Thursday, February 5, 2009

Economic Leverage in Hard Times: Part 1—Housing

On my trip to Tennessee last weekend I saw a bumper sticker I liked a lot:
The best things in life aren't things.

The bedrock of that aphorism, which I have built a life upon, is that one can enjoy a high quality of life without owning a lot of things. Basically, there are two strategies for breaking one's addiction to material acquisition (despite Madison Avenue's best efforts to keep us on the treadmill). First, you can value non-material things more (such as relationships, walks at sunset, yoga, hanging out with children… or even authoring a blog!). Second, you can switch your focus from ownership to access—which is much less expensive. Instead of owning a table saw, maybe you can borrow your neighbor's (and in return, s/he can borrow your extension ladder twice a year to clean gutters, or prune the tree branches looming over the roof).

Today I'm going to start a series of blogs on how you can maintain (or enhance) your quality of life in economic hard times, when discretionary money is at a premium. I'll lay out practicial ways you can increase your level of sharing or otherwise reduce outlays, while at the same time keeping you on track for The Good Life. This is, of course, something people living in intentional communities have deep experience with. Since I've lived in community for 34+ years, I figure I've got credentials for this topic.

That said, I'll be slanting my suggestions toward people not currently living in community—because there are a thousands of times more of them than there are communitarians in the US. Even though community is the place where you're likely to see the potential of sharing most fully in bloom, far more people will be willing to tinker with the life they already have, than are open to moving to an intentional community in order to better cope with the economic downturn. While most communities are happy to hear from prospective new members (see FIC's online Directory for the latest info) and I certainly don't mean to discourage you in any way from that search, in this series I'll be exploring options that can be considered anywhere.

• • •
In this opening installment, I'll focus on housing, which typically represents between one-fourth and one-third of a person's disposable income. That's a lot of money, and that means there's a lot of room to maneuver. Here are a half dozen ideas for how to you can either lower housing costs or make your housing dollar go further.

1. Take in a boarder
The income will immediately help defray your own housing costs, and may well be a bargain for the renter. While the degree of interaction with the renter can vary widely, there is considerable potential for ancillary benefits—such as increased safety, help with chores (taking out the garbage, raking leaves, shoveling snow), someone to talk with. On top of this, the renter may have skills and availability that can be used to benefit you and reduce their rent. Perhaps they can babysit for your kids; maybe they can do electrical work and will rewire the attic and repair old lamps; maybe they can do your taxes—be creative! So long as you're agreeing to a rent reduction in exchange for something you'd otherwise pay for, everyone's a winner.

If board is included in the deal, the renter may take turns cooking, giving you and your family one or two nights off. [I'll have more to say about shared meals in a subsequent blog.]

2. Homeschooling
When I was a kid, everyone I knew either went to public school or the private Catholic school down the road. Today's options are far more robust. While public school is free, if that isn't working for you then homeschooling will be far less expensive than a private school, and not just because of the cost of the education. It will also be less expensive from a housing standpoint if room and board are involved.

Keep in mind that this option extends for the duration of the parents' obligation to cover the costs of their children's education. That means college, too. I have a friend in Loveland CO who's son goes to school at nearby Colorado State University in Fort Collins. It's close enough that the son lives at home and that translates into much lower fees (and debt).

3. Work at Home
In today's world of telecommuting, it is increasingly permissible to spend one or more days of a regular 9-5 M-F job at home, zipping your output over to the workplace electronically. While this isn't be an option in all jobs, there can be some serious savings
if you can do it. First, you won't be driving to work, which saves, gas, parking fees, and wear and tear on the car—not to mention the need for fewer costumes to satisfy the dress code. Second, you can designate an office space in your home and deduct reasonable expenses related to maintaining that space for business purposes (and perhaps some portion of your home computer expenses).

4. Refinance
If you own your home and have a mortgage, now is a terrific time to refinance. Interest rates for mortgages are at historic lows. Be sure though, to negoitate a fixed-rate mortgage—stay away from that ARM (and a leg) roller coaster!

Further, there is now available an amazing program for accelerated debt retirement through smarter scheduling of payments. The company who originated this is called U First. If you have debt, this program will save you unbelievable amounts of interest payments.

5. Downsize
While this option is more accessible if you're renting, it may make sense to sell your current house and buy something smaller if the price is right. Here are factors to take into account when assessing the suitability of a new location:
o Is it closer to where you work or where your kids go to school (savings in commuting expenses—best if it's close enough to walk to your destination)?
o Do you need all the space you have in your current home (have your kids left the nest; do you really need both fondue sets or that Commodore 64K computer you bought in 1992)?
o Can you find an up-and-coming neighborhood that is both safe and less expensive? (Hint: investigate if your perspective new site has an active neighborhood association or other vibrant civic organizations—dynamic social fabric can more than compensate for a less prestigious address.) A side benefit here is that homes are likely to appreciate in value much more quickly in a neighborhood that's riding the Up escalator.

6. Do Your Own Yardwork
If you hire someone to cut the lawn or other landscaping chores, think about doing these things yourself. In addition to the immediate savings of out-of-pocket expenses, you'll get some exercise, have it done exactly the way you want it, be at home instead of spending money at a bar or on the golf course, and are much more likely to meet your neighbors (maybe you can own the lawn mower and the guy next door can own the snow blower—get the picture?).
• • •
OK, that's the upside. Now let's turn this around and have a peek at some of the challenges associated with sharing. It is more difficult than falling off a log (though easier than brain surgery). Here are three common pitfalls:

o Loss of control
If you own a thing entirely and don't share it, then it will always be there when you want it and in just as good a condition as you left it the last time you used it. Further, someone else may be using the thing (or have it reserved) when you want it and you'll have to wait. (Remember to breathe.)

o Bureacracy of Access
When two or more people want a shared thing simultaneously, you'll have to negotiate who'll get it first. In addition to the time it takes for that dialog (which may not be your idea of fun) at least some of the time you'll be expected to let the other person go first and defer your plans to use it. Further, you may be expected to follow a protocol for reserving the thing, or for reporting damage—which is bureaucracy you wouldn't need if you alone used the thing.

o Tragedy of the Commons
When owenership (or at least access) to a thing is shared, then users have a tendency to be somewhat less careful about how they take care of the thing and maintain it in good working order. If there are maintenance or repair needs, it may be unclear who will take responsibility for that, and their motivation to handle the task with alacrity and diligence may be somewhat diminished.

While all of these challenges can be surmounted (mainly through good communication and laying out clear expectations and agreements up front) I want you to approach this with your eyes open. Living in community most of my life, I have a deep respect for the power of sharing and reducing my impact on the environment. While it undoubtedly takes effort to make sharing work, I have happily chosen to invest more time in communication and less in money-making. [See my blog of Feb 11, 2008: My Journey with Money for more of my personal story on this.]

What I want you to get excited about it is that, unless your bottom line goal in life is material accumulation, almost all of us can simultaneously reduce our expenses and increase our quality of life. And in today's world, you are only a web search away from access to someone else's experience with trying almost anything you can think of to accomplish this. Give it a try!

1 comment:

Unknown said...

The following paragraph is extracted from this article by Morgan Robertson of the University of Kentucky.

"Hardin's thesis works only where there is an 'open access' regime, meaning that there is no restriction on access to the resources in question. However, researchers studying the transition from subsistence to capitalist economies throughout history and in the modern developing world have found that "open access" regimes are only found where traditional economic patterns are in the process of being severely disrupted."

The article is a good one for many reasons but this clarification should excite all community advocates whose minds are haunted by the implications of the "tragedy of the commons".