"Investing" in productive property improvements vs markets: Low cost of living

[Syonyk]

Topic of conversation:  Retirement through a focus on productive property improvements and extremely low cost of living, vs relying on the markets.

Let's assume that, at some point, exponential growth on a finite planet hits some sort of wall.  I know, there are lots of electrons spilled claiming that this just ain't so, but let's assume that, in the next 50 years, we hit some sort of hard limit.  Climate, political, economic, resource-based, whatever.  Something.  Doesn't matter what.

This means that relying on market returns for early retirement is likely to run into a problem as well - if the market returns are small, flat, or negative, that puts a bit of a crimp into many people's plans.

An alternative path, one which I've been pursuing, is one of "extreme expense reduction."  This looks like a paid off house, solar for energy production (probably oversized a bit, so even if I'm net pushing more onto the grid than I pull, I have more energy if I can't afford the grid in the future), gardens, rainwater capture, greenhouses, a root cellar, etc.  And, ideally, working relationships with people in the local community I can trade with.

It seems, to me, that this is a more robust solution against a variety of possible futures.  If markets continue heading up, great.  I have good food, cheap power, and more money than I know what to do with.  If they don't - well, I still have cheap power, enough food, and ideally a surplus to trade locally.

This also ties into my desire to have a wide range of income-generating skills.  I have a few profitable side gigs, and intend to keep working on those.  With some of the stuff I plan to do to my property (solar, aquaponics, etc), having useful knowledge in these areas will make me of value going forward if I'm right.  That guy who knows how to set up a rocket mass heater for an aquaponics greenhouse is likely to be in demand, if local communities need to ramp up their own food production.

It's a pessimistic viewpoint of the future, which I entirely acknowledge (and my day job does consist of basically get paid to be a pessimist, so I recognize my bias), but the returns on some of this stuff are radically less dependent on the markets than just shoving everything in an index fund.

Anyone else taking this path and have useful suggestions?

[Adam Zapple]

(and my day job does consist of basically get paid to be a pessimist, so I recognize my bias)

I'm gonna guess actuary or police officer...leaning towards actuary.

Anyway, I do not live this way yet but think its a great idea...hence why I spend time reading this blog and these forums.  Where will put your money first?  Paying off the house or investing in sustainable energy/utility reduction?

[jengod]

I bought a relatively expensive wall-mounted clothesline this year with this kind of thing in mind.

Next "investments" in this vein will be (a) installing a downspout and daisy-chaining rain barrels for rainwater storage and (b) demolishing our concrete back porch (ugly as hell anyway) so we can start installing a laundry-to-landscape greywater system and possible branched drain from other water sources including sink and shower.

We probably won't do solar because our electric bill is relatively low but we have been actively working to reduce our electricity use further by planting trees to reduce heat gain in the summer so we don't have to use as much A/C and swapping out electric appliances for "off-grid" versions, i.e. French press instead of electric coffee maker, cast-iron waffle iron instead of electric waffle iron, old-style manual schoolroom pencil sharpener for the kids, etc.

[Syonyk]

I'm gonna guess actuary or police officer...leaning towards actuary.

Neither.  Not even close. :)

Where will put your money first?  Paying off the house or investing in sustainable energy/utility reduction?

Banks don't loan money to bums.  Saving up a bunch of money then taking a few months off between jobs to work on a house and property (nobody had lived on the property for the better part of a decade so it took some work) makes one a bum, from the bank's perspective.  So, house is paid for.  Funny thing, that.  You can be deeply in debt and get a mortgage, but if you can pay for a house in cash, you can't get a mortgage.  Apparently the concern is that I could have taken all that money to Vegas and put it on black right after signing the paperwork.

They did, helpfully, offer that I could take a cash-out refinance after I bought the house...  I offered my opinion on the process.

In any case, house is paid off, so I can go forward investing in other stuff.  I'm planning on solar next summer, and some good garden beds in the spring (as well as a set of compost bins and a chipper-shreader for ripping random waste up into quickly-compostable bits).

Next "investments" in this vein will be (a) installing a downspout and daisy-chaining rain barrels for rainwater storage and (b) demolishing our concrete back porch (ugly as hell anyway) so we can start installing a laundry-to-landscape greywater system and possible branched drain from other water sources including sink and shower.

I'm hesitating on a greywater system for the laundry right now because we do a lot of cloth diapers, but showers and tubs are definitely on the list.  That's going to be a lot of work to trench in, but it'll help save the septic system, which currently has a lawn on top of it (I don't want to grow edibles on top of the leech field, but you can't do much else with the land).

We probably won't do solar because our electric bill is relatively low but we have been actively working to reduce our electricity use further by planting trees to reduce heat gain in the summer so we don't have to use as much A/C and swapping out electric appliances for "off-grid" versions, i.e. French press instead of electric coffee maker, cast-iron waffle iron instead of electric waffle iron, old-style manual schoolroom pencil sharpener for the kids, etc.

Our view is south facing, so I don't want too many trees out there.  We actually don't take that much solar energy in the summer as the sun is very high in the sky.  The deck will be designed to help with this, though.

I've been running vent fans at night (think portable whole house fans) in the summer to help cool things down as well - an awful lot of the year, we can run 60W worth of fans all night and chill the house nicely.

[Syonyk]

Well.  I see.  Apparently we're off in the weeds here!

[Cranky]

I'm definitely more interested in the "good life on less money" side of things than the "invest a bunch of money and quit work" angle. I don't think it has to be one or the other, but I notice that a lot of people prefer one or the other.

[undercover]

Permanently reducing expenses is always more powerful than increasing income.

[MasterStache]

This is a great topic.

I installed solar on a previous residence myself. That was in 2012. I've looked into solar on my current residence and determined it is not ideal. My roof is east-west facing. And since state regulations has crippled the solar industry, payback is beyond 10 years. We plan on moving to a LCOL area in about 11.5 years (daughter finishes High School). Depending on the solar market in my state, I will look again to see if it's feasible. 

I am installing a rain barrel system next spring. I have created raised garden beds to produce some of our own food. I've even planted more landscaping/tress over once grassy areas to reduce mowing expenses. 

I have installed new windows/entry doors and added insulation in the attic. We had insulation blown into wall cavities as well. Granted this is all work that needed to be done but I absolutely see it is a net positive investment gain, in some cases much batter than even current market returns. Our energy bills have been reduced by half.

I've also started line drying my clothes. So in a sense yes I do weigh home improvements etc. against projected market returns. I've even considered paying off the house early. I'm not quite ready to start thinking long term market returns would be less than mortgage interest rate. That's a tough pill to swallow for me. I enjoy math!! 

[MasterStache]

I'm definitely more interested in the "good life on less money" side of things than the "invest a bunch of money and quit work" angle. I don't think it has to be one or the other, but I notice that a lot of people prefer one or the other.

I see far more folks encouraging both because I don't think they are mutually exclusive. A good life on less money usually means more money to invest and quit work.