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.
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.
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.
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.
In Part Two, I’ll discuss how I planned for and tracked the expenses for building the cabin.