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Mind Your Money: How An Art Therapist Bought Land For $68,000 To Build Her Future Home

The 28-year-old plans on building a multipurpose home on the property.

Name: Essence J.

Age: 28

Occupation: Art Therapist

Salary: Recent annual salary bump to $68,000, up from $50,000 in 2021

Money Shift: Moved from Chicago to Muskegon, Mi. and purchased a plot of land

Goal: Build a home on her land that may also be used for art therapy sessions and/or a vacation home.

After living in Chicago for seven years for college, including graduate school, and building her art therapy career, Essence J. decided that she needed to focus on her healing.

After working from home as a virtual therapist during the pandemic, coupled with expensive rent and dealing with neighbors, Essence realized it was time to pack up and head three hours to Muskegon, Mi., her hometown.

In Mar. 2021, she purchased a 60x 140-foot deep property close to Lake Michigan. She found it by Zillow surfing. “This is my ideal situation being near water in a very laid-back type of town,” said Essence, who purchased the land for $62,900. Her decision to purchase land is on-trend with the rest of the nation. 

According to a Realtors Land Market Survey, in 2020, land sales rose 3 percent, and its sale prices increased on average by 2 percent. And sales price of residential land rose 6.8 percent. Ideally, Essence says she wants to build a multipurpose home that can be used as her residence, her art therapy sessions with clients, and/or for Airbnb vacation rentals.

RELATED: Mind Your Money: How This Mixologist Is Making Her Home Buying Dreams A Reality On A $75,000 Salary

Money on the Mind

Essence put down 10 percent of the cost of the land plus closing costs, $7556. Her mortgage is just under $300 per month, but it includes taxes, etc., so she isn’t taking a big bite out of the principal. She has a balance of about $55,000.

She has $16,000 in student loans from undergrad, and her graduate school was free. “Even though it probably won’t happen, I am hoping for $10,000 to be eliminated,“ Essence said. Her loan payments run $186 per month.

A naturally frugal person, she lives with her mom to save on rent, does her manicures, and styles her recently cut hair. She spends $10 per month at the gym and $86 monthly on her cell. She has no credit card debt, opting to pay it off each cycle.

Essence says she tries to save $1,500 per month but may slip down to $1,000 per month if an unexpected expense arises. Nibbling at her budget are the fees for starting her own private therapy practice. Her website is $26 per month, and insurance for the practice is $86. She is still building her clientele. "I'm trying to lay the groundwork," Essence said.

Cash Counseling

At 28, Essence is young but not too young to set up her financial infrastructure for now and for retirement.

Elsie Theodore, regional vice president/registered principal at Primerica, says Essence has positioned herself well to meet her financial goals by moving home. "I'd (use) mom as much as I could," Theodore said.

Theodore suggests that Essence enroll in a Roth (IRA) and fund it fully, but also enrolls in her company's 401(k). "If her company is matching, she's losing years of income by not participating," Theodore said.

Essence needs an account for emergencies, and that account should hold at least one to two years' worth of living expenses, Theodore said. It may seem like a long time, but because of Covid and people getting laid off, it's best to have more than the six-to-nine months of expenses previously recommended by personal finance experts, Theodore said.

Essence may want to consider a money market account that she feeds every month and is more accessible than a CD or mutual funds. Even then, Theodore suggests a mutual fund to help build wealth.

Theodore also recommends that business owners have a separate account for expenses and create an LLC for their business. Because she's a property owner, Essence may want to consider drafting a will.

Theodore also thinks that she needs life insurance that will cover funeral expenses. "She might as well get it while she's young and healthy, and it's cheaper," Theodore said.

House and Healing

Robert Carroll, a certified graduate builder, and owner-contractor at Carroll Construction says the first thing a landowner like Essence must figure out is what her town will allow her to do with the property. Any  improperly zoned construction and the town will "shut it down real quick."

A trip to the local permit office can help with that, he said. Generally, cities tend to have stricter plan requirements than in more rural areas. While a builder may have rave reviews online, Carroll advises that people speak with former clients. 

He states that a lot of reviews online are fake and can't be trusted. Problems almost always arise when building a home, he said. Be sure to ask people how their builder can solve them. It's not about being perfect but being professional.

Also, some builders have a stock plan that may save money.  When drafting your home, you may not want to go with the lowest bidder, Carroll said. He said that a low-skilled person could end up costing you more in the long run.

The pre-planning process is critical. "It's least expensive to fix a problem on paper," Carroll said.

Natalie P. McNeal is the author of The Frugalista Files: How One Woman Got Out of Debt Without Giving Up the Fabulous Life, available in audio and print.

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