Prosperity

I know a number of people who claim they can’t afford to buy a house or they can’t make it on a single income, and I truly have to wonder if they are living in a different world than mine.

See, I live on a single income. I bought a house with just my income. I sent my children to college with just my income (and scholarships – I have very bright children, who are all now over 20 years old). I can do pretty much anything I want with my single income.

People are going to say that I must have a very well-paying job to do all of this.

I’m going to tell you a secret – my take-home pay from my day-job is less than a thousand a month. Not much less, but it’s still under a thousand.

I am currently earning more money than I ever have, and I didn’t have this job when I bought the house. I was, in fact, virtually unemployed at the time, working for a temp agency, and averaging maybe $500.00 a month there. On that, I bought a house. I was not too proud to take advantage of many, many programs out there to help low income people buy houses. Nor was I determined to buy new. A used house is good enough. I looked at houses on tax auction (and almost bought this lovely brick 4 bedroom house on 3 acres for $10,000 – except it meant the children’s father would also have to move so we’d be within the mileage requirement of the divorce order – not likely). I looked at repossessed houses and found several likely candidates. I jumped through all their little hoops, and I made outrageous promises (which I kept), and I bought a house. A brick house, sitting on a quarter acre of land, 3 bedrooms, 1 bathroom, a huge kitchen and huge living room.

Yes, the plumbing sucked, and the wiring is 35 years old, but the roof, foundation, and frame are sound. The mortgage payments are less than I was paying for rent – inlcuding ad valorem taxes, property taxes, insurances, and all the other taxes and fees homeowners must pay.

Yes, it was a terrible ordeal, and I don’t want to have to go through all of that again, but honestly – buying a house is much easier than buying a car (another ordeal I will avoid).

But it is possible, depending on what you want anad what you’re willing to do, to buy a house on a single income – and a very nice house at that.

Yes, keeping up with utility costs can be harrowing, but you’d have those costs regardless of renting or owning. The worst part is that the utility companies don’t tell you what you’ll be paying for your usage until after you’ve used it – sort of like going in to a restaurant and ordering a meal, but there are no prices on the menu items and you won’t know what the meal costs untilafter you’ve eaten it. Even if you try to select menu items you think are cheap, you won’t know for sure until the reckoning. Very wealthy people may be able to live like that, but us working poor, we want to know up front what things will cost so we can decide before we use it if we can afford it. We can’t afford to pay after the fact – not easily. And yes, I know about bill averaging – but that only means the exorbitant payments will be delayed, not that they won’t happen. Even that can still be a hardship.

My solution is to economize deeply on energy costs. I have multiple sources of energy (a portion of my electricity comes from windpower, I use propane as well as natural gas for heating and I am saving to install a fireplace for further energy savings – I have plenty of trees on my property for wood, don’t hesitate to collect wood set at curbside after storms, and know places to gather free firewood, and I use rechargable batteries for the battery-operated appliances I use), and I use as little energy as possible in an urban environment.

I don’t have to have state-of-the-art, top-of-the-line, all-the-bells-and-whistles items. If it’s sturdy and works as I want, then that’s good enough for me. I’m not about to pay for features I’ll never use, and I’ll willingly pay extra for those non-standard features that I will use.

Perhaps one of the things that makes my life more luxurious than others’ is that I have no credit card debt and no outstanding loans other than the mortgage payment. I haven’t used credit cards in more than 20 years and it’s been a tremendous savings to me. I’m not wasting a quarter of my income on interest fees, and I don’t have to pay 3-4 times what an item is worth once it’s paid off on a credit card. It may take a little longer to save up for a higher dollar item, and it may take planning to have enough cash reserve to pay for impulse buys and items I want that go unexpectedly on a really good sale, but in the end, my dollars buy much more whan I pay cash than were I to use credit.

People moan about not having a credit history or not having good credit if they don’t have credit cards, and it makes no sense to me. When you buy a house, your credit counts a little bit – but it’s your monthly utilities and paying your landlord on time that matters most. Mortgage companies work with people with bad or no credit, and even bankruptcy is no bar to buying a house. Ditto for buying a car – used or new. And medical bills? Well, they may hurt to pay back, but your credit is less important than your insurance. If you can get cheap insurance (check around – it’s possible) or have set up a Medical Savings Trust Fund or Account, then even that isn’t effected by your credit. The only time you have to worry about your credit history is if you’re going to buy small dollar items on credit. Houses, cars, land, even good jewelry, can be bought without a credit history. So, I say fie on credit history. Who needs it?

I’ll tell you one of my secrets for saving even more money on things: pay cash. Especially for services like plumbers, electricians, construction, auto care. If you pay cash, almost all the time, they’ll give you a cash discount. That discount is always more than what a decent tip for the services would be, so you can pay the worker a nice tip and still pay less than someone who charges it. And – if you tip well, the next time, they’ll give you a better discount.

I also don’t hesitate to shop around for the lowest price on high dollar items like furniture (and again, I am happy enough to freecycle, recycle, trade, barter or buy used – I just got my computer restored with a new hard drive and all it cost me was a lasagna). I’ve helped friends save thousands of dollars in buying cars by doing this. And even the little things benefit from a shop-around – I now know where to buy 25 pounds of rice for $3.00, a gallon of fresh milk for $2.50, who has the best bones for making pho, and where to harvest pecans and other foods at no or low cost. I belong to a food coop, too, which allows me to buy buffalo and venison for less than the grocery store charges for beef.

I live well because I’m willing to take the time to do the research and to follow up.

The initial research may take time – I didn’t learn in a weekend where to get good, inexpensive milk or who had the best bones or when the harvest seasons were for assorted foods. Plan on spending several years getting this down if you don’t have friends or family membres who will share thsi information with you.

And once you’ve done the research, you have to make plans – plan on your route to grocery shop so you don’t back-track and recross your path too often. Plan your meals so you only have to grocery shop once a month for your non-perishables and no more than once a week for perishables.

Set up separate checking accounts for bills that can be direct debited (like your mortgage, insurances, internet, and car payments – but not utilities or credit cards) and don’t charge extra for it (some do – check first). If you can pay through direct debit, it saves you postage and the task of remembering to send the payment in – and no worries about the Post Office losing your payment. Once you’ve paid via direct debit for a while, some companies give you an annual refund or lower your payments (or both!), saving you even more money.

If you can afford to pay things like your internet service or insurance annually, you can often save 1 or 2 month’s premiums. I’d recommend, if you’re just starting out, to take a year or two and deposit double payments into the debit account, then at the end of the year (or two), change your debit to annual. Remember to keep depositing the money monthly so when the next year’s annual debit comes up, you’ll have the money there. If you deposit the full premium all 12 months, and they only charge you for 10 or 11 months, you’ll slowly build up an excess. You can either upgrade your service or remove the excess to a saving account or purchase stock or bonds with it.

If you’re young (under 40), you’ve got plenty of time to do these things and build up a good savings relatively painlessly. If you’re old like me, you can at least be saving some money to splurge on other things.

Whatever you do – avoid credit cards like the pestilence they are! Take out loans for really high dollar items only (like mortgages and cars). Carry only the least insurance you need – don’t get greedy. If you’re young, consider term life insurance and if you’re old like me with no dependents, forget life insurance and get some pre-paid funeral insurance instead. Make sure your will is on order regardless of your age. Destroy previous copies of your will so there’s no disputing it when you do die – and you will die. We all do. If you live your life so you pay for everything you buy when you buy it, you’ll be able to afford nicer things and you won’t leave crushing debts behind for others. Even if the last part means nothing to you, the pleasure of having nicer things, affording vacations, and so on should.

The insidious evil of credit cards is that they make paying triple and quadruple the real vaue of something just for the instant gratification of owning it now seem painless. Take a minute to calculate it out – with interest, how long will it take you to pay for that velvet cloak or new iPod on a credit card? How long will it take you to save up the cash for it if you set aside each month what you would have paid the credit card company? Chances are, it’s a lot less time to save than you think and you can probably get a better item later.

“If you don’t have the cash to pay for it, don’t buy it” has been my mantra for several decades. That’s why, with a single income, I can afford to buy a house, and send kids to college, and have nice things, and do fun stuff – even with a monthly income of under $1,000 a month. I can afford all I need and a surprising amount of what I want. And I can still donate to charity, too.