One of life's biggest expenses is dwelling space. I've been thinking for a while about how to handle (and eventually eliminate) this expense. Owning your own home outright seems to be the most significant step in achieving financial independence.

If you want to buy your own house, I see at least two options:
1. Get a mortgage, say, a 15-year mortgage on a $100,000 house
2. Take, say, $10,000 and buy the cheapest house (or trailer or cabin) possible

The obvious downsides to option 1 are that we'd be stuck with a mortgage payment for the next 15 years and that we'd end up paying a pretty penny in interest. The upside is that we could probably live in a pretty nice house.

The downside to option 2 is that our living space would probably be pretty crappy. The upsides are that we'd immediately own our property outright and it would take a pretty serious financial disaster to put us out of our home. Losing a job would be no big deal at all. If we had no mortgage, no car payments and no credit card payments, we would barely have any living expenses at all. If we were to choose a rural area (which I think we would) we could even grow our own food, reducing our living expenses even further.

Has anyone else here taken this approach to financial independence? If so, what has been your experience with it?

Also, can anyone poke holes in this idea? Are there pros/cons I'm missing here? I'm biased, of course, so I'd like to make sure I'm not being irrational.

Cheap is not always cheap. Will cheap be making you drive more and spend more on gas? Will it put you in a more dangerous area that makes you spend more (monetarily and psychologically) on safety? Will the cheap place require more maintenance? Will it depreciated faster or appreciate slower? Will it frustrate you, leading you to spend money on things to make you feel better (will you go out to eat instead of cooking at home because your kitchen makes you crazy)?

And of course, do you want to live in a rural area? If not, what is the goal in mind that makes the sacrifice worth it? If you're going to give something up, it should be with a goal in mind. If there's nothing you feel you need to save the money for, then why not put it towards something you want now?

I'll try to poke some holes...

First off, I'd say that option 2 could be entirely possible if you choose the right place I personally know a few people that live almost free but they do it in Hawaii where the climate is conducive to both living without utilities and to growing food year round.

Second, I think you need to balance quality of life issues. I realize that it is possible to be completely happy living in a cheap trailer. But will you still feel that way in 10 years when/if you have a family and things get crowded. Will you still feel that way when you are making enough money to easily afford something nicer?

Third, trailers are not very energy efficient compared to houses. There is a good chance you will be spending considerably more in utilities than you would in a house. You also must pay fees for a place to put your trailer or, if you buy the land, you have that expense.

Remember too that if you borrow that $100,000 to buy a house you get a tax deduction on the interest. If you buy land then put a trailer on it, no deduction. That means you pay more in interest.

I have no doubt that it is possible to live as you said, very frugally, and be very happy. If you make that choice though it is important not to burn your bridges. If you really think that is a good choice for you, rent a trailer for a few years and see if you still feel that way.

Good feedback. Let me address some of the issues brought up:

That's a good point about gas. As long as I were to keep my current job I would be driving a considerable distance to work each day and that would be expensive.

I'm not worried about depreciation on a $10,000 property. Even if the value were to go right down to zero in 10 years, that's like $10,000 for 10 years of rent, or $83/mo. Pretty good deal. Maintenance is an expense I didn't really think about but maintenance would have to be pretty expensive to offset the savings of not having a mortgage payment. I also didn't realize that it may cost more to heat a trailer than a regular house. I imagine it's not a ridiculously large expense, though, since so many poor people live in trailers.

That's another good point: would I go nuts living in a trailer for years? It's certainly possible (probable) that I'd get sick of it.

I know I would like to live in the country because I grew up in the country.

I was thinking of buying a piece of property, with a trailer, $10,000 out the door, as opposed to a loan. You can imagine a larger number if that doesn't sound realistic. The idea is to pay cash for something cheap rather than get a loan for something more expensive.

Another thing I didn't mention that I should have: I don't see myself living in this trailer for the rest of my life. If I were to be able to get my living expenses down to just a few hundred dollars a month, I could put the vast majority of my income into savings. Eventually I'd be able to pay cash for a nicer house, and once I could comfortably do so, I probably would.

Not to say it would or wouldn't be a large expense. But be careful with the "poor people can afford it" argument. Poor people are often constrained by capital, and thus choose something with a low initial cost even though the total cost over time is higher. Example: rent-to-own.

I've thought this scenario over before.

It depends alot on where your trailer would be. If its truly in the country, then you will end up paying for stuff you probably never thought about. Like water deliveries, septic system maintenance, etc... Older trailers are also going to have all sorts of weird problems with the electrical system, at least in my experience.

Utilities will definitely be higher in a trailer. I live in central Arizona, and my electric bill even during the hottest months(biggest bill is usually in August) is only ~$250. Thats with the AC cranked down to 74F the whole summer. My parents live in a trailer in a rural area, about an hour away. During the same month, their electric bill is easily twice that much, despite leaving the thermostat close to 80F.

I would imagine the same would go for colder winters, although you could install a fireplace, chop wood, and probably be OK if you didnt mind hours of backbreaking labor(I had to chop firewood as a kid, it sucked). Plus you usually have to get a permit to cut firewood in public lands.

This a question that is key to my hopeful future..
1. I am disabled and on disability..(presenty stuck in nyc caring for a sick mom).
2. I'd love to find a place I could get a home and a little land...
3. I really do not need medical or schools close. I'm in my 50's
4. If I could find a repo that the bank would let me buy That would be great..
But after all I am not saving much and make only what I get from social security.

I found this thread by accident and I just had to reply.

I though through this very same scenario for a long time and finally decided to make it happen about 2 years ago. I bought a 26' camper new for about $10,000 and moved it to a campground that allowed long-term living. It's awesome!

My lot rent is about $300, which will go away as soon as I can secure a chunk of land. Utilities are included. I live in a semi-rural area so there are lots of opportunities for home-grown produce, eggs, meat etc. I actually know my neighbors. I never hear gunshots or police cars or worry about things being stolen. I have a lot of stuff (grills etc.) that sit right outside all day with no problems. The park is kept up very nicely by the owner who lives on site. We have cookouts and bonfires all the time. My quality of living has greatly improved.

Expense wise, I have eliminated renter's insurance, phone, cable, internet, utilities, security deposits and leases. When I decide to move, I won't need a moving truck.

Space has not been an issue. When I moved out of my apartment, I threw away a TON of useless stuff. It might be tricky with more than 1 person though. My new place gets messy quicker, but only takes about 20 minutes to clean from top to bottom. Winter is not much of an issue where I live, but if you live in a cold climate you will probably burn a lot of propane.

I guess houses are pretty cheap right now, but if buying a house outright is not possible for you, I would highly recommend you go with option 2! Like I said, I've been doing it myself for close to 2 years with no regrets. It's really not as extreme as it sounds. I actually expected a lot of hassles and difficulty, but it's been extremely easy living. The benefits GREATLY outweigh the drawbacks.

Just my $0.02

What I have found is that even more than a mortgage or rent it is the money you spend on - excuse my French - CRAP, that you really don't need. Examine every purchase and think about where this item will be in six months or two years. Unless it a perishable item and you don't see it with you where you want to be in the future, DON'T BUY IT!

Living in a "livable" place is important to me. Spending time commuting to where you can enjoy yourself because you don't like home can be HUGE. Like others have said, cheap isn't cheap if you aren't happy. BUT only you can know the answer to that.

I have thought about this a bit because I have a sibling who is single, and also would love to save money on rent/mortgage. Now she is living with my mother and pays a small rent to her, but that may change in the future. Sadly living in an apartment (at least where she currently lives) is not very cheap, 600 for a studio if you are lucky. Some options we have discussed are: geographic arbitrage: either moving further west which-cheaper but then a crappy long commute, moving to another part of the country where housing is cheaper, being an au pair, renting a room in someone's house, or alternatively renting a house with other roomates. If one is handy, buying a cheap house and fixing it up over time (that's what we are doing). There are no trailer parks where she lives, and as a single female doesn't want to live in a trailer. I'm not against trailer parks, but it seems the trend any trailer parks in half way decent areas are being sold and made into subdivisions or some such, so there are less (favorable) trailer parks as time goes by. I personally think this issue will come up more frequently; as income is stagnant housing is taking a bigger chunk out of people's pockets, so one may need to think of creative solutions to housing.

I completely agree with DerKoch, I have spend so much money going for the cheapest available plots which left a big whole in my personal finances. Better ask yourself those questions DerKoch mentioned before you decide to go for it!

Jane