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Debt Free Home Ownership

Posts: 230
Location: CW Ontario, Zone 5
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Hello everyone! I recently wrote this little piece up on my my blog .

I'll post it here for fellow permies to enjoy.

“On applying to the assessors, I am surprised to learn that they cannot at once name a dozen in the town who own their own farms free and clear. If you would know the history of these homesteads, inquire at the bank where they are mortgaged” – Henry David Thoreau, Walden

Such is the way of the 21st century home owner. Spelled out by Henry Thoreau all the way back in 1854. He saw what was happening to the western world back then and today the things he said in Walden are even truer. Now it is nearly unimaginable for someone to buy a home without getting a mortgage and paying for the next 25 plus years. This is the norm.

Have you ever looked up the origins of the word mortgage?

mortgage - Old French mortgage, equivalent to mort, dead (< Latin mortuus) + gage, pledge


Indeed a death pledge. Having a mortgage basically sucks all the life out of you by making it so you have to work really hard every day for a long time to pay the monthly payments. Usually 25 plus years!

Let’s say you took out a 25 year $100 000 mortgage (most houses these days are over twice that much) at a rate of 6% interest. That works out to be a monthly payment of $644.31 and a total payment of $193 293. Holy smokes, that’s almost double the amount initially borrowed!

So just by following the standard operating procedure of today’s society and getting a mortgage to buy a house you can’t afford, you end up paying twice as much for it with the interest payments. You are paying the bank as much as you borrowed. What a sweet deal for the banks.

But you don’t want to pay the bank a stupidly large amount of money and still be able to own a home? You want to be debt free and not be renting a crappy apartment for the rest of your days? You don’t want to work really really hard for the next 25 plus years at a job you don’t like and live in a beautiful home you fully own? Absurd! Crazy! That will never happen! Pipe dreams! Can’t be done! Is what they will tell you. But….

It can be done! It should be done!

How you ask?

The journey to debt free home ownership begins with the accumulation of money. I hope you didn’t think there was a way to do this without money, because there isn’t (unless you are really lucky). The world we live in uses money, so we must also use money. Money is a tool to get what we need/want. We need a home to live in and time to enjoy life. We need money to pay for the home so we don’t have to sign up for a ‘death pledge’ and sacrifice all our time paying back a loan.

“A dollar saved is worth a whole lot more than a dollar earned, because we have to earn so darn many of them to save so precious few.” Rob Roy, Mortgage Free

So true indeed.

To accumulate money quickly, extreme saving techniques need to be implemented. By following a philosophy of living based on providing for your needs and seriously reducing your luxuries, it is easy to save a ridiculously high percentage of your income. Before you know it you will have a large amount of money saved up and you are one step closer to owning a home outright. There are many strategies for going about doing this. You should check out my article on extreme saving and these other blogs which go into great detail on the subject. ERE and MMM.

Once you have a good chunk of money saved up, it is time to go out and look for a piece of land. There are many factors to think about when buying a piece of land and you should think carefully on them. Where do you want to live? How much land do you want/can you afford? What kind of jobs are in the area? Will you be on or off the grid power? Is the land suitable for establishing a permaculture farm? You shouldn’t spend all your hard saved money on the land either; keep a bit to build your initial living quarters. There are always costs you don’t factor in to your initial calculations, so having a little extra is always a good idea.

There are a few ways to go about looking for the right piece of land, such as MLS sites, classified ads, or contacting a real estate agent in the area. These are all well and good ways of getting property, but they might not land you the best deal. Maybe the way to find the best deal is to go land prospecting.

What I mean by this is driving around the country side in the general area of where you would like to purchase land and look for nice spots and for sale by owner signs. If you see a place that looks really nice and you might like to live there, go around and start talking to the neighbours. See if they know who owns that land and if they might be willing to sell you some, or if they know of anyone in the area who might. Who knows, that piece of land might belong to some old person who wants to see something done with the old family farm, but would rather not sell to an industrial farmer. You might be exactly what they are looking for in terms of someone to take over their land. By creating the opportunity for it, amazingly good luck may just come your way and you get a super sweet deal. If you don’t go out and try you’ll never know. You can always go back to the MLS sites and real estate agents, but they will almost certainly not bring you super sweet deals.

By talking to the locals you can also begin to establish some relationships and find out in more detail what the area is like. You might learn some key information, or just make a new friend. If you happen to get a place near by, these people might help you out with your projects, or hire you on to do some work for them, or be one of your loyal future customers. Building community is always a good idea and it starts with talking to the locals.

So you saved up a bunch of money, did some prospecting, found a sweet deal and now you own a nice little piece of land which you payed cash for. No need to get a loan because of your excellent saving and prospecting skills. Now it’s time to move out of your apartment, quit paying rent and get on to the land you just purchased. ‘But I need a place to sleep’ you say…

On to the next step on the journey to debt free home ownership! Building a temporary shelter.

Basically this means building a small, low cost structure on you land where you will live while you build your permanent house.

“With respect to luxuries and comforts, the wisest have ever lived a more simple and meagre life than the poor.” Henry David Thoreau, Walden

By moving onto your land right away and setting up a temporary shelter you eliminate the cost of paying rent somewhere else. This is huge in terms of saving money. Even if you were following the methods of extreme money saving and had a super cheap apartment, it would still be costing a good few hundred dollars a month. Now those few hundred dollars a month can be saved up towards the building of your permanent home. This money will add up fast.

You also gain valuable building experience. This building experience is very important for first time home builders. Most people have never built anything before, let alone a house and the task can seem quite intimidating, which leads to a lack confidence. But by setting about the task of building a small, easy to build structure, based on straight forward plans, the first time builder will find that it isn’t really all that hard. Completing this build brings about a major confidence boost and a new way of thinking about how shelter is provided. After all, birds, bees, and beavers can build themselves a place to live, why can’t we?

Building the temporary shelter also allows you to make lots of mistakes which won’t effect your living conditions for too long, but will give you valuable insight into what not to do when moving on to the building of your permanent home. Making mistakes is unavoidable (unless you are perfect, which isn’t likely) and not necessarily something you want to avoid. They are valuable learning opportunities, especially for the first time builder. The construction of the temporary shelter provides the best space for learning from mistakes. This shelter is by definition temporary. That means you won’t be subject to your mistakes for very long and you won’t make those same mistakes again in future builds, thus making the construction of your permanent home much more mistake free. You wouldn’t want to make all those first time mistakes on the home you plan on living in for an extended period of time. This could lead to all sorts of avoidable head and heart aches.

Having a place to live on your new land while you build your permanent home is also a huge plus. Now you are on the land every day, getting a feel for it, planning where you think your new home should go, and observing the natural elements that will effect your home. Once construction of the home begins, it is much easier to get work done when you are living on site. If you were living in the old apartment, say 30 minutes away, when building the home, it would be much more of a pain to drive out to the construction site and get to work, only to have to pack up later and drive all the way home. Living in the temporary shelter allows you to just wake up in the morning and get to work. You can see the progress everyday when you look outside and are more motivated to keep going even if the weather sucks sometimes.

So you say “I don’t want to live in a little shack that I made lots of mistakes on” and would rather bring your fancy pants trailer out to the property to live in while building your home. Fine then! You can do that, but you will be missing out on tons of fun and learning. Trailers cost a lot of money though and unless you were living in one prior to buying the land, you aren’t following the strategies for extreme saving. You had better follow the next step to gain building experience though.

On to the next step of the journey! Building a low cost home.

We finally made it to the part about beginning to build your actual home!

This begins with research and planning. You should do lots of research into the type of home you want to build. Watch videos, read books, talk to people. There are many different building methods you could use for your home, they each have their pros and cons. One of the main deciding factors in choosing which design method you should use is the availability of materials. Using materials from the land, or from local sources is much cheaper and friendlier to the environment than buying materials which have to be shipped thousands of kilometres. Building an earth sheltered home using logs from the forest and the soil on your land is way cheaper and better than building a conventional style house with toxic plywood and bricks made in some factory a long ways away. So by observing your land and learning about the local area you should get a good idea of the type of home to build.

So you’ve done the research on the different design methods, the availability of materials, the factors affecting your land, and the local building codes and have decided which kind of house to build. You’ve studied all the books, read all the forums, watched all the videos, and talked to all the people you could about this design method and are ready to start planning your home.

The first key to success when designing your initial home is to keep it small! Nothing leads to frustration and disappointment faster than taking on a project that is way too big. There is no reason to jump right into building your dream three bedroom, two bathroom, two story, open concept 2000 square foot house. Not only is this way too much to tackle in one go, but it is also really expensive. Sure, you are saving lots of money now living in a temporary shelter on your paid-for-in-cash land, but you still don’t want to take out a lone just so you can jump right in to building a mansion. Once you complete your initial small build you can add on additions in the future when they are ‘needed’ and as you save more money. You will also have the experience from the initial build which will help you in planning and building the future additions. So start small!

The next key to success is to keep it simple. The same points apply here as to keeping it small. Designing complicated roofs, or fancy this, or experimental that will just make the job of building your home more of a hassle and less fun. Stick to a basic design that is straight forward and has been tried and tested before. The longer it takes to build, the less enthusiasm you will have to work on it as time goes by and the more stressful it will become. Stress and lack of fun are to be avoided and it all starts in the planning.

Building a small, simple, well designed home you can afford can be done in a matter of months. Now you can move out of the temporary shack type building you were staying in and into your very own debt free home!

Now you’re laughing! You have a nice place that’s paid for, functions well by good design, and you know about all the systems and how to fix them because you built the whole thing. From here on out you have a serious amount of freedom. You need very little money to pay for general living expenses because you have been practising extreme saving techniques, so you don’t need to go to soul sucking job every day all day. You now have the time to do even more cool things, like continue to implement permaculture designed system on your land which will further reduce your dependence on money.

So some time has passed, you have saved up a ridiculous amount of money in relation to how much you worked, and you decide for whatever reason that it’s time for more room in your house. No problem. By now you are more or less an expert when it comes to building whatever home design you chose to build, so you make a plan for an addition. Because you knew you would be adding additions in the future, you made a good design which is easy to add on to. Again, from previous experience, you know not to bite off more than you can chew, in terms of building cost, size, and design complexity, so you add on a reasonably sized, well designed addition. This takes a few months to complete and presto, you have a considerably larger home than you did before, all debt free.

Continuing down this path, in ten years you could conceivably have a mansion of a house, if that’s what you’re in to. Had you gone out and signed up to a ‘death pledge’ to purchase this size of a house right from the get go, you would be no where near paying it off ten years down the road and it certainly wouldn’t be as much fun as building it yourself.
gardener & author
Posts: 633
Location: South Alabama
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Awesome, Simon. You're beyond right.

It's interesting that you mention "10 years" as well: that's exactly how long it took us to save up to buy our current homestead debt-free.

No bank is taking my food forest!
Simon Johnson
Posts: 230
Location: CW Ontario, Zone 5
hugelkultur forest garden foraging cooking
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Thanks David!

Well done keeping those bankers away!

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