Monday, November 23, 2009

The Big Pay-Off

I've been touting the Possum living way of life for so long that most of the people who know me just kind of tune me out after a while. Since I first became acquainted with Dolly Freed's philosophy, it has been my goal to pay off my house.

A year or two ago, I was having a conversation with a dear friend about such things. We talked about the benefits of investments versus owning one's home, and at the time, the thought was that it was better to carry a mortgage and put extra cash into a 401K or other investment savings account (a lot of people still feel this way). My friend admitted knowing some older folks who'd lost HUNDREDS OF THOUSANDS of dollars when the stock market slumped a few months prior (this was more than a year before the talk of the recession began,and before the stock market crashed in September 2008).

At the time, I insisted that a better use of one's money would be to invest it in one's home. I said installing things like low-cost/no-cost heating systems, self-sufficient energy sources, gardening tools, seeds, food storage facilities (cold closets, root cellars) were a better use of the funds than carrying a mortgage and having a stock portfolio. My thought was that if we're self-sufficient, if we don't have a mortgage, if we can produce our own electricity and grow a bit of our own food, then we don't need a huge income.

In addition, I argued that owning the house with its self-sufficient systems makes one more secure, because one wouldn't be subject to the fluctuations of a fickle marketplace.

This morning I read this story, which is about a woman who is living my ideal. She's in her sixties and is self-sufficient, living without the help of government programs. She's eligible for a social security stipend (widow's benefits), but has opted to wait a few years when the payments will be larger.

She owns her home, and she has a small income from some creative enterprises (including a rented apartment over her garage). The author of the piece is her nephew, and as he says, she's living better than those of us working 40 hours per week - because she was frugal and thoughtful with her finances ... and because she chose to "own" her home rather than play the stockmarket.

I don't disagree with having a "nest egg", just in case, especially if one has a mortgage, because having that cash in the bank provides a nice feeling of security. In an emergency, we know we can pay for the next meal.

But having the mortgage (or a rent payment) locks us into the money economy, and we have no choice, but to work - often at jobs we hate. If I had, in savings, the amount of money I owe on my mortgage, I would pay the mortgage. I don't care that I would be "losing" money over the long-term. If something happens to the banks (and it has in the past, without warning!), or if my money is invested in stocks, and something happens to the stock market, I lose that money. It's gone, like so much smoke up the chimney.

My house, though. My house is a tangible thing that I'm sitting in right now. It's a piece of land that I can dig into and grow things out of, so that we can eat, even if we can't afford to go to the grocery store. It's a roof that can have solar panels so that I can have electricity even if I can't afford to pay the bill. It's walls that keep the wind and rain and snow from soaking my clothes. Properly managed, this little land with this little house can satisfy all of my basic needs.

Sure, I can think of lots of instances where the house and the land were lost, but right now, more people are losing their homes due to money issues than are losing their homes due to natural or manmade disasters. Despite all the senstaional news reports about floods and mudslides and wildfires, statistically, my money is more secure invested in my land and house than it is as a bunch of numbers on someone's computer screen.

Which is why, *I* would rather have no mortgage and no savings, because if I own my house with a small piece of land and a few chickens in the yard, I can feed myself and my family, and potentially, earn a small income to pay for the other things (we think) we need to be comfortable.

If we had no mortgage, Deus Ex Machina could quit his soul-sucking job and stay home to tan those hides in the backyard, or go hunting, or whatever else he wanted to do. The point is that his time would be his own, and he'd be free to chose the activity rather than having the activity dictated to him.

What it all boils down to is freedom.

The lady in the article has it, and it's what we all say we want. But some time ago we all bought into the notion that money would give us that freedom, not realizing that we'd sold our freedom to the highest bidder, and he's been collecting ever since.

Yes, in our world, some money is essential, but instead of investing to make more money, in my opinion (and in the real-life examples of the lady in the article and my hero, Dolly Freed), it makes better sense to make our lives as low-cost as possible, which means not investing, but paying off.


  1. I totally agree with your logic. Early in our marriage, we pulled all of our monies out of what we considered unstable situations such as stocks. We even eliminated life insurance, choosing instead to keep an appropriate financial cushion on our own to deal with funeral expenses and to arrange our lifestyle in such a way to not be trapped if one or the other of us dies unexpectedly.

    Back when the banks started getting unstable a couple of years ago, we chose to invest in tangibles rather than leave money in the bank or invest in stocks. I feel far more secure with a solar oven, xtracycle bike with electric assist (motor), grain grinder, and some extra wheat berries than having a bank balance.

    Unfortunately, even without a mortgage currently (we rent), we still are somewhat trapped in the money economy. We have expenses that have to be paid regularly in case: utilities, insurance, taxes, etc. Some level of income will always be necessary; the hope is to keep reducing the amount needed!

  2. This is my biggest dream - owning the house we live in - no mortgage at all. It's a long term goal - there really isn't much extra income above and beyond, so the savings isn't growing the way I'd like, but that is the goal. Stocks have never made much sense to me - a roof over my head and land of my own is all that makes sense, for many of the reasons you speak about - vegis and chickens. I'm looking forward to that day.

  3. that goal is the only thing that will see a person through when things collapse. they might continue for quite some time but eventually they will collapse because everything does. it looks like it will happen in my life time but certainly in my children's life time. i want them to learn how to live like this. that is the best security i can offer for their futures.

  4. freedom IS our best security, and I loved this post of yours. We are totally on the same page! This is how my grandparents lived, and the kicker is that MY parents were the sort that came off like doing something other than living simply and paying cash and paying off your house note were all things that backwards people did...people who did not have business savvy. And my grandparents remained modest, minded their own business, and lived just like your friend's blog's Aunt Jane did...just fine doing well with less and living very very well without complicating things and getting stressed. My grandfather retired from a tool and die job and had slowly over the years bought their old woodworking equipment when they it for nothing and set up a woodworking shop in his retirement. They bought down and out broken antique furniture and restored it...Grandpa did the woodwork repairs and Grandma did the refinishing. They kept a big garden, a very small rehabbed farmhouse, and had relatives and friends from out of town stopping by a lot. They didnt wear fancy clothes and took care of the things they did have, ate simply, hung clothes out to dry, and cut the gras with a bushhog. Grandpa hung a Saw Sharpening sign in front of his woodworking shop and got to know all the area farmers that way and got a side income now and then sharpening tools for people. They accounted for every penny for groceries and I remember they checked it all against the receipt when unloading it in the kitchen before putting it away. I sure miss them, and I learned more from them than from my parents who thought they knew better and now are rather stuck in different circumstances due to the difference in choices they made throughout the years. I sure hope I can be like my grandparents. If Jack and I had not changed our way of life drastically and decided to slow things down and "live below our potential" (ha!) we'd probably not be around right now. We VALUE the freedom of being OUT of the rat race,and when anyone marvels over our apparent lack of "ambition" we tell them this IS our dream and we're going down paths we'd never dreamed, but few of them are hinged to money.

    OK sorry to blab your comments to death :)

  5. Couldn't agree more. Stock market is un real. Real estate: in the sense of owning our own home is real. And one of the primary steps in self-sufficiency.

  6. I agree very much; owing money on your house has become such an accepted 'fact of life' that most people don't even consider that you don't have to!
    I can't tell you of all the awful looks I get when I say that I built my house and don't owe a dime on it. People will look at you like you have 2 heads or even suggest that I think I am
    better than everyone else because I don't choose to be in debt. Building my house has been a real eye opener in many ways.

  7. Would you PLEASE stop saying things that make so much sense and make me re-examine the way I do things, lol!

    Girl, you are giving me things to think about with every single post. Thanks for putting your thoughts out there.