Houses are often called "money pits" because they consume so much money in so many ways that homeowners are often financially drained after paying for the mortgage, property taxes, insurance, utilities, cleaning, maintenance, repair, pest control, moving expenses, and many fees and taxes associated with buying or selling a home.
People often take comfort in how the mortgage interest deduction reduces their income tax liability, but they get back only a fraction of what they paid. Spending $100 to get $25 back is hardly cause for celebration. Cameron Huddleston, a Kiplinger.com contributing editor who focuses on personal-finance topics, was shocked by the true cost of home ownership.
Folks who are less financially savvy are more likely to be blown away—perhaps even financially devastated—by those expenses. One analysis in The Wall Street Journal found that a home purchased for $290,000 in 2007 will really cost its owner over one million dollars. Think of how many decades of full-time work it would take you to make that much money; is it really worth it?
I think the answer is a resounding "no" even in good economic times. During tough times, such as the current recession that is bound to get much worse, owning a traditional (non-micro) home is a great way to ensure that you lose lots of money. The average home lost 28% of its value after the real estate bubble collapsed in 2008, but prices will certainly fall much further.
However, there is a silver lining in this cloud. By owning an unusually small home—a microhome—you can make money from it and have a wonderful life with lots of free time and fun instead of working like a dog and worrying about money. If you're tired of the rat race or are looking for a way to prosper when others will be struggling for many years to come, read my free e-book, Microhome Living. It doesn't contain any viruses, adware, spyware, or other catches—I am a doctor, not a spammer.
Incidentally, as a doctor, I know that the stress level has skyrocketed since the subprime mortgage crisis revealed how inept our politicians are in managing the economy. However, the subprime mortgage crisis is just the tip of the iceberg. I spent a few months researching our economic crisis and found other cancers lurking in our economy that will make the subprime mortgage fiasco seem like the good old days. If you read my other free book, From Bailout to Bliss, you'll understand why we're headed for some very rough times, but you will also see that there are ways for us, individually and collectively, to sidestep much of the fallout from this crisis.
Microhomes help storm-ravaged communities recover
Natural disasters, such as Hurricane Katrina and tornadoes that virtually wipe towns off the map, often permanently break up communities and households. Rebuilding typical homes can take months to years, especially when local resources are stretched too thin. In contrast, microhomes can be constructed in less than a day. Microhomes require far fewer material and labor resources, enabling families and communities to quickly reestablish.
Answering the #1 objection to microhome living
Q: I am very interested in the microhome living concept. I am tired of pouring my money into my money pit of a home, and more than anything else, I would love to spend my life doing what I want instead of working to support my money pit, which also consumes a lot of my free time. You know: cleaning it, maintaining it, and repairing it—not my idea of a good time! Just one problem: How do I squeeze my stuff into a microhome?
A: Most of the space requirements for homes stem not from the space we occupy but from the space occupied by our stuff. In a typical home, most of the stuff is rarely or never used. We tend to keep items around on the off chance we might use them again, but most stuff just accumulates dust year after year, decade after decade. By discarding, donating, or selling items you likely will not use, almost everyone could comfortably fit into a microhome. On those rare occasions when you need something you previously parted with, you will have saved so much money by living in a microhome that you could easily afford to buy a new version of whatever you need.
Secondly, microhome living need not be dollhouse living. If you require more space, you can have more total square footage than a traditional home, yet at much lower cost. You CAN have your cake and eat it, too! :-)
More space at less cost? How?
• Store your stuff in adjacent microhomes that are more shed-like than home-like. I enjoy being in a beautiful home, but my books don't mind the absence of insulation, drywall, fancy trim, expensive windows and floors, plumbing, heating, and electricity. Ditto for the 95% of my clothes that I never or rarely wear, the kitchen gizmos that no longer seem like such a good idea, and so on.
• By building your own microhomes, you can have more total square footage at less cost than a traditional home even if you insist on making all of your microhomes as fancy as standard homes, or even more upscale. If you harvest your own wood as described in the book, you can have Bill Gates quality at a cost that would not faze a McDonald's trainee. Most people would find it difficult or impossible to build a typical home, but they could easily master the basic skills required for microhome construction.
• Microhome living doesn't just save you money on your home but also the countless expenses associated with it, such as utilities and insurance.
Microhomes are small, but not this tiny! :-)