Pay It Forward, Part 1

It is said that one of the biggest investments that most people have at retirement age is their house.  It usually takes families 30-40 years to pay off their mortgage so they own the house free and clear.  This debt often causes families to work at jobs that they don't like, it causes stress, and causes them to feel tied down. 

An alternative to this is for the family to live in a less expensive house and pay it off earlier (with the same monthly payment amount).  After it is paid off, they would continue to make the same payments, but into a savings vehicle.  This savings would build up much faster since the interest is working for them, instead of against them.  When the savings builds up to the value of a house, they would buy a second house, paying cash for it, and "rent to buy" it to one of their kids or to someone else who needs a break.  The rent would go 100% to principle and taxes, no interest or PMI.  They can pay it off early without penalty, or pay for it with the minimum monthly payments, and own it free and clear much earlier than with a conventional mortgage.  The buyers would agree to participating in the same program, where they would save the same payment amount until they can buy a second house and spread the love.  Meanwhile, the first family would be getting payments back for the second house and continuing to put payments into savings, so they could buy their third house before the second house is paid for by the renters.  Because of the margin created by living in a less expensive house and not paying interest, this program has the potential to increase in velocity and spread far and wide.  The risk is fairly low since all houses are owned outright as soon as the first house is paid for.

As an example, we could look at a house purchased for $200,000 paid for with a $6,000 down payment and a fixed rate of interest at 5%, with monthly payments of $1,041 plus PMI and taxes (total monthly payment of ~$1,260 for the first 10 years, when it will drop to ~$1,208).  Over the course of 30 years, the family will actually spend $391,757 on the house, and by that time it will be worth $485,452 if inflation stays steady at 3%.  The alternative example for this family would be to buy a house for $150,000 with the same $6,000 down and a fixed rate of interest of 5% on a 30 year mortgage.  The minimum payment would be $729.63, with an estimated PMI and taxes of $161 per month.  This family would pay the same they would have paid on the $200,000 house ($1,260/month).  PMI would go away in less than 4 years, and the house would actually be paid for in less than 15 years (with the same down payment and monthly payments!).  For the next 15 years, they continue to pay property taxes (which also increase with inflation) but would save the amount that they had been paying towards principle, interest and insurance ($1,093) into a savings vehicle with 6% interest. At this point (at year 30), they have $341,000 in savings, and can buy a second house of the same value (their current house is worth $367,000 at this point) and "rent-to-buy" that second house out for $2,200/month ($300 for taxes, $1,900 towards the principle).  Now their savings is increasing by an additional $1,900 per month from the payments coming in for the second house.  From a net worth perspective, the family has greater net worth in the alternative scenario starting at month 2 due to the amount of money they lose in interest and PMI in the first scenario. 

My Search for a New Car

I was blessed earlier this spring to have totaled my car.  This was the first Honda Odyssey we owned, and we put 86,000 miles on it after the 120,000 it had when we bought it.  We paid $6800 for it and put another $1700 in repairs into it over the 7 years we owned it.  It was hit from behind 2 years ago, denting the back hatch, but it was still operable.  The insurance settlement from this accident was $2400.  The insurance settlement from totaling the car this spring was $3100.  All in all, we spent a net $3000 for this car, and got 86,000 miles out of it.  That's under $0.03 per mile!  My goal (taught to be by my dad and a family friend) was to spend less than $0.10 per mile for the purchase price and major repairs, minus the selling price (or in this case, the insurance settlements).

But, I wasn't satisfied with $0.03 per mile because of the rising prices of fuel and my increasing understanding of ecology.  At $3.50/gallon, getting 20 miles per gallon, I was paying 17.5 cents per mile on fuel alone.  So my new goal was to find a car that could stay under $0.10 per mile including purchase price, repairs, AND FUEL, minus selling price.  If I found another car as healthy as this van I just wrecked, I only had $0.07 per mile for fuel, so it would need to get 50 miles per gallon or better if gas stayed at $3.50 per gallon.  The next day, gas went up to $3.70 a gallon :)

If I look at electric vehicles (and I did, extensively), the calculations get more complicated.  Most electric vehicles don't advertise "miles per kilowatt hour" fuel efficiency.  They say that they are the equivalent of 120 mpg, but that is a point in time based on high gas prices and low electrical prices.  Still, this rough calculation is enough to satisfy me that I can stay under $0.07 per mile in fuel costs for quite a while.  And there are quite a few cars out there that look interesting.  Check out "The Elf" and "The Truckit" at  http://organictransit.com/  or take a look at all the electric vehicles at http://www.evtradinpost.com/.

After all my research and calculations, however, I've decided to do even better and ride my bike and walk.  I have a 2 mile commute to work and a 2 mile commute to the site where I'm building a house.  My wife has a Honda Odyssey to haul around our children, and she can occasionally give me rides in really bad weather.  I need the exercise, and the price of repairs (or even completely replacing the bike) every year is still cheaper than the electricity to charge an electric vehicle.

Reflection: Psalm 148 and The Canticle of Daniel

Psalm 148 and the canticle of Daniel (which is an addition to the book of Daniel found in the Septuagint, also known as the Prayer of Azariah) are very similar in that they both command all of creation to praise or bless the Lord.

"Praise him, sun and moon; praise him all you shining stars!"

"Bless the Lord, sun and moon; sing praise to him and highly exalt him forever.  Bless the Lord, stars of heaven; sing praise to him and highly exalt him forever."

 When I read through all these parts of creation that are commanded to praise and bless the Lord, I think and meditate on how most of creation doesn't need to be told to praise or bless the Lord - they praise and bless the God just by being what they were created to be.  Sun and moon always have and always will bless the Lord.  Stars of heaven always have and always will praise him and highly exalt him.  It is when we get to humanity that the commands to praise and bless the Lord are not followed 100% of the time.  Or, do I give humanity too much credit?  This, of course, brings to mind Romans 9:16-23, where Paul reminds us that even the evil in the world is used to "make known the riches of his glory."  Perhaps we, also, always have and always will praise and bless the Lord, whether we choose to do so as objects of wrath or objects of mercy.

 

Reflection: Creation as Incarnation

Read Genesis 1:26 and 2:15,19-20. Do these passages apply to us today?  What does dominion really mean?

St Francis is the patron saint of ecology, and he viewed all of creations as a type of incarnation.  Ilia Delio put it succinctly in Care for Creation: "Francis teaches us that God is incarnate in all of creation, and that entering in the cloister of creation helps us to deepen out relationship with our Creator."

Do you think that care for creation is something that can be left up to a few individuals, or does the responsibility rest on all of us?  Can a person reach perfection in Christ without a respect for creation?

What is different about the United States that causes it to be the heaviest consumer of non-renewable natural resources and the biggest generator of pollution per capita on the planet?  Do these aspects lead us away from God, or towards God?  What does the antithesis of these aspects look like, from a political, economic, and cultural perspective?

One Way to Create Jobs in America

If the government would stop subsidizing chemical-based commercial agriculture, consider the consequences.  The price of the products produced by these farmers would go up, taxes could go down (or stay the same but come closer to a balanced budget), organic food could compete with chemical-based food on price, consumers would buy more organic food.  Organic food production is more labor intensive, so jobs would be created.  Pollution would decrease in streams, rivers, and oceans.  Lower demand for chemical fertilizer, pesticide, herbicide, fungicide, and GMO seeds would make their prices increase even more, thus making organic prices even more appealing. Local farms would spring up like crazy because demand would return.  People would, over time, be eating healthier food and would have fewer medical problems, thus relieving some of the burden on the healthcare industry and the perceived need for government controled insurance.  More money for food would be kept in the local economy rather than amassing in large multi-national corporations.  Large food recalls would decrease since the food supply would be produced more and more by small local farmers. Transportation of food would decrease, thus decreasing our dependence on foreign oil and decreasing the amount of pollution created.  Food would be selected for flavor and nutrition rather than shippability and shelf life.  Farms would tend to be polycultural rather than monocultural, thus decreasing the risk of blights and pests.  Soil fertility would start to increase rather than decrease, due to soil management practices utilizing manure and mineral balancing techniques.  Large chemical based farms would eventually go out of business and those farmers (approximately 1% of the population) would have to find something else to do, possibly small scale local farming.  The number of farmers would increase from 1% to 5%.  If we create jobs for 4% of the population (~8% of the workforce), we just solved unemployment.  All by cutting a backwards subsidy.

Reader's Block

Last night, a friend mentioned that there was a book that was given to him a while back that he started to read and had to put it down - it was too much for him at the time - then he picked it up again in a year and it was great.  Ive had a similar experience with A Testament of Devotion by Thomas Kelly, Life Together by Dietrich Bonhoeffer, and No Man Is an Island by Thomas Merton, though I haven't yet gotten to the "picked it up again" part.  I wonder if it's better for me to try and force myself through a difficult book, or give myself time...