Buying a House with Cash

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.

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?