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ah the fact that many parts of the country dont have homes of 300,000. Try 400 to 500,000 and thats a small house, small lot, no coast, no lake, not in a city, etc etc. 80,000 doesnt make it and esp if you include ins, utilities, groceries, auto expenses, child expenses, real estate taxes, income taxes, sales tax, and much misc.
Some people think being house poor is some sort of achievement. Then they have all their crappy, poorly done DIY repairs because they can't afford even a basic $500-1000 professional repair. Also, they can't do simple math using a calculator.
Some people think being house poor is some sort of achievement. Then they have all their crappy, poorly done DIY repairs because they can't afford even a basic $500-1000 professional repair. Also, they can't do simple math using a calculator.
Being house poor isn't an ideal situation but it is an achievement if you consider what the alternative is. Everyone needs somewhere to live. If renting cost more, the same, or even just slightly less than owning, you're still better off owning even if it means being house poor. At least you'll have something that will help build wealth so you're in a better financial situation when it comes time to retire.
Some people think being house poor is some sort of achievement. Then they have all their crappy, poorly done DIY repairs because they can't afford even a basic $500-1000 professional repair. Also, they can't do simple math using a calculator.
Keep in mind when many are house poor they go into it knowing they’re starting out in their career, and their income level will be rising. Also the appreciation will be greater in said neighborhood/area.
Many a friend and family member that were always broke after buying had no issues down the road. They’re also sitting on tons of equity that was used to move up the housing food chain. As someone who waited until 40 to buy I look back and think shoulda, coulda, woulda.
Keep in mind when many are house poor they go into it knowing they’re starting out in their career, and their income level will be rising. Also the appreciation will be greater in said neighborhood/area.
Many a friend and family member that were always broke after buying had no issues down the road. They’re also sitting on tons of equity that was used to move up the housing food chain. As someone who waited until 40 to buy I look back and think shoulda, coulda, woulda.
Yep. It’s definitely taking a big risk in those early years but the reward is worth it.
Many a friend and family member that were always broke after buying had no issues down the road. They’re also sitting on tons of equity that was used to move up the housing food chain. As someone who waited until 40 to buy I look back and think shoulda, coulda, woulda.
It is hard to convince some people about the importance of having a long time horizon.
I guess it is a concept that not everyone wants to wrap their heads around.
Being house poor isn't an ideal situation but it is an achievement if you consider what the alternative is. Everyone needs somewhere to live. If renting cost more, the same, or even just slightly less than owning, you're still better off owning even if it means being house poor. At least you'll have something that will help build wealth so you're in a better financial situation when it comes time to retire.
You can buy a home and not be house poor by taking the time to figure out expenses. You can buy something affordable or wait another year or two to save more. And yes, I live in a HCOL area and it still makes the most sense. You have to look very closely at rent vs. home costs because you can't just compare rent payments to mortgage payments, you also need to add in homes expenses in the short and long term. The problem is that people have gotten into a cycle of debt so the finance everything. New roof? Finance. New water heater? Put on credit card. Home renovations? Pay it all with a home loan or HELOC. The interest paid quickly outweighs any equity. You can build wealth by investing while renting. Taking control of personal finances is an achievement.
Well there are definitely different "house poor" scenarios here.
One might be I live in an area with very high housing prices. I've ran the numbers and know things are going to be tight, but I think it's important to get in the game. I'll try to limit how much I spend as much as possible so I'm not too strained financially. I'll make sacrifices in other areas of my budget so I don't get into a pinch.
Another is I live in an area where I could comfortably afford a 1500sqft 4/2 in a decent neighborhood but I have an expectation of living in a 2800sqft 5/4 in the more prestigious neighborhood. So that's what I'm going to do. Lender says I can get a mortgage for the bigger house so I must be able to afford it. Budget? Isn't that for poor people? We are fine we make $100k/yr.
I certainly wouldn't criticize the former for going in with eyes open and taking a calculated risk. It's the latter that I would criticize.
You can buy a home and not be house poor by taking the time to figure out expenses. You can buy something affordable or wait another year or two to save more. And yes, I live in a HCOL area and it still makes the most sense. You have to look very closely at rent vs. home costs because you can't just compare rent payments to mortgage payments, you also need to add in homes expenses in the short and long term. The problem is that people have gotten into a cycle of debt so the finance everything. New roof? Finance. New water heater? Put on credit card. Home renovations? Pay it all with a home loan or HELOC. The interest paid quickly outweighs any equity. You can build wealth by investing while renting. Taking control of personal finances is an achievement.
This is a smart post. I can't necessarily say whether buying or renting is the better decision. I used to think it was a wash after you account for home repairs and renovations, which tend to make the financial benefits of owning a lot lower than people think. Lately, in an insane market, of course everyone with a house looks like an investing genius. The big issue for me is that rents are currently soaring where I live and I really doubt they'll be coming down any time soon. So I think locking in housing costs by buying is the most sensible move. But I totally agree about buying something affordable (to the extent possible). People love the leverage of a mortgage, but they forget that leverage works both ways and we will not always be in boom times. Buy what you can afford, live modestly, and use index funds or rental properties -- not your main residence -- as your main investment vehicles.
This is a smart post. I can't necessarily say whether buying or renting is the better decision. I used to think it was a wash after you account for home repairs and renovations, which tend to make the financial benefits of owning a lot lower than people think. Lately, in an insane market, of course everyone with a house looks like an investing genius. The big issue for me is that rents are currently soaring where I live and I really doubt they'll be coming down any time soon. So I think locking in housing costs by buying is the most sensible move. But I totally agree about buying something affordable (to the extent possible). People love the leverage of a mortgage, but they forget that leverage works both ways and we will not always be in boom times. Buy what you can afford, live modestly, and use index funds or rental properties -- not your main residence -- as your main investment vehicles.
You said it well. Our first house was nothing like what we have now but it was what we could afford. Thank goodness because we were able to go through a layoff during a bad economy and the ability to have an extended maternity leave of nearly 1 year. We moved up and may stay here until the end because it is a great house and location, but we still made sure that we could weather any unexpected events (like a pandemic!).
How old are your wife and her children? I think anyone who has not had to pay a college bill after 2008 doesn't really grok the problem.
And some of us don't even grok grok. (At least not until we Googled it.)
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