A lot of has changed in my life since I wrote the previous Part 1 post back in January 2020. I’ll go ahead and finish this Part 2 and then in later posts will talk about my current frugal life.
I used an Excel spreadsheet to track the money I saved each month towards the retirement cabin and the money spent each month. I got estimates on the different items needed for the construction of the cabin, including site prep, septic, well, electric, cabin shell, roof, heat, cabinets, etc., and also tracked these items in the spreadsheet.
Thanks for reading and I look forward to sharing my tips for a frugal life!
This post will be Part 1 of a multi-part post on frugal retirement housing.
I believe that one way to be successful in financial
independence and retiring early is to have your housing paid off (no mortgage).
The reason I believe this is that a lot of your success in early retirement is
managing your cash flow. Housing expenses are typically one of the largest
monthly expenses for people, through either paying rent or a mortgage payment.
Once I decided that I wanted to retire early, I
started saving money to have a small retirement home built out of pocket. To
begin the process, I found a one-acre corner lot in a rural area that appealed
to me, so I paid cash for the land out of my retirement housing pool of
savings.
I was talking with a coworker about my plans to have a
small retirement home built and as I’m describing the type of home I wanted, he
says, “I can build that for you.” Turns out he built houses as a contractor in
previous career. I explained that I wanted to build the house in stages and pay
for it out of pocket as I went. He said that would not be any problem.
I asked him to find plans for a small, one-bedroom cabin-type home that would be 24’ x 24’ (576 sq. ft. total). He found plans for a cute home that had a cathedral ceiling in the living room/kitchen, a full bathroom and one bedroom. He estimated he could build the cabin for $20,000 in materials and his time. I had enough cash saved for him to start the site prep work, which involved digging down eight feet to install a pad and post foundation The trench for the water and sewer lines came later, after I had the well drilled.
Water line trench being dug to the cabin.
One of the first things I did was to
sign up for an owner-builder card from our borough (which is like a county) so
that I wouldn’t have to pay borough sales tax on any materials purchased for
the house. I gave my coworker a copy of my owner-builder card so that he could
use the card when he purchased the materials for me.
I set up an account at the local
building supply company so that my coworker could purchase the materials using
my owner-builder card number and put the cost on my account. I would pay off
the account monthly with my Bank of America Alaska Airlines credit card to
build airline miles. I paid off the credit card balance in full every month and
used the accrued miles to fly my son and daughter up to visit me for free.
As my coworker was working on the
foundation of the house and I was saving money for the next stage of the
building process, I also scoured Craigslist every day looking for free items
that I’d need for completing the inside of the house. Springtime was the best
time to find these freebies, as that’s when people started remodeling their
houses. As I found things that I’d need for finishing the house, I’d store
these things in my garage.
The thing I got for free from Craigslist included most of my kitchen cabinets, all of the bathroom cabinets, light fixtures for the kitchen and living room, a ceiling fan (though I ended up buying a new one, because I found one on sale that I liked better than the free one), bathroom towel racks and towel rings, toilet paper holder, toilet (though I ended up buying a new toilet), bathroom pedestal sink with new-looking faucet and handles, ceramic-coated cast iron Kohler double kitchen sink, bathroom wall cabinet (though I ended up not using it), two electric kitchen stoves (I gave one away and kept the better one). By getting these items for free, that freed up additional cash that I could save for the house construction.
Free refrigerator, stove, kitchen cabinets and sink. I bought the sink base and the lower corner cabinet from Home Depot.
Other free items that I received were from friends who gave me a refrigerator and a pressure tank for the well that I’d need for my property (no public water or sewer in my rural area). In both cases, my friends were replacing their old items with new appliances and were happy to give the old items to me.
Free white cabinet and pedestal sink with fixtures, $5 mirror from garage sale, claw-foot tub from Craigslist
Dumpsters were another source of
free items. At different times, I found two perfectly good wooden side tables,
two new pillar candles still in their packaging, and a new 5×7 picture frame
all sitting in front of dumpsters.
Not everything to complete the
inside of the house was free, but I did get some very good deals on some items.
I found a Craigslist deal on linoleum tile flooring. The seller was asking $125
for what turned out to be brand new, in the box linoleum tiles. I asked the
seller if they’d take $45 for all of the boxes (thinking the seller would
counteroffer with a higher amount), when to my surprise, the owner said, yes,
they’d take $45 for everything because they just wanted those boxes out of
their garage. The boxes of tiles filled up the bed of my pickup truck. I
researched the tiles online and found out they were commercial grade Armstrong
tiles. (A side note is that when the house was completed and I installed the
tiles, I had seven or eight unopened boxes leftover, which I then sold on Craigslist
for $75. The flooring ended up being free and I made money on the deal.)
Other items that I found for minimal costs were a bathroom light fixture, apartment-size stacked washer and dryer, and clawfoot cast iron tub (the special tub faucets purchased new cost more than the tub itself) on Craigslist and a room-sized oriental rug, living room chairs, and a bathroom mirror from garage sales. In the Home Depot seconds & returns bin, I found a bedroom light fixture that had been returned and a special-order laminate kitchen counter top that had one small chip out of a corner.
By not having to buy all of the above items at full price, I was able to increase my savings toward completing the house. Every little bit saved got me closer to having the funds to complete the house.
Pad and post foundation of the cabin
In Part Two, I’ll discuss how I
planned for and tracked the expenses for building the cabin.
Because I was a spendthrift during most of my early years, I was in and out of debt during a lot of my life. This indebtedness changed when I purchased the book Life or Debt: A One-Week Plan for a Lifetime of Financial Freedom by Stacy Johnson. This book literally changed my life as I worked through the process of paying off my debt. This debt payoff occurred eighteen years ago and since then, I’ve been able to stay out of debt (except for a mortgage which I now have paid off, own the house outright, and use it as a rental). I do use a credit card for almost all purchases and pay off the balance in full every month. The credit card I use earns mileage with a major airline and I use those accrued miles to travel to see family for essentially no cost for airfare.
Once I had the debt paid off, I started looking for ways to be frugal so that I could save money towards my retirement housing. My deep-seated fear of ending up being a homeless bag lady really gave me the incentive to save. I started out my frugality path by reading financial blogs and information on the internet. At that time, couponing was becoming a big thing and I followed several of the extreme coupon bloggers and used their systems. What I came to find out was that most of the coupons were for name brand products and even with the coupons, it was less expensive for me to buy either store brands at the major grocery stores or buy in bulk at Costco and Sam’s Club.
I started cooking almost exclusively from scratch, which helped me save money by not buying expensive pre-made or processed foods. I’d read through cookbooks and write a list of items that I’d need to make the recipes that I’d chosen. I generally only shopped once per month for everything on my list, such as staples, then once a week went to the store and purchased the produce that I’d need for that week.
I still shop in this manner, though if I do see an excellent buy on something on sale that I definitely use, I’ll purchase as many of those items as I feel I’ll use. For example, almost a year ago I found thirteen 12- oz. bags of Starbucks coffee beans in the sale bin at one grocery store for $3.98 per bag and eleven 12-oz. bags of Starbucks ground coffee for $4.98 per bag at a different grocery store. I bought all of these bags of coffee and put them in my freezer. I’ve thoroughly enjoyed drinking this coffee and still have three bags remaining in the freezer. Getting Starbucks coffee for this price is the only way I’ll drink Starbucks; otherwise, I purchase Seattle’s Best Coffee for $5.98 for 12-oz. bags or the Kirkland brand coffee for the current price.
I worked for a state government organization for many years and the government benefits included a defined benefit plan and a supplemental annuity plan that took the place of social security (the state doesn’t pay into social security). I feel very fortunate that I started working for the state government when I did, because a little over a year later, the legislature changed the retirement plan from a defined benefit plan (a pension) to a defined contribution plan (which is like a 401(k) plan).
I ended up taking early retirement from state employment, which meant my monthly pension payment was cut 30% from what it would have been if I’d worked longer (I left employment after a little over fifteen years; it would have taken twenty years of work to receive the full pension amount). Because of my frugality, I’m able to live on the early retirement pension. And because I’d worked in non-state jobs in my earlier years, when I get older, I’ll also receive a monthly social security payment.
Nowadays, a defined benefit pension is no longer the norm and most organizations either have a 401(k) or nothing at all. This type of retirement plan puts the onus on the employee to fund their share of the plan. Some organizations will match the employee’s funds up to a certain amount or certain percentage.
I currently work a part-time job from home as an adjunct teaching university classes online. The university has a deferred compensation program for adjuncts which is 403(b) plan. Because of my frugality, I’m able to live on just my pension and rental income, so can defer almost the entire amount of the teaching income (for 2019, up to $19,000 can be deferred, plus an additional $6,000 if you’re over 50 years old as a “catch-up”).
I’ll write more later about retirement housing and how I frugally achieved my retirement housing dream. The takeaway from today’s post is to always look for ways to be frugal and stay out of debt.
Hi! I’m Hundo P Frugal. I’m semi-retired and work a part-time online job from my home. I have two paid-off houses (one of which I use as a rental), no debt, multiple income streams, savings, and investments.
My ace in the hole is frugality. In my early years, I spent money on things that depreciate and lose value over time and didn’t spend money on things that can appreciate over time, like investments or property. I had high credit card, student loan, and mortgage balances. But eventually, I got sick and tired of living paycheck to paycheck. I started reading books like “Life or Debt,” “Your Money or Your Life,” all the David Bach books, and “The Millionaire Next Door” series. Finally, I started implementing what I was reading. This was before my favorite FIRE bloggers started their blogs (the Frugalwoods, Mr. Money Mustache, the Mad FIentist), but once they did begin, I started reading them and implementing their ideas, too.
Are you tired of the commute to work, the long days sitting at a desk or in a cubicle, the dealing with co-workers and bosses, the same hamster wheel schedule day after day after day? Are you ready to retire or be semi-retired? In the coming posts, I’ll show you how I did it. We’ll see all the areas where I became frugal. It was this frugality that let me arrange my life so that I no longer needed full-time work. Just a few of these areas are:
