How I built my own house — without a mortgage
This guest post from Ian is part of the “reader stories” feature at Get Rich Slowly. It's the extended version of the story he shared in his prize-winning entry to this year's GRS video contest. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
It dawned on me in college, having experienced several different summer jobs, that I really didn't like being employed. Sure, the money is nice — but it's just no fun at all to spend your days working to reach some boss's plans or goals. I'm sure there are some folks out there who find a 9-to-5 job fulfilling, but that sure ain't me. There's too much fascinating stuff out there to learn and do to spend 40 years in a cubicle. The mere thought makes me shudder, and I wanted nothing to do with a career.
Most of the financial advice out there is geared towards building up a big account to retire on. I figured that I would enjoy taking a different route — reducing the total income I needed to live on. With a significant reduction in expenses, it becomes feasible to live very comfortably on a part-time income, or even just income from hobbies. How do you reduce your expenses that much? Live off the grid.
By “live off the grid”, I don't mean abandoning all your possessions to live in a shack in the woods. I mean taking control of your necessities and providing them yourself instead of relying on other to do it for you (and paying them to do so). Going offgrid requires a greater up-front payment, which is rewarded by great benefits in the long term (sound familiar?). Building a house yourself is a huge investment in time, sweat, and cash — but it allows you to enjoy freedom from rent or mortgage for decades. Like cooking at home instead of going out, but writ large (hundreds of thousands of dollars large).
The more I looked at the offgrid option, the more financial advantages I saw in it. By choosing an earth-bermed home design, I could minimize heating and cooling expenses, as well as exterior maintenance. Having my own well and septic system eliminate the water bill, and having my own photovoltaic system for electricity cuts out another bill. My consumable fuels for the home are limited to some wood for winter heating (easily collected from the property) and propane for cooking (for which a couple hundred gallon tank is nearly a lifetime supply). Add some food production on the land, and you can also reduce grocery expenses.
Does this mean intentional poverty? Absolutely not. It means that I can have great quality of life, make $10,000 per year with a part-time or online gig, and have more disposable income than most middle income debt-ridden wage slaves.
At the time I put this notion together, I was in the middle of getting a fancy engineering degree from a fancy university. I had been losing interest in engineering as a field to work in, and opted to jump to a more hands-on field of study and get the fastest two-year degree I could. I judged that it would be better to leave with some sort of diploma than drop out altogether.
At the same time, I started looking for affordable rural land. I had a small inheritance from a great grandparent that I had been saving for something significant and meaningful, and a piece of land seemed like the perfect use for it. I eventually found a 40 acre parcel in the Southwest for less than $500/acre. I ditched school for a week to camp out on it, and fell in love. It had a good southeast facing slope for my passive solar house plan, and everything else I wanted in a parcel.
Ian's parcel of land
On the third day, I signed a bill of sale, wrote a check for the price (10% off since I wasn't financing it) and made it mine. And then (sadly) headed back to school. A year later, I came out with my degree and a $35,000 bill from Sallie Mae. That student loan was my only debt, and it meant a monthly payment of something like $250. Not bad at all, by most standards.
I packed all my belongings into my truck (a paid-for beater of a 1970s Chevy) and embarked to find a job in the little windblown town nearby and build my house. Jobs were sparse, though, and I wound up making less than minimum wage as a commission mechanic. That $250 loan payment was a massive chunk of my income, and it became clear that I wouldn't make any progress unless I changed my situation. So I packed up again, and moved to the big city (ugh). Not what I wanted to do, but it was necessary. After a couple false starts, I landed a bartending job that paid pretty darn well. Now that I was finally making more than I needed to just scrape by, I set about making some real progress.
Saving was immediately gratifying, because I brought home my day's earnings in cash every night. I budgeted out what I needed to live on (rent, gas, food), and put that much in my living expenses envelope each evening. The loose change (a couple bucks worth usually) became my “fun” spending money, and everything else went into the student loan envelope. Every time the envelope crossed the $1000 threshold, I took it down to the Post Office and sent a money order to Sallie Mae. I didn't eat out, I didn't go to bars, I replaced my big beater truck with a little beater truck that got much better gas mileage, I didn't have a TV, and I split an internet connection with a neighbor in my apartment block. I grabbed every extra shift at the bar that I could manage. It paid off. In 53 weeks, I zeroed out that student loan. (I have the closure notice from Sallie Mae framed.)
Then came a big moment of truth. I'd been focusing intensely on paying off that debt, and the house plan was a bit of a nebulous thing that I would do later, after the loan. Well, now the loan was gone, I had the good-paying job, and I was used to living on not very much. I could go do anything now! I could buy a slick new car, or a bunch of cool gadgets, or anything I wanted. Or I could make the earth-bermed, offgrid house a reality. It didn't take much reflection to conclude that the house was what I really wanted. So I replaced my “Loan” envelope in the closet with a “House” envelope and went right on with the same budget. Soon the envelope filled up, and I replaced it with a shoebox. Eventually the pile of cash in the shoebox started making me a bit nervous, and I got a safety deposit box at my bank.
When my second year on the budget netted me as much as the first, I crunched some numbers and concluded that a third year would be enough to get me enough money to build the house. I informed my manager at the bar that I would be leaving on May 31st of the next year, when it had warmed up and I deemed that building season was in full swing.
During that third year, I started spending some of my savings to pay for some initial infrastructure that I had to hire out, like the installation of my well and septic system and the kit for my house (purchased from Performance Building Systems — a company I highly recommend). When I finally quit the bartending job (on exactly the day I'd selected a year earlier), I headed back to the property with a wad of about $40,000 in cash and a sturdy pair of work boots.
Ian has his work boots on
I spent that summer living in a neighbor's barn and building. The house I'd decided on was a monolithic concrete arch, 24 feet wide and 36 feet deep. It came to 800 square feet total, and would be covered with 2-4 feet of earth when finished. The sides would be completely underground, and the front wall would be fully exposed, with a lot of glazing to let in light and warmth (you can see photos of a bunch of these homes at earthshelter.com). I first needed to dig into my hillside and lay a slab foundation, then construct the framework of the the house, build the front wall with concrete block, and then have the main framework shotcreted (concrete sprayed with a high pressure air hose, to form rounded structures). Once the shotcrete set, I began building wall framing inside, and running water and electrical lines.
It's not finished yet — some things cost more than I'd expected, and by the time winter really set in, I had a lot of interior work still left to do and had run out of savings. So I moved back to the city to find another job, and I continue to work on the house on my weekends.
However, the house is complete enough that I could live in it if I had to. I'm working my current job (I leveraged my offgrid experience into a position in the solar power industry) because of a conscious decision that the income is worth the time, and I have an alternative option should I decide that I really dislike the employment. That option makes a big psychological difference.
I can reflect on my job and know that I'm working it for a specific goal. I already have enough saved up again to finish the house interior, and what I'm doing now is saving up to build and stock a good workshop. With a good selection of woodworking, metalworking, and automotive tools I will be able to indulge in fairly technical hobbies. I can easily live on the proceeds of custom niche machine work, or have fun restoring and selling an antique vehicle from time to time. In addition, things like building my own furniture and maintaining my own vehicles will save a lot of money, and be more rewarding than hiring others to do the work for me.
Thanks to the planning and hard work, I will retire by the age of 30 — if not sooner. That doesn't mean I'll spend my time watching TV and playing golf, it means I will be able to actually live life instead of sacrificing all my time to a job making money.
Questions About the House
Living off the grid isn't what many people expect. With the dramatic recent reduction in solar power costs, you can really have every modern convenience without a power pole. You really can't tell an offgrid home from the inside. The keys to doing this effectively are putting more attention into efficiency, and choosing the right power sources. Electric heat, for example, is extremely inefficient. Propane is a far cheaper way to cook, and a wood stove is a great inexpensive, renewable source of heating. Thoughtful home design to utilize solar exposure, prevailing wind currents, and other environmental factors can significantly reduce the amount of artificial heating and cooling needed in the first place. Modern efficient appliances and lighting further reduce electrical needs.
Because of my high altitude and sunny climate, I chose to use a solar hot water heater instead of an electric or propane type. It's a simple system with an 80-gallon tank (which should be able to supply comfortable hot showers through 3 days without sun), and it reduces my propane needs to just cooking. Internet can be provided by either satellite or wireless broadband (my cell phone reception is iffy at the house, but my Blackberry can get a pretty decent signal).
What about my social life? Am I going to be some sort of loner hermit? The answer is definitely not.
I'm not someone who needs constant social interaction, but you get plenty of it in the boonies. It's clear from both my own experience and talking to other folks living in similar situations, that there is much more community socialization when there aren't many people than when there are lots. I've never known more than one or two neighbors when I've lived in a city with dozens of people within shouting distance. But when there are only five families in a square mile, you know all of them, and their dogs, and often their friends and relatives who occasionally visit. It's true for my house now — there are a few permanent residents and a few weekenders and we all socialize regularly.
The other question I always get is about family. The short version is that I have no desire for marriage or children. The house isn't big enough for a family, and it wouldn't be feasible to put on an addition. If I wake up one morning and suddenly can't live another day without offspring, I'll just have to build a new house. But I don't envision that happening.
If you're considering doing something like this, I'd like to offer a couple quick tips from my experience. Just as a good financial decision now can have magnified implications down the road, time spent planning a house can prevent huge problems in construction. An hour spent fixing something in the foundation can prevent a day's work in construction or a week's work in finishing.
My other suggestion is to not let the traditional rule your decisions. If you're putting this much work into a place to live, you clearly plan to be there for a long time. So don't worry about building a house that will be easy to sell — build the house you really want to live in. My bedroom is minuscule by most folks' standards, because I like the idea of a cozy sleeping space. (I also ran a small water line and drain to the bedside table, so I don't have to get out of bed for a drink of water at night.) The pantry is huge, though, because I will be growing and preserving food. I'm building a house to live in, not to sell, so I don't care if it appeals to a real estate agent or bank loan officer.
Most of all, if you have a dream, you should do it. Stop fantasizing and start planning. No matter how many years it might take, it won't ever happen until you start. And once you do start, you'll be amazed at what perseverance and dedication can do for you. There's no better feeling in the world than deciding how you want to live and making it happen.
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