Thursday, June 14, 2012

Tiny houses

I saw this video on Yahoo's main page today and had to watch it, even though its kinda a puff piece on a wholesome family "making it work" and all that, because the Tiny House Phenomenon (no not this tiny house :)) is actually a thing and I've been interested in it for the last couple of years:

Indeed, there's something very romantic about the idea of just shedding all of but the most essentially material goods and living a simpler existence.  But enough Thoreau/Emerson/Trancendentalist jibber jabber.  Consider the economic, environmental, and health-oriented bonuses a person or family would accrue if you could, like the family in the video, live such a life.

Sure, you'd have to throw down for open land and, say, $15,000 for the structure (not including labor costs, if any, I'd assume) -- the family in the video says the house cost them $13,000.  Not to mention if you opted to go with solar panels.  And you'd probably have to spend some money on some tiny house-designed furniture and that sort of thing.

But on the flip side, aside from any payments for the land and more mortgage payments.  Drastically low utility bills (especially if you opted for solar panels).  Drastically low homeowner's insurance.  Huge savings for simply not buying things for which you have room in your Tiny House (clothing, various household items, toys if you have kids, books, big TV's, shit you currently have stacked in closets that you never use). 

Just as a hypothetical, if the HillcrestBlogger Family opted to live in a Tiny House, what type of living expense-savings could we see?  Those monthly expenses we current have that are specifically fixed to our house are as follows:

Mortgage, $1,080
Entergy, $88
Centerpoint Energy, $85 (12 month average)
Internet, $25
Water/Sewer/Trash, $70
Terminix, $25
Housecleaner, $90

(if by chance you are a regular blog-follower, you'll note that we recently cut out pay-for TV and I wouldn't anticipate we'd be resubscribing in the Tiny House!)

So, I guess it would be fair to approximate our monthly house-oriented expenses at $1,463.  Over twelve months that's $17,556.  And in a Tiny House of , let's say, 200 square feet, which is around 1/7th the size of our current house?  I guess the best I can do is estimate:

This website lets you plug in certain variables for a home's yearly energy cost.  The minimum square footage for the calculator is 250 square feet and scaled window size by 1/7.  Otherwise, I just kinda guessed.  In any event, it said a yearly energy cost, with some upgrades, would be approximately $677.00.  Internet would remain the same, as would, presumably (if we remained in the city limits) water/sewer/trash (total $95).  I'm not sure whether we'd use Terminix on that size of and type of a house.  My guess is that we would not.  And, of course, the housecleaner would be out :)

So, minus a mortgage, we'd be looking at an estimate of $1,817 per year, a savings of $4,596.

But how you do you estimate the mortgage?  Or is it really even a "mortgage?"  I guess you'd say it was the cost of the land plus whatever it cost to build the Tiny House.  I have no idea what type of land/lot would be available within the city's limits -- importantly, where we'd want to live -- but it would very likely be expensive.  And within the city limits might not be a doable thing.  But according to Zillow, there are several lots in cities around Little Rock on multiple-acre lots with attractive features (such as lake access) for around $40,000.  So to be on the generous side and because this is just a hypothetical, let's use that number.

Using the $40,000 for the land-cost and upping the building cost to $20,000 to be on the liberal side, we'd be looking at $60,000 for the "mortgage".  My guesstimate of a five-year note at 2.8% yields a monthly expense of $1,072.00 (with taxes and all that type of thing).  So for the first five years, the cost of the "mortgage" on the Tiny House would be almost identical to what our mortgage is now.  But after five more payment, "mortgage" or otherwise.  The land and the Tiny House would be ours.   And at that point, the financial savings would really start to compound.  Curious to see how much?  Let's extrapolate:

                                                       Current Yearly Expenses          Tiny House Expenses
Year One                                             $17,556                                     $14,582  (-$2,974)
Year Two                                            $17,556                                     $14,582   (-$5,948)
Year Three                                           $17,556                                    $14,582   (-$8,922)
Year Four                                            $17,556                                     $14,582   (-$11,896)
Year Five                                             $17,556                                     $14,582   (-$14,870)
Year Six                                              $17,556                                      $1,817     (-$30,609)
Year Seven, Eight, Nine, and Ten         $70,224                                     $7,268     (-$93,565)

Those numbers are quite astonishing.  For the first five years we'd be accruing a modest $3,000 per year in housing-related savings as we'd be paying off a $60,000 note at approximately the same rate as our current mortgage.  And over the course of five years, that modest savings does equate to almost $15,000.  But man, once that note is paid off...the yearly savings jumps to almost $16,000 per year, plus, you own your Tiny House and the land upon which it sits outright.  And over the the course of a decade, we'd be looking at savings approaching $95,000.  Again, with ZERO debt and a place to call all our own. 

I had planned to comment also on what I would think would be the environmental impact bonus with a Tiny House, as well as how much healthier you'd surely have to be after living there, but this post has gone on pretty long already, so I'll maybe comment on those at a later date.  But I think they're relatively self-evident -- lots of outdoor time, probably some quality gardening and a vegetable plot and all that.  Low carbon footprint, etc. 

In any event...Tiny Houses.  A very interesting thing to think about and consider...

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