The Mortgage Trap

Mortgages, I believe, are largely the work of the devil.

A house that costs $70,000 to build is sold by the developer for $90,000. Then it is sold by a realtor for $120,000. By the time you pay off a thirty-year mortgage, you've paid over three times the value of the house- roughly 300k- to the bank. So everyone gets a profit- except for the homeowner.

If you have a mortgage, multiply your monthly payment by the number of months of the mortgage and you'll find the "true" price tag.

Since the average American can't afford to buy your ordinary house outright, I suggest that we all participate in a minor housing revolution. At the very least, I will.

The house you see above costs slightly over $10,000. It is 800 square feet in total. It comes in a kit that can be constructed by two people in a little over two weeks. It's all steel frame makes it durable and basically maintenance free, at least for the exterior. You can visit the website here, if you're interested.

Of course, the kit doesn't come with plumbing, electrical, insulation, or anything else you'd find in a house- it's just a shell.

But it's a start.

I refuse to live under a mortgage. I know people who are making LOTS of money a year, and yet have nothing to show for it. Their monthly bills often match or exceed their income, and they've basically become wage slaves. Most importantly, the mortgage payment takes 33% or more of their income every month, most of which is interest. If they were sick and had to be out for more than two or three months, their financial life would be in shambles.

Thoreau once said that a man is rich in proportion to the number of things he can afford to let alone. A rich man who cannot drop everything at a moment's notice to pursue life is not really rich at all. His money controls him- not the other way around.

I know it will be difficult- I've heard enough people tell me how hard it will be, how it'll cost more than you think, etc. To them, the traditional way is the safe way, the right way. I understand their viewpoint.

That said, I'm going to do it anyway.

As Americans, one of our chief weaknesses is our short sense of history. We forget that one hundred years ago, the average American house was built by its owner. Some built shacks; others built houses that are still standing today. But they built them. My grandfather converted an old chicken house into a home that shielded multiple children from the rain and served him well most of his life. It did its job well. It wasn't much, but it was enough.

Secondly, there will always be naysayers. It is easier to stand aside and simply say, "It can't be done" than it is to actually try it and risk ridicule. And if the naysayers are loud enough, no one tries, and their prediction becomes a self-fulfilling prophecy.

I estimate that it will cost roughly $30,000 to complete the project. Luckily, I currently have a place to live, so I can work on it at my leisure. It's not necessary that I have it ready to move into for a while. So I'll take my time, and hopefully prove all the naysayers wrong.

Eventually, when I finish it, I'll buy another and stick them together, and slowly complete the second half, thereby having a 1600 square foot house. But that's further down the road.

Wish me luck.