House Poor

[BRTreedogs]

I don’t care what it is or how awesome it is.

If it won’t be paid off before my first year eligible for retirement.

Then I’ll live without it.

 

[Throwin Darts]

I don’t care what it is or how awesome it is.

If it won’t be paid off before my first year eligible for retirement.

Then I’ll live without it.

That's what I'm talking about.

 

[Beendare]

Man it would be hard going from the record low interest rate mortgages of a few years ago to 6% or so now....especially the higher interest rate Jumbo mortgages.

One of the constants in our lives is inflation. Owning stuff- like Real estate- is a proven way to stay ahead of inflation. Stocks of solid companies are another proven hedge on inflation. Putting your money in the bank or Bonds for long periods is a proven loser.

I know of homes in desirable areas that were $425k in 1990 and worth $3.4M today. Thats what inflation does to you.

 

[Burnsie]

When my wife and I got married 34 years ago we paid diddly for our small brick ranch home, but we were still house poor, because we were poor. We were both starting our careers at starter management trainee jobs making squat. It was tight month to month, even more so when the children started coming. But we worked hard, budgeted, and kept our nose to the grindstone.
The house was supposed to just be our starter home, but we kept remodeling it, maintaining it and poof 30 + years went by. We raised three kids in that small 1600 sq ft ranch house. The kids are all out of college and on their own, the house is paid for, and me and the wife are in a pretty good spot. Our kids keep urging us to sell the house and take out the large amount of equity that has accrued over the years and move into a nicer place. But the price of houses has outpaced the amount value our house has increased. I'd still have to take on a small mortgage to move up to a house that was appreciably "better". I don't need a new mortgage at this point, I'm planning to retie in a couple years. The house is plenty comfortable now that it is just me and the wife, I'll probably just ride it out to the end here.

 

[Joshk358]

I refuse to be house poor. My wife and I could for sure upgrade if we wanted to. We chose to live below our means. If I was house poor I would not get to go on some of the hunts I get to do, go on family vacations and all the awesome experiences while on those trips. My house is more that I ever thought I'd have anyway. Also, its paid off in 4 years. So come retirement time....that's one expense I will have zero worries about.

 

[cnelk]

I’ve said it before.
Interest rates are all relative.

I bought my place in 1989 with 11% interest - $54,000
Refinanced every time I could get 2 points lower.

But you have to commit to staying to recover the closing costs

My place is now worth $600k

I bought my Wyo land with cash.
Built it up in the past 4 years and I’ve tripled my money.

 

[wapitibob]

I've had 1.2 million in residential real-estate that was worth $500K and $80K that's worth $600,000. Play the game long enough you'll see some swings.

 

[wind gypsy]

Being house poor has always sounded too stressful to me. Peace of mind is worth a whole lot.

That said.. I'd definitely live with a lesser (smaller, older, fewer bells and whistles) that allows the lifestyle like you mentioned desiring. Bad thing about older houses.. Maint can be murderous when it comes time to deal with siding, decks, windows, roofs, etc.

I've also become very black pilled in my outlook for the future of our country so I'd have a real hard time living with being stretched thin.

 

[Ultracarry]

Been in real estate all my life - one thing you need to keep in mind is where you spend the most time - if you would rather be at home with a family, kids, dogs and entertain everyone and that’s what you enjoy more than vacations out of town and traveling .. you might see the value in spending more on your house and not mind paying for it.

My first loan was at 9.5% … private lender but it was a way to get my foot in the door . Two on a lot, rental income offset the payment… refinanced later to a lower rate and took the money I had saved plus my cash out and went and bought 3 on a lot … averaged the interest rates out now and it’s floating in the 4’s …

I make all the financial decisions in the marriage and let my wife know what I’m doing and she lets me know what she’s doing inside the house to make it a home .. and yard work etc … I would never allow a woman to make a financial decision that I would have to pay monthly for …

 

[BigMiss]

I would never allow a woman to make a financial decision that I would have to pay monthly for …

Insane.

 

[Sccritterkiller]

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!

Moved out of neighborhood 20 yrs ago when my oldest was 4...we have acreage, a pond, creek, killed ducks, turkey,and deer in my back yard. Unfortunately town came to us...property value is up 300% since we bought the house....we we probably a little too aggressive paying off out mortgage...we are starting to research how to reduce our capital gains liability when we sell....Still one of the best decisions we made for the kids. If you kids are already used to neighborhood life it might be an issue.

 

[Bachto]

Like many have said it's situational dependant and based on your personal finances.

We were house poor (and maybe still are a bit) it wasn't that fun for a few years but it's been worth it... I think. When me and my wife were engaged we bought a house in 23' that was the TOP of our budget at the time and the payment was about 40% of our income. The payment sucked but we got the house for a decent amount under market value because of interest rates (7%) and the deferred maintenance on the actual land itself scared away a lot of pople. We actually got married at our house a year later. For the last few years every time I got a bonus at work we did a project at the property. Many of these projects I did myself. We were just able to refinance when rates dipped down to 6% for like a week and it dropped our payment from $3900 to $3100. But we have a house that we bought for $470,000 that is now worth close to $600,000. If people care, it's a 5 acre property, the house was built in 2019 and it's 1900 square feet. The land and the age of the build is the whole reason we stretched our budget for it.

Would I do it again? probably. Do sometimes I think about selling it putting all the equity on something cheaper...all the time.

 

[dr.mooseknuckles]

Housing market is insane in downtown Columbia, SC right now.. Seller's market for sure.
We would "like" more space with 3 kids but don't really need it with a large park right across the street. Doing another small reno in the next few months to create another bedroom for our youngest. Will build another closet in our master which will function as my "gun cabinet".

In 2018 we added 2000 square feet to our home we purchased in 2015 and have a pile of equity in our home. Have a 2.65% 30 yr fixed currently and got a HELOC to do the mini renovation coming up. A house down the street that went on the market a month after we started the big reno went on the marked for $750k. We kicked ourselves as we'd have taken that corner lot with pool and 4300 sq ft. and still be close to the park.

That same home just went on the market a couple months ago for $1.65m with no major work done. Insane. They got the asking price.

Our lender is a friend and when we were applying for the HELOC, she told us that a couple recently bought a $1.5 m home and put $750k down in cash but with rates right now, they're paying $8k a month!!!!! We think that couple are actually our friends who recently bought a home. They'll be ok though. He's an ortho surgeon and she owns a big marketing business.

It's wild out there! Just going to hold on as long as possible. We could easily sell our home and make a pile on it, but the problem is finding something that doesn't need work at a reasonable price.

 

[Bachto]

I make all the financial decisions in the marriage and let my wife know what I’m doing and she lets me know what she’s doing inside the house to make it a home .. and yard work etc … I would never allow a woman to make a financial decision that I would have to pay monthly for …

you still have time to delete this. Posting on a public forum on how little you think of your wife...wild.

 

[Sccritterkiller]

Housing market is insane in downtown Columbia, SC right now.. Seller's market for sure.

It's USC...you have to compete with folks buying houses for their kids while they are in school....ask me how I know.....
Limits supply.
I dont know why anyone would live in the armpit of SC, 10 degrees hotter there than any other place in the state.

 

[Sccritterkiller]

… I would never allow a woman to make a financial decision that I would have to pay monthly for …

So if your wife was a CPA you would still feel this way?....damn dude crawl back under whatever rock you crawled out from under...smh

 

[Oregon]

1300 sq ft home on a 9000sqft lot. In town. Bought 13 years ago. No neighbors behind me is the only reason I bought this place. Creek and overgrown blackberry patch. With 5 dogs, just shoveling dog poop over shoulder is way better than any other method.
Mortgage is 9% of monthly income. Wife so wants to move out of town on a chunk of ground.
I barely have time to upkeep my small lot , let alone acreage. many buddies have nice spreads but they spend a lot of money and time up keeping.
I have 300,000 acres of public land 5 minutes away. Good enough for me.

 

[S.Clancy]

1300 sq ft home on a 9000sqft lot. In town. Bought 13 years ago. No neighbors behind me is the only reason I bought this place. Creek and overgrown blackberry patch. With 5 dogs, just shoveling dog poop over shoulder is way better than any other method.
Mortgage is 9% of monthly income. Wife so wants to move out of town on a chunk of ground.
I barely have time to upkeep my small lot , let alone acreage. many buddies have nice spreads but they spend a lot of money and time up keeping.
I have 300,000 acres of public land 5 minutes away. Good enough for me.

This is the way.

 

[Hnthrdr]

Been in real estate all my life - one thing you need to keep in mind is where you spend the most time - if you would rather be at home with a family, kids, dogs and entertain everyone and that’s what you enjoy more than vacations out of town and traveling .. you might see the value in spending more on your house and not mind paying for it.

My first loan was at 9.5% … private lender but it was a way to get my foot in the door . Two on a lot, rental income offset the payment… refinanced later to a lower rate and took the money I had saved plus my cash out and went and bought 3 on a lot … averaged the interest rates out now and it’s floating in the 4’s …

I make all the financial decisions in the marriage and let my wife know what I’m doing and she lets me know what she’s doing inside the house to make it a home .. and yard work etc … I would never allow a woman to make a financial decision that I would have to pay monthly for …

Lolz when you are out earned 4-6x and your wife if a business owner you make decisions together, modern problems require modern solutions

 

[peterk123]

Not sure I completely understand what you’re saying. Are you saying that the amount owed on my home not necessarily the value of it should be at 20% or less than the total amount of my assets? And like you said by assets were talking things that go up in value like stocks bonds rental property maybe some stuff like that but not depreciation such as cars and boats correct?

Close. The net value being ideally 20% or less of your income generating/appreciating assets. For example, you have $1 million in total assets. House would make up $200K of it.

This is not anything preached by anyone. It was something I came up with to guide us. Our actual goal was for it to be under 10%. It worked out to be a very good rule of thumb for us as we approached retirement.

The number one biggest mistake couples make in retirement is that dream home. Planning well ahead of time (as early as that first purchase) really helped to put thing into perspective for us.

Like someone above stated, it's different for everyone. The moral of the story for us was that we wanted our home to be our smallest asset because well, it's more of a liability when you consider, real estate taxes, operating costs and upkeep.