House Rich or House Poor?

Post written by Monica Gaylor.

“A house is made of walls and beams; a home is built with love and dreams.”  Unknown

“A house is a home when it shelters the body and comforts the soul.”  Phillip Moffitt

The Best Decision I Ever Made

When I am 100 years old – I bet this decision will still be in the top 10 of my all time best decisions.  Generally, I march to my own drummer and people are often left scratching their heads trying to understand my motives and subsequent actions.  Some of the good decisions I have made were going to college (total accident), then bucking the business degree and going back to study art, traveling the world, teaching, and I hope that starting this blog will rank high too.

But, the best decision I ever made was to buy a really inexpensive-fixer-upper house, which I paid off completely about a year later.  I was 33.

I have to say that most people thought I was crazy.  And, according to the trend in home owning at the time – I was really going against all common sense thinking.  I heard things like:  “That neighborhood?” “But it won’t appreciate as fast as a house.”  And “It’s so small.”  Not to mention all the comments about its interior.  “It has dark-brown carpeting.”  “There is no dishwasher.”  “There is no washer and dryer.”  “The bathroom is horrible.”  Etc.  And I don’t want to rose-color it for you – these things were all true.

In 2001, I purchased a tiny little co-op (think apartment or condo not 60’s commune).  It was 800 square feet, 2 bedrooms, 1 bath, and a balcony that was built into an extra room off the living area.  With a boatload of flaws, it was a serious fixer-upper.  But, flaws and all, it was livable.  (Note:  800 sq. ft. is about as tiny as it gets in my area of the country.)

The rules of this co-op are that all units must be purchased with cash.  No mortgages allowed.  This was some HUD requirement.  And, this made it tough for others and myself, but did keep the prices low in comparison to other condos and houses in the area.  The seller and I settled on $17,500.  I did not have this much cash just lying around so I had to creatively finance it.

I had about a third of the cash.  I refinanced my car for another third. And for the last third I got an unsecured loan from my bank.  It pays to have good credit and no credit card debt.  I think I even took a credit card check to the escrow company to pay the closing costs.

I justified this purchase in several ways.  One, I owned the house outright.  I did not own my car anymore, but I definitely owned my house.  I could not be homeless.  This can be a big fear to someone who does not have parents or reliable family to count on.

Secondly, I justified all the new payments (car and unsecured loan) as not actually being anymore than rent on a two-bedroom apartment.  And furthermore, it was rent that would end in 4 years (car loan) and 5 years (unsecured loan).  It was not a hideously high mortgage that would finally end in 30 years.  I travel a lot, but if I had to give up traveling for 4 years I could do that.  It turns out that I did not.

And lastly, I was house rich, not mortgage poor.  I wanted to be able to have a house and a life, not just unreasonable bills.   I purchased the co-op because I really did not want to change my lifestyle.  I preferred cheap expenses so that I could travel in my off time.  I wanted to own a house – but I did not want the big mortgage payment that goes with it.  Thinking outside the box let me have my cake and eat it too.

The equity in my house is sweat.  I am and artist / sculptor and thus have skills.  Aside from some electrical work, I have done the fixing-up myself.  And we are not talking just painting.  I tore out walls and closets.  I rebuilt said closets to be bigger, better, more efficient, and to take up less actual floor space.  I ripped out carpeting (gross).  I laid tile.  I cut holes in walls, dry walled, and refinished / textured the drywall.  If I didn’t know how to do something, I researched it and then muddled through.

I really lucked out on the bathroom.  It was truly horrible.  The cast iron tub had many large chips in the porcelain.   The shower surround was off-white (tub was white?) and was never finished at the top.  And the toilet was simply disgusting.  I am not going to go into it.  Luckily (and one of the reasons I purchased there), part of the co-op maintenance fee covers some electrical problems, plumbing, bathtubs, sinks, etc, but not cosmetic issues.  So, when my plastic surround thing in the shower / tub began to crack and leak water, the co-op retiled it for free.  And a few years later when my tub / drain was rusting out and leaking, the co-op did a new tub liner and drain fix for free.  It looks brand new.  I thought I would have to replace the toilet myself, as it was very stained and ugly.  But, someone told me to try a pumice stone first.  It got all the stains off – completely.  When my friend who criticized the bathroom visited, she asked me if I had gotten a new toilet.

Fixing up my fixer-upper was quite a workout, but it is now a beautiful little artist loft.  It no longer has two bedrooms, as I prefer the “no wall” loft look.  You walk into the back and fall into a big bedroom / office space.  It has a big studio (requirement) and a great room (kitchen / dining / living room area).  It is awesome.  I did these tasks slowly and as I could afford them, so I never had to get a loan for said work.  The same goes for the new appliances that were replaced as needed and as I could afford them.

No, my little house does not have a custom built kitchen with stainless steal appliances and granite counter tops.  These things are not important to me and certainly not in line with the simple / minimal lifestyle that I have in mind for myself.  With the kind of money people spend doing remodels like that, I could go to Europe for 6 months or take a year leave of absence from my job. (Oops.  Sorry – jumped on my soapbox for a second.)  But seriously, the people who did that and took out a second loan and added more credit card debt to their life; are they any happier?  I bet not when they are writing the monthly checks for it 5 years later and it costs twice as much as the original price.

For 10 years I have lived with the knowledge and freedom that my house is paid for.  This has made all the difference in the world.  I am never stressed about finances.  I know that if I lost my job or something – everything would be ok.  I can honestly say that less is more and less is security.  I have watched colleagues and friends be stressed about their mortgages and some have even lost their houses.  I have reached the conclusion that it is time in America for a paradigm shift.  Americans spend way too much on their houses, both in buying them and having ‘others’ fix them up.

Yes.  I get that a house is important to many people.  And, it is important to me too.  But haven’t we become a little ridiculous about the amount of space that we need, the right neighborhood, the “new” factor, the “remodeled” factor, and the get it over with quickly attitude.  In the 50’s, the American family was bigger and needed less space than the smaller American family of today.  While families have shrunk, house sizes have more than doubled in size.  And the kicker is, in the past 30 – 50 years ago, they were happier.  My thinking is this – they were happier because they had the necessities and just a little bit more.  They focused more on the family “experience” rather than the family perception to others.  Values mattered more than things or space or the “right” neighborhood.  I recommend you give “less is more” a chance – become house rich.


One thought on “House Rich or House Poor?

  1. jean November 9, 2010 / 1:35 pm

    Great blog post. I love the focus on saving money!

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