Hi Dave Ramsey! I appreciate that you’ve given your input on the Tiny House Movement! I’ve been anticipating your thoughts on tiny houses. My husband and I, and our two kids, live in a tiny house and I would like to respond as I think it’s a conversation that is worth our thorough consideration.
We downsized from a 2,000 square foot mortgage two years ago. Our kids were in preschool, my husband was a teacher and a grad school student, and I ran my own wedding photography business. We wanted to become a one-income family that home schools and has a travel budget (we value travel as an important part of our family’s education), among other goals such as financial freedom, of course! Our budget absolutely would not allow it. The student loans totaled more than the mortgage and financially, we were more lined up to become a three-income family!
With enormous prayer and reflection on our options we made huge changes to line up our lifestyle with our values.
I think you approached the Tiny House topic purely from a real estate investor’s perspective. We did not. I bet very few Tiny House Dwellers do. We feel we have made a great investment in our quality of life. Now we can follow the plans and guidance of God rather than the demands of our bills. We have made decisions that are more responsible and sustainable in terms of our finances, our education, our environment, our faith, and our happiness.
If we had instead invested in real estate with plans to sell during a great housing market economy we would have been taking a gamble. Our tiny home is paid for and is not a financial risk.
We could choose to purchase a traditional house in the future. Rather than selling our tiny house, keeping it would give us even more options! We could rent it out, arrange for it to be our vacation home, offer it to a friend or relative who needs housing for a period of time, or gift it to one of our children as their starter home.
Have you ever visited a Tiny House, Dave? Although I’m asking you to consider their potential purpose in light of their value declining, I think you might be swayed to see their potential to at least maintain their value! They are appealing to so many demographics and financial statuses! Also! Consider the uncertainty of our economy. If things get rocky, which house is going to be in higher demand: The Tiny or the MegaMansion?
If we chose to sell our tiny house, you are absolutely correct, like any home, there is potential for it to go down in value. But I would like to argue that, at such a cheap initial price, it is currently serving it’s purpose for us at a time when our quality of life with our young family is more important than square footage or equity.
I think that tiny houses offer an option unlike low-income housing. Financially stable housing. In a culture with such a dynamic variety of needs and desires I think, at the very least, we should not write-off tiny houses as a fad. We need to note the important role tiny houses are playing in people’s lives; they serve a great purpose in goal achievement and quality of living.
Despite their sustainability, truly affordable price tag, role in offering a way to more easily achieve goals, putting the American Dream within reach, tiny houses are still viewed as controversial and often even rejected outright in a culture where never-satisfied-consumerism and massive debt is the accepted norm and, further, even socially encouraged. I think this warrants our reflection and continued conversation.
Sincerely,
A Content Tiny House Dweller,
Kim Kasl
12 Comments
Lovely response that is well thought out and truth based. I love and value all thing “Ramsey”. But…. my tiny house is currently under construction.
Well said! LOVE IT! LOVE IT! LOVE IT!
<3
(Also rely disappointed in Dave's view. Even if the Tiny House is "disposable," it is still often a better tool to financial freedom, especially in expensive markets, than the standard route, besides all the awesome reasons you mention. Love your response.)
I love Dave Ramsey and I love you! Great to read comparison from a couple of my favorite reading sources. I have in been so much prayer about our home investment, so each point of view helps give me perspective. Today is a sad for me. I’m giving up my chickens to make more room in our lives for getting our HUD home more liveable (or sellable.) My ideal home always has been a tiny ‘little house on the prairie’ hobby farm (plus modern conveniences) ever since I was a little girl. Funny story. We have 6 bedrooms. 6 people. We share and sleep in just two of those bedrooms. Take that, consumerist America.
Great response. Dave Ramsey isn’t for everyone and his advice, while generally quite good and wise, isn’t set in stone gospel. I know many families, including my own, who cannot be helped by Ramsey’s advice. Chronic illness (and subsequent bills, income loss, etc) is financial ruin with little to no hope of escape. All we can do is trust God to provide. Satan can have our debt when the Good Lord returns.
We don’t and can’t live tiny, but we live small…..6 people in a two bed, one bath cottage under 900 square feet in a low tax rural corner of our town.
beautiful response!
Buying a house with the idea of turning around and selling it is one of the things that has driven houses to be bloated, expensive to buyt, expensive to heat, expensive to cool monstrosities so many of us are trying to get away from. If we could get away from thinking of our home as an investment, and start thinking of our home as… well.. home, and if we can own our home outright, these are huge plusses.
I think the biggest thing Dave misses in his analysis is the housing costs. Let’s say someone is paying $1,000 per month to live somewhere. In three years, she will have spent $36,000. If she buys a tiny house for $36,000 and lives in it for three years, she’s not out anything even if at the end of the three years the tiny house has lost all its value because it turns out to be a “fad.” Moreover, she still has the tiny house to live in at the end of the three years, an no housing costs, allowing her an extra $1,000 per month as compared to her previous status quo. As you pointed out, most people don’t buy a tiny house as a real estate investment. If the value of the tiny house happens to appreciate over time, that’s great, but to most people it has little relevance.
Love this response, Kim! Thanks for speaking what we Tiny Houses know to be true.
Perfect reply. Everyone needs to do what’s right for them, not what other people think
Wow! What a great response! I think that tiny houses need to be customized to fit the owner, but that does not make them unsaleable or worth nothing. Dave does not address the lack of mortgage payments, cheaper utility bills, and the ability to travel for work. Nursing comes to mind, as many nurses work jobs 4-6 months at a time. Also engineers, as some “temp” jobs pay very well but they are a year of employment. By the time you pack, move, pay first and last months rent, on and off of utilities, etc. did you really make anything? Only to do it 12 months later. So I think tiny houses offer freedom and money making abilities that site built homes cannot. Later, you can buy the farm and use the tiny house to your advantage. All of this being said, I didn’t understand his answer as it only address one aspect of home ownership.
To me the tiny house movement is in response to the absurd amount of red tape money and time required to build a traditional house. Just because a house has a government stamp of approval, doesn’t necessarily mean that it is well built. There have been many cases where even though there is supposed a system in place to protect the consumer, when there is substandard building methods being used by contractors no one is ever held accountable to clean up the mess.
Tiny houses on wheels is the last place of freedom where people can create a shelter and build it themselves without having to pay a government agency a fee to have a place to live and do it inexpensively if they build it themselves. There are both male and female teens that have built their own THOW for between 10K and 15K. If you are willing to live even more rustic, there are THOW that only cost 5 to 8K. There is no need to take out a loan. I think Dave is right, taking out a loan and spending 60 to 100K on a THOW is contractors taking advantage of a fad. As soon as you take possession its probably lost 30 to 50% of its value. As we see in the housing market, contractors are always trying to cut corners and make more profit, THOW contractors are no exception. Also as we see in the housing market government oversight doesn’t necessarily mean you get better value, it just means that you have to pay a middle man.
Building your own THOW for 20K and saving and investing the money you save every month to buy a house cash IS YOU taking advantage of your financial position. Also the skills you develop building your own tiny house will benefit you when you go to purchase real estate. You may find you enjoy it so much you will find a fixer upper and rehab it yourself, putting you even financially further ahead.
To me at this time tiny houses give people options that aren’t there in traditional real estate, mainly for low income workers, college students, newly married couples and retiree’s. Just like any option, you can squander your opportunities by buying into a fad, or you can use it to strengthen your financial position. Choose wisely.