Will Taking Out A Loan Make Your Property More Self-Sufficient?

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Virtually anyone who has tried to homestead has entertained taking out a loan. While “living off the fat of the land” sounds like a great idea in principle, actually making it happen on the ground in practice is tremendously difficult. You have to do a lot of work. And often, you do not have the financial means to make it happen right away. 

For that reason, many homesteaders consider taking out a loan to pay for improvements. On the face of it, it seems to run counter to the nomadic, frontier lifestyle. It does not make sense to embrace a life of freedom and owe money to a bank simultaneously. 

It turns out, though, that borrowing for homesteading makes sense economically. Remember, the whole purpose of capital is to provide extra resources today to become wealthier tomorrow. Investing in cash in various improvements to your property will improve your lifestyle and help make you more independent in the future. 

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Calculating Your Return

When operating a homestead, you need to think about each of your investments like a business, according to thetinylife.com. If the cost of improvements is greater than the benefits you derive from them, then there is no point in borrowing money to make it happen. On the other hand, if you expect to make a return, you absolutely should invest since it will make you better off financially over the long-term. 

Working out how much your loan will cost today is easier than in the past. Sites like Pigly.Com now offer calculators that do all the number crunching for you. Thus, you do not need to be an accounting whiz to figure it out.

Once you have the capital cost, you can then think about whether you will make a return on your investment. 

Consider how much extra money the investment will generate for you over the coming years compared to the loan’s value. If the extra money is greater than the loan, plus interest, then, generally, you should go ahead. 

ROI Chart

Factoring In Non-Tangibles

For some people, there are so-called “non-tangible” benefits from becoming more self-sufficient too. Often being able to say that you can live off the land without relying on anyone else is worth the expense in itself. 

Because of this, you can afford to be a little more liberal with your investments. Taking out a loan, for you, it is not so much about making a return. It is more about independence and getting off the grid, even if the economics do not quite work. 

Only you can value these intangibles. Ask yourself how much money you would be willing to pay for being more self-sufficient if somebody could hand you a product that made it happen today before taking out a loan. Then compare that to the difference between the value of the investment and the amount you save on bills. If it is bigger, then again, you should consider going ahead, even if you’re losing money. 

Virtually anyone who has tried to homestead has entertained taking out a loan. While "living off the fat of the land" sounds like a great idea in principle, actually making it happen on the ground in practice is tremendously difficult.

Final Thoughts on Taking Out a Loan for Self-Sufficiency

Fortunately, most of the time, you will save money every time you take a step towards self-sufficiency. But it is never free. It requires large investments upfront if you want to make returns in the future. 

Have you considered taking out a loan as a means of doing self-improvement projects or maybe to buy equipment in order to make your homestead more self-sufficient? Do you see where investing a bit now can make your homestead more self-sufficient for the future?

Tell me in the comments below if taking out a loan is an option or has been an option in the past. Do you have other suggestions that will help others make their decisions?

About the author

I'm a mama to four and grandma to six. Yankee born with a love of the south. I love old-fashioned ways with modern thinking. I'm a homesteader, gardener, blogger. I enjoy “from scratch” cooking, consider myself a crafty do-it-yourselfer, and animal rescuer.

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