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The terror of the high cost of living in America

Over the last few years I have been researching hundreds of alternatives to traditional housing because the largest chunk of the cost of living that’s unmanageable is housing. What I’ve discovered is difficult to stomach.

PROBLEMS

1. More then 150 million people in the USA live in fear. Yes, I said fear. Fear of poverty and all the societal problems associated with poverty. Fear of becoming homeless; fear of not being able to pay bills. Fear of not being able to provide food for their children. Fear of being forced to live in substandard housing or in dangerous neighborhoods. Fear of getting ticketed because the registration is expired. Fear. Real terror. People respond by cutting corners, taking on too much work, neglecting their kids, suffering through health problems, malnutrition, taking advantage of others, crime, violence, and most often, seeking alternatives to the oppressive system.

ter·ror

ˈterər noun
1. extreme fear.
“people fled in terror” synonyms: extreme fear, dread, horror, fear and trembling, fright, alarm, panic

The percentages of people living below the “poverty line” is staggering. It’s unfortunate that the “poverty line” calculations leave out the cost of housing. Yup, the poverty line calculations don’t include housing costs, or perhaps the bureaucracy is so deep into the propaganda business that it’s lost touch with reality. According to the US Govt there are 49 million people living below the poverty line. Another 100 million cannot afford the cost of living and are living paycheck to paycheck in a rollercoaster lifestyle of debt and crisis, managed ineffectively by beg, borrow and steal.

2. The war on poverty brought us more of it. The cost of living, especially the cost of housing, has risen far faster then wages and income every year since the 70’s. This has resulted in people working 2, 3 or even 4 jobs, 7 days a week just to survive. And they live in fear of what’s happening to their kids, their sanity and their physical health. Poverty has been scientifically proven to cause mental illness. The United States and it’s oppressive economy contributes to this. In fact, most Americans resort to stress relief wherever they can find it; drugs, alcohol, bad decisions, violence, unhealthy lifestyles, family abandonment, escape from society, suicide, and many other serious side effects of poverty and income disparity. Yes, society is to blame for not preventing this with bold policies and forward thinking in government.

3. The institutionalized and oppressive housing market demands regular profits causing an inability of the public to afford traditional housing. Fewer people invest in their future today then ever before. Meanwhile all efforts of people to try to live in alternative housing situations and/or offgrid living are being systematically outlawed to funnel people back into the traditional housing market. This has led to people being arrested for growing food in their yards, collecting rainwater, or living in their cars. The predatory partnership between the government and elements of the oppressive economy has forced extremism in many forms because with poverty comes limited options. When I say extremism I mean non-traditional alternatives such as tiny houses, living in vehicles, stealth camping, homelessness, multi-families living in one or two bedroom apartments, tent cities, communities in abandoned buildings, etc. All of these things are illegal in parts of the US. Is this a free country? I think not. It’s not even affordable anymore. Free? What the fuck is that?

4. Debt has become the crutch for the economy in America because without it most purchases would not occur. 50% of all Americans spend 110% of their income every month on bills, shelter and food. This has led to a huge “savings bubble” where funds for emergencies and retirement are simply not available. Only those who qualify for credit can use it for emergencies or needed purchases like school supplies or books, clothing, auto repairs, registration, taxes, health insurance, etc. Even school tuition loans are a billion dollar profit center for banks and institutions creating a 20 to 30 year financial burden for college kids to look forward to. If you don’t think this is sick, what’s your problem? We should be taxing the shit out of financial institutions that issue credit and those funds should be used to bail out Americans suffering from debt starting with student tuition.

5. Rental leases are unethical. That’s right, I said it. They are the immoral outcropping of a society that accepts greed and condones the wealthy taking advantage of those without significant financial resources. A rental lease forces tenants to remain in a specific rental for the duration of the contractual term despite that lower rental situations might come up during that term and therefore the tenant cannot take advantage of the more affordable rents as a direct result of leases. Same goes with deposits. Deposits for rentals cripple a tenant to a specific rental because the tenant cannot afford to move unless they can come up with a full months rent at the new place AND the deposit for the new place which is likely the same as a months rent. And the tenant has to do all this in addition to finding a new place to move to in the final 30 days of the lease. The landlord has complete control over the deposit for the current rental and may or may not give the deposit or a portion thereof back to the tenant in enough time to make those fund available for the new rental. In almost all cases the tenant has the hardship of losing the deposit and they’re forced to accept whatever available rentals are there, even more expensive rentals because of leases and deposits.

We are at a crossroads with housing and the cost of living. It’s finally at peak affordability in America. The housing market bubble screwed Americans in 2008-09 to the tune of 9 trillion, some say much more. Now the bubble is back again. Landlords and the real estate industry has seen gigantic profits for the last 40 years and it has decimated the middle-class and debilitated the lower-class by epic proportions. You can dispute or debate the facts but that’s not going to change anything because the state of the union is clear and undisputed. America is fucked.

SOLUTIONS

Solutions are many, but not so palatable by right wing republicans and moderate, right-leaning democrats, and especially libertarians who are lost in their own failure to comprehend reality.

A. First, we must enact major rental control laws that provide simple ways tenants can break leases whenever their financial situation changes, the tenant has opportunities elsewhere, or they find lower priced rentals. Landlords can always get insurance or save up for expected loss of tenants due to lower rents (or they can lower the rent). Oh, and if they don’t like it, too bad. If you’re a landlord that “needs” high rent to afford the mortage, that’s your problem. You made a poor decision.

Rent controls need to prevent rents from going higher then 33% of the tenants income or more than 40% of the median income for a given area. Currently many renters pay 50% or more for rent. And deposits should be given to the tenant immediately and the only deductions should be for damages proven in a civil court. Otherwise the tenant should get the deposit back upon giving a notice to vacate the rental.

B. Debt should be a maximum interest rate of what banks will give for a saving account. That means that if a bank will pay 5% for depositing money, then the maximum interest on credit cards, auto loans and mortgages should be no more then 5%. I’ve seen people paying 29% on a $10,000 credit card for decades and they still are unable to pay that balance off due to the interest. Credit card debt is immoral. It’s the disgusting business of fucking other Americans without consent. And then there’s student debt. What the fuck is wrong with Americans who think burdening kids with debt for decades is acceptable? Educating our children is an investment in the country. Everybody benefits from an educated public except the corporations who maintain the status quo. It’s time they paid for all education. Period.

C. The government must be made to either (1) leave people alone who are seeking out alternatives and let them live unmolested freely in society, or (2) provide 100% of the needs of those who fall through the cracks in the economy including housing, income, food, energy, transportation, etc. The best solution here is called a “universal basic income” or UBI. Google it. People wanting to live in tiny houses or live in cars or in tents on BLM land or public land should not be bothered or harassed by police and laws should be made to prevent the police or the government from preventing people from living on their own in alternative housing situation and lifestyles. Because the UBI is unlikely in our capitalistic greed-based society, the affluent public needs to shut the fuck up about people living in the streets or in their cars. The affluent (or naive) public and the government needs to back off and permit tiny houses and other forms of offgrid living because the government hasn’t done poor people any favors that help them survive in this oppressive country; in fact, they’ve made America into a third world country, so the people should be able to live as such with the freedom to build shanty towns and makeshift shelters in parks and on the sides of hills where poor people can survive. The economic slavery model isn’t working for 80% of the public. So the solution here is for the government to provide a basic income that covers the cost of living minus luxury items to every man, woman and child in the USA or they need to eliminate any laws preventing people from finding alternatives on their own.

D. Minimum wage should be tied to the cost of living unless there is a UBI in place to offset the disparaging wages in America. Unless and until a basic income is implemented, minimum wage should match at least 50% of the cost of living. Currently in some states the cost of living is around $60,000 per year, so minimum wage should be around 50% of that at a very minimum ($30,000/year). The arguments against this don’t wash. What I mean is, that if you are against either the Basic Income or tying the minimum wage to the cost of living, then your opinion no longer matters. That’s right, you have failed the citizenship test. You don’t get it. You’re not worth the time it takes to school you on the realities in America. Am I being too harsh? Get fucking used to it!

E. Lastly, let’s resolve fear. To eliminate the fear that is pervasive in poverty the only tangible answer is a universal basic income coupled with realistic rent controls and the freedom of the people to freely seek out alternatives to the oppressive economy in America. Otherwise, fear will “motivate” people instead of passion, compensation, recognition, loyalty, honor, morality and ethics. Additionally, we need better education in high school that teaches our kids to avoid debt and teaches them about how corrupt and fucked up oppressive policies help corporations and big businesses screw them out of their life savings and give them no future by ruining the environment.

Given the recently purchased presidential nomination process by Wall Street interests, much of these solutions are unlikely unless the American people rise up and demand real change under threat of a revolution. That’s unlikely as well because the system has so pervasively institutionalized the addiction to greed that few Americans can disconnect from the very system that oppresses them.

Notes: Not all government officials, landlords or policies are bad, but the solution to our situation in America cannot be more of the same incremental changes or half-measures. We need bold action. This means we can’t afford more greed-based practices or policies.

We must be bold

O beautiful for spacious skies,
For amber waves of grain,
For purple mountain majesties
Above the fruited plain!

Who knew back in 1911 when this version of “America the Beautiful” was popular, that in a little more than 100 years later the country would be in so much trouble.
What happened to brotherhood and sisterhood in the last century in America? Seems we’ve lost our way. We need to boldly change this. Are the plains still fruited? Yes, the mountains are still majestic, but for how long? How much of this pollution and profiteering can these mountains handle?

Thine alabaster cities gleam
Undimmed by human tears!
America! America!

Cities no longer gleam undimmed by human tears. For millions upon millions of Americans the factions of profit over people have held the people down. It’s time to be bold and help each other break free from the bonds of economic slavery.
Back in the early days another song came forth in celebration of America:

Oh, give me a home where the buffalo roam,
& the deer and the antelope play,
Where seldom is heard a discouraging word
And the skies are not cloudy all day.

Sadly, the buffalo no longer roam like they once did, and often is heard a discouraging word. And not everything back then was great, but there was hope that one day freedom would sing, and the cities would gleam and not a discouraging word would be heard. The hope was that America would evolve into something better, progress for the good of all.
The history of progress in America sadly isn’t the story of how the people evolved and overcame sickness, scarcity and poverty. It is the story of a struggle between the opposing forces of the Establishment vs The People for control, money and power.
The seemingly eternal plight of the people to overcome elements of control artificially places upon them by the establishment has creeped up incrementally to where we are today. The burden now upon the American people is too heavy and we can no longer afford to continue this struggle in half-measures and minuscule incremental change that could take decades or centuries to accomplish at great sacrifice. We must be bold. We must act now.

The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.
— Franklin D. Roosevelt

This struggle isn’t just about people, it’s about the planet. We cannot survive without a mutually supportive and healthy relationship between the people and the Earth. This means we must take bold action to save our world and preserve it forever. We all depend on this. The test score of our progress is an F. We failed.
There is still hope. We can do this but we must do it together. We must act now and be bold.
The profiteers that control this country need us, so we should use this leverage to regain control from them. We must take a stand against these powers now. Our place in the dirt is getting smaller giving way to every-increasing for-profit enterprises, and the environment is suffering. If we are to become less dependent upon the profiteers we must become self reliant and vigilant. We must be bold.
Let’s save the planet and the country for the sake of the future for all of us. Unfortunately we’re late, but there’s still a chance if we act now and be bold together. We don’t need big oil, big pharma, big business, big banks, big government and big oligarchy.

Do not go gentle into that good night; Old age should burn and rave at close of day. Rage, rage against the dying of the light.
— Brand, Interstellar

We must consider the option of a peaceful revolution if we cannot change our country through peaceful political efforts. It started back in the 60’s and 70’s, and we’ve tried a million different ways to bring about change peacefully. In these next few years we must do our best to overcome the oppressive forces that are preventing the American people from progress on wealth inequality and protecting the environment. If we act boldly now and are still unable to effect positive change, we must consider more serious action. If voting in elections hasn’t brought us better conditions in the last 50 years, why would we continue to think the next 50 years are going to get better unless we do something different.

We used to look up at the sky and wonder at our place in the stars. Now we just look down, and worry about our place in the dirt.
— Cooper, Interstellar

We must be bold. We must act now.

How to escape the American Dream

I posted a simple comment on my Facebook wall that went something like this:

“I’m curious, what if I told you that you could own a tiny house in Maui and 1.5 acres of farm land, plus a rental tiny house that generates $700/month income, all for about $400,000… Would you be interested?”

24 hours, 107 likes and 52 comments later I’m here writing this blog post. People are starving for alternatives to the ridiculously overpriced “traditional” real estate offerings that they’re willing to give up on previously unheard of things like municipal water, flushing toilets and 24/7 utilities just to escape the fucking rat race! That’s where I come in. I’ve been exploring alternatives for all my life. Alternatives to the status quo and the economic profit funnels that we take for granted every day. So I’m going to write a series of blog posts to share solutions in the form of current avenues to escape the economic pitfalls of modern America. But not just how to save money being frugal, more about the big picture; housing, land, and alternative lifestyles. I’m not going to candy-coat this shit, and I’m also not going to edit my language to protect anyone’s sensitivities. Just solutions that might fit into someone’s reality. Not everybody’s, but some possible avenues for a few to find their own situation that’s better than what the culturally conditioned American Dream is selling you. Let’s get started. You only need two things to get away from the traditional housing racket: a dwelling (home) and a place to put the dwelling (land). The hard part is affording the land. The easier part is the dwelling to put on that land because that’s where we can find the most options for your specific needs.

Land

landmauiIt’s the thing you’re standing on. It’s not cheap, well at least not everywhere. And despite what you’re told, you can buy land if you can figure out a way to save 50% of the full price. For most people that’s simply not possible. You can also rent land from someone. Typically they don’t even understand that concept; but we’ll explore that later. As far as having the ability to buy land, some people have a mortgage and are building equity that can be used later to invest in land, but most don’t have this option either. If you think creatively, you might discover a way to get a small slice of property where you are or where you want to be. Specific to the County of Maui, there are a few things to understand first. According to a few of the real estate professionals that I have spoke with, there are officially only two sources of financing a land purchase: First Hawaiian Bank and Wailuku Credit Union. Ultimately, you’re going to need a bank’s blessing unless you have cash.  You’re going to need 25-50% down payment at a minimum. The banks will tell you that you’ll need at least 25% down if the property has “full utilities to the site”. If the property has an HOA, CC&Rs or a private road, you’ll need at minimum 35% down. Anything else is probably going to be at least 50% down. You might want to explore Google for “USDA Farm Loans” which usually require a minimum of 2 acres and must be zoned AG. Here’s the bad news. Land financing is typically 1, 2 or 3 year terms, 4-6% interest and a balloon payment due after 24 to 36 months (that can be ugly) and at least a 60 day escrow for land purchases. So quite obviously this is not for everyone. A cash deal is best of course. We’re going to look at a specific property as an example below.

MAUI367858

Click to view source / listing

Land price $329,000.00  (2.66 acres on Maui)
Down payment amount 50%
Total amount financed $164,500
Payment amount $4,930
Balloon payment $0.00
Total payments $177,487
Interest rate 5%
Total interest $12,987

Your monthly payment amount will be $4,930.21

Wow!, that’s ridiculously expensive. This is why I recommend you find another way to accomplish your land purchase, such as, finding more affordable properties and pay with cash, owner financing, etc. Here’s the actual property listing: http://maui.paragonrels.com/publink/default.aspx?GUID=34f92425-7ff4-4c4d-9d6c-53e91e39289a&Report=Yes

Home

basic-diy-modelIf you are somehow able to buy land, you’ve got the most difficult part behind you! The next step is the dwelling. Most of you know I’ve been a tiny house advocate for years now, and now a tiny house builder. So I’m 110% biased towards you buying a tiny house for your land and of course buying it from me. But you have many other options such as container homes, yurts, and traditional structures. Whichever way you go you’ll have to contend with the myriad of obstacles that have been purposely put in front of you to prevent you from escaping the traditional housing route. In some cases you will not be able to avoid zoning or building codes because of county or HOA rules. In Maui County they’ve been particularly friendly towards tiny houses done right. Tiny Houses are small minimalist dwellings built upon a wheeled trailer that typically have about a 160 sqft footprint on average. Seems small, but when you are trying to live smarter, more affordably and with less impact on the environment, then tiny houses are a win-win. And as the saying goes, they’re not for everybody. Tiny houses can be purchased or you can do it yourself (DIY) build them.The prices for tiny houses range from the low $25,000’s to incredible road-mansions for $300,000 (which I am not a fan of). If you’re downsizing, there’s no reason to go big and spend a lot. Think simple and practical rather than fancy and palatial. If you want huge, then go the traditional McMansion route. The average tiny house, whether you build it or buy it, is going to cost you around $30,000 to $50,000. Most tiny house situations are offgrid with water catchment, solar power and composting toilets (again, not for everybody).

Income

If you put the land and the home together in this case, you’re spending less than $369,000. This gives you the opportunity to purchase another tiny house for say $40,000 and rent it out (if you could afford it). Depending on the amenities you might be able to offer to that renter, you might be able to rent that second tiny house for around $600/month. More if you supplied water, power and wifi. This means that $410,000 cash nets you $7,200/year income minus property taxes, but you will be paying zero rent and no mortgage unless you financed the land purchase.

Here’s another property for sale that’s just $320,000 for 1.5 acres:
http://maui.paragonrels.com/publink/default.aspx?GUID=e4895f46-7e91-479a-92ca-a6d7d3481eab&Report=Yes

Is it possible to retire in Hawaii on social security for less than $410,000 — I guess so! Is it common, hell no it’s not. You’ve got to look for these kinds of deals and it’s not going to be easy to make them happen. In fact, most land in Hawaii is way overpriced and unreachable for most people. But you never know what you might find until you actually look.

I’ll be sharing more available properties and situations as I find them in this series of articles entitled, “Escaping the American Dream: how to avoid the Joneses altogether” (book title coming soon). Each article will have it’s own title of course, but I’ll be focusing on opportunities to avoid buying a $650,000 shack in a bad neighborhood and going into debt for the rest of your life, and how to free yourself from the never-ending rental housing cycle that is more like throwing the majority of your income in the trash.

The properties mentioned and linked to in this article are of course temporary. The links probably will not function after they've been sold. Here they are currently:

* Land Parcel #1 is 2.66 acres in the area of Wailuku
Link - http://maui.paragonrels.com/publink/default.aspx?GUID=34f92425-7ff4-4c4d-9d6c-53e91e39289a&Report=Yes

* Land Parcel #2 is 1.54 acres in Wailuku 
http://maui.paragonrels.com/publink/default.aspx?GUID=e4895f46-7e91-479a-92ca-a6d7d3481eab&Report=Yes

* Tiny Houses are available anywhere, but here's a link to my Maui-based tiny house building company - http://www.simpletinyhouses.com/
But wait... this article isn't for everybody. Many people can't afford to buy any real estate. You still have options. I'll address some of those in future articles.

Note: I'm no attorney or real estate professional. You can look this shit up yourself via Google. For the financial calculation use this site: Amortization calculator. Or contact a professional. In fact, DO contact a professional because I'm no expert!

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