Traveling a Different Financial Path Part 2

Posted by on Jan 16, 2018 in Blog | 2 comments

Welcome to part II of Traveling a Different Financial Path. First, let me begin by stating my longterm goals for what I consider to be the road to personal freedom.

I have continuously sought ways to live debt free with the lowest possible overhead. I feel at my most secure financially when my overhead is so low that if my husband and I fell upon hard times, we could survive on two part time jobs at minimum wage. That pretty well sums up economics 101 according to Teresa. 

In part two of this short series, I hope to explore the mortgage situation in the US and housing in general. Clearly, there are parts of the country where owning a home is out of the question for many. The big metropolitan cities on both coastlines are getting far too pricey, for example. Yet, we need shelter of some kind. Can we find a way to beat the system even with these housing challenges. How do we bring our overhead down to the lowest possible if our housing, renting or buying, becomes an unmanagable proportion of our monthly expenses?

What can we do?

Speaking with hindsight that eventually influenced my decision to buy and where to buy, my number one piece of advice is that if you’re going  to buy a house do it in an affordable part of the US. Younger buyers may not be able to live in the house full time or even at all for some years, but if you want to retire early like I did, it will behoove you to consider this suggestion. Wherever you live, however, do your best to buy a house well below your means, for the shortest loan period possible and then pay it off as soon as you can. If you want to keep overhead as low as possible and live debt free, this is a good solution. Your two major expenses in life will be house and car. If you can’t resist overspending on either one, you will struggle to be free for your entire life.

I was buying a house in Maine.

That was where most of my career as an educator took place and where I raised my children. I say that I was buying a house because until I sold it, I was making payments on the house, so technically it was never really mine. I left Maine to travel the world and at the time thought that I’d never buy a home again. But then we had the crash of 2008 which made sitting on the money from the sale of my house feel uncertain. I didn’t like the idea of everything I owned being in the hands of the bankers and financial institutions who had been at the very least partially complicit in the crash. I nervously sat on the money from the sale of my house for some time, several years. It was wonderful to not own a house or a car at the time. I still say that was the most carefree time of my adult life. Ultimately, however,  I ended up quite by accident in the midwest right before the birth of our only grandchild. It was there that I discovered an affordable standard of living that if done correctly would meet the promises made by expatriates who were living abroad in some of the cheapest parts of the world. I still intended to keep traveling longterm but had no interest in permanent residency abroad.

We live with an overhead of about $1500 a month.

Largely because I finally purchased a house for less than what my house in Maine cost. That left me with some funds for upkeep, taxes and insurance for quite a few years. My overhead is as low as the cost of living projections for living in Costa Rica, Mexico and Portugal, three countries that promise a less expensive retirement for expatriates. I spend more than that because I can but if my husband and I fell upon hard times, we really could survive on two part-time jobs at minimum wage. Bringing in roughly $750 a month each is not undoable. And, although I’m aware that there never will be total freedom from financial worry, especially since our fearless leaders seem to want to peck away at our social security and pensions while Wall Street is begging to gamble with our money and bailed out banks just might need some day to declare a national emergency and shut their doors, I rest a lot easier knowing that I’ve done what I could. No debt, low overhead and owning my little home and old car are about as good as it gets.

I realize that my economic model is almost unheard of these days.

Average American Debt

The general rule of thumb applied by the average American from all economic brackets  is to borrow whatever your lender is willing to loan  you. That is, as long as you can make the payments, go for it. So even people going into retirement are buying their dream homes and living with a mortgage. I can’t tell you the number of people who I know personally that are in that situation. I am also acquainted with people who have made three times the money that I’ve made that have no money. They live from paycheck to paycheck as though they are below the poverty line.

Increase of Retirees with Mortgages

I can’t explain why so many people have fallen for the propaganda that says we deserve to have anything our heart’s desire, but many have done so and unabashedly. “I’m worth it” is written all over their faces and frankly, it makes me cringe.

Freedom quite possibly means something different to everyone, but to me getting out of debtors prison was freedom.

While my debt was a source of great discomfort to me, you can be sure that it was making someone else very rich. And, while I fully understand that this advice only applies to those who are living above the poverty line, statistics clearly show that plenty of people who have managed to make a living wage, also easily spend it all.

By the way, don’t take people too serious who claim to be able to live high with no worries.

Trust me. Most likely they’re stretching the truth or outright lying. Statistics claim that roughly 85% of all Americans from all economic brackets have no money. If you subtracted their debt, even those who have saved a bit — have no money. That means any time you’re with a group of ten people, anywhere, 8.5 of these poor souls have no money. I don’t care what they’re driving or what they live in, they are living paycheck to paycheck. They are owned by their creditors. That includes dentists, doctors, lawyers, movie stars and football stars, teachers, firemen, policeman or business owners. Yep! All of them.

Yet, let me promise you this!

It will be challenging to go against the current of popular economics. You will have to stand out like a sore thumb and if you’re not careful, you’ll start to feel sorry for yourself. Everyone else will be driving a fancier car, living in a bigger house or at the very least admiring those who do. Pish tosh! Ignore them. If you want to be free, refuse to join them in their debtor’s prison.

So, there you have it. 

Economics 101 by Teresa, a model for staying out of debt with the lowest overhead possible.

Happy trails …

Read my first article about Traveling a Different Financial Path It’s all about cars.

Teresa writes about unconventional ways to live life and encourages people to think about the limits our  cultural expectations place upon us. Take a look at her books. 

 

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2 Comments

  1. Good stuff, as always, Teresa! Appreciate your outlook, my friend.

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