Laying the financial foundation for your homestead
There are 5 essential steps that you can take before you go shopping for your dream acreage – they’ll make you a better homesteader, help you build your skills and your self-reliance before you quit the rat race. You’ll benefit from developing these 5 skills right now. A top priority is to get out of debt!
Part 3: Don’t wait till you retire before you begin to homestead – take these 5 steps now
I hear a lot from folks that like the idea of self-reliance and the security that homesteading offers and definitely plan to do that when they retire. But homesteading is more than just moving out of the city, leaving the rat race, and planting a garden. There are skills to learn. Mistakes to make. While you can begin to learn these essential homestead skills from a well-stocked homestead library – there is no substitution for experience and learning from your own mistakes.
There are 5 essential steps that you can take before you go shopping for your dream acreage – that will make you a better homesteader, and help you build your skills and your self-reliance before you quit the rat race.
Many of these essential skills for the homestead lifestyle were taught by parents to their children a few generations ago. Schoolchildren worked alongside their parents after school and during the harvest season and so for them, these things were intuitive. But today, these skills need to be learned on purpose. They are opposite to our natural citified inclinations.
Post 1 and 2 of this 3 part series of homesteading
Step 1 – Scratch cooking was discussed here along with several recipes to free you from packaged food and condiments.
Steps 4 and 5 are the focus of this final post in my 3 part series.
Step 4: Get out of debt
As a young married couple, starting with nothing, we racked up some debts. While we bought our derelict farmhouse and single acreage without a mortgage, thanks to a very generous loan from Mr. Joybilee’s parents, we weren’t expecting the expenses that home ownership required. Suddenly instead of $450 a month rent, that included utilities, we had a property tax bill of almost $2,000 a year, plus a heating oil bill of $500 every 3 months, and an electricity bill of $100 a month. This was in 1984. Then there was an annual $800 bill for house insurance and Mr. Joybilee’s teaching income barely covered our annual necessities. Moving from a 2 bedroom apartment to a 5 bedroom house meant that our furniture looked a bit meagre. Add a couple of babies, and some major house repairs – like a brand new roof, and redoing the wiring in the circa 1920s house, and those debts kept accumulating. After 10 years we’d found ourselves 30 thousand dollars in debt and no light in sight.
We “woke up” one morning, in 1996, and realized something needed to change and with repentant hearts before God, asked for His help. And He did help. We paid off the debt in 1 year and we’ve been debt-free for 18 years now. Once we became determined to live debt-free it was like a game to see what we could do with our own hands that would save us money and time. Living debt-free was a learned skill, which took time, patience, and a humble attitude. We made mistakes as we mastered the skills we needed to make it work.
We had a garden, as I mentioned in part 2 of this series, but there was a gap in my thinking between gardening and cooking what we grew. Learning to cook from scratch and then learning to grow what we ate were two essential steps that led to a more frugal, independent lifestyle, and then ultimately to getting out of debt. They didn’t make us debt-free though, without a consistent effort on our part to debt-free living.
While there are a lot of ways to live frugally, none of them will help you get out of debt unless you make a concerted effort to pay off your debts and to live debt-free. Let me share with you some of the things that worked for us to help us pay off $30,000 in debt in just a year.
15 tips to get out of debt:
- Decide that you are going to pay off your debts and not accumulate new ones. Make a family commitment to this. Include everyone in the decision. You will have a better chance of success if everyone is on the same team. Know your personal reasons for getting debt-free and living debt-free. Being sure of your reasons will make it easier when challenges to your plan come along. This makes it easier when you skip the trip to MacDonald’s after the roller-hockey practice and your son asks, “Why don’t we go to MacDonald’s like everyone else does, after the practice. Are we poor?”
- Reserve your credit card use for extreme emergencies and pay every credit card off completely at the end of each month. While some folks suggest that you cut up your credit cards, we didn’t do this. But we stopped putting things on our credit card that we could pay for with cash – gasoline, groceries, medications – and reserved the credit card for purchases that had to be made on the credit card – like hotel reservations or online purchases.
- Use the “debt snowball” to pay off your debts. Dave Ramsey talks about paying off your lowest debt first, then using the money that would have gone toward that debt to pay off your next lowest debt. This allows you to pay off your debt faster – Dave calls it the “debt snowball” effect.
- Pay off your highest interest debt first. Then use the money that you were paying that debt off with to pay off your next highest interest debt. This is similar to Dave Ramsey’s debt snowball in that it increases the amount of money that is freed up to pay off debt. But while using the debt snowball, gives you a faster reinforcement, doing it this way instead, puts more money toward the principal of your debt each month. Both of these strategies work – use the one that appeals to you.
- Have a reward in mind that you can look forward to, as each debt is paid off. Maybe you’ll go out to a restaurant or rent a movie. As you are planning the reward, don’t be enticed to increase your debt to fulfill it. When your full debt is completely paid off you should have another reward that you are now able to save up for.
- Don’t make your “get out of debt” plan an austerity plan or you will have trouble sticking to it. Deprivation isn’t the way to a happy, contented life.
- If the “wolves are at your door” don’t take the food from your family table to pay off your debts. Feed your family first. Take care of the rent and groceries before you pay off your debts.
- If you absolutely must skip a payment, contact the creditor immediately and explain the circumstance. It could be that another payment schedule can be put in place to help you meet your obligations.
- Turn your time into money. Take your leisure minutes and time off and find something that needs to be done to serve your community. Maybe you can make soap, or bake bread and sell that in your neighbourhood. There are jobs that we usually think of as teenager jobs – do a few for extra cash.
- Build community in your neighbourhood or your faith family. Invite friends over for a potluck, talk about your motivation to get debt-free, enlist the help of your friends and family. When you can get community support, it helps you stay on track when things get tough. For us, this effort to build community was a real eye-opener. We found that many of our friends, who we thought were very successful, were actually living paycheque to paycheque and financing their lifestyle on debt. Some expressed admiration for the choices that we were making to get debt-free, and some wanted to join us on the journey.
- Clear out your used books and de-clutter your house and yard and sell the surplus. First of all, de-cluttering will allow you to simplify your use of space. It will make you more satisfied with what you have, so even giving away what you de-clutter will help you. But if you can gain a little bit of cash through it, you can use this to go against your debts.
- Pick up the pennies wherever you find them – don’t despise the day of small beginnings – you are learning useful skills while you whittle down your debt, and you are also passing the knowledge on to your children. Celebrate the salad dressing you made at home that saved you $4 over the grocery store version. Learn to bake your own bread and reward your family with a healthier lifestyle while you whittle away your debts.
- Learn to fix small appliances, repair clothing, re-build what is broken. Do it for yourself and you’ll stretch your dollars. Do it for a neighbour and you can make some money.
- Be generous with others. Sometimes when we are struggling to get out of debt we forget how wealthy we really are. By giving generously to others, when we have an opportunity – tipping well at the coffee shop, giving to panhandlers, or charities – we feel less poor and hard done by. We had a designated giving amount in our monthly budget to be able to do this. Planting seeds of generosity will reap a harvest later.
- Don’t be too proud to accept help when you need it. Living in a community sometimes you are the giving person and sometimes you are the receiving person. Both roles are ok, and each person needs to feel comfortable in either role. Jesus said, “It is more blessed to give than to receive.” Yet somehow I don’t think any of those that were healed by Him would have given their healing away. We are meant to be both givers and receivers. When someone gives you something – just say “thank you” – and promise yourself you will pay it forward when you are able.
Step 5: Build a homestead business to support your homestead projects
While you are working toward getting out of debt and living debt-free, it can help to start a home-based business, something outside of your normal salaried 9 to 5 work schedule. This is something that you can begin part-time and build on by scale.
Building a homestead business serves two purposes. First of all, it will teach needful business skills. You’ll be able to practice on a small scale the skills that you need to learn before mistakes are very costly. Once you move to your homestead, you will be able to expand what you are already doing to bring in extra money, and perhaps even give you a full-time income.
This was a mistake that we made, in 2003, when we moved away from city life and a full-time salary to living full-time on a rural homestead. Our income dropped from $75,000 a year to less than $10,000. While we were out of debt, and our farm was paid for, the monthly feed bills for our livestock were a burden that drew on our retirement savings. Thankfully, we did have retirement savings to draw on. It took an additional 4 years before our business efforts on the homestead actually started paying all our farm expenses – but to achieve that, the whole family had to work incredibly long hours, 7 days a week. Our average hourly income was less than $1. It wasn’t exactly sustainable. If I was starting now, I would establish the website, the products, the market, and the blog 3 years before making the move to full-time homestead living. You are in a great position to do this now – before you quit your day job.
Even with an established customer base, there is a lot to learn about running your own home-based business – marketing, accounting, merchandising, legal requirements, liability, etc. that you have to learn even if you already have an MBA and an accounting designation, like Mr. Joybilee. There is no shortcut to graduating from the school of hard knocks.
Alternatively, you may start a brick-and-mortar business or work for someone else. None of these steps are without risk and most homesteaders choose a combination of them to find their sweet spot. What you begin this season may change and evolve as you gain a better understanding of the needs of your market. This is good — it’s not a failure to begin again. Most folks in my area do more than one thing to make a living here – but the lifestyle is worth it.
Getting your business education without the tuition costs
While Mr. Joybilee came to full-time homesteading with an accounting degree, a financial planning degree, and an MBA – none of this helped us make our home-based business successful. Education is only the beginning. Until you’ve quit your day job and started working for yourself, it’s all just theory.
As a starting point, begin your business education now. Follow a few business blogs, read a business book a month and try to apply 5 specific things from each book to your business efforts now, even if you are just beginning.
These first books will give you a foundation for deciding what kind of home-based business will best meet your personal strengths and weaknesses. I found from reading Conative Connections and taking the Kolbe test online that I was strong in research and organizing facts and I was strong in innovation and creativity, I was not as strong in hands-on day-to-day follow through. If you came unexpectedly for a visit you’d see this with a glance at my kitchen counters, while I’m writing. This told me that while, I’m awesome at writing how-to e-books, and blog posts and designing knitting patterns and formulating herbal balms and ointments or soap recipes – don’t ask me to make the same pattern 50 times for my fibre arts business or make 100 batches of goat’s milk and lavender soap. While I could make the batches of soap necessary to sustain a soap and body care biz, I just didn’t come equipped with that kind of energy. To be successful, I’d have to hire that part of my business out.
You’ll save yourself some frustration when you are designing your homestead business if you and your partner take the Kolbe test before you design your biz and read this book.
Conative Connections, acting on instincts by Kathy Kolbe (2011)
Conative Connection: Uncovering the Link Between Who You Are and How You Perform
Boundaries, when to say ‘yes,’ how to say ‘no’ to take control of your life by Dr. Henry Cloud and Dr. John Townsend. Boundaries permitted me to say, “no” to outside demands – especially from folks who thought that since I was a stay-at-home, homeschooling Mom, that meant I had 100% availability. It also helped me to have the courage to “bless and block” the trolls, and those who treated me badly called me names, or sought to embarrass me online (sad to say, there have been a few).
The War of Art, break through the blocks and win your inner creative battles by Steven Pressfield (2002) The War of Art is a great motivational book to help you move past your resistance and get down to work. It’s written to artists and writers but it applies to everyone who has to manage their time well and wants to do something of value.
Problogger, Secrets for blogging your way to a six-figure income by Darren Rowse and Chris Garrett (2010) When I ordered Problogger from Amazon, I had blogged for about 2 years on Blogspot. I had a very small audience and couldn’t figure out what to share and what to keep to myself. This book changed my blog overnight. I combined my farm website and my blog and turned to WordPress and started managing my blog as if it actually was part of a homestead business, which it was. I still follow the Problogger blog regularly – if you are just beginning this journey, check out this book.
The $100 Startup, reinvent the way you make a living, do what you love, and create a new future by Chris Guillebeau (2012) Chris Guillebeau’s book will stretch your imagination with possibility. It presents the whole idea that you really CAN do what you want where you want to live. This is an inspiration that you need to read before you take the next step toward your homestead business.
The next few books are marketing books. I’ll admit that marketing and copywriting were foreign cultures to me before I started this homestead biz education. These books are an introduction to what marketing is in the “new social economy” and why it is awesome to learn this skill and be able to give real help to people’s problems.
Gary Vaynerchuck’s book and Dan Kenndy’s book are about using social media to serve your customer base. If you think that Twitter, Facebook, and Pinterest are huge time wasters, this book will offer you a fresh look at social media. But they aren’t for giving specific answers to your technical questions like – “How many times should I post on Twitter each day? Or “How can I build my Facebook fan base?” These books will give you the theory that you can then build on.
The Thank you, Economy by Gary Vaynerchuk (2011)
No B.S. Sales Success in the New Economy by Dan S. Kennedy. (2010)
The next book is about using storytelling to connect with your audience. I read this book because I wanted to tell better stories. While this is a marketing book, it’s actually about making real connections and how the culture of a business is not so much based on price as it is based on stories and connectedness.
What Great Salespeople Do, the science of selling through emotional connection and the power of story by Michael Bosworth and Ben Zoldan (2012)
Enchantment, The art of changing hearts, minds, and actions by Guy Kawasaki (2011) is a book of success stories. It’s the story of MacIntosh, the story of Apple, and many other stories about how a person transformed a situation or an encounter into something different – something memorable and gained a loyal customer or fan through the transaction.
Thou Shall Prosper, Ten Commandments for making money by Rabbi Daniel Lapin lays the foundation for a right view of a business. So much of our socialist education and media make a business out to be the bad guy. That makes it hard if you want to start your own business. How can you blame business for all that is wrong in the world and then spend your time trying to build your own business – the internal conflict will make you sick. This book will help you get a new appreciation for the value of a business to the community. It will help you understand that receiving a piece of paper (aka money) for doing something good for someone else is normal. That piece of paper is the certificate that proves you did something good and right in this world.
Thou Shall Prosper: Ten Commandments for Making Money
You can find more specific helps in building business skills in the Homestead Kindle Bookclub. The book club virtual assistance service gives you a daily list of free Kindle books specifically picked with the needs of homesteaders and preppers in mind. Find out more.
This 3 part series is a simple introduction to some of the skills that you’ll need when you move to your dream homestead. For some folks, the idea of waiting till they retire to fulfill their homestead dreams seems like a good choice. Don’t wait though. You’ll benefit from developing these 5 skills right now — even if you don’t move to your homestead till after you retire.