Are you struggling with mortgage payments? Is the bulk of your income going towards meeting house loan obligations, property taxes and house maintenance? If your answer to these questions is yes, then sadly you are house poor.
You might have the house of your dreams for now, but maybe not for long. If you have trouble meeting mortgage payments, sooner or later you’re going to lose your dream house. So what do you do to avoid becoming house poor?
Don’t Force the Issue
Even if you can squeeze into your budget mortgage payments, don’t buy that house if it means you’ll have to sacrifice saving money for emergencies, paying credit card bills, or paying your medical insurance premium.
Understand that there will be emergencies in the future, and if you’re ill-prepared, you might lose your house to the bank or to a new owner. Don’t force the issue, maybe it’s not yet time for you to have that house. Save a little more money to increase your equity ownership and to bring down monthly mortgage.
Live Below or Within Your Means
Sometimes it becomes SOP to buy a new car and new furniture along with a new house. This is unnecessary especially if your budget barely permits it. If you want something fresh for the new house, repurpose old stuff to make new house items. Or you can sell them off to raise money for new furniture. To save more money, simply clean, repair and repaint old furniture.
It is ideal for house owners to keep their house expenses at about 25% of their disposable income. This means that if you earn $10,000 a month, your monthly house payments including mortgages, utilities, and taxes should not exceed $2,500. This is to ensure there’s enough income left for other qually important expenses like grocery, tuition, health care, etc.
A house is a substantial purchase. Buying one is one of the most important decisions you’ll ever make in your life, so don’t rush it. Have more patience or else you’ll end up with a big house that’s about to be snatched away from you because you can’t pay for it.