Are you desperate to pay off debt this year? You have a good enough reason to feel that way.
According to the study published on Nerd Wallet, the cost of living in this country already outpaced the income growth. If the income grew by 26% the past 12 years, the expenses have grown within the range of 37% (food and beverages) and 51% (medical costs). This is probably the reason why debt is something that our society finds very hard to manage. The study revealed that the average household is paying a huge amount of interest each year – a whopping $6,658 a year. With the average household income being $75,591, the interest alone is eating 9% of the hard earned money of consumers.
This is a painful fact to swallow. You can just imagine how much debt we owe to accrue that much interest! Each year, the credit industry is earning more than $6,000 on interest from every American household. We just have so much debt to pay off.
The truth is, the debt itself is not a problem. There are instances when it is okay to be in debt. However, you need to ask yourself – up to what level will you let your debt accumulate? Will you let it rise until it becomes hard to pay off debt?
Obviously, you do not want that to happen. But you are torn because you want to live a certain standard of lifestyle. On top of everything, you know deep in your heart that you want to live in your own house. You want to own the roof over your head. That is your dream and that remains to be the American Dream of most consumers.
Because of that, we are all ready to make the lifestyle sacrifices that will help us afford the lifestyle that we think we deserve. We all think that the big house will give us that.
The truth is, we do not really need that big house. Because that house is what keeps us in debt. It is what encourages us to rack up huge amounts of debt. While credit by itself is not a problem, once we start accumulating it, that is when it starts to enslave us and keep us from really enjoying what this life is all about.
If you want to free yourself, you need to revise the way you look at big houses and start considering the real value in tiny homes.
The main reason how a tiny house can help with debt payments
It seems that the dilemma of falling into debt is not a question of whether you will borrow money or not. It is more of why you will put yourself in debt in the first place. If you do not want to be a slave to debt, there is one thing that you can do. You can join the Tiny House Movement.
This is literally living in a small or tiny house so you can live on less and thus, be able to manage your debt properly.
You see, the problem with debt is not that you have it – but more of having so much of it. A tiny house will not guarantee that you will not use debt. When you live in a tiny house, you will actually have more freedom to use credit because you know you can afford to pay off debt. At least, it places you in a financial position where you have all the extra money to use credit wisely.
The true concept of the tiny house living is that you will concentrate on what is important to you and live on that. Nothing in excess unless it is really needed. There are so many ways that living in a tiny house can help you with your debt payments.
Let us start with the obvious – it will remove your mortgage payments or monthly rent. Do you have any idea how much a traditional house will cost you?
According to TheTinyLife.com, homeownership will cost you $1.07 million over the course of 3 decades. This is for a single family home that costs $290,000 in the market. This type of house, after a down payment of $58,000, will cost you a total of $427,000 ($232,000 as the principal and $195,000 as the interest). If you factor in the taxes and insurance ($6,000 a year), maintenance ($300/month), and major repairs/improvements ($300,000) – all of these will add up to more than a million dollars. All for a house that is valued at $290,000 when you first bought it. If you choose to buy and live in a Tiny House, you can buy one even for $20,000. Based on the data from WiseBread.com, a do-it-yourself tiny house will cost around $23,000. Although technically, the cost per square foot is bigger, it does not matter. You can easily buy it in cash. That is the game changer here. These homes range between 200-400 square feet and are known for its space saving features.
Other reasons why you can pay your debts by living tiny
The lack of mortgage or rent payment should be enough reason for you to understand the appeal of tiny houses. It will keep you from hundreds of thousands worth of debt and still let you own your own house. A tiny house can help you pay off debt because it helps you avoid it in the first place. But beyond that, there are other benefits to living in a tiny home. Here are other benefits that will help you improve your financial standing.
Lowers your utility bills.
First of all, it lowers your utility bills. A tiny house only has one bathroom. Most of the time, people use a composting toilet. So your water consumption will go down. Not only that, the cost to heat and cool your home will go down significantly. You have so little space that it will not take too much energy to heat or cool your house. This is one expense that you will see going down.
Keeps you from buying too many “stuff”.
Another benefit of living in a tiny house is you will be discouraged from buying a lot of stuff for your house. If you have a 5-bedroom house, you need to put furniture in each and every one of those rooms. Not only that, we usually tend to buy things if we know that we have space for it. With a tiny house, you will not buy things unless you absolutely need it. Your reason is simply because you do not have space to store it. If you spend less, you get to have more money to pay off debt.
Allows you to spend less on upkeep costs.
The final benefit is spending less on your upkeep expenses. You do not need to spend much on maintenance or repairs because you have a very little space to look after. Instead of having to buy cleaning products for 20 or more windows, you only need enough for 5 or so. When it comes to repairs, the small space will not cost much in terms of materials and you will not spend a lot on labor – if you cannot do it yourself.
In case you are wondering how a family can live in a tiny house, there are tons of videos that you can watch. But here is one video that will show you just how liberating it is for people to live in a tiny house. If you think that this is only for single people or childless couples, think again. This video features a family of three – a husband and wife and their 13-year-old son living in a house that is 320 square feet.
As you can see, this family is able to live comfortably and the small space is actually good for them. They brush into each other often and they learned how to focus only on what is important. The best part about this is they are living without any mortgage.
It seems that living without a mortgage is the real appeal of living in tiny houses. But beyond that, the lower cost of living is the one that will help you pay off debt. If you have student loans or high credit card debt, this is an option that you can seriously consider. This can really start you off right so you can set up your future to be financially stable despite your debt obligations.
