This post comes about because my co-workers’ cousin just lost her job. Her husband has been on disability for years, so hers was effectively the only income. Her *first* response to the job loss? To declare “I’m gonna sell my house, buy a lot, and move to the country!”
OK...:cracks fingers: Let’s look at this logically, shall we? I know, from co-worker, that cousin’s house is about ½ paid for. Let’s assume that, knowing that it is a modest house (especially in *that* area), it cost originally $100,000. So...she owes $50,000 (ignore the interest right now,
OK - it’s not material for this discussion.) Let’s see how this plays out....
1. You gotta actually *buy* the lot. I don’t know how much land is going for where she’s looking (about 90 miles SE of her current home), but let’s assume a minimum of $5,000. That’s for a totally *unimproved* lot (and I’m thinking I’m way low. Still...run with it). OK, but you can’t just drop a home on it...you need to do some stuff first:
a. Septic System - MINIMUM $10,000.
b. Driveway - mine was $2,500, 6 years ago. Prices have gone up...but let’s just use this number, since I know that’s what I paid.
c. Water Meter - :heh: Sticker-shock time - I had to pay $2,500 for the HOOK-UP fee. Can’t see it being any cheaper now....
d. Electric - where she’s moving is the same Co-op...it’s a $250 deposit (or was 6 years ago.)
So far, we’re at $15,250 for the improvements, PLUS the cost of the lot. Call it $21,000, so far, just for the spot to plop a tent on.
2. You gotta have some sort of housing. *Some* places don’t allow mobile/manufactured homes...for this exercise, let’s assume this lot does (it’s cheaper). So......
6 years ago, I was looking at mobile homes. Granted, I was looking at new double-wides, but the *cheapest* I found was $80,000. (Yes - for a dinky MOBILE home. :shudder:) The few single-wides I looked at were running about $60,000 New (because of Himself’s asthma, used was out of the question unless the seller would guarantee me there was no water damage)......figure used
ones to run about half of new. So, call it $30,000 MINIMUM for a used mobile home. If you’re lucky. (To do this right, I should go look at current prices, but I am without ‘net access right now. This’ll do, though)
So.....we’re at $51,000 right now. They owe $50,000 on their current house. This.....doesn’t make sense to me. :shakes head:
Let’s not even go into the fact that they LEASE their car (they don’t own one...just lease it. Stupid!). That bill won’t go away, unless they pay the penalty to break the lease.....they still have to buy a car. Call it $5,000 for a decent used one - again, I have NO idea what they could get for
that price, but it sounds like a decent amount. (You could go cheaper, of course....but I’m assuming that they’d want a newer used car, and $5,000 sounds reasonable for that. I could be WAY off, though. And, since the husband is disabled, a bicycle/motorcycle wouldn’t be practical.)
So.....we’re already up on cost (plus the added debt load, but hey - who counts that, right?). Now you gotta factor in cost of living. Yes, the area she’s thinking of is cheaper to live in than where they are.....But. Groceries are actually a bit more expensive, once you factor in gas. (Farther to drive to the store, you see. And there’s only 2 stores there, just like where I live. NO variety at all, and very few “odd” items...like Ricotta cheese. That’s “unique”. :sigh:) Clothing....Wal-Mart or drive to a big town. Phone.....ah, phone service! If it’s like where I live, there’s 1 choice - take it or leave it. I pay about $90/month for phone/DSL.....which I think is high, but I have no choice. Cell phone service is spotty out here - the company I am with is the ONLY one that I’ve ever gotten a signal in my house from. So........
Now, I’m NOT saying moving is a horrible idea. IF she wants to do it so she can try and help supplement her diet with a garden/chickens/etc, then..OK, I can see it - but it still doesn’t make financial sense. The ONLY money they will have coming in is Disability and her Social Security (both of which are NOT going to be around forever...I’m watching for those to be taken away
soon-ish.) (And, again - MOST communities around here allow up to 3 hens, and you can garden in containers. So, moving for a garden/chickens is NOT a smart idea!)
It *might* lower her monthly payments....but honestly, not by much. Not without paying cash for the lot and improvements - if all she had to finance was the mobile home, then yes - that *would* make sense (again ignoring the fact that the housing market SUCKS right now, and NO ONE is really in a position to buy. She might get lucky and get someone to assume her note - IF
it’s an assumable mortgage. If not....she’ll have *2* house payments. Unless she lets her current house go into foreclosure.....which is NOT a good idea. I think that would include the risk of the bank putting a lien on the new home......:sigh: I don’t know that for a fact, though.....but it’s
something to consider.)(And - she doesn’t HAVE the cash for any of this, so she’ll be going into debt from the get-go.)
Here’s the thing - in a Depression, it’s NOT the time to go into more debt. IF she could sell her house for enough that the current mortgage is paid off AND she could afford to pay cash for the new lot/improvements/house, then yes - it’s a good idea. If not - and in this market, I’m betting on NOT - then no, this is NOT a good idea.
And, for the record, yes, I DO believe in miracles. Yah can do ANYTHING - He can make it possible for her to move without assuming more debt. However....I also believe that I should plan for the worst. IF I get a miracle, fantastic! If not, well - I’m not worse off, because I prepared.