This post is part of the new “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others will be examples of how a GRS reader achieved financial success — or failure. Today's reader story is a little bit different; I wrote it after interviewing the subject.
For Your Money: The Missing Manual, I knew I wanted to include stories from average folks like you and me. As I wrote each chapter, I asked around to find one or two people I could interview for sidebars that would illustrate my points about happiness or travel or debt reduction.
Unfortunately, not every interview made it into the book. Out of the twenty stories I heard, maybe ten or twelve actually made it past editing. One of the interviews that got cut was with Jacob, a 25-year-old GRS reader from Kansas who, aside from the mortgage on his home (about which more in a moment), doesn't use credit.
So today, I'm sharing a very expanded version of what I wrote for the book. I've gone through my notes about our e-mail and phone conversations, and have drafted a profile of Jacob. These are all his own words, though I've re-arranged the order to give a better narrative flow. I hope you like his story as much as I do!
Hey Twitter followers! Do you live without credit cards? Want to be in my book? Drop me a line!
My name is Jacob, and I saw you were looking for people who don't use credit for an upcoming article. I'm 25 and I've made it this long with out ever having been given a line of credit. I don't have a credit card or any other form of credit. I do have a debit card that comes out of my checking account so I am not completely archaic.
A brief rundown of my situation:
- Graduated college with a masters degree (~$16,000 in student loan debt)
- Bought a house (FHA loan) ($7,500 first time home buyers credit that I will begin paying back in 2010's taxes)
- Bought an antique vehicle (not my primary mode of transportation)
- Refinanced my home loan less than a year after originally buying it
I'm employed full time and save fairly aggressively (at least I tend to think so). I actually own a fairly unique home; it's an old fire station, and my antique vehicle is a 1966 fire truck. I know both of those are probably not the most responsible things to do financially but I felt that I could afford both even though I had just graduated from a state school and bought both within six months.
I hope that my email doesn't come off as audacious or boastful. I was just offering up a very unique situation that I thought might interest you and your readers.
What's it been like to live without credit cards?
It really hasn't been all that difficult. I'm sure that I probably could have gotten a better rate on my home loan and my vehicle loan if I had a credit card and had built up a better credit rating. I'm sure that my credit score is lower than it would be had I been using a credit card for a few years.
I did run into a bit of trouble twice though when I was renting a car, but I've managed to rent hotel rooms (under 25 years old) and bought plane tickets with out any problems. Money has gotten pretty tight without having a line of credit to cover low times, but I've always lived below my means and cut way back when money was tight. Right now I have a healthy savings account that I am about to dip into to travel to Prague next summer for 2 weeks.
I'm actually fascinated by the fire station. Can I ask you more about that?
Sure. I'm really not shy about my situation. I live in Wichita, and a lot of people have heard about me at least in passing or at parties. It's hard not to own a fire station and a fire truck and not be noticed! People are a lot less shy about asking those questions when it's such a unique situation. Apparently its hard to gauge the market on antique fire truck and fire stations.
How much did the fire station cost?
Originally, the seller was asking $120,000, but after some negotiating I ended up paying $116,000 and got the three large window AC units (there is no central air) and several appliances. The home was only appraised at $115,000, so I had to cover the $1,000 difference at closing.
And you bought this right out of school?
Yeah. I was lucky to be able to afford a down payment right out of college. I was lucky to owe as little as I did with my masters degree. I worked 2-3 jobs every summer to be able to live and go to school without working during the semesters. One summer I worked 70+ hour weeks, and some of those days were 16 hour days between two jobs. I also had some help from my parents.
For my mortgage, I have an FHA loan, which only required 3.5% down. I know it probably wasn't the most responsible thing, but I didn't want to live with my parents and commute 30 minutes each way, and I didn't want to rent and just lose that money each month. Was it the smartest choice I could have made? Maybe not, but it has been a lot of fun and it hasn't set me back financially so far as I can tell yet!
My sister lived with me for a lot of the time I've had the fire station, and she has paid a little bit towards rent, which has helped me increase my savings.
When did you buy the fire station?
I bought the fire station two years ago this June. I've actually refinanced my mortgage since I purchased it: I dropped my loan from 5.875% down to 5.0%. It cost me a little bit in closing costs, but it reduced my monthly payment from $893 to $803. I pay an additional $100 each month towards principal, which is bringing down my loan quicker than I anticipated.
I bought my house right before the market went downhill fast. I bought it before the $8,000 tax rebate, but I did qualify for the $7,500 tax rebate that I will have to pay back. I used the rebate along with some saved money to pay off completely one of my high interest student loans. I traded a 10-year 6.8% student loan for a 15-year 0%-interest loan (rebate) from the government.
Why a fire station?
I bought the fire station because I was looking for a place of my own. I wanted lots of space where I could build things and have a small shop. I also like having extra storage because I'm a bit of a collector — I have trouble throwing things away. Plus I had plenty of room to buy and store an antique fire truck. (Granted, I wouldn't have bought the truck if I didn't have a fire station.)
And you have a fire truck?
Yes. About a year after I bought the Fire Station, I bought the fire truck that lives in the garage. The fire station was built in 1953. The fire truck is a 1966 Dodge and comes from a small town called Centralia, Kansas. My dad grew up in Centralia, and it was the fire truck in town when he was a kid. It only has 1600 miles on it, and at least 400 of them are mine.
The truck is probably the most irresponsible purchase I've made. I found it at an online auction. To buy it, I had to get a two-year loan at 9.75% through my home-town bank (where I've been a customer for a long time). The truck cost me $5500 after the auction fee.
What's it like to live in a firehouse?
Living in the fire station has been a lot of fun. The garage is large enough to have friends over and have parties, and when we cook out we can open up the large doors and eat in there and still feel outside. The winters are a bit tough with the gas boiler. My gas bills in the winter have topped $350 on more than one occasion.
I've enjoyed having my own home:
- I have lots of space to plant vegetables in the summer and flowers in the fall.
- I recently bought raspberry and black berry plants so I will get some fruit in the years to come.
- I can do renovations if I feel like it and feel like I am getting something out if it.
- Recently I have also started brewing my own beer at home. I am about to bottle my first batch and we will see how it goes.
With my tax refund this year, I think I'm going to pay off the loan on my fire truck so I'll be able to shift more money towards savings and put more of it towards my student loans. I debated using my tax refund to pay down my student loans since it would save me more in the long run, but having one less loan to worry about and being able to apply that money towards the student loans with the flexibility was much more appealing. (Also, it would allow me to begin saving for a possible engagement ring.)
J.D.'s note: I'm not a fire-engine sort of guy, but I have to say: I love this. I love the brick firehouse, and I love that Jacob went out of his way to find a fire engine. There's nothing about this that isn't awesome. It's too bad his story didn't make the final cut for my book, but I'm glad to be able to share the extended version here.