Re-Evaluation

 

63fbc37988fe505c7cdb87b8eabfb431When I first started looking in to getting my own place, it began with a quest to find out what I could afford for a mortgage, and what kind of house I could build. I knew from the beginning that I wanted a small house—that has never and will never change.

Before discovering Tiny houses on wheels. I searched for ideas for small homes in general, little cabins and cottages under 1000 SF. I spent hours on pinterest and other websites looking for small homes that I could potentially build.

I went to mortgage calculators and read information on home loans and interest rates. I learned that for a small loan, less than 100k, my mortgage payment could be less than $600. That seemed doable.

I had come to settle on these plans below. The house looked picturesque and adorable. It was about 700 SF and was perfect for me, with a little kitchen, a small bathroom, and an adorable porch.

mydreamhome

So why did I shift from this to tiny houses on wheels? Well at the time I was only making about $300 more than my bills each month. It was a dream at the time, just a dream.  It was a fun dream, and I enjoyed looked at the small houses.  But then my search took me to tiny houses. I was enamored. I still am. And I had found something that I could potentially do with my limited funds. The dream took hold.

Don’t mistake my tone. I sound like the dream of living in a tiny house was a fad or a phase that has since past. It is, and it isn’t. I think that I could do it, and I was fully prepared to. But now I’ve gotten a promotion and 2 raises. Once my Credit Card is fully paid off, I will be making $1000 more than my current bills. Once my credit card is paid off, I will also pay off my phone and my iPad. So that my only bills will be my data plan, which work pays for, so basically a free cell phone, my car insurance which I may be able to call and get lowered since I’ve not had an accident for like almost 10 years and even that accident I did have I paid out of pocket instead of insurance, and my student loans.

Car Insurance: $70
Student Loan: $400*
Other Loan: $150**

*This loan is on a sliding scale. So the price to pay goes up, and will go up to around $800 before it’s paid off. I would like to pay more to it, instead of the minimum. Already I am paying about $50 more than is required. I would like to be able to double that, start paying $800 or $1000 to it instead.

**This is a loan that is in my parents name. I currently pay them $350, $150 for the loan and $200 for rent. But when I get my own place I won’t have to pay them the rent.

So, $70 + $800 + $150 = $1,020
I currently make $568 a week x 4 = $2,272
Which leaves me over $1200 left after bills.

I of course didn’t include gas and groceries.  Right now gas costs me between $20 and $25 to fill my tank, and I fill it about every ten days or so. If I got a place closer to work I could cut that cost, especially if I got a place potentially within walking distance.

For groceries It depends on what I buy, but generally I pay less than $30 a week. I get 5 Healthy Choice meals for $2.50, a box of fiber bars for $1.60, and a couple of steamer bags of mac and cheese with broccoli or peas. I sometimes get a couple of pizzas. Of course there are times when I need other things, and when I live on my own I’ll have to think about dinner too. But I think I could do weekly shopping for under $100 a week at most, and many weeks under $60. But if I budget $100 a week that should be enough and give me extra money for the occasional splurge.

So Gas and Groceries for the month would be about $500 but probably less, like $400 or even less. That brings me down to $800

I’ll have other bills of course. I’ll need electricity. Propane for the stove and for heating the house and hot water. I’ll have a well so I won’t have a water bill, just electricity to the well pump. I did some googling and got an average electric bill of around $100-$130, but I wonder if that assumes a family of 4. To be safe I could just assume $130 for electricity. If I got an on-demand water heater instead of one that keeps a tank of hot water constantly hot, and since I rarely use the stove, my propane bill wouldn’t be very high, higher in the winter when I need to heat the house, but a small house costs less to heat. I think it costs like $800 to fill a 500 gallon tank, and that would be good for a year? I could be wrong I gotta research that. But that’s around $70 a month.  So between gas and electric thats another $200 and brings me down to $600 left.

That doesn’t include internet. That ranges for $30 to $100 a month depending on what speed I want.  We pay around $60 right now at home and that speed is fine. So we’ll say $60.

That leaves me with $540 for a mortgage.  Now, I can’t use ALL that. I want to be able to save some money into savings for a rainy day. At the very least $100 a month into a 401k or something. So now we’re down to $440 a month. Sheesh.

$440 a month could get me between $60-$70k home loan. That might be doable for a very small house, but that doesn’t include land.

Now, with all these numbers rattling around, it’s all pretty tight, doesn’t account for sudden issues. What about if I need a new roof? What if my water heater dies and I need a new one? What about getting books or movies. Great to have internet, but sucky if you don’t have any money to buy games or movies or art supplies or books.

It all gets pretty depressing when you think about it.

But wait! There are other options. Who said I even need a mortgage? I was going to build my tiny house before, why can’t I now?  Sure I’d need to pay professionals to do some stuff that I wouldn’t be able to do. But it’s not impossible to consider. And I’m sure my Dad would help, perhaps even my other family.

If I chose to save up after I pay off my credit card, I could save up that $1000 a month for a year and have around $12,000 or more. I could save for another year and have $24,000. With that I could purchase my land. then that money could begin going to building materials as I can afford them. I can live at home and build over time.

Then if something happens, if I lose my job, the land is mine no matter what. And if I don’t lose my job, if nothing happens, then my home is build and mine and I have no mortgage, and all my extra money can go to paying down my student loan.

I think that may be the way to go. It means living at home for another 1-2 years while I save up for land, then continuing to live at home while I build my house. Lets do some more numbers, because I think it’s fun.

Pay off credit card by: September 2017
Save up until I have $12,000 so until September 2018
Buy land at the end of 2018
Start building in 2019.

It’ll probably take me a couple years to build it, if I am going as I can afford to. So I’d have my own home around 2022 provided nothing bad happens. 5 years.

It will take longer, I’ll live at home longer, but in around 5 years I’ll have my own mortgage free home, and still have several hundred more than my bills each month so I could start putting $1000 a month onto my student loans to pay those off. I could potentially have my student loan paid off by the time I’m 45-ish.

Of course that is all dependent on me keeping a good job.

It all seems so daunting, and sometimes I wonder how people do it.

A super quick home estimator calculator tells me that materials will cost $45,000 to build a 600 SF house with no super special features. If when I go to build I’ve still got $1000 more than my bills a month, it will take me 45 months, or almost 4 years to afford all the supplies.  Of course that calculator includes things like light fixtures and appliances and other things. I could still salvage a lot of stuff to bring that cost down.

I think what I need to focus on right now is taking it one step at a time. Pay off my credit card. Make sure it is paid off by September. Focus on that. Then in October pay off what is left of my cell phone and my ipad. November and December I’ll focus on the holidays and getting/making gifts for people.

Then start saving, all that money that was going to my credit card goes into my savings account. I’ve got $300 in there right now. Add to it.  At the end of 2018 take that money and decide what I want to do. Do I want to buy land? Do I want to use it as a down payment and get a home loan? I’ll have around $12,000 hopefully. I’ve seen on real estate sides lots of 1.5 acres or so going for about that much, sometimes less.

In the meantime, start doing research on building. Start considering home designs, materials, what I want and what it will cost. I don’t have to make a decision today.

 

 

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