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cost of housing


One fact in yesterday’s post really jumped out at me: That in the UK study, “homeowners who have paid off their mortgages are in the best position (to survive a financial meltdown), able to last for 426 days before exhausting their reserves, while those with a mortgage would have just 22 days before their money disappeared.” In the phone call that occasioned yesterday’s post, Henry told me that of all his co-workers, he is the only one who lives alone. All the others either have roommates to share their housing expenses or live at home with their parents.

These facts sent me off to the Internet to confirm what I already knew but had never thought much about: That housing expenses—mortgages, property taxes, insurance, utilities, home maintenance, and the like—comprise the largest spending category for most people.

When you’re looking for a place to live, one number rules your world: You should spend no more than 30% of your income on housing. You have probably heard that rule-of-thumb from a financial adviser or parent, a landlord, or lender. It’s embedded in online budget calculators and federal policies. There’s just one problem: It’s essentially an arbitrary number. Says David Bieri, an assistant professor at the University of Michigan: “It creates more distortions than it actually solves.”

If the 30% rule ever made sense—which economists contest—it’s almost meaningless now, when almost 41 million US households spend more. Income growth has been tepid or worse, yet home prices are rising and rents have soared, threatening to make cities from Austin to New York unaffordable for average earners. And cities are where the jobs are, and culture and entertainment, too. The cost of housing is more than it seems on the surface: it is the cost of access to a whole way of life, jobs, and amenities not available out here in the sticks.

That housing is the biggest monthly expense for most people becomes more apparent when you look at the situation of seniors and others who are living on fixed incomes. A study by AARP and Harvard’s Joint Center for Housing Studies found that one in three Americans older than 50 faced a severe or moderate housing burden in 2012. That’s up from one in four in 2000.

Renters have it tougher. Nearly one-third of renters already pay more than half of their income on housing.

It’s become fashionable these days for advisers to warn retirees and pre-retirees to set aside enough money to pay for health care in their golden years. But people might be better served if they were told to make sure they first have enough income and assets to pay for housing and home-related expenses after age 65. That’s because those expenses comprise the largest spending category for older Americans, according to a report published last year by the Employee Benefit Research Institute (EBRI), a private, nonpartisan, nonprofit research institute based in Washington DC.

The dollar amount spent on housing and home-related expenses decreases slightly with age. But the share of these costs in household budgets remain stable at between 40% to 45%, depending on age group. Households age 60-64 spent on average $18,720 or 43% of total expenses on housing in 2011, adjusted for 2013 dollars; households age 65-74 spent $14,732 or 42%; and households age 75-plus spent $13,111 or 44%. Or put another way: you’ll need roughly $250,000 set aside at age 65 to pay for 20 years of housing expenses.

To be fair, EBRI found in its analysis that health expenses do increase steadily with age. In 2011, for instance, households with at least one member between ages 50‒64 spent 8% of their total budget (or $4,176) on health items, compared with 19% (or $6,603) for those age 85 or over. And health-related expenses occupy the second-largest share of total expenditure for those over age 75.

Studies show that almost 90% of older adults want to age in place—that is, stay in the home and the community where they now live. But by age 85, more than two-thirds of individuals have some type of disability that makes aging in place less practical or more costly.

The typical homeowner aged 65 and over has enough wealth to cover nursing home costs for 42 months. In contrast, the median older renter cannot afford even one month in a nursing home.

Housing is the cost no one is really talking about. So what do we do about it?

Obviously the solution for all of us of limited means is to lower our housing costs. In some locations, the government has stepped in with various programs and tools—rental assistance, expanded use of technology and services to modify their homes, more services delivered at home and communities that promote independence but prevent isolation—but these are not universally available and are directed primarily to poor people and older adults.

Letting people go homeless is no solution, either. I read a report that says the cost of providing “supportive housing” in Los Angeles CA is actually less than public costs of homelessness. The typical public cost for residents in supportive housing is $605 a month. The typical public cost for similar homeless persons is $2,897, five times greater than those that are housed.

No, we need to lower the costs of housing in all of our budgets, old and young alike.

Many people would prefer to retire without a mortgage. At the moment, however, nearly a third of households age 65 and older are retired with a mortgage. You can substantially reduce the share of housing costs by paying off your mortgage before you retire. The best time to start this is when you are young.

When I was first married, Holly’s grandfather offered a piece of advice I wished I’d taken. He advised me to pay off my mortgage before I did anything else. At the time, I dismissed his counsel as too “old school” and stepped onto the treadmill and began making improvements on our home through debt financing before we could afford those improvements out of current income and savings. Big mistake. Once you step onto that treadmill, you can rarely get off without a bump.

Downsizing can be an important way to both create some additional money that can be used to fund retirement, as well as have a home that is easier to maintain. It’s nice having a large house if you have a large family, but once the kids move out it can be difficult and expensive to keep larger homes going. Downsizing to homes with lower taxes, lower utility bills and in need of fewer repairs helps.

If downsizing isn’t in the cards, you can always consider a reverse mortgage. A reverse mortgage is one way someone can use their home as an asset to fund retirement, but there are good reasons for not doing it. The fees associated with reverse mortgages can be high and is something a retiree needs to be aware of when considering this option. A reverse mortgage might be a less popular option for other reasons too, such as loss of ownership.

One of the reasons I moved to West Texas was the lower housing costs. It meant moving from a highly-leveraged home valued at over $400,000 into a property that could be paid off in seven years, even on Social Security. I have only two years yet to pay, maybe less. At the same time, I have preserved those aspects of life that are important to me. But those things do not carry the huge price-tag I was paying in Minneapolis.

Downsizing was the best solution for me. Helping others was one of the things I wanted to preserve from my old life. And it seems to me that helping others who are just starting off to eliminate the costs of housing is a benefit that is not inconsequential.

This is a long way of explaining my thoughts behind the creation of Estrella Vista.


Groove of the Day

Listen to Rosemary Clooney performing “Come On-A My House”


bye bye blues


Henry called yesterday as he does every Sunday, and reported a mood in the outside world that I can only characterize as “disquiet.” He said that people that he sees at public places such as shopping malls and in the workplace seem tired, angry, beaten-down, dispirited, overwhelmed. He said that many people appear to be holding on by a thread (if at all), attempting to extend an unsustainable way of life.

Despite what the talking heads are saying, the old economy isn’t doing so well. It is forever changed. In the most recent jobs report of the Bureau of Labor Statistics, there has been job growth as reported, but the two main sectors of growth were fast food and retail, accounting for a total of about 32.2% of jobs created in October.

Due in part to these low-paying jobs, many more people are resorting to using payday loans to get by. Payday loans are, of course, a practice that goes back to the Great Depression of getting credit against one’s next paycheck. With their exorbitant fees and interest rates, however, they are designed to entrap borrowers in a cycle of debt just a half-step above borrowing from Guido with the lead pipe. I recently read about one desperate borrower who got $800 within minutes from a website he found on his phone. When he called to check his balance a few weeks later, he was told he had electronically signed a contract to pay back $3,920 to a company owned by an American Indian tribe. This is apparently not unusual.

On the current Zero Hedge website, corporate executives are said to cite “softness in consumer spending,” a “challenging” climate, “fairly stagnant economy,” and “cautious” optimism. And that’s putting a good face on it.

Retailers are announcing new plans for Black Friday, the fake festival of consumption traditionally held the day after Thanksgiving. Some stores are adopting their own equivalents of payday loans by opening their doors as early as 6:00 pm on Thanksgiving itself, so that crazed shoppers can fight to get their hands on bargains, sometimes resorting to violence. This strategy will likely only shift sales a half-day earlier, with slower sales resulting on Christmas Eve. It is forestalling the inevitable let-down.

The fact remains that a massive, irreversible shift has occurred in the American economy. Adjusted for inflation and other factors such as length of the work week, the middle-class cohort earns $700 in average weekly earnings—well below its $827 peak back in the early 1970s. Note that this is a gross income number that doesn’t include any tax withholding or other deductions. Disposable income is therefore noticeably lower. If we multiply this weekly earnings figure by 50, we get an annual figure of $35,000. That’s a 15.4% decline from the similarly calculated real peak in October 1972.

The higher-paying jobs have been exported to China and India, and have become low-paying jobs forever. They won’t come back. Our factories have been dismantled and would be outmoded and uncompetitive anyway if they were somehow pressed into service. Much as we might hope that this is only a temporary thing, the “good old days” will never be again.

This situation is by no means unique to America. According to a report released in the UK, millions of people are less than a month away from the modern equivalent of the breadline. The average household is just 29 days away from this point, while others are much closer still, according to the “Deadline to the Breadline” report. Homeowners who have paid off their mortgages are in the best position, able to last for 426 days before exhausting their reserves, while those with a mortgage would have just 22 days before their money disappeared. And the typical household living in private rented accommodation is just two days away from the breadline.

It is time we turned the page and adopted new ways. The American love affair with unbridled consumption must end. “Good new days” are not possible unless we make this change, and get on with the business of living that will make us truly happy.


Groove of the Day

 Listen to Les Paul & Mary Ford performing “Bye Bye Blues”


walk away


“Walk Away Renée” is a song recorded by the band The Left Banke in July 1966. It was always one of my favorites. I am not alone in my admiration of the song. Rolling Stone placed the song at number 220 in the “500 Greatest Songs of All Time.”



Groove of the Day

Listen to The Left Banke performing “Walk Away Renee”



someday it will happen


Groove of the Day

Listen to Diana Ross & The Supremes performing “Someday We’ll Be Together”



Yesterday my neighbor Whitebear drove over to fetch Alex and me for a visit at his home. We were there from about noon until the sun began to sink behind the mountains.

He wanted to show me the progress he’d made building his house, an elaborate hacienda-type structure that is the home of his dreams. He flies the flag of the American Indian Movement. He seemed impressed when I told him I had once met with Vernon Bellecourt, one of the leaders of AIM.

He shares the house with his wife Julie and a large number of animals that include dogs and cats, horses, chickens, turkeys, turtles, etc. He has cultivated a bounty of fruit trees and plants that supplement his diet. His property is also home to wild deer, antelope, and large cats of various species. While there, we even saw the tracks of a mountain lion.


This is a little old, but here is a slide show showing his property:


I don’t see Whitebear very often—he keeps most people at a distance—but I consider him one of my closest friends out here. One reason he invited me to his home is that he was placing some ashes from our mutual friend Michael in a small chapel he had built, and he knew I would appreciate being a part of that. I left an offering of a single menthol cigarette, which was a favorite of our departed friend.

Another reason he invited us to his home is he wanted an opportunity to meet Alex. I’m glad Alex had an opportunity to visit Whitebear’s because it gave Alex an opportunity to see what is possible living off the grid. Even for us.

Whitebear has lived in this country longer than I have, and he has had more money to work with, too. The visit demonstrated to Alex that it needn’t be as austere and simple as the lifestyle we have so far achieved.


Groove of the Day

Listen to Robbie Robertson and The Red Road performing “Cherokee Morning Song”




Of course, Alex’s post yesterday was a disappointment to me. His announcement hardens intention. But given my philosophy, there is little for me do do but to accept his plan to leave and support it to the best of my ability.

Readiness refers to how likely a person is to seek out knowledge and participate in behavior change, and Alex is clearly not ready for what this place—and I—have to teach him. In the three months that he has been here, Alex has never explored the property nor (to the best of my knowledge) left the vicinity of the house except to pay a visit to the neighbors’. Whereas we spoke frequently upon his arrival, this ceased around the time that he began to spend hours of time on the phone each day and night with a young girl who has become his exclusive counsel.

Individuals go through various stages in order to adopt or maintain new behaviors. According to a website I consulted, in the pre-contemplative stage, the person is generally not aware of a problem or not ready to act. In the contemplative stage, the person is thinking about a change, but is not yet taking action. In the action stage, the person adopts a behavior change and is practicing it. In the maintenance stage, the person retains the new behavior as a result of reinforcement. In the last stage, the behavior is part of the individual’s lifestyle and is no longer seen as a change that needs attention or reinforcement.

Interventions work best if they match a person’s state of readiness. For example, if a subject is not even aware of a problem or its consequences, teaching should be directed toward raising awareness of the need for behavior change before any other learning can take place.

Readiness implies a degree of concentration and eagerness. Individuals learn best when they are physically, mentally, and emotionally ready to learn, and do not learn well if they see no reason for learning. Getting people ready to learn, creating interest by showing the value of the subject matter, and providing continuous mental or physical challenge, is usually the mentor’s responsibility. If the mentee has a strong purpose, a clear objective, and a definite reason for learning something, he makes more progress than if he lacks motivation. In other words, when learners are ready to learn, they meet the mentor at least halfway.

Alex appears to believe that he already has learned most of what is relevant to his personal situation. He doesn’t yet know what he doesn’t know. Give him time.


Groove of the Day

Listen to The Fifth Dimension performing “Go Where You Wanna Go”




by Alex King

I am taking a leave of absence from both Estrella Vista and Wandervogel Diary. Neither is indicative of an ending, but rather a new start. Coming here has allowed me the opportunity to truly take stock of all the damage I’ve caused myself. My life is currently in shambles due to many years’ worth of bad decisions. I’m not writing off the dream, but rather getting myself situated so I can be more helpful in the future.

Beginning with the latter, I have created a web profile of myself as a writer an aspiring author. This site incorporates a blog entitled “Ramblings”. Although most of my efforts are going towards building up my portfolio, there will nonetheless be postings that will intersect with the Diary. These I will happily repost here, but for those who want to keep tabs on me personally, I will be on This site is new, so there isn’t much to see, but with a lot of effort and a little luck, this could change soon.

The item of more immediate interest, I’m sure, is my leaving Estrella Vista. Once more, this is only a new beginning. Since being here, I’ve had the time to closely examine my life. In 25 years, I’ve nothing substantial to show for myself, save 2 prison sentences and some accumulated debt. I’ve always been one to believe a person should take responsibility for themselves and their actions. I can’t expect others to wash out my indiscretions for me. I have to do this myself.

The last time I indulged in city life, prior to my second arrest, jobs were all but inaccessible to me. Without probation and with all the time that has transpired, I’m much better situated to work my way into a legitimate position in the workforce. I will need aid initially, but with a dedicated effort I expect to have something going within 2 months.

I would like to offer my sincere appreciation for the refuge that has been provided for me. I came here with nothing to offer and was received. I appreciate everyone reading this, for giving me my voice and for responding. I look forward to a time in the future when I can be an asset, but I need the time if I’m to no longer be a liability.


Groove of the Day

 Listen to “Disturbed” performing “Prayer”


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