Living mortgage free

I have received a number of requests to wirte a post about life without a mortgage.  So, for those who asked - here we are.

We have not always been mortgage free.  When we purchased a house in Melbourne, we had a significant mortgage.  I was on less than graduate salary and the Gentleman Builder was on a stipend while studying his Masters.  Things were tight.  Very tight.  We made the decision, however, to pay more than the minimum repayments (by about double)  to get ahead on the mortgage in preparation for having children.  We had always planned on moving to the country and having a sustainable farm and the house in Melbourne was a stepping stone for us.  The plan was to work in the city and earn enough to buy a block and build a house without a mortgage.  The plan was going according to plan when we were approached by an investment firm to purchase our house when I was pregnant with Little Miss.  The timing was a bit off so I managed to negotiate a long settlement so I could see out the pregnancy in Melbourne.  We moved to Gippsland when Little Miss was 4.5 months old.

If I am honest in the appraisal of our finances, we would have been quite comfortable on one salary had I not been ill in 2009/2010 (and the start of 2011).  That little furore cost us nigh on $100K in out of pocket expenses and lost income due to me not working.  Like Pumbaa (from the Lion King) says "You got to put your behind in your past".  Despite how guilty I feel about the costs associated with my illness, what's done is done and there's nothing anybody can do about it.

In a nutshell we live a peasant, no... wait, what I mean is we live a p-l-easant life.  We have enough to get by on and don't miss out on too much.  We have chosen, consciously, not to enter into debt.  The way we achieve living mortgage free is to spend less:

• Our kids live in hand-me-down clothes (which actually sits well with me considering how much waste there is in the world)
• We have a very dubious car 
• I am not an average woman. - I spend less on beauty products in a year than most women would spend on shampoo alone.  I don't do pretty and I have never been a fashionista (lucky, really, because if I was not already that way, I would have been forced down that path (or the wheels would have fallen off somewhere along said path)).
• We rely on birthdays and Christmas to stock us up on new clothes
• As things have broken (like the microwave) we have not replaced them but made do without (part of this has been preparation for the fact that we will have less power at the block and therefore any electrical items we can live without we do).  
• We don't spend money on entertainment (the only exception in the last few years has been Rock the Ballet but I also consider that educational so it is easier to justify)
• There are no meals at restaurants
• We don't buy magazines and rely on the library for books and DVDs
• We don't have the latest gadgets (no iPhone,  iPad or XBOX60 in sight)
• Until I started work in Melbourne we shared a mobile phone
• We repair things as many times as we possibly can
• The kids' art collection is mainly recycled food boxes with some staples

Seriously though, it can be tough.  I work full time in paid employment while the Gentleman Builder homeschools the kids, looks after the farm, builds the house and keeps up with the standard household chores of cooking, cleaning and washing.  on weekends, after a full week of work I come home to work on the building.  To help out the Gentleman Builder and allow him to spend as much time as possible to build I make and freeze meals for the family for the next week. 

I don't make a spectacular wage, a little above the Victorian state average of  $60K.  With that I support our family of four and fund the build.  I'm not going to mince words; we live pretty close to the wire.  We have no spare money for holidays and there is no fat if something goes wrong. If I were to lose my job, we'd last about a fortnight.  That's not a pretty place to be with two dependent children and is a cause of stress for me at times.  Knowing that we have taken this path by choice helps me to move through the stress and see how I am helping set us up for the future.

We have deliberately chosen not to take a mortgage out for the build.  There are a number of reasons for this:

1. I believe the economic climate we live in is precarious at best at the moment
2. We don't want any financial institution to have any whiff of a right to come and repossess our residence if the economy falls flat.  
3. I like the fact that we actually own the things we have.  While we don't have much, what we do have is all ours.
4. Debt worries the Gentleman Builder and I don't like for him to be stressed

And we're not the only ones that have downsized and are living mortgage free. There are many out there doing the very same.  There are plenty of sites offering advice on how to get to the point where you no longer have a mortgage.

To be honest, life would be much easier if we took out a loan.  We would be able to get all the things we want for the shouse.  Not having a mortgage and paying for things in cash makes us seriously contemplate every choice that we make.  A side-effect is that living without a mortgage has made us make more sustainable choices too, which I am very happy about.  I am being true to myself and the things I believe in and I like that sense of authenticity.  We have used many recycled materials in our build which we possibly would not have done if we had money available for other options.  I am honestly very grateful for that.  Money can, on occasion, cloud judgement.  Not having money forces you to make choices about everything.  

And we are actually not 100% debt free.  My parents have also helped us (thanks be to the Bank of Mum) out with a small, no interest loan so we could buy a stainless steel tank (which would have been out of reach with our budget).  The plan is that once we are living on site and the building is complete we should be able to save the money we owe and pay it back within a few months.

However, there is a cost associated with not having a bank mortgage - an extended build time.   Because we don't buy in labour the build is slow  (which is not surprising considering the Gentleman Builder educates the kids; feeds and waters the livestock and maintains the home we live in).  The building process is unrelenting with single tasks dragging out for weeks or months making progress on the build doggedly slow.  At times I find it infuriating.  Some days I am so sick of working on the shouse (and I just want it to be finished so we can live there) that I question our choices and worry that we have made a terrible mistake.  If the kids were in school the Gentleman Builder would have 6 uninterrupted hours a day, five days a week to build.  Additionally he would not have to rush around organising curriculum and planning lessons.  He would not have to dedicate hours to learning new skills (like copperplate and German) to be able to pass this on to our children.  However, when I catch a glimpse of the kids running around or feeding the pigs or chatting to the steer, or I see the joy and pride on the Gentleman Builder's face as the kids read I know that we have done the right thing.  For us.

I just want less stuff

We live in a society that places a great deal of emphasis on material possessions.  To maintain the economic growth of the last few decades, our society has become focused on the things that others own and structuring advertising to ensure that we "keep up with the Joneses". 

"When you look at the buying habits that have taken hold in our culture over the past 30 years or so, you can see that we made the decision somewhere along the line to work longer hours so we could acquire more things.  We've exchanged our leisure time for stuff" ~ Elaine St James.  This works because there is a pleasure component to buying things (ergo shopping addictions).

I wonder how many people look at an item and decide whether the possession they are seeking is what they really want in life.  I have been caught in the "stuff" trap; I have iPhone envy; I crave gorgeous clothes and, as Radiohead proclaim, "I want a perfect body.  I want a perfect soul".  But I am able, most days, to take a step back and realise that the stuff I have does not define the person I am.  I am not worth more if I wear Prada than if I wear something from Target.  My worth, in my opinion, is in the way I treat people and the things that I do, not the clothes that I wear or the type of phone I use to I keep in contact with people.


As the Irish philosopher Charles Handy once said, "We can manage our time.  We can say no.  We can give less priority, or more, to homework or to paid work.  Money is essential but more money is not always essential.  Enough can be enough".

I love this concept as it can be so easy to get to decide on a certain milestone (I want to go on a holiday) and get carried away (I want an overseas holiday flying business class and staying in 5 star hotels).  The point here is that what you may really need is a break, some time out from the mundane reality of life and what eventuates is a burden of costs and expectations that are hard to meet.

Recently there was an ad for a credit card which ended with the line "I just want... more... stuff".  (Don't get me started on advertising and it's effects on spending habits).  Ever since the credit card ad aired, coupled with the fact that we face the prospect of moving the contents from our current home to the shouse (at about half the size of our current living space), the Gentleman Builder and I will pack things to donate and chant "I just want... less... stuff".

With each iteration of clearing out in preparation for the move to the shouse I realise how much we have accumulated over the years that we don't need and probably never did.

Thankfully, decluttering is the buzz-word of the minute among housey people and zen interiors are popular.

We have adopted three criteria for deciding whether to keep something we are undecided about:

1. Does it serve a purpose?
2. Is it of sentimental value?
3. Is it pretty?

If the answer to all three questions is 'No' the item is donated or thrown away, depending on its condition.  If any of the questions result in a 'Yes', the item is put to the side for another time.

Each time I go this process it gets easier.  I make decisions faster and don't fret about the choice I make.

For me, throwing out an item that might one day have a purpose has always been difficult.  For this reason, I have accumulated a whole room full of stuff that sits there and makes the room unusable.  I am finding it difficult but I am getting better at not accepting new stuff and not buying things that don't have an immediate need.  I have found that I am getting better at not taking things into the home that I will eventually have to throw out.

Furthermore, I now have a better filtering mechanism when buying things. I acknowledge that I used to buy things I didn't even need.  It would appear that some people go even further and buy things they don't want.  Now, I actually contemplate the purchases I make.  Part of the reason for doing so is financial.  Another is space limitation (I don't want to end up having to throw it away because it will not fit in the shouse).  Furthermore, I refuse to pay for storage for my stuff.

I find I can get away with much less. As the 90s ad campaign goes; reduce, reuse, recycle!

Self-sufficiency as a protection mechanism

In reading about recent company closures,  personal bankruptcy and multiple  companies reducing staff numbers, I have been thinking about the role self-sufficiency plays in recession-proofing individuals against the failing economy.

I am well aware of the risks posed to Australia as a society with regards to the looming GFC2.  Hell, when Goldman Sachs are slashing remuneration for senior execs, that's a sure-fire sign that the economic world is going down.

However, I wonder how many have considered the possibility of a perfect storm event.  As witnessed in 2008, the global financial situation has an effect  on the Australian job market, housing affordability and food prices.  Add into the equation climate change, global warming and peak oil and then consider the effects of population growth; what are the ramifications for individuals?  Australians  scraped through the 2008 economic crisis due to the booming resource industry and the fact that China was still manufacturing at full speed when America hit the wall as a result of overextended mortgages.

My take on the 2012 situation is that America is still in the doldrums, Europe is slowly spiralling downwards (Greece avoided defaulting in debt in March by sheer technicality, Italy's debt is on the rise  and Spain is the latest to go down in the government debt crisis).  Furthermore, China has reported plans to reduce manufacturing to meet energy reduction targets and stated a reduced reliance on mineral imports in general.  Add to this that Saudi Arabia has cut oil production (which, to me, screams "we can't increase oil production") and I am seriously worried about the future of the world economy.

I worry that these events are building to a perfect storm where peak oil will hit at the same time as countries increase inflation rates in an attempt to address spiraling debt.  The result, I fear, will be further job losses, loan foreclosures and increased poverty.  Governments that currently offer welfare may well reconsider the amount they provide or the criteria around provision.  This will increase reliance on aid from independent organisations.

The gentleman builder and I have been gearing for such events since 2000 when we wed and honeymooned in the Maldives.  On the plane back, my ever optimistic husband said he was glad we had spent such an exorbitant amount of money on our honeymoon to visit a destination he predicted would not be there in 2100.  Now, his cynicism may be a little depressing but it got me thinking and we started making a plan.

We planned to buy a block large enough to run a farm that would see us self-sufficient in terms of food.  The aim was to buy and build a home without a mortgage to ensure the ownership of the property should the economy fail and we risk losing our security blanket to increased interest rates or loss of a job.

In 2006 we purchased the block 220m above sea level in cool temperate Gippsland assuming that sea level rises and global warming predictions (not taking into account recent calculations that have made vastly less appealing predictions about such things taking into account various tipping points but that's a different story) would see us safe on top of our hill.  (On the up side, we imagine that being closer to the sea will mean that we get to enjoy (pedal-powered) summer retreats to the beach on a more frequent basis than we would otherwise).

We chose a block specifically that faced north, has river frontage and is undulating.  The late Ron Hateley would attest to the value of microclimates in germination and survival of plants and I tend to think that with the less predictable weather cycles that are coming our way, we will need all the help we can get.

I believe that every household should be taking steps towards self sufficiency.  While I cannot see the majority of people will be keen on having sheep instead of lawn mowers; I believe a vegetable garden, rainwater tank, solar panel and a couple of chooks should be staple for every suburban home.  Those in apartments need not miss out - a herb garden or veggies in pots is a good idea.  In fact, companies like the Little Veggie Patch Co. are making millions out of container gardens.  Not only will proponents  get the benefit of eating fresh organic produce and will reduce food miles they will be building skills that will come in handy should things turn pear-shaped.

I have already touted the benefits of seed saving and planting heritage varieties.  I believe that composting and soil conservation is an extension of that principal which will become increasingly important as fertiliser costs continue to rise.

I also think there is a real opportunity to make use of produce that would ordinarily go to waste and maximising the fruit and vegetable growing power of small communities.  Many people that have their own vegetable patch will share excess produce with friends and families and informal food coops and food swaps are being established around the country.  A community group in Western Australia have even run a Crop, Swap and Share where members of the community share excess produce followed by a sausage sizzle.

For those without land to grow vegetables community gardens are increasingly popular.  Furthermore, countries are returning to practices employed during World War II (such as the Dig for Victory campaign in the UK) to .

In addition the slow food movement is gaining momentum and jamming, preserving and stewing fruits is coming back into vogue.

I believe, the uncertainties of the future will lead to stronger community connections and informal arrangements between neighbours, families and friends to ensure adequate, nutritious food supply. 

Micro homes - finally I'm trendy!

When we were first designing the house, my hubby kept assuring me that we didn't need a 3 by 4 metre laundry.  I was convinced that having the space to iron and hide the clothes airers in winter was essential.  My hubby tried to assure me that the kids could share a room until they left home.  I was sure that they would eventually need their own space so it was essential to have at least 4 bedrooms (one for guests too).  I also managed to convince him that, to make sure that we could cater for families that may come to visit 5 bedrooms would be required.  As we like to preserve our own produce and plan to be as close to self sufficient as possible on the block a large pantry would be required.  The final house design included a 4x4m walk in pantry behind the kitchen.  The pantry design included an outside door so we could cart firewood directly into the pantry rather than traipse it through the house.  It even had a designated library with walls that would be lined with bookshelves and space for a chesterfield sofa as that had always been my husband's dream.

At the time my husband had tried to tell me that a small home would be cheaper (and easier) to make and that we really didn't need all that indoor space.  I found it hard to see how, with 50 acres, we wouldn't just build what we thought we would need.  My hubby showed me a series of photos of micro homes and the insides of yachts and various other sea-faring vessels in an attempt to convince me that living in a smaller space would really be just fine.   I was sure that we would need each and every part of the above design and could not come to accept any other opinion.

I've already mentioned that the original plan was to build the shouse and live in it while we built the house then convert the shouse to a shed and garage. However, weather and illness delayed the project significantly (by about 3 years) and has meant that the money we had set aside to start building the house with is no longer.  As a result, the shouse will be our final resting place.  It may or may not have an extension built at some later stage (we're still negotiating on that point and the discussions have been put on hold until we are living on site).

The shouse is designed with a bedroom and ensuite, living area (a kitchen, dining and small lounge) and an 'attic' area for storage.  This all fits into a 9 by 6m rectangle (taking account of the 500mm thick strawbale walls).

Since coming to the conclusion that the shouse will be our home for at least a decade, I have realised that we probably don't need a 4x4 metre pantry (the design I have recently come up with will have a pantry that will fit in the 830x1000mm space under the stairs to the attic). I have also realised that we will not need a library.  We have plans to have high shelves between the beams that will store our books (I'll still get my library ladder).  We will made use of vertical space and have floor to roof cupboards in the bedroom and bathroom.  The attic will have a bank of cupboards around the circumference that will store all manner of infrequently used items.  The windows in the bedroom and the dining room have beautiful wide sills that we will be able to use in lieu of window seats.  We imagine that the large sills will come in particularly handy when we have parties.  

The thought of living in small home has had to make us think about the things that we own and start to prioritise what we really want and need.  We are currently in a standard 3 bedroom home and have stuff all over the place in each and every room.  We are planning an enormous cull of possessions when we move into the shouse as there are just so many things in this house that we just don't use.

For example, the 'back room' is chock full of stuff, 99% of which we just never use.  It has all my work clothes (which is the 1% that does get used), a spare bed (used about a dozen times in the last 4 years), an enormous pile of kids toys, some camping mattresses (which have not been used since we moved here as we have not had time for holidays but will hopefully get some use again once we have finished building), the clothes airers which are pulled out in winter, a stack of clothes kindly donated to us from friends and family that don't yet fit the kids and about 5 boxes of things that we brought from Melbourne but have never opened.

While the shouse is a small house it should suffice for the four of us and we like to consider ourselves ahead of the trend as in the last few months we have seen mainstream media reporting on micro-houses. Micro homes are increasingly being considered by individuals, couples and families alike.  Even Oprah has featured the small home movement. Soaring property prices and a realisation by many that more stuff does not necessarily mean more happiness has led to many bucking the McMansion trend and turning to smaller homes.  Tumbleweed seem to be the market leaders in small home designs.

The small house movement is reported more frequently as a viable option for people looking to downsize or for those looking for an ecologically friendly way to live.  Generally speaking, the smaller your home's footprint is the less impact it will have on the environment in terms of building products.  Obviously there are choices you could make that would mean a larger home could be incredibly environmentally sensitive (think composting toilet, sustainably harvested timber, recycled windows, cork flooring etc.).  Likewise, a small home built from steel and concrete could have quite a large environmental impact.

Now, I am all for saving the environment, reducing our ecological footprint, recycling whenever possible and living with less but even I have limits.  I could not personally, for instance, live in 8.3 square metres!