How You Can Own Two Homes with No Debt on $33,000 a Year

As you may know, I LOVE real-life stories of people who have done what other people say is "impossible" to do financially. Well, I found another one the other day -- this one from ABC News that chronicles how the cheapest family in America saves cash. Here's the part I liked best:

The Economides say careful planning allowed them to pay off their first house in just nine years, even though their family income averaged just $33,000 a year. Their second home is nearly paid off as well.

Now I'm sure there will be several comments such as "I bet their house is worth $30,000" or "I'm sure they have no fun" (which they budget for, by the way) below from the naysayers out there. But the fact is, if you want it bad enough and are willing to work at it, you can achieve financial freedom on almost any income. It simply means you have to spend less than you earn.

Here are some more tidbits from the piece and my comments to them:

The Economides spend $350 a month on food and cleaning products, feeding seven mouths for 30 days.

That's amazing. I think we are frugal and we spend $450 a month for four people.

How do they do it?

Step one: Careful planning. The Economides make a grocery list and check it three times before heading to the store.

"These women that are at the grocery store every day, three times a week, are spending gobs of money on food that they don't need to be spending," said Annette Economides.

That's certainly true. Grocery stores, like all retail establishments, are designed to get you to buy more of things you didn't know you needed. And the more often you're in them, the more often they have a chance to sell you more stuff.

The piece then lists an example of how they save so much on food shopping:

"Buy one, get two free," Annette said, reading from a coupon for brownie mix. "So you now have three boxes. And I have a coupon for another dollar off. All three for $1.19!"

My wife does this too. She often combines a store special like "buy one, get two free" with a coupon to make the savings really, really big.

Step four of the family's money-saving plan involves having a lot of freezer space. Whatever the family cannot consume right away can be purchased and saved for a later day.

We do this a bit. We have a small freezer in our basement that has more than paid for itself in the two years we've had it.

Step five is to avoid credit cards — and their costly interest payments. The couple has never used a credit card in 22 years of marriage.

Ouch. Now they're getting personal, huh? ;-)

Their advice to other families, which they offer both in seminars and on their Web site, is make a plan and stick to it. First, figure out how much you need to pay your monthly expenses.

Simple, simple stuff -- but it works. Good for them. they may not be the biggest earners in the world, but they are certainly financially free because they spend less than they earn.

Comments

[Nick]

You obviously have to take cost of living into account. The article states that this couple paid off their house in 9 years on a salary of $33,000. First, congratulations to them, that's quite an accomplishment.

On the other hand, I live in Washington D.C. and a house that could accomodate 7 people (three bedrooms, two baths) costs approximately $200k. To pay it off in 9 years with an interest rate of 5.75% you'd have to make payments of $2,375 a month. Considering that this family only makes $2,750 a month before taxes, that would be impossible to do in this market. This family is from Arizona and in Phoenix, a 2 bed/2bath house can be purchased for $70k. That's a mortgage payment of $830 a month which is much more reasonable.

[Rhonda Schaffer]

But, on another hand, I live in South Dakota, and I bought my house for $7,500. Yes that's a correct figure with no typo's. It all depends on where you live, city or rural. I just happen to live in a smaller town. If you don't mind driving an hour into the city or getting a "local" job then getting 2 houses is perfectly reasonable under the circumstances provided.

[The Financial Ladder]

They're a fine example of how to manage money. Good enough to write a book!

[Lazy Man and Money]

Hmmmm, that home could be well over 1,000,000 here in Silicon Valley. I think that makes the "they own two homes" statistic kind of irrelevant.

It's fairly easy to own two cars if you want ones that are old and barely run. It's a lot harder to own two new Ferrari's.

Good job by them, but there are lots of people doing the same thing. My mom used to be able to get 20 bars of soap for 9 cents total after coupons. Sometimes the store would pay her to buy things because the cost was negative after the coupons. I'm not convinced they are the cheapest family in America.

[Tight Fisted Miser]

I think that their being able to buy two homes is still quite an accomplishment even if they did do it in a cheaper market. I don't think the point of the article was that everyone can buy 2 homes in 10 years but it was just giving an example of what is possible when you spend less than you earn.

[Lana]

From the article:
"Right now, we need $3,400 a month to cover everything," said Steve Economides. "Then we take everything over that amount and split it into three. One third goes into a house fund, to cover any house emergencies. One third goes into a 'fun' account, for vacations, and one third for our family goes to charity, but for other families can go to mutual funds or other kinds of savings."
If they need $3400 a month to cover their expenses I dont see how they're doing that on $33,000 per year...$3400 x 12 = 40,800. I mean, I realize their income might be more this year because it says $33,000 average over the past years (he is a freelancer after all), but still...this makes the article a bit misleading.

[Jesse Joyner]

I just find it interesting that their names are the "Economides"; talk about living up to your name.