|
|
|
I have been re-reading Possum Living by Dolly Freed. Her number one thrift tip is to have your house paid for. She says: "Have you read John Steinbeck's 'The Grapes of Wrath' When we read it, it completely amazed us. All that starvation, squalor and general misery the Okies were forced to endure stemmed from only two roots: (1) the fact that they didn't own their homes outright, and (2) their mule-headed determination to rely on the money economy. They would have had problems, but not all the grief they had, if they had owned their homesteads in Oklahoma. The geek who stayed behind living on wild rabbits probably wound up living better than anyone else in the story."
Dolly might be a little rough, but basically she is right. She's talking about the Great Depression, of course, and some people feel we are headed into that again. So many of us are living from paycheck to paycheck, paying interest on everything we "buy" and buying stuff we don't need.
I also just read "Angela's Ashes" which is a painful and crude read, because I can see that they relied on the money economy instead of getting out and scrambling for food, fuel and the basic necessities of life. Only the author, Frank McCourt, showed much initiative, and he didn't have any guidance from a more experienced person. He survived, and that is the climax of the story. A paid-for house, at least in our current government, is pretty good insurance against starving. But don't make the mistake of using it for collateral on a loan, or you can still lose it. There have been so many newspaper articles in the past three months on people who were well off, at least on paper, who are now homeless. Whatever you have to do, pay off that mortgage. Grow your own food and reduce the grocery bill. Wear your clothes until they are truly worn out if necessary. Stop going out and don't drive unless you have several errands to do. Barter. Help your neighbors. Gather and sell aluminum cans. If you have ten cents left over at the end of the pay period, put it away for an extra payment. This may sound extreme, but I think it's realistic. Don't want any ThriftyFun-ers going homeless!
Source: "Possum Living" by Dolly Freed, Universet Books, 1978.
By Coreen from Rupert, ID
By
07/23/2009
When my husband and I bought our house in 1991, the price was reasonable (for Long Island, NY) and so was the interest rate. Then in 1998 we refinanced to a lower rate but continued to add extra money toward the principal as we had been doing since we bought it. After he passed away in 1999, I continued payments, adding extra again each month, then refinanced again a couple of years later, this time it went down to 4.825 %. But the taxes in my area are high so I ended up taking part of the insurance money he had left and paid it off a few years ago, at that point it was about $59,850 left (on a $128,000 mtge). Now my situation is different than others, we had no children (my second marriage, his first), I had retired about six months before he died in 1999 (not knowing he was ill) and owed absolutely nothing (other than the usual monthly expenses). Also, when I prepaid more each month, I had the choice of whether I wanted it to go to principal or interest, naturally, I chose principal. And again, make sure there is no pre-payment penalty. Mine wasn't, so I was able to pay it off without losing any more money.
Everyone has a different situation. I was able to pay it off (and have not been back to work since I retired). But what worked for me may not work for someone else. And I am very good at budgeting and making the most of what I have.
My motto is to get the most I can for the least amount of money and I do very well. It takes a bit of thought, but definitely worth it.
By
07/23/2009
Nice idea, but if you are already doing the things you mentioned and so much more and just to make the payments, it could be a pipedream. We are managing to make our payments rounding up to the nearest hundred, which is what I have recommended. Mind you, this is not many extra dollars, but at least we are doing what we can, and every dollar decreases our interest. Check with your lender first that extra money goes to the principal, or they can just take it for interest.
By
07/23/2009
This is a thoughtful point, but if you have already been slammed by the economy, how do you do it? I don't have the money, and neither do my parents, who are financially stable. I will say that it's a good plan, but not a very approachable one right now. I'm still trying to see if I am going to be able to be find a job in four quarters when I graduate, as another young person who is going to be permanently disabled. Right now, I can choose between medicine and bills that pile up, even with good insurance. And Kathy is right-if you have a lot free and clear, you will be punished by colleges. Financial aid is out of the question if you have two kids, a paid off house and you claim them on your taxes. Yes, it is thoughtful, but impossible for most average people.
By kathy (Guest Post)
01/15/2009
I think this is a good idea but I have also been told that if you have kids in college and you own your home outright your child may not be able to get grants and government help with college tuition.
By TennesseeTruly (Guest Post)
01/13/2009
My husband is retired, I'm disabled. We just moved from NY to TN and bought our house here. We moved here to save money. The cost of living in NY was so much more expensive than what it is here in TN. We can live quite well on my husband's military retirement here.
We took a large chunk of money and paid half down on our home here in TN and only took out a 10 year mortgage. Every other month, we pay an extra mortgage payment so that we can reduce the mortgage that much more. This way we can pay off our home sooner.
By kddid (Guest Post)
01/07/2009
I am old now. But in 1972 we had 3 little ones. We didn't make a whole lot of money. We bought a house that was 1 year old. We made a house payment, + one more payment, which was like making 3 payments. The second payment was like paying 2 house payments with no interest, just principal. We got it paid for in 1/3 the time. We still live in the same home today.
One year my husband was laid off for 9 months. We lived on unemployment. Our entertainment was playing cards or other games. We didn't starve. When our friends was struggling, we always had money, cause we didn't have a house payment. We never bought a new car, until we had the money saved up to pay cash, cause we didn't want to pay the interest.
Neither of us smoked or drank, so that is like money in the bank also. We are retired now, and living well on our social security, not dipping into our savings. Just a little to think about.
By
01/07/2009
Funny, I never thought of "Angela's Ashes" in that light before. I always thought the McCorts' problems had more to do with irresponsible financial stewardship in general.
Paying off our mortgage is still a distant dream for us; it's also a major bone of contention between hubby and me. He mortgaged the family home when he fell ill a few years ago - thinking more of immediate money than his heritage, I suppose.
Now with an auto loan and other credit to pay off, we've been in a pickle since I was seriously injured and left visually impaired by a drunk driver in February 2003.
Since I've gotten my head together at last, we're on the verge of paying off our highest-interest credit accounts in a couple of months and will fully own our van before Thanksgiving. Then, at last, we can start paying more toward the principal on our mortgage!
By (Guest Post)
01/07/2009
Wow, I've never heard of Dolly Freed or her book, but it sounds intriguing. And your advice is great. Thanks for speaking truthfully about what we all should realize is the right, strongest way to live our lives. My parents got married during the Great Depression, and consequently, they were very frugal. Now, to me, it just seems the best and ultimately the happiest way to live. And being green? That's icing on the cake. We all need to realize that throwing things away, whether its hard-earnned money or resources, is just being a poor steward of what has been given to you.
By ms. carmen (Guest Post)
01/07/2009
That is a very heart-felt article and I thank you for writing it. I always need to be reminded of either needing or just wanting something and these books are good examples of how extreme conditions can get. I agree-pay down that house!
Like ThriftyFun on Facebook
