Home Ownership and Family Compounds

 

I am a cheerleader for home ownership. Not only do you have the freedom to decorate as you please and the security of knowing that no one is in your home when you are away from it, you also get budget control. Rent has a tendency to go up every year stealing your raise before you even get a good look at it. Fixed mortgages do not.

In most instances, you also get a plot of land with your home ownership which, used wisely, can minimize your food budget and give you control over what chemicals go on your fruits and vegetables.

I am not, however, a fan of the 30 year mortgage. I don’t believe in making “payments.” As you make the payments on a 30 year mortgage, you end up buying your house two and three times over because of the interest payments. Amazingly, it’s very hard to convince normally reasonable people to understand that the tax deductions you get on mortgage interest are a fraction of the interest you are paying out.

It’s very easy to quickly pay off a mortgage. First, obtain an amortization schedule on your mortgage. You’ll notice that in the early years, you are paying mostly interest. The principal payments are very small. Write a check for your regular monthly payment and write a separate check marked “principal payments” for as many of those early principal checks as you can afford and still have a little money to put in your rainy day fund.

At the time you are applying for the mortgage, you can also negotiate for a higher monthly payment. In 1989, I purchased a new, double-wide mobile home. Not the Taj Mahal, I will admit, but it was adequate housing. The lender set up the payments for fifteen years at $375 a month. I asked them to round it up to $400 and instantly, I knocked three years off the payment schedule. I made as many monthly principal payments as I could afford and paid off the note in 1995.

The home was set up on the back of Momma and Poppie’s two acres. The acreage was Momma’s inheritance from her Momma but it languished for ten years before Poppie was able to build a home on it at the front of the property.

In choosing to live on a family compound like the Bush and Kennedy families, I obviously had a good relationship with my parents in which they understood that I was an adult making my own life choices and they could not interfere with those choices. The arrangement has suited and benefitted all of us for the last 22 years.

I consider the family compound to be an improvement on home ownership. It takes family support to an all new level. As Shannon Hayes said in her book, Radical Homemakers: Reclaiming Domesticity from a Consumer Culture, “Utilizing family relationships to share, rather than replicate assets is, beyond a doubt, key to unraveling the extractive economy and rebuilding a life-sustaining economy.” I covered the “extractive economy” in my February review of her book. I have to agree with her about utilizing family relationships and avoiding the replication of assets.

In terms of assets, Poppie and I have, together, bought at least three riding mowers in the last 22 years. The expense of garden tools, fertilizer, and grass were also shared. I recently bought a new leaf blower for the property and he bought a new gas edger.  We also share the labor of keeping the property looking park-like. Poppie helped build my front deck including a decorative railing, he has fixed many frozen pipes over the years, allows me to consult with him on the best way to hire someone to fix things we can’t (i.e., tree removal), transportation to family parties or car repair shops has been shared, as well as the job of watching over the property. I have often received a telephone call from them that “some stranger” was headed to my house. Momma also made many contributions that helped support my working years. Her leftovers saved me from having to cook many times. We even shared a joke about saving the “scraps for the dog” and I, of course, was the dog.

My major contribution to the family compound was paying the property taxes each year but as Momma and Poppie age, I have been able to return much of the support they offered me in my early years on the property. In the last three years, both of them have been in and out of the hospital and have called on me to buy their groceries, pick up their drugs, take them to doctor’s appointments and the like. Living on a family compound is beneficial to every single family member.

Even if you can’t or don’t want to live on a family compound, home ownership is the way to go. By paying my home off early and saving a portion of my earnings, I had the financial freedom in 2000 to go back to school for a year. It wiped out my savings but I never regretted it. With the economic meltdown, my job disappeared to part-time workers but my house and car were paid off. There was no big adjustment in moving from paycheck to unemployment check although I’ll admit to becoming frugal in ways that did not previously occur to me. I have now been unemployed for three years and have probably weathered that circumstance better than others. Home ownership was the key. A home that is paid off is also the only way you are ever going to have choice in your life. Choice comes from being debt free and saving a portion of your earnings.

Update: Obtaining homeowner’s insurance in a rural area is sometimes more difficult due to the lack of fire hydrants. See Insuring A Rural Home.

12 thoughts on “Home Ownership and Family Compounds”

  1. Excellent article. You covered all the bases.
    When I paid off my mortgage I also put the “regular” payments in my savings account and was able to buy a brand new car paying cash. I kept that car for ten years and continued to save and bought my next brand new car cash as well.
    Now that I am retired I watch even more closely what my spendings are.

    1. Meta — I’ll bet you’ve made a number of sales managers unhappy with those cash payments on new cars. I hear you on the careful spending. I didn’t intend to be “retired” this early in the game. I won’t even buy soft soap anymore because I can get 30 oz. bottles of Suave shampoo much cheaper. It’s all soap.

  2. If I had to pay a mortgage or rent now, I’d be homeless. I raised two sons with very little monetary help. I worked full-time with a part-time job to get by and give them a nice home and decent car. Their money went for their gas and wants. I paid a 15 year mortgage down to 10 year the way you mentioned. I was blessed with good market conditions, too. I had to sell our favorite house due to being laid off a while. The payments were very high. I didn’t wait around till I was behind in payments; I put it on the market. The house sold for twice what I’d paid for it. Thank you Lord!! Within weeks I bought another nice place and dumped every penny of profit into the new place and kept making extra principle payments. Life rushes by and now one of my sons has passed on and the other son is grown with a good education, good job and his own mortgage. I am mortgage and rent-free, living in my place that I bought and paid for as a short sale. I really thrive on bargains. So Mizz Chairman of Yard and Garden, you are so right about that extra little payment every month. The way you live on your compound is what I thought I’d do one day but all my family except my son has preceded me to Heaven. My son has no interest in farming and my sweet daughter-in-law might run away if we took her to live on 80 acres of “dirt”. I’d love it but only if I had family around. Count your blessings, Mizz Chairman!

  3. I am glad you addressed these issues. I used to be a loan officer, and people would come in for a 30 year mortgage. I always showed them a 15 year payout, too. Most times, it didn’t raise their payment more than $100 (usually less), and they could see for themselves how much they would save in interest. My boss hated it – and I got in trouble for what I viewed as helping these people! Anyway, the other issue of family compound is a good one, too. So many times, people live so far away, there is no help available. I would think that young mothers and older members benefit more than most, but all members benefit from help being so closely available. I, do, however, think it’s key that adults be treated as adults, and obviously your parents did well in not interfering.

    1. Holleygarden — I’m not the least bit surprised that your boss hated you trying to help people. If you succeeded, it cut into bank profits. Paying off a mortgage ahead of time cuts into their profits, too. Makes my evil “hee hee” come out to play. When you stand before the pearly gates, I’ll bet you will be standing there with extra points in your hand. If more people believed in the goodness of God, we wouldn’t have so much striving for greed. Everyone would understand that their needs would be met by God. I don’t have “extras” anymore but I’m also happier than I’ve ever been. I have to wonder just how “happy” the strivers are.

  4. Good advice! We always pay extra on our mortgage payments – it’s absolutely staggering how much in interest we pay!
    I don’t know if I’d be able to tolerate my parents quite so close as right next door, but I do wish they lived closer than they do now (8 hours away, longer with kids in the car). They want to move up to NC at some point, which would be so great. Nowadays people’s jobs take them all over the place – I’ve never lived near relatives, unfortunately.

    1. Hey Indie – You keep paying extra on those Red House payments and you’ll have it paid off before you know it. Just about the time your parents moved to NC, Mr. Red House would get transferred to Timbuktoo.

  5. I think this is okay for blood relatives. Blended families no. My boyfriend wants me to live on his property within hollering distance of his two grown children. They do not work and don’t like me because I’m messing up their “gravy train.” No flipping way I would do this.

    1. Becky – In some families, it wouldn’t even work among blood relatives. My Dad died in early 2015. My brother and his wife have been renovating Poppie’s house and will soon move in. I don’t anticipate any problems with them living here. If your boyfriend is supporting his grown children instead of making them support themselves, I wouldn’t move into a situation like that either.

      1. Thank you for the confirmation. It’s already a very difficult situation. I love him very much but I honestly feel I need to keep them at arms length.

        1. Becky – I wish you the best of luck. Go with your gut. One of the problems with family compounds is inheritance. We spent the year after Poppie’s death working out the details of my brother and his wife moving into Poppie’s house. The property had been left to us children and while we were perfectly okay with his wife moving onto the property, we didn’t want her or her children to inherit because it had been in our family some 120+ years. We wanted it to pass down to the next generation of children. We hired a lawyer who helped us work out an agreement plus we deeded a lifetime estate to my sister-in-law. That deed allows her to live in the house until her death (if my brother predeceases her). Upon her death, ownership reverts to the remaining siblings and then onto the next generation.

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