be in as good as health as now
So, really, again. A simple (and I say TOO simple) mantra is not going to work for EVERYTHING.
It’s all situational. I do agree that leaning towards a more patient and calculated outlook can help, but sometimes you gotta do what ya gotta do and FAST.
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I need to find myself some parents who could provide rent-free housing.
Don’t forget that construction costs are lower right now because builders are dying for projects, when the markets returns to normal in a (probably) 5 year span, they may sky rocket. Material costs go up too. Lumber is going up, as are other materials.
http://www.purchasing.com/article/451701-Lumber_prices_are_rising_despite_soft_demand.php
The benefits of doing it now, is that you lock in today’s costs now.
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mbelousov: that’s the same line of reasoning that caused people to buy homes in the housing boom. You can’t predict where prices will go – no one has a crystal ball.
It’s much better to wait for your finances to be in the right place than to time the market for materials.
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I really respect your decision to basically “reset” your expectations of what building/owning a home should be like. Rather than following conventional wisdom (and look how far that “wisdom” got the housing market!), you followed your instincts. You didn’t want to be beholden to a bank for 30 years; you’d rather do what you can, when you can, and in the meantime live with autonomy. That takes courage, and I really respect that.
When I was looking for my condo, people pressured me to buy the nicest place I could afford. Something about buying the max possible didn’t sit right with me. I knew in my gut I wanted to have flexibility in the future, and I didn’t want my whole paycheck going into my home. So I bought a place that cost about half of what I could afford, and I’m so glad I did!
My company started doing layoffs soon after I closed on the condo. I was lucky enough to keep my job, but the harrowing experience opened my eyes to the dangers of getting in over your head in real estate.
[As an aside, I recently started a website to encourage people to make rational, reasonable decisions about real estate based on their own personal circumstances. I think this is a deeply important project.]
Congratulations to you, and I look forward to more stories about your construction project!
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I just want to commend you on your decision. Imagine how you’re going to feel the first day you wake up in your new home and know that it’s YOURS and not the bank. I would do the same if I could.
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@66
Buying pre-existing inventory, and building a new home are not really the same thing (though you can speculate on both).
Materials generally go up in price (govt printing more currency diluting value, etc), they are tangible products and you have to pay what the market demands. Hence when you build a home, it will cost you what it will cost you based on labor/materials.
Pre-existing improvements on land are worth whatever someone wants to pay for it (no more, no less). This is what mainly caused things to implode, once people realized there aren’t too many more idiots (I use this term gently) to pass on the overpriced torches onto, values suddenly plunged (because people no longer thought those improvements were worth what they were being valued at). Example being, if you were trying to sell a home for 50k but the only offer you could get was for 25k – guess what, that’s what your house is worth.
Clearly there are many many more variables, but that’s my take on it.
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Not living like everybody else…that phrase makes me smile. We “own” a condo in the city with a mortgage that was easy to pay pre-kid, but tough to pay after childcare ($12,000/yr) kicked in.
Then a friend in the country with a really big house but no maintenance skills invited us to move in with her in exchange for keeping up the property. We could then rent out our condo to pay the mortgage.
Now we live in a big house in the country with five adults (my husband and I, our friend, her mother and occasionally her brother) our toddler, and a rotating assortment of guests. We can save and invest a comfortable amount of money now, too.
The only downside is that my husband and I have only one car; I depend on him (he uses the car for work) or on our friend for rides, and have a long commute on public transportation.
But we hope that by saving energetically and investing wisely, we will be able live better in the future. Like everyone else – but without the debt.
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@JD and Meg – people don’t half-build houses here because it’s a bad idea. In many developing countries, the banks are sketchy and there are no places to park investment capital. Cash on hand is at risk of theft, extortion, “family need”, etc, so they plug it into building supplies. This is also an effective hedge against inflation, which can be brutal in less stable economies. These problems are simply not issues in the US – drop your cash in ING and let it earn interest.
Also, building materials matter. You can let half-built cinder block homes without plumbing and electricity sit out for a year. Do that with a wood-framed house with fixtures and drywall, and you’ve made a huge mistake.
Great decision, April. Wish I had done the same, as we rue the decade plus it will take us to be debt free.
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April, well done! I made the opposite decision a couple years ago and have paid a very heavy price as a result. If you want to hear the gory details, I’ve posted about it on my blog a few times. What I haven’t blogged about yet, but will at some point, and/or write up for JD’s reader stories, is that when all was said and done, I ended up having to file Chapter 7. I’m finally done with all that, but even after the bankruptcy, I’m now at least 50k upside down in the new house.
I have a good friend that has done the incremental remodel of his house over a period of three years or so. It’s been frustrating at times, but it’s all paid for and it is coming out very nice. He’ll probably be done in another year or so. To give you an idea of how much fun he has had, he went an for several months with a blue tarp instead of a roof because of structural damage discovered after the roof was torn off. Luckily it was during the summer, which is pretty dry in Portland.
It really is worth the effort and the discipline to be patient and wait until you can pay for things. Hang in there, you’ll get it done, and the result will feel awesome!
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I would just like to second the comments from Tyler T @#50. Having worked as a CPA for a commercial contractor for years, I can tell you that there are MANY things to consider when you’re thinking of building over a long term. It absolutly will cost more, and total cost will be very difficult to budget. And building codes can change. So what you thought will be the $$ amount you will need will undoubtly not be enough when the time comes. I would still advise that regardless of the financing used that you build all at once.
On a second note. It doesn’t make a whole lot of sense (or cents) to “live debt free” if you have no savings. I don’t believe that is the case here, but before we all jump on the “debt free” band wagon, lets remember that some debt can work for us. A small mortgage on a modest home and a small amount of school loans for a degree in a good field are great examples. It just doesn’t make sense to pay off your mortgage but not save for retirement!!
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As I was reading about your situation, I started really hoping you’d find a way to stick it to the man (i.e., the bank.) You only have to wait four years longer for the house? And you can breathe easier right away? Great choice!
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I did actually think that the long building process might have more to do with building permits than any “pride” issue.
Also, some of us might have to rent and try to pay a mortgage at the same time. The only way to get back to “one payment” was to get in the house as quickly as possible and focus on repayment. We did this–borrowed 35K to get into our house and then finished the rest of the house as we had funds. We had the (personal) loan paid back in 5 years, I think. We worked on the house as we had funds, while living in it. But we also have very liberal building permits here in Poland and didn’t have to anything finished in order to live in it, legally.
Do they give open-ended building permits in the states?
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@Emoney–Good point, and something I probably could have expanded on more.
@Debbie M–I admit, it *did* feel like we were sticking it to the man!
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You made the right decision. The whole mortgage loan fiasco that practically brought the US economy to a screeching halt was created in part by the loan scenario you initially discussed. People with basically NO money (which is what you have if you don’t have a varifiable income track record from your freelance career and your husband–horrors–wants to start his own untried business in the middle of getting a loan). If you can’t prove that you can sustain a significant loan, like for a house, then you have no business getting one. Relying on income from a freelance writer and a brand new business could have spelled financial disaster for you so by choosing to build slower and pay cash you made a very excellent financial decision that you will thank yourself for later!
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Wow. Good for you for making the choice to delay and pay cash. I don’t have any specific tips, but I can tell you that the end result will be so much sweeter when you wait. This is from personal experience. You’ll also be able to get more of what you want, with less interference and less frustration.
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Tyler K: the motto “live like no one else” does not apply to the style of the house, it applies to the method of obtaining the house. Most people get mortgages. Very few save up so that they can own their home outright from the first day they move in. I think it’s extremely rare. I myself am a firm believer in paying cash for things, but have bought 2 homes with a mortgage so far in my life.
@#64 JLA, delayed gratification refers to waiting to buy something that is a want, rather than a necessity. Not to getting a better job – waiting to get a better job when you could get one right away is just foolish.
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@#79
Ahh, so, it’s more about material things than life planning/experiences. I’m much better than I used to be then.
Honestly, the job I went to was worse than the one I left in that it was a 20% increase in daily expenses (Ohio to L.A.) and the same salary. It wasn’t a necessity since I had a decent one in the first place so it was a calculated risk. Eventually it panned out but my quick decision in taking the gig is what saved me.
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This post is great! Congrats to you and your husband on making this decision. It is awfully hard to wait but it will be so worth it in the end. We never imagined we would have a paid for house in our life but after starting Dave’s plan a year ago we see this in our not so distant future. We hope to be able to save cash for the next house.
I love hearing about the financial process of building the house. So many people I know build and I don’t know the first thing about it and just assume it is waaay out of our price range. I would love to hear more about that side of it if you are willing to share.
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We got the plans five years before we built. We saved- but still took out a small loan to build. Construction loans are much more difficult to get (considering that several banks turned us down because a Sears bill for 9.95 had not caught up with us seven years before- causing a delinquent account rating!)
Just before we built we had the plans checked by the county. The contractor had connections. Our dream house was built a year that we were out of the country! Good part of that- no way to make changes.
We paid off the construction loan when we moved in…and were mortgage free.
Great article April. It sure brought back memories.
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I am a bit confused — you say that you’d be at the mercy of the bank if you changed jobs. What does this mean? As long as you are paying the bills, what does it matter?
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Great post April.
I’ve never been a huge fan of the term “delayed gratification” or the phrase “live like no one else so later you can live like no one else.” They put too much emphasis on the item or end goal. It’s important to have a goal and a plan, but if you delay too much gratification you take all the fun out of life! It is important to find enjoyment and satisfaction in the process.
I prefer Dave’s other motto: “Debt is dumb and cash is king”
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@quinsy:
If the entirety of “living” to you is based around the cost of your mortgage payment, such that you’re “like no one else” simply by having an uncommon mortgage payment (of $0), it sounds like you’re not really living at all. Baker, who just got back from Thailand with his family, is a *lot* closer to “living like no one else” in my eye than anyone who’s decided they’re going to pay cash for their new stainless steel kitchen appliances instead of financing them.
Which certainly isn’t meant to imply that paying cash for your new kitchen is a bad idea, just that it’s sort of an empty goal to base your definition of “living” around.
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I completely support your decision in waiting, and living like no one else.
I did get a construction to mortgage with 5% down. The builder did not pay the other contractors and so they sued me for repayment. I had to hire a lawyer to get the builder removed. The construction to mortgage loan marries you to the builder, and the bank WILL NOT give you the money. The builder was one year past due, on delivery, and I had been paying interest to this construction loan.
It cost me another 6 months, lawyer fees, but I managed to get the builder of the loan and finished the house by myself.
In the mean time, my loan got sold 3 times. Oh what fun!!!
I closed my loan and put another 15% down to get a conventional rate. Remember, I said the loan got sold 3 times? Well, the new loan company charged me PMI, even with 20%. It took another 6 months to deal with that.
A year later Katrina hit….
It’s 2010, I’ve gotten rid of that house, and WILL NEVER DO A CONSTRUCTION TO MORTGAGE LOAN.
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The only way I think this example of living “like no one else” is that not many people are lucky enough to have a free place to live. And since they still haven’t saved up 20% they will wait to build the house until her father can kick in some free labor? Yes I guess most people aren’t that lucky.
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Read a study tracking kids who showed a precocious ability to delay gratification and kids who couldn’t and how well they did later in life. The kids who could delay gratification, of course, did better.
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I don’t think this was just about delaying gratification but looking at and weighing your options. I was in the building industry and was always surprised how clients would not look at more than one way to do something. It was if they were looking thru a straw to make a final decision that could potentially cost them tens of thousands of dollars.
I’m guilty of it too!
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I would like to add another thing to keep in mind. I would like to start by saying that I agree with your way of doing things, but you need to consider all possible outcomes. There is a reason people say things like building a house, living with one car, etc will lead to divorce. It’s because it’s stressful. You are making a conscious tradeoff for the longer, and potentially much more stressful route.
Right now you have your 5 year plan, but what if something happens to your dad? Is he your only contact to get this done? You also need to be aware that if you are halfway through your project and decide to ‘finish up’ quickly with a construction loan you will likely not have that option. Most lenders won’t touch a property that has any improvements made due to the possibility of unpaid work and leins. A broker friend of mine told me she has had more than one person come in and say “I was so excited that I already dug the septic/foundation.” And she had to tell because of that she couldn’t get them construction money for another year (statute of limitations).
Is there any way to do build your house more in stages? I don’t know your living situation and you may have plenty of room and privacy. But I have known a handful of people who have built a huge garage/apartment and then lived there while construction on the main house was going on. Then they had a killer garage, office, or guest area. One built the garage in such a way that that could be a living area while he parked outside, then simply opened it up for his cars when the main house was finished.
It might be overwhelming, but by financing things yourself you have opened up a number of possibilites. You should brainstorm and get more creative before you settle on a complete schedule.
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@Tyler–If wanting a dishwasher means we’re living like everyone else, so be it, but I never said it had to be stainless steel!
We don’t have quite a few things considered standard in most homes, but a dishwasher, yeah, I do want one at some point.
Paying in cash is not the end goal or our definition of living. It is a means to an end that will give us even more options for living in the future, and really, in the present, since our lives and our jobs are no longer going to be dictated by a lender. Our plan is to build everything in cash so that we can afford to travel for extended periods with our hypothetical future children or just cut back on work, and do all of it completely debt-free. We’d love to be traveling the world right now, but we also want a home (more of a homestead, really), and traveling and building debt-free is the route we’re going, so we have to wait a bit longer on both.
To you, it’s a no-brainer to take advantage of our situation and not unusual at all, but to many people I know, it is unusual. You’d be surprised at some of the responses when they ask how the house is coming along and I tell them about our change in plans. Thankfully, I have GRS readers as a sounding board!
Also, thanks for sharing your home with us on GRS awhile back. It inspired me to find a way to make ours smaller (not 450 sq.ft. small, but smaller nonetheless).
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Time flies and before you know your house will be completed. I love this post because am also doing the same thing, building the house slowly.One of the strategies am using to complete the house is DIVIDE and CONQUER. Every month i set aside an amount to the building account. After 6-8 months i use the cash towards building. I have planned the building in phases, eg the first phase was building the foundation, secong phase is buying blocks, third phase is roofing and the final is furnishing. I started building in 2009 and according to the plans, the house will be completed in 2012. One of the tribe in my country(ZAMBIA) has an adage which goes like this”Ukutangila tekufika” which means being in FRONT does not mean being AHEAD. My folks will buy houses using Bank loans, they will temporally be in FRONT but in 3 years time i will be AHEAD because my house will be complete without any debt.
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My husband and I inherited about $400,000 from his father in 2007 and didn’t spend a penny of it, not one single penny on anything. That year we downsized our lifestyle, moved from a small house (which in our neck of the woods was already downsized), to a 2 bedroom townhome, bought a Sonata for my husband, a commercial real estate broker, and a Pontiac Vibe for me. We already have everything we want (except a flat screen television
. We live in a county in NJ where everyone lives in huge homes and drives luxury cars whether they can afford them or not. The temptation to keep up with the Jones’ is strong at times, but we know that we’ll be able to retire at some point and live the kind of lives we want, free from financial worry. That is definitely worth the wait!
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We are currently considering paying off our mortgage within the next year. We live very far below our means by most people’s standards and have considered a lot of what you wrote in your artical. There is more freedom to choose jobs, take time off, and less stress if we lose a job because we know that we will have a roof over our heads and paid for cars in the drive way.
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My delayed gratification comes with putting off buying a home.
I joined the military to serve something bigger than myself, but ended up moving someplace I wouldnt want to settle down :-p
So my wife and I won’t buy a home until we are someplace we’d like to stay for a while.
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Hi, April- I’m thrilled for your decision. And the patience, yes, the patience is so hard to have. I haven’t been in your shoes, but I so appreciate your thoughts.
This week my builder’s grade oven broke. I was so thrilled, I can’t even begin to tell you. I was already looking for the oven of my dreams. The one I want is around $4k. But then my husband told me of some financial concerns he has. After some thought, I decided to have a repairman come look at the oven. It might cost me 2 or 3 hundred, but I want to be in a position where I’m not rushed into buying an oven that I don’t like. (I’m an avid cook, so this oven is important to me.) It feels ridiculous b/c my current oven is so old.
Thanks for your really good reminder. It’s nice to hear and, frankly, pretty rare to hear.
Emily Dykstra
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Good luck with the house. Paying all those points and closing costs to lenders when building a house used to really burn me up. I’ve never paid so much for so little. Now I’m living like no one else, and it’s great every day of the year except April 15th when I have to pull out my check book for the Government, but it is still better than writing that monthly check to the mortgage company.
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