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My Tiny House Saved Me From Financial Disaster

why-youre-broke-tiny-house

I’ve been back and forth on writing this post for a long time, 5 months in fact.  Baked into this story is a fair bit of embarrassment. But in the end, I know that many people out there have been put in similarly compromising positions and this might be helpful.

This is the story of the worst financial disaster of my life.  The story starts with me working with an accountant for the first time in my life.  I’ve always done my own taxes, but things have gotten very complicated now with owning multiple businesses, a small army of contractors, etc.  I earn very little from this website, it’s my other ventures that bring in most of my income.

Tragedy Strikes:

I had submitted everything to my accountant way ahead of time and he had informed me that my taxes for the year would be around $3,000.  Not great, but as a self employed person you usually get pretty slammed with taxes.  From there I made a lot of decisions about spending, planning and budgeting for the next year.  I was feeling really good.

Then I got the bad news in a phone call….   “Ryan I’m so sorry, we made a mistake with your taxes, you don’t owe $3,000, you actually owe, $30,000 in taxes.  We made a decimal mistake”

I was at a total loss for words.  I was sick to my stomach. I felt hopeless.

I eventually calmed down and started to think.  This was a problem, a problem that had a solution.  It was a budget that needed to tighten the belt in a way that I had never done before.  So I broke out my computer and started a spreadsheet that allowed me to fully understand what I owed and when.

Identifying two important facts:

1. I needed to come up with a lot of cash, which I now had a real world number for

2. I also understood that timing was going to be a huge factor.

The name of the game for me was to earn more income while I timed very precisely spending to meet all my commitments.  Certain bills weren’t due for several months and my taxes weren’t due for about two months because I had done them so early.  Each time I paid a bill I had to quickly ramp my account back up in a perfect way so that I could be on point for the next bill.  This meant that there were times I’d be close to zero, but it would be part of the plan.

The ripple effect… of Death

The real chaos came from the fact that I had some other big bills coming up, having to pay $30k in taxes all of sudden was creating a ripple effect that left unchecked, would spell disaster.  A lot of my planning deals with working with cash flow, I don’t get a steady paycheck since I’m self employed.  This means I earn money and have to make it last until the next time I get paid.  Timing is so critical and a shock to the system of this magnitude was devastating despite me having a solid emergency fund.

The main considerations to my budgeting:

  1. Understand my expenses down to the dollar.
  2. Understand my income, but operate under the worst case scenario
  3. Develop a strategy to increase income, assumed most would fail
  4. Remove costs that weren’t critical, go as lean as possible
  5. Stick to my budget no matter what

The big thing here was understand expenses and income, but operate in the worst case scenario when it came to my income projections.  For expenses, I used my real fixed costs and projected variable costs with 6 months past data

I then needed to come with a strategy to earn more income fast.  What this meant was I needed to get two big projects I had been casually working on out the door, I had to hustle a second income from somewhere and I had to make this happen quick.  This lead me to my first lesson:

Lesson Number One:

I’ve learned that sometimes it comes down to income, not expenditures.  This is a particularly tough pill to swallow at times because when we talk about budgeting, debt and savings its often a discussion of what we can cut out.  The truth is we can cut out all the fluff, go very lean and still not have enough; that is what happened here for me.  What this means is that we need to work on the other side of the equation: income.   I realized that was the case with me, cutting lattes would get me no where.  I need to earn more to make this equation work.

How I Boosted My Income:

As I mentioned I was able to get two projects out the door, but I didn’t stop there.  I operated under the assumption that most of my efforts would fail.  With that mindset I knew I needed to move on a lot of ways to earn income to find a success.  So from there I looked at my skills and sent some emails to connections offering my services.  I was able to land a business coaching gig and a marketing strategy coaching session.  I did a few other things, but you get the idea.

Lesson Number Two:

One thing I realized at this point was I’m pretty good at a lot of marketable skills .  This brings us to the second lesson: be valuable.  Whatever this means for you is the correct answer as long as you can do some thing and people are actually willing to pay you for it.  For me I realized I have experience in building businesses and marketing.  I can do these things and the outcome of that activity is I can earn other people money.  Hence I’m valuable in my own way.  Think about how you are valuable, because everyone is, the trick is identifying that talent and who you’ll sell it to.

How My Tiny House Saved Me:

Through out all of this it struck me how different this time in my life would have been if I been in a traditional housing option, namely renting.  Right now the average rent in my city is around $1000 a month with utilities.  What compounds this fact is that if I had been renting I would have not be able to pay off my student loans earlier so in addition to rent and utilities, I’d also have to content with a $250 student loan payment.  This all would add up to me needing to come up with additional $5,000 on top of the $30,000!

Beyond money considerations living in a tiny house meant one thing that was extremely comforting: I would always have a place to live.  That comfort of knowing that, let me take a deep breath and know I was going to be okay.  To top it off, my utilities are $15 a month with my tiny house and push comes to shove, I could work any job part time and make it if I had to.

Lesson Number Three:

Tiny Houses buy you security, peace of mind and a place to lay your head.  More importantly, it let me say “I’ll be fine” and move from trying to survive to finding a solution.

Once I realized that I would always have a place to stay, I could focus on executing my plan.  The plan gave me confidence, it let me put aside the knot in my stomach and get down to the work at hand.

Lesson Number Four:

With a budget in place, I found that I could move past fear and act with confidence.  Simple things like grocery shopping became empowering experiences because I could buy the food I needed AND it was a positive reinforcement because I knew the money was there for me, that it was part of the plan.

The Results

After all the worry and hard work, it came time to start paying the bills.  I think the daunting thing about the entire process was that I knew the entire plan was going to take 4 months to execute.  This essentially meant that I was holding my proverbial breath for that entire time.  Even though I had a place to live, a budget to rely on, I found it very difficult to keep pushing.

Part of this journey was trying to keep myself above water emotionally.  I knew I was on the edge of slipping into depression, teetering there in a very precarious way.  I felt a knot in my stomach, knowing that the stress wouldn’t end for months at which I’d either make it out barley or crash horrifically.  I carried this with me and it weighed heavily on me.

As I moved through the critical execution phase of my plan I had to trust the plan.  In the budget I trust.  The plan called for at one point I’d have a whopping $256 in my account for a period of 48 hours; After which a payment would hit and I’d ramp up for the next bill.  The whole thing hinged on me hitting things perfectly paying bills and crushing income strategy to face the next big bill.

In the end I was able to earn enough and then some.  Along the way I got hit with some unexpected bills and needed to up my game, to keep pushing and never stop.  At the end of this I have started to rebuild my rainy day fund, which I hope to expand to $30,000 with enough time.

I’m also cognizant that even though I paid those bills, it’s a double edge sword, I now have to pay taxes on the money that I earned to pay them.  A lot of this can be offset with business write offs, but not all.

Your Turn!

  • What tips have you learned from your own tough times?
  • How has budgeting save you?

Tiny House Preppers & Prepping

It is interesting to see the different types of people that are drawn to tiny houses, they come from all walks of life, all political leanings, religions and nationalities.  We are read in over 160 countries so we get quite the mix.  Over the past few years we have seen a lot of interest coming from the prepper community, the survivalist community and from the homesteaders.  While each unique groups in their own right, they all have a good bit of overlap.

fdgfdgI’ve come to know people from these groups and while it’s true I get the occasional “the sky is falling, put on your tin foil hat” email or phone call; by in large these folks are very normal people that have a practical way about them.  I don’t particularly subscribe to prepping mentalities, but I thought I might share some of what I have learned over the years from talking with them.  I do spend time on various prepping, homesteading and survivalist websites because they typically are the best source of information on things like off grid living, practical solutions to modern day problems and other useful skills.  There is a strong overlap between between my interest in permaculture and tiny house living, and these schools of thought, so its an interesting topic to me regardless.

Preparing for what might come, whatever it is, seems to be a balancing act; everything in moderation right?  I like what Jack Spirko says about preparing “everything you do to prepare should help you today, not just in a disaster”.    So whatever you do, should improve your life and situation now.  Along with this, is enjoy the life you live now, don’t spend it worrying about what could happen later.

Another lesson I learned from studying permaculture and the Transition Town Movement is that there are simply too many possible things that can go wrong and while you can make educated guesses, even those are just guesses and how they actually play out will vary wildly.  Take the email I got recently that sparked the idea for this post.  The person that emailed me was worried about hurricanes threatening the coastal town where she lived.  It is true that a hurricane could rock their world, it’s happened plenty of times before, but how the aftermath plays out could vary.

So the take away that I gleaned was that there are any number of things that could happen and each of them could have a wide array of outcomes, meaning an almost infinite possibilities; including the possibility that nothing will happen at all.   So how does one prepare for that many events?  The simple answer is that you don’t.

32366bb40d9ae2b8fdac1c506156b3f7Preparing for all those things isn’t practical, so the only thing we can do is to become resilient to changes that will come at us.  Resiliency is the ability to react to changes in our system, adjust our environment, behaviors and systems to then rebound from that.  Our ability to recover from the shock to the system is key, the faster we can recover, the better we will be.  We start with being resilient as an individual and then grow it to our neighborhood, our town and beyond.  We can achieve this by generating our own power, growing our own food, building community and other proactive steps.

So how does this all tie into tiny houses?

Tiny houses present an unique set of hurdles because of the space that we live in is so small.  While many peppers focus on gathering and storing things that they might need in an event, this doesn’t work well with limited square footage.  So how does a prepper manage this?

The likely hood that of a long term event is generally pretty small and most of them will be localized.  Most events will disrupt things for only a few weeks at most and if we are in good financial shape, we can recover quite well even if we loose everything.  The likely hood of a long term event that is wide spread is significantly less likely to happen.  Equipped with a few tools, a knowledge base and a plan, we can be pretty resilient to most things.  So if we can prepare for a 3 months disruption we can either last the event or move to an area that was effected and since we have our ducks in a row, we can start a new life.

That isn’t to say there aren’t considerations to be made for longer term events that are wide spread, take the great depression, it affected millions and lasted over a decade.  The point is, plan for the most likely events first.

The one big thing that we have to our advantage with a tiny house is that it is mobile.  If the SHTF we can pack up and move on, maybe even before the event with enough warning.  The only flaw to this is if roads become blocked and/or lawlessness spreads; but these are things we can plan for and develop contingencies for.

Another obvious thing is that most people opt for off the grid solutions for their tiny houses, so this is naturally a happy coincidence when it comes to prepping.  The one thing to consider is how you move these capabilities if you need to bug out.

Bug-Out-Bag-home

A good portion of people also look to the famed “bug out bag” or “go bag” which is simply a bag that is all set to go at a moments notice that contains most of what you need to immediately leave.  Most of these bags are setup to only last short time frames, they are self contained kits to keep you alive if all else fails.  Its a great place to start and I know of several tiny house dwellers that have them in their tiny houses.

Another thing that a lot of tiny house dwellers do is garden.  The ability to grow and store your own food has a ton of benefits right now for your budget and health, but with the added benefit of you being able to keep yourself alive if food becomes in short supply.  While I have seen a ton of people store a lot of food, the truth is that you need to be grow your own because it could be lost and will always run out.

Now growing food is one thing that I know very well, in fact I do it professionally.  I am literally a sustainable urban agriculture professional/farmer.  Here is a sobering truth, even though I do this almost every day of my life, even though I have grown literally tons of food in a given year, if things got really bad for a long time, I’d most likely starve.  This will improve dramatically when I shift to a perennial food forest, but even then it will be tricky.  It’s because growing enough calories for a person, which is expending a lot of energy farming,  365 days a year is a really hard thing. Don’t forget that if food is in short supply, so is gas, materials, seeds, amendments etc. There are many people out there that can grow a few things really well, but can they grow a full diet of crops without any machines or amendments?

permaculture-chickensdsfs

My experience focuses on sustainable agricultural systems, meaning I grow a diversified group of perennial crops organically with on site nutrient sources in a way that cycles through the system.  The problem is that sometimes you don’t have a good crop, sometimes you need something that is from an off site location.  It can be tough to produce enough calories  The point is in a survival situation there is no store to go to and if you can’t grow enough because of a disease or bug, you’ll starve.

So when it comes to food production, start now because it will take a lifetime to get good at it and focus on perennial organic crops.  Taking lessons from permaculture will go a long way to meeting this need.

Finally the greatest asset you can have outside of a few basics, is knowledge.  Knowledge can’t be lost or stolen, it doesn’t way anything or take up space,  it is always with you and it can be shared or traded.  Skills that you have can be practical for everyday life such as food preservation, bartering, fixing things, growing and gathering food, etc.

The one parting thing I will say is that in my opinion, whatever that is worth, is that the ability to take care of one’s self is a powerful thing.  It is why many of use come to tiny houses, because it enables us to live lives that are more practical, purposeful and to live the life we want to lead.  I also feel like your ability to help yourself and your neighbors in tough times is more than just a moral obligation, but should be seen as a civic duty, one that is generally missing from our society today.  Not only does it help to do some of these things in the good times, but it will help in the tough times; even if nothing happens saving money, eating good food, and connecting with neighbors are all things we can benefit from.

Your Turn!

  • What are things can you do that improves your life now, but also increases your resiliency?
  • How do you handle prepping in small spaces?

Recovery Huts

We have talked about using Tiny Houses for homeless and emergency in the past.  I have often thought about using one of these solutions as a temporary shelter while building my full Tiny House, then using it as storage.  Check out some the other posts:  Exo House and The Red House. Today I found a new one that is kinda neat, so check it out!

As the world’s climate changes and natural disasters increase in frequency, versatile and quick-to-deploy emergency shelters can mean the difference between life and death for displaced populations. Seeking to provide for this need, Recovery Huts offers a line of instant shelters that can be set up in 30 minutes by a single person. Each shelter can be delivered in 4 stackable sections that weigh no more than 60 pounds each, and if the 85 sq. ft footprint of each hut is not enough for a household, extender sections enable an entire community of huts to be interconnected.

Via