A while back, there was a commercial that had people walking around
carrying “their number.” The number represented the amount of money
each person would need in savings in order to live the lifestyle they
desired in retirement. This effectively pointed out that everyone had
a different number, which implies that each had a different idea of
how they wanted to live once they reached their “golden years.”
The reality of homesteading life is that you don’t have to wait
until you retire to realize your dreams. You can create these dreams
now; by slowly implementing more and more self-sufficiency into your
homestead, you will require less and less money in that retirement
account. In affect, you will be lowering your “number” with each
self-sufficient project you implement.
You won’t need some huge dollar amount stashed away in various bank
accounts. You won’t be left hoping these investments will kick off
enough interest and dividends to provide you with money to live on
while not dipping into your principle (cash invested). So many things
can affect what your investments will produce. I know very smart
retirees who conservatively estimated their retirement lifestyle based
upon a 6% return. Now that the recession has arrived, most of those
investments are earning less than 1% per year. Unless they adjust
their retirement spending, they will have to dip into their cash
savings, which leaves fewer and fewer dollars remaining to earn
interest. Many of these retirees may have to return to work late in
their years just to provide enough income to live on. My grandfather
became a Wal-Mart greeter in order to make ends meet after he retired.
He was a wonderful grandpa but not a great financial planner,
unfortunately.
As homesteaders, we invest money and time in our homesteads and
ourselves in order to reduce expenses now and well into the future. Let’s use the installation of a woodstove as an example of a
homestead/self-sufficiency project you can do now. Suppose you were
heating your home with electricity this past, frigid winter and, like
many Americans, experienced far higher than average heating bills.
If you had a woodstove and your land provides you with trees that you
can turn into firewood, you may well eliminate a good portion of that
winter electric bill, but it will cost you money (investment) to buy
and install that woodstove.
With the stove installed you are beginning to reduce your “number,”
now and into retirement, not to mention enjoying a much warmer home!
The amount of money invested in the woodstove will be far less than
what you would likely have to save and invest to kick-off the same
amount in interest payments each year. Let’s say you were to go so far
as to spend $2,000 to buy and install a woodstove in your home. Let’s
say that this investment saves you $200, or more, a month during the
winter. In a couple of years this stove will more than pay for itself,
but consider the alternative. How much money would you have had to
save and invest in order to provide that same amount of winter-month
savings year after year? How long would it take you to save up that
amount? This investment saves you even more when you consider what
future costs of energy might reach. You can ponder those costs as you
sit around your warm woodstove during a power outage in the middle of
winter. In my opinion, that’s spending some self-sufficiency time in
style!
As
you become more and more self-sufficient, you may realize that with
enough of these “investments” you won’t have to wait very long before
you can retire. You will have such a low “number” that it won’t take
long to create it or put it into savings. You may need some income as
part of that number and some folks choose to semi-retire by working
both on and/or off their homestead. There is no right or wrong way,
just what you decide is best for you.
Challenge yourself to think outside your comfort zone. Begin by
picking one monthly expense that you expect to face each month for the
rest of your life. Figure the average per month for the past few
years and then find a way to lower or eliminate that number from your
monthly expenses. This savings decreases the number of years you have
to work and save to create a nest egg large enough to live off nothing
but interest (and hope that the economy doesn’t erode that principle
or its ability to earn interest).
When you are dreaming of what your homestead might be like someday,
consider your expenses and how that homestead can set you free from
them.
Start attacking each line-item in some way now so you can secure your
homestead and retirement sooner rather than later. For most of us,
our monthly expenses look something like this:
-
Rent or Mortgage
-
Taxes
-
Insurance
-
Car Payment
-
Gas
-
Phone Bills
-
Internet Access
-
Electric
-
Water/Sewer
-
Trash
-
Clothing
-
Food
Mortgage and rent can be eliminated in many ways but I suggest buying
a mobile home with land for very little money and turning it into a
dream homestead. Real estate taxes are typically much lower on these
types of properties as well.
Property insurance will be less because the value of the property will
be less. Owning your assets free and clear may give you the comfort
level of not having to insure everything you have against every
conceivable tragedy. Think about it, what would it cost you to
replace your old mobile home with a newer-model, repossessed mobile
home? I have bought many for far less than $5,000 and if you are, in
fact, buying a newer mobile home, chances are it will be bigger and
nicer.
