Wednesday, April 25, 2012

Tiny House for a Little Money

Brief Thoughts on How to Afford a Complete Change in Lifestyle

When talking about my house, I often get asked the question “How much have you spent on it?”, by which it is implied “So how on earth does someone recently out of college afford to do a crazy project like that?!”  And there’s some good reason for skepticism: I did just graduate two years ago, I am entirely on my own financially, and I do fit into that category of “under-employed” (although mostly by choice) that they talk about on the news so often.

Do I hold a secret to financial success?  Probably not. Well, actually definitely not.  My parents raised me on a financially conservative philosophy that pressured me to save extensively, and in recent years I’ve read a few books on various methods to achieve that “financial freedom” that we all long for.  Most of this post is going to be a rehashing of those tricks, along with some of my own ideas that have enabled me to at least start my journey towards tiny house ownership.  This is mostly directed towards those crazy enough to want to live in less than 200 square feet, since I’ve heard many worrying that they’ll never be able to afford to live the dream and build their own house.  I should add that I am by NO means a financial expert, and any suggestions I have offer no guarantee of financial security.  These are just my ideas that will hopefully offer some inspiration to others to make their own situations financially viable. 

On Savings

We’re all taught that saving a portion of our earnings is the best, most sure-fire way to financial security.  (Or at least we should have been.  By the current state of our country’s economy, it seems that some of us missed this memo.)  From an early age, my parents impressed this practice on me.  My allowance was divided into three portions: savings, charity, and spending money.  I can’t say that I particularly enjoyed seeing my money disappear and nothing but a bank stub come back, but I didn’t have much choice in the matter.

It wasn’t until high school that I willingly purchased a ticket to the savings train.  I don’t quite know why I got on board, but it probably had something to do with the reality of college bills looming on the horizon.  My parents very generously made the offer to all five of their children that they would split college bills 50/50.  By no means did they want any of us graduating college with a heavy debt dragging us down.  This was a fantastic deal (thanks mom and dad!), but it still left me with thousands of dollars in bills to pay every year.  Pretty good motivation to start squirreling money away, huh? 

But in some ways, it was almost too much motivation.  Once my savings started to accrue enough yearly interest to pay for more than just a lunch at McDonalds, I began to want more.  Saving became a game that challenged me to penny-pinch every meal and every mile.  After college, I landed a well-paying job in a remote area of Virginia- the perfect opportunity to join the pro-league of savings.  For each paycheck, I placed less than twenty-five percent in checking for living expenses, and the rest in savings.  During that year, I was able to build up a wicked nest egg, but, to be honest, I had to be a modern day Scrooge to do it.  So it seemed that while the arbitrarily set monthly spending amount guaranteed a good amount of savings, it didn’t always equate to contentment.  

Lots of people recommend setting up a monthly budget with specific spending “categories” that realistically accommodate your needs and desires.  I think these are a great practice, but I just didn’t feel much like putting the effort into tracking my spending constantly.  So instead, I came up with the lazy man’s method of saving.  Essentially, I did the reverse of what I had been doing.  Instead of stuffing money into savings as soon as I received a paycheck, I left everything in checking, spent it (conservatively) until my next payday when I would move the remainder to savings and start over.  With my new, lower paying job, I’m only able to save a couple hundred dollars a paycheck, but every little bit counts and the increased flexibility has left me more content.  

On Credit

In 1929, many Americans learned first hand the risks of borrowing and investing.  Remarkably, these lessons didn't last very long and were repeated in the late 2000's when the housing industry collapsed due to the excessive use of credit.  So we've discovered once again that debt is dangerous and bad, right?  Pretty much.  As a society, we definitely rely on debt too much and treat it too casually, a fact that many tiny housers hope to change through their lifestyle choices.  I personally decided to build a tiny house so that I could avoid debt and be financially free.  But, I should note that I have taken on debt (something I've never experienced before) in the process of gaining housing independence.  

Given that its only been a year since I first heard of tiny houses and I'm nearing the completion of construction on one, its pretty obvious that I didn't exactly make a detailed budget and fiscal feasibility analysis prior to driving the first nail.  There's definitely value to doing such calculations, but in this case, I realized that building a tiny house is one of those projects you can easily dream about doing while never actually accomplishing anything because excuses and obstacles keep popping up.  

Instead, I looked at my savings, determined that I had enough stockpiled to get a decent start on construction, and started making calls to get estimates for a trailer.  It was literally that simple.  But, instead of draining my savings to pay for materials (after all, my money is earning a handsome 0.5%!), I signed up for a couple credit cards with temporary 0% APR introductory rates- essentially free short-term loans.  I shelled out the $4500 cash for my trailer, and then started placing construction bills on the cards, making minimum payments each month.  Is this risky?  Kind of.  If I miss a monthly payment, my APR is jacked up to an absurd rate, and I really only have about 12-24 months to pay the entire balance off.  But, it has enabled me to spread construction costs over a period of a year or two, instead of having to pay cash for everything upfront.  As long as I continue to live a frugal lifestyle, it should be perfectly doable to pay these off and return to the blissful state of being debt free.  Annnddd...I'll be left with a truly livable investment!

First Steps

Really, the cost of construction materials isn't what's holding most prospective tiny housers back from fulfilling their dreams.  In my situation, I faced the following difficulties:

1. Nowhere to build.

2. Nowhere to live.

3. The reality that tiny houses are illegal to occupy in my area (and most areas, for that matter).

Obviously, I overcame obstacle #1.  I've lived in the Richmond area for less than a year, so I didn't know anybody with space where they'd be willing to let me park a trailer and hammer away for half a year.  But, I was determined to start construction ASAP, so I started talking about tiny houses at work and leaving things like The Small House Book around the office.  Before too long, I had an offer from one of my co-workers to use her backyard.  She has joint problems and never goes out there, so she generously has been letting me use the space as long as I contribute some towards the electric I use.

The sad, frustrating part is that I still don't have an answer for obstacles #2 & 3.  There have been some possibilities, but they've been blocked (perhaps unjustly) by zoning authorities.  I was really, really upset about this for a while, and stressed about the possibility of having gone through all this work only to have an "uninhabitable structure" (even though it doesn't fit the definition of a structure).  But, I realized that there isn't any point in worry about this much.  Right now, my backup plan is to move the house to a campground (where I'll have to pay $400 a month for rent, which is actually more than I'm paying right now!).  I won't be saving money that way, but it should give me a great opportunity to test the house out, see where I need to make improvements, all while not tying me down to one location.  Long term possibilities include purchasing my own property, or, purchasing my own property and turning it into something of a "tiny house campground" where people would make a large payment up front (essentially "purchasing" a lot) and then pay an insignificant "rent" every month so that it fits within the zoning rules governing campgrounds and less appealing trailer parks.  If you live and Virginia and the thought of such a tiny house community appeals to you, drop me a line!

So do you need $20,000 to $40,000 cash in the bank to build your own tiny house?  Probably not.  Once you get started, you'll be surprised at how creative you'll become at digging up money bit by bit to get one step closer to a finished house.  Note that I said "probably not".  Be honest with yourself.  If your life situation is very insecure or you've had problems with paying off debt in the past, you may want to practice some frugal spending strategies first.  But if you've got a couple thousand dollars in your emergency fund, why not take the plunge and start swinging a hammer?  Now that you've got my two cents worth, run on down to the hardware store and buy some nails!   

Some Super Resources

Radical Homemakers- Great book by Shannon Hayes on how to shrug off consumerism and become a net producer, transforming society as you go.

Your Money or Your Life- A super involved way to work for your financial independence- and how to actually take advantage of it once you get there! 


  1. I live in Richmond and think that with the number of financially challenged people in the area, a tiny house park would be an excellent idea. I am in love with tiny money, nowhere to build, nowhere to park, and, um, no idea HOW to build anything!!

  2. Agreed! It would be awesome if an organization such as Habitat for Humanity would sponsor something like that.

  3. I live in Fredericksburg and we're currently saving towards buying land and building a home. I'd love to just build a tiny house but two things stop me: 1) my husband is 6'7" so it can't be too tiny and 2) where would we park it?

    Tiny house farms sound amazing. Like a trailer park except the homes would ACTUALLY be mobile, instead of fake mobile. (Which is a huge issue for mobile homeowners, actually, because most can't move their homes and are subject to the whims of the landowner.)

    1. Forgot to mention, I found you via the tiny house map.

  4. How do you find out if occupying is il/legal?

    1. Chances are, if you straight up ask your local zoning office if you can live in a house on wheels, they'll say no...I just closed on a fixer-upper house in the city that I plan on moving my house to. The old house isn't in great shape, but I called the zoning department to see if I needed an occupancy permit to "live" in it, and they said it should already have a permit associated with it. So, if anybody asks, I'm "living" in the big house, and just have the tiny house plugged in for cleaning...