Buying a House with Cash

by Sandy L on August 2, 2010

One of my readers requested that I go into more detail about how on earth my mom bought a house with cash while making minimum wage. It just didn’t add up and she wanted to know more.

So here’s a little history.  My mom came to this country in 1966, got married around 1970 and bought her house in 1979 for $10,000 in cash money at age 47.

Mom's house after putting her green thumb to it

The harsh reality is that she did a lot of things that most people just plain ‘ol won’t do. Here are a few:

  • Privacy – She lived with her brother until she was married. Her rent was low and they could split utility and food costs.
  • Quality of Life/Family Time – My mom worked second shift because she got a little extra per hour for working those hours.  It also eliminated the need for full time daycare as it was opposite shifts of what my dad worked (when he actually was working). Lastly, she worked every second of overtime offered.  Work came first for the sake of family.
  • Safety/Location – She lived in a bad part of town..and bought her house in the same neighborhood.  It had a bad school system (she sent me to private school) and I personally know 2 people who were murdered in my neighborhood. One of them happened in the house abutting our property. Theft was also an issue.
  • Leisure – no vacations, no restaurants (except McDonalds and pizza joints), no movies, no organized sports, etc.
  • Patience – How many people wait til they’re almost 50 to be first time home buyers?

She also did about 100 other frugal things that you hear about on all the blogs that I won’t go into in this post.  She also had some things going for her.

  1. It was 1979 and housing prices were depressed because interest rates were hovering at around 15% and peaked at almost 20% in 1980.
  2. My family was able to negotiate the price directly with the owner.
  3. It was a rental. In general, rental properties were worth less than single family homes due to the neighborhoods they were in.
  4. It was a dump. It was a 3-decker (ie, 3 family unit), and I remember the 3rd floor apartment had a ladder going up to it.  The toilet was also where the kitchen sink was supposed to be. It needed a lot of work and the work only got done when money became available. Most of the nicer 3 deckers were about 2-3x that price at the time.

But you know what? It was still better than the log cabin she left in Poland that had no running water or electricity.

Depressed yet? Well you shouldn’t be.   Most people don’t get paid minimum wage and most people take out mortgages to spread out the outlay of costs.  Was this settling? For her, it was a huge lifestyle upgrade and she was happy.

So what’s my point? Well, I guess it’s to never say “I could never pay for a house with cash.”   Anything’s possible. I’m sure plenty of people could pay for a trailer home with cash. It just depends on what you’re willing to give up in return. It could be family time or the size or location of your home.  Telling yourself it isn’t possible limits your potential. Instead, tell yourself you could do it if you needed to.

What are the things you did compromise on?  What is non-negotiable for housing?

{ 11 comments… read them below or add one }

tina August 2, 2010 at 9:01 PM

and how much was private school and WPI??? Did you also get social security payments when your father died (assuming that’s what happened since there is no other mention of him)?

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Everyday Tips August 2, 2010 at 10:14 PM

Wow, your mom was a hard worker, that is for sure! She sent a great example for you kids.

It is amazing the amount of opportunity that is in this country. You just have to find it, which your mom did. I am not saying it is easy, but it can be done.
Everyday Tips recently posted..Do You Take Advantage of Free Or Almost Free Stuff

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Molly On Money August 2, 2010 at 11:20 PM

Your Mom is a great example of someone breaking down the myth that you have to make a lot of $ to save.
There’s a blog I’ve been following for a few months about a mom living below the poverty line and making it. It’s very inspirational.
Check it out: http://www.pennilessparenting.com/

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firstg6 August 3, 2010 at 12:02 AM

Tina – private school was about $1500. This was a little more than 10% of my mom’s gross pay. WPI was paid for with financial aid, student loans, and me working about 30 hours per week. It was not my most favorite time in life. Lots of work and very little sleep.

My dad didn’t work enough to have any kind of SS payout. My mom was better off waiting til she retired and collecting her own. I have a series of posts that will come out on him. I’ve submitted a couple of articles to guest post on another blog. More will come of that story later.

Everyday Tips – there is so much opportunity here for people who are hard workers. I feel very fortunate to live here.

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Shaun August 3, 2010 at 12:51 AM

Telling yourself it isn’t possible limits your potential.

Good advice for life in general! Our potential sometimes exceeds our wildest dreams.

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Budgeting in the Fun Stuff August 4, 2010 at 6:16 PM

It sounds like your mom did what made her happy even if she gave up some amenities for it, which is admirable. It also sounds way rougher than anything I could do, but I freely admit that I am spoiled.

We didn’t buy our house in cash, but we did wait until we had 20% to put down on a 15 year mortgage. We’re also paying it off in 10 years or less. We compromised on extras, but our house is really great for us. It’s a 2 story instead of the 1 story we wanted, but it’s in a nice starter neighborhood with a great school district (we don’t have kids, but it makes it easier to sell in the future). It has a big open area for our board gaming parties and it’s definitely big enough for just the two of us (3 bedrooms, 2 1/2 bathrooms, 1750 sq. ft.).

Of course, Texas has cheaper real estate, so that helped.

Awesome story…rough to grow up in, but amazing none-the-less. :-)

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Sandy L August 4, 2010 at 6:58 PM

BFS. You’re so right about my mom picking something that made her happy.

Although the house was crappy, it sat on a double lot. She had about 40 kinds of foods growing in it at any time, including 4 kinds of fruit trees. It really was her little oasis in the hood.

We have a similar sized house 1728 to be exact. I also have a husband gamer like yourself. Are you sure you’re not my southern twin?

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Nicole August 4, 2010 at 8:03 PM

My husband is also a gamer. He’s currently thinking about weeding some of his Eurogames to the local gaming club. :)

We didn’t buy our house in cash. I did what the internet told me to do and bought a house with 20% down and a 30 year mortgage (I would have gone with 15 year, but at the time the rates for 15 and 30 were identical so there was no point… we’re hoping to refi to a 20). While I was looking I did notice that we could buy some homes for cash… there was even an actual house that we could have gotten for 7K… no actual glass in the windows and in a crappy neighborhood, but it did have plumbing.

We ended up with a house at the exact top of what we were able to pay. It’s a lovely house, but we could have got something reasonably nice and smaller for 100K less. On the plus side, it is in very good shape and nowhere near college students. But still…

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Budgeting in the Fun Stuff August 5, 2010 at 8:00 PM

It’s no nice to be able to use the term Eurogames without getting question marks shooting back at me! Yep, hubby and I Eurogame (more him…I like the potlucks for the chatting). :-)

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Squirrelers August 7, 2010 at 11:38 AM

Excellent post. This is an enlightening and inspirational story. Your mom clearly worked very hard, and hats off to her for saving enough to buy a house outright. Very impressive how she managed to accomplish that.

In terms of compromises and non-negotiables, for me it’s safety and affordability. I also highly value school systems, and proximity to employment when choosing a place to live.

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Money Reasons August 8, 2010 at 3:26 AM

All the comments above reflect what I too was going to say, so instead I’ll just say:

Thanks for sharing your mom’s story! It was Inspirational, even though between the lines it sounded pretty rough too. The fact that she had such a lovely garden makes me believe she truly is one that can see beauty in many things! Very positive!!!

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