House Poor

[peterk123]

Our rule when we bought our house was one person working full time, another part time at McDonalds, had to be enough to make ends meet. Stayed in that house for almost 30 years. Simple, small, but raised two kids in it. Sold it, moved and spent only half of the cash on the next house. Smaller house, lesser neighborhood, tiny yard. As a result, my wife retired at 52, me at 54 (I do have a part time gig).

Houses are not an investment. Only time you make money is when you die because you don't need another house to live in. So, your kids make money.

Get the smallest home you can be comfortable in. The carry costs will be a fraction of your dream home. That's the thing nobody thinks of, the carry cost. Especially ten to twenty years out. You're home should not be a burden. It should be nothing more than a non issue.

 

[arrow179]

I’ve owned 6 different houses in the last 24 years and moved 9 different times to 4 states. We have upgraded every time. Current house is more than I’d like for a mortgage but we have a decent nest egg and hoping to have everything paid off in next 7-8 years way before we think about retirement. We really like where we are now and it works well for our situation. Current house payment is about 25% of our annual income. It’s doable but I would prefer it to be less.

I would hate to go into retirement with a paid for house and no money. It’s all about balance…don’t give up your future for what you want today. If your house payment is more than 50% of your income I would consider you to be house poor.

 

[MuleyFever]

My wife and I really want to move but its so hard to make it make sense. We have a 1.9% rate and the house is 75% paid off. We could easily pay it off in a year or 2 if we wanted but investing instead. What we would want would put us back in a $400-600K mortgage. Im afraid we would be house poor unless we gave up investing some. We are probably 20 years from both being retired. I just don't think its worth it. I would rather retire earlier. We have also thought about staying here and just buying our retirement property now because its not getting cheaper.

 

[madgrad02]

We were in the same boat... had a house on just under 3ac and loved it... almost paid off, no other debt... but then we had the opportunity to buy a house with some land. Went from debt free essentially to not for a few years, but to have 52ac out my back door... so far, so good.

 

[IDVortex]

Following along for knowledge.

Same.

 

[getcervid]

House poor makes me think of households that have to spend roughly 1/3rd (33%) or more of their gross income on their mortgage payment (principal and interest) or rent.

As far as I can tell, a lot of financial advice recommends that your rent or principal and interest not exceed 25% of gross household income. To me that has been a good rule, and it’s the rule I’m continuing to use to set the budget for our first house purchase. In my ideal world (and I’m sure many others), we’d buy a house that can be afforded at that rule (25% of gross) on a single income. That’s not always realistic or necessary, in my opinion.

But, plenty of budgets could feel squeezed at lower percentages or have breathing room at higher percentages. I think it definitely depends what all other obligations and goals you have.

 

[Svivian]

I’m currently debating giving up my 2.75% ($1650/mo) mortgage to build on some land. Problem is land prices are through the roof right now it’s ridiculous.

What’s even more ridiculous though, is building is still penciling about the same cost as buying someone else’s shit box in this current economy. (atleast for my area of the country) I’m also not talking a total custom home.

 

[100percent]

Well we had our house paid off. And then we decided to sell it and buy a newer house with an amazing view!! Now we have a mortgage again lol. But I figure you only live once

Beautiful!

 

[Hnthrdr]

Live in a great neighborhood in a nice house. The itch to get out of town keeps growing. I grew up with horses, Herefords, chickens and a pond full or largemouth and catfish. I want that for the kids and it’ll be uncomfortable. The smart thing would be to finish off the current 3% mortgage, but then the kids will be graduated and never experience what I did.

It’s really going to hurt, but we can swing it and back it up with investments if the shit hits the fan. At least on paper that how I see it… thus the question for people that have done it!

The way I see things, I maybe I’m totally wrong, but the world these days is run on loads of debt… not that the little guys wont get burned but unless they want to light the world on fire, they will continue with inflation and QE, there is massive national debt that needs to be refinanced this year. And if I’m wrong and the world starts running on fundamentals again, it will be wild to see what happens

 

[chuckD]

I let the wife talk me out of a house 10 years ago on 17 acres because it was an extra 1400 a month. It makes me sick to this day. We have almost quadrupled our income since then; moral of the story is you should always be making more money each year, unless you are scaling back or retired.

 

[S.Clancy]

All these definitions of "house poor" need some more context. 25% of your income at $80,000 feels a lot different than 25% of your income at $250,000. You can creep the % up with higher income.

That said, were at like 13-15% at a pretty decent income.

 

[Ucsdryder]

All these definitions of "house poor" need some more context. 25% of your income at $80,000 feels a lot different than 25% of your income at $250,000. You can creep the % up with higher income.

That said, were at like 13-15% at a pretty decent income.

It’s all relative. Right now I’m sub 10% so creeping in to that 25% is uncharted territory.

 

[coya]

This has been a great read. Looking forward to keeping up with this thread

 

[gonhunting247]

We decided to be property and house poor but have a place for the grandkids to run wild a bit. It's not huge acreage for some, but we have 58 acres that we purchased and lived in a 5 wheel for a few years, as I built a shop and put water, power, fiber etc. to it. I also scratched out a site and poured a pad that has two monolithic poured walls that step down over the grade. We decided to get a manufactured home since I told my wife it would take me a couple more years to build a house myself. We ended up with double mountain views and on a deadend road. We have river frontage and lots of wildlife, with tons of peace and quiet. We will actually have to work a couple more years before retiring, but we both love it and have zero regrets so far!
(front window}

(back window)

 

[Yaremkiv]

Still renting and still can't justify buying. The irony is; I own and operate a finish carpentry business, we specialize in custom and semi-custom homes, my income depends on people wanting to live in a beautiful home, not just a box but for me, I just need a box on land. I did buy 3.5 acres last year that I'll eventually build a shop house on.

 

[gonhunting247]

I will never be able to finish all the projects on it that I have in my head, but so far I really have enjoyed transforming a raw piece of land into what it is to this point

 

[satchamo]

I love these threads. It’s the same 10 people patting themselves on the back virtually for all their financial saviness.

 

[cnelk]

Been in the same house in Colorado for 37 years.
Have another place in Wyoming for the past 4.

Not house or property poor in the least.

Gotta live your dream - or nightmare

Your choice

 

[gonhunting247]

I love these threads. It’s the same 10 people patting themselves on the back virtually for all their financial saviness.

I wish I was one of those guys. I pay too much at too high of interest it seems , but we sure love our little piece of dirt!

 

[thinhorn_AK]

No, we’d been saving for several years so when we got our place back in 2020 it was damn near the bottom of the market. We locked in with a 2.2% interest rate and we were able to put over 100k down which kept the payment low. At the time we still had close to 250k in cash available so we weren’t house poor at all.

Nowadays the mortgage is easy to cover since combined we bring in about 15k/month. The mortgage is like 1600/month. We’re not rich but certainly not poor and not even close to house poor.