So we have got you in the right state of mind, got you excited to build your house within minutes. Yesterday we talked about what basic tools to get and how to learn to use them, it may take a few weeks to complete this step, but we are moving on. Today we talk about getting your finances in order.
The sad truth is that it will be difficult to get a loan from the banks, your best bet for this is to have a good relationship with your banker/lender and get creative with how you approach it. There are some easier ways to get loans for the purchase of land (depending on your state), but they often come with 8-9% interest and 20% down. Of course there a loads of exceptions and variations depending on what bank and where you are.
For many of us we will have to rely on the money we have in hand to finance our construction. Depending on your choice of house to build you will need as little as $3,000 up to $23,000 if you do the work yourself. Now you can make your money go a lot further if you scavenge stuff off of craig’s list, ReStore, dump, etc. When it comes to building your house remember that it is almost always going to be more expensive than you expected, so budget for it; I suggest 15% additional for things that come up.
The other key thing to do is make sure if you are going to start without all the money, think about key steps in the building process that you need to finish. For example, some people lay their flooring down, then put up the framing, you would be wise to have enough cash on hand to finish sheeting the sides and the roof so that nice brand new floor doesn’t get rained on.
So when I speak of finances I go beyond just affording your house, I want to shift your entire financial life, why? A few reasons: first to be fiscally sound will mean you can more easily get into your house, next it means that you will be able to overcome any financial hiccups during the process and finally, having all your affairs set means that when you start to live in your home you will also be happier because you no longer have debt, collectors calling you, you have a security blanket for rainy days and reduced stress. With all of these reasons you will be much happier because there will be no more financial stress and you will enjoy your new house more.
When it comes to finances I subscribe to Dave Ramsey’s approach. His process First establish a $1000 emergency fund, start viciously paying down debt you have, establish 3 months living expenses in savings, then and only then, you become stable and able to take on a loan and/or start saving for your Tiny House.
When it comes to your house I can’t stress enough, you need to have your finances in order. Part of this process is also educating yourself about needs and wants. To do this we really need to understand how our society places pressure on us to consume things. Consumption is obviously tied to money, because we need to purchase things in order to consume. If we are able to reasonably take ourselves out of this culture (to a point), we can reduce our spending instantly.
More on consumer culture tomorrow!