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Composting toilets aside, I see a tiny house in my future

I love my house, but it definitely can be a financial burden sometimes. There’s the mortgage that takes up a good chunk of the monthly budget, maintenance and repair costs and hefty utility bills.

Wanting a space of your own — without the huge money, work and time commitment of the average house — is part of what started the tiny house movement that has gained momentum in the past few years.

The tiny house movement is a social movement centered on building and living in very small houses for reasons that include financial freedom, simpler living and environmentalism. The movement has grown over the past several years, giving rise to companies that design and sell tiny houses, tiny house lifestyle blogs and nonprofit organizations such as the Small House Society.

A tiny house on display at the Tiny House Conference in Charlotte, North Carolina, in April 2014. | Photo courtesy of Ryan Mitchell, The Tiny Life

According to the blog The Tiny Life, the average American house is a gargantuan 2,600 square feet while the average tiny house is 100 to 400 square feet. Some other fascinating stats from the blog: Many working-class Americans put one-third or more of their income — or about 15 years of their working life — into their homes.

I recently watched a fascinating documentary called Tiny, about one man’s quest to build a diminutive house. It’s pretty impressive that some people can live in such small spaces. But I could definitely do without a composting toilet, thanks.

And while I admire those who do it, I can’t imagine myself , my husband Joe and our two dogs living in a house so tiny it can be pulled down the highway on wheels. But, a few months ago, I read an article in The New York Times about a couple who built a modest 700-square-foot house. Now, that I could do, and I started dreaming. I love the idea of dedicating less of my money to my living space. It also sounds fabulous to have more time and more freedom. Some small house dwellers say they can do their weekly deep clean in 15 minutes flat. Sign me up.

Several years ago, it never would have occurred to me to live in a little house. But, as blogger Miranda Marquit points out on Money Ning, the view of pumping money into a house as an investment no longer holds true, especially if you might not stay in your house long-term. Joe and I lost money — and had to come up with $10,000 at closing — to sell our last house at the height of the financial crisis, so this rings true for me.

Tiny houses tend to be more expensive by the square foot, but cheaper overall than larger houses, according to Forbes.com. Some people, if they do a lot of the labor themselves, are able to build a tiny house extremely cheaply. For example, after a foreclosure, one architect built her own tiny house for $11,000 so she could have her own space and be mortgage-free. The cost of utilities is much lower, too. For example, utility bills for a tiny house usually run $10 to $35 a month, according to the company Tumbleweed Tiny Houses. And you’re limited by space on the number of pieces of furniture and amount of stuff you can have. Overall, a small house can lead to big savings.

So, if you’re sold on the tiny house life like I am, where do you start?

The key is planning, according to the blog Tiny House Talk. Think ahead and consider how you use your space, because an efficient layout is essential for maximizing a small space. For example, one couple put their washer and dryer right in their clothes closet (yes, that’s singular — they share), while others create home offices in corners.

As for me, I’ll keep following the tiny house blogs, dreaming and trying to convince Joe that it would be great for us, and our finances, to live in a house that’s the size of a small apartment — one day.

 

How to Prepare for a Meeting with a Financial Adviser

Some people need personal trainers to help them stay on track with their fitness goals — and to correct bad habits before they turn into wasted time. I figure my financial habits could also use some structure and expert guidance.

So, after making it to my late-20s without a money plan, I’ve decided to meet with a professional — a financial adviser (someone comes highly recommended from a person whose judgment I trust). I have a phone call scheduled for next week to review my financial big picture and to, hopefully, learn of any mistakes I’m making with my money.

In preparation, I’ve been searching for tips about what to do before meeting with an adviser.  Here’s some advice I’ve found:

Get the numbers
You won’t get far without hard numbers, advises David Ning from personal finance blog MoneyNing in a piece for US News & World Report. Compile statements from all your bank, investment and retirement accounts and send them to your adviser.

This was a good exercise for me. Too often, I divide up money tasks instead of concentrating on my overall financial health. For example, I’ll dedicate a Sunday to verifying transactions on my checking account. Two weeks later, I’ll pay my Roth IRA a visit. A few weeks after that, I’ll check in on my 401(k).

Knowing that a stranger will be seeing these numbers is a bit nerve-racking. Yet just like doctors need personal information, so does the person helping you become financially healthy.

Give some thought to the future
Having an open mind is important — yet so is having some long-term goals for your money, according to a guide from Hartford Investor. What are you saving for? When do you want to retire, and will you have enough money to do it?

Looking at my account histories has made me aware of the fact that I don’t have financial goals. Money from my paycheck tends to chill in my checking account until it’s spent, rather than get routed toward investments for my future.

I do automatically route some of my money each month into a savings account (and meticulously track the amount in it). Yet unfortunately, the same cannot be said for my Roth IRA. I guess car problems and vacations are immediate, pressing needs (and wants), while retirement just seems so far away.

Study up on financial basics
A working knowledge of investment terminology and products will help streamline the meeting, Ning advises. I figured I had a sufficient grasp on money matters (I do work for a personal finance website). Then I got an email from my adviser with some investment performance charts. Let’s just say I’ll be doing a bit more studying.

Next week, I’ll be blogging about some things I learned from this first meeting — and (hopefully) some of my new money goals. With turning over a new financial leaf in mind, here are some of the best money blog posts of the week:

Money Crashers has some advice for couples who want to stop fighting about money.

Fitz from Ready to be Rich shares his favorite methods for avoiding procrastination.

According to 20 Something Finance, Generation Y might be leading the frugal revolution.

Financially Poor gives readers some techniques for overcoming debt fear.

SavingAdvice describes three tell-tale signs that you’re trying too hard to “keep up with the Joneses.”

Life and My Finances is “swimming” in cash after selling an unneeded vehicle.

 

When Spring Cleaning, Don’t Forget about Financial Clutter


Behind my desk at home lives a box. Inside the box lurks my financial life, organized within tabs like “Bank accounts,” “Car stuff,” “Receipts,” “Investments,” “Tax things,” “Insurance,” “Misc.” and “VERY IMPORTANT.”  This is the box I will grab first if my apartment ever catches fire.
 
Over the past five years, this box has grown heavy. So, last weekend weekend, in the spirit of spring cleaning, I decided to go through the box and sacrifice some of its contents to the shredder. This is something I had been putting off (like many other financial chores) — generally, my interactions with the box involve opening it furtively and shoving in papers that I figure I’ll need when I grow up someday.
 
I’m happy to report that the box lost a lot of weight and will be easier to carry out in the event of a fire. And, today, I came across this article from financial counselor and CBS contributor Ray Martin, which lists financial documents that it’s OK to throw out. I was relieved to discover that Martin’s list matches the documents I shredded.
 
  • Receipts: I save receipts in case I need to return things. I’m pretty sure, however, that Banana Republic isn’t going to take back that dress I bought in 2009. All 61 receipts in the box went into the shredder.
  • Bank deposit slips: I had lot of these hanging around, although Martin says you can toss them as soon as the money appears in your account.
  • Credit card and bank account statements: I’m ashamed to say I found a handful of bank account statements in unopened envelopes. From 2008. Martin says the expiration date of bank account statements is generally one year (although it’s a good idea to keep any that contain images of checks). As for credit card statements, you can toss them after checking them for accuracy.
  • Old tax returns: Martin points out that the IRS has a period of limitations when it comes to reviewing old returns. To be on the safe side, I shredded only the returns from before 2006 — after scanning them and saving the images on two separate flash drives. The thick stacks of paper made a very satisfying noise as the shredder devoured them.
  • Utility bills: I found a cache of electric and gas bills from St. Louis, which I left in 2009. It was a good idea to keep them for a few months (I had to dispute an inaccurate charge after I moved out). But three years? Into the shredder they went.
With financial spring cleaning in mind, here are some of the best money blog posts of the week:
 
Man vs. Debt gives some dramatic suggestions for parting ways with clutter.
 
I Will Teach You to be Rich describes the debilitating condition of personal finance dread.
 
Couple Money explains when to call your partner out on over-spending.
 
Give Me Back My Five Bucks wonders if she could ever truly become a minimalist.
 
Dual Income No Kids Finance lists some bad habits that can cost you.
 
Funny about Money emphasizes the importance of regular insurance checkups.
 

Credit Card vs. Smart Phone: The Showdown

The “big news” in credit cards last week was mostly about cell phones.  Three of the largest carriers, AT&T, Verizon and T-Mobile, joined with Discover Financial Services (the world’s fourth largest plastic payments network after Visa, MasterCard, and American Express) to enable payment by cell phone. 

Sounds cool, right?  Rather than pulling out your wallet, you’d just waive you smart phone in front of the register.  You’d get an electronic receipt right on your phone.  This method of payment is already big in Japan. 

But don’t write off plastic just yet.  For consumers, there are issues of convenience and security.  At $200 per register, merchants may be reluctant to install new readers.  This means that the places that accept pay-by-phone may be limited.  You’ll still have to carry your card anyway.  And some experts fear that a lost or stolen cell phone could pose more of a risk than a card alone.

Personally, I don’t see the advantages of pay by phone.  Not having to carry a card? I’m still going use a wallet to carry driver’s license, cash, business cards, library cards, grocery lists, etc.  Not having to swipe? Yea, that’s huge labor savings.  Not having the theft risk of my credit card numbers exposed? I’m sure thieves have already figured out how to intercept the signal between my smart phone and the register.  Plus, do I really want to migrate my credit account every time I get a new phone or carrier?  I think I’ll keep my card and my phone separate for now.
 

 
 
     


 
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