House Poor

[Ucsdryder]

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

You’ve got a great setup. 2 of them actually!

 

[timekiller13]

Never been house poor. Bought my first house during the housing market crash as a foreclosure.

Sold it during the COVID craze for 3.5x what we paid for it. Bought a family members home at a discount because we paid cash and no realtors. Used a HELOC to pay for the upgrades and renovations.

 

[menhaden_man]

Paid mine off and downsized in 2020. Three kids, wife and a dog in 1800 SF, but I’m semi retired and completely debt free before the age of 50. Pretty much do what I want and we get to fight about other stuff besides finances. I feel bad for folks that paint themselves into a corner. It works out a lot, until it doesn’t.

Once all you have to worry about utility bills, food, and letting the gubmint get a piece of flesh, life is a bit easier.

 

[Rich M]

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

Instead of judging, folks can look and say - if he can do that, I can do that.

2010 recession was a tough time for many and was a really good buying opportunity. From what folks on here are saying, Covid was too. The 2-3% interest rates was likewise a stellar time to buy or refinance.

 

[Carr5vols]

Do not consider myself house poor been in same house for 21 years and it is about 7% of income. I could sale it and make 3x what I paid for it and then move back to the family farm in TN but my wife likes it in GA and kids are at Geoegia Tech so right now we staying.

I do find it interesting so many people want to retire early. I honestly love my job and as long as they keep me around I am going to keep working. My dad at 69 has not retired and my grandfather worked until his brain cancer shut his mobility down. (Both loggers and farmers) We just like to work.

 

[Jimmy]

Failure to take a chance on myself in the past has cost me probably $700,000 so far in my life. I think if you wait for 'perfect timing' it may never come. 'Good enough' timing might be the best you get.... whatever that's worth.....

 

[boperleb]

Good things are always overpriced, 30 years ago wooded land in MN was $200/acre but I was making $6/hour. I grew up on a dairy farm and knew from an early age that I needed hunting land so I started buying and going in debt, yes, land poor, at one time having over 1200 wooded acres. You can be not only house poor but land poor. Ask any farmer. Property only has value when you sell it. If you don't sell you only have expense.
We still own over 600 acres and it is a joy to walk out your back door and go shooting, hiking, ATV riding... BUT my property taxes would fund a couple western hunting trips/year and as I get older (presently 66) it becomes more difficult to properly maintain the land (food plots, tree plantings, trail maintenance, deer stands) If you are not planning on selling and capitalizing on land value increases you could find yourself land poor. Property ownership comes with a maze of complications due to local zoning, trespass issues, liability concerns, weather impacts (will my trees blow down in the next storm). Just consider the cost of buying equipment to do the work on the tree farm. I just bought a skid steer for work on the tree farm, it was over $80,000!
Don't rule out a long term hunting lease or outstate semi guided hunts.
I was a forester with the state of MN specializing in private forest management and now have a 1 man, part time forestry consulting business. I have visited with 1000's of private woodland owners over the last 45 years and most clients have inherited their land or purchased it many years ago. Wooded land values are near $5000/acre presently. Buying at these prices will put most people into the land poor category very fast! Be careful about deciding between what you want and what you need!

 

[peterk123]

I should also add that we measure house poor, or better yet overall house/ wealth health as home value as percentage of our total assets. Income to debt service is just not a good way to measure financial health in my opinion. I feel it's one of the reasons why home prices are so out of whack. All anyone cares about is the monthly payment, not the actual value of the real estate.

You are doing good if the net value (value minus mortgage) of your home is 20% of your total assets. This doesn't include crap like your car and fishing boat. I'm talking true assets that increase in value over time. You are doing exceptionally well if it is only 10%.

Now, this is not possible when you are first starting off. But it's an interesting thing to monitor as you age, and something to consider as you step up in homes and get closer to retirement.

 

[Weldor]

I don't think there is a ( one size fits all ) for housing or finances. It's really up to you personally. JMHO.

 

[RyanT26]

Never been, that has been more about pure luck and purchasing time than anything.

The only thing I would offer a bit of advice on that I think is going to be very popular if the interest rates ever drop again. Not that we’re currently on that trajectory, but if they ever do.
We bought your house in 18 with a standard fixed 30 year. Refinanced in early 20 to a fixed 20 year, payment essentially stayed the same.
Hindsight being 20/20 I would have refinanced it back to a fixed 30 year to take advantage of the historically low interest rates. At the time, everybody thought they might even fall farther, but no luck.

 

[WoodlandCritter]

I'm about on the bleeding edge of house poor. Spent 345k on a manufactured sitting on 1/2 acre in '24 @ ~7%. Definitely looking to refinance once interest rates drop, current mortgage payment is ~2500$ and we have a combined income of ~130k. Can still afford occasional vacations, can still afford to eat out. Still contributing to my 401k. Takes me a lot longer to save up for new toys than when we lived in a 630$/month apartment and I was pulling in 70k.

However we have a big 'ol veggie garden, 5 ducks I get to watch waddle around the yard, room for my dog to wander, and a mini little fruit orchard, and a shop for me. And I'm only ever 10 minutes away from being in the Kootenai National Forest or 30 minutes from the Cabinet Mountains Wilderness. I really can't complain. Super happy with it for a first house.

 

[CorbLand]

Depends on what your definition of "house poor" is. Some people look at my situation and say I am rich and others would have an aneurism.

My mortgage is a significant amount of my monthly take home. We bought when we had two incomes and it was far more manageable. My wife wanted to stay home when we had a kid so after that, we dropped to one income. Things are tight, there isn't a lot of wiggle room month to month but we make it work.

It more has come down to what are we willing to sacrifice. We don't have new cars. We don't get to go on big vacations. We don't get to eat out a lot. We make our own baby food. Goodwill has a surprising amount of good baby clothes for cheap. We make it work.

We got married in 2018 and looked at buying in 2019. Many people told us not to unless the mortgage would be under the ~25% of combined income, which it wouldn't have been. Three years later when we bought, we paid ~180,000 more for a home and still couldn't get it under the 25%. If we had of bought in 2019, it would be less than 20% of just my income.

I would make sure that it is something both you and your wife want. Make sure you are both willing to make the needed sacrifices (this is a big one). If you are both on the same page, go for it. In 10 years you could look back and be saying "that was stupid" or you could be saying "that was the best decision we ever made." My short life has taught me that that is a common theme between most life decisions.

 

[BigMiss]

This has been an interesting read. We close on our first home in a week. Between a car payment and paying more than double the minimum on my wife's 130k of student loan debt, the thought of adding a mortgage was really daunting - especially since we'll have a 6.5% rate. But for $450,000, we will have a 1900sf home that is move-in ready, 15 acres, a 4-car garage, and a 300' barn to have fun with. I cannot fathom spending 25% of my gross pay on a mortgage. But we live in MN and also only take home 57% of our income after tax and retirement.
To those who say your house is only an investment for your kids once you're dead, my only argument to that is that you can use your home later in life for greater financial freedom. We may sell in 10 years and buy something new, or we may sell in 30 years when we're starting to get sore and grey and move into something that suits our lifestyles even better for a net trade.

 

[Hnthrdr]

I'm about on the bleeding edge of house poor. Spent 345k on a manufactured sitting on 1/2 acre in '24 @ ~7%. Definitely looking to refinance once interest rates drop, current mortgage payment is ~2500$ and we have a combined income of ~130k. Can still afford occasional vacations, can still afford to eat out. Still contributing to my 401k. Takes me a lot longer to save up for new toys than when we lived in a 630$/month apartment and I was pulling in 70k.

However we have a big 'ol veggie garden, 5 ducks I get to watch waddle around the yard, room for my dog to wander, and a mini little fruit orchard, and a shop for me. And I'm only ever 10 minutes away from being in the Kootenai National Forest or 30 minutes from the Cabinet Mountains Wilderness. I really can't complain. Super happy with it for a first house.

Be on the lookout for lower rates later this year, Fed has a pile of debt that is due to he refied… our national idiocracy can help us little guys out, I would guess they will drop rates before mid terms and to refinance the national debt that is due, I don’t think we are going back to 2% rates, but I would guess maybe 4%? Potential for a tad lower if you have great credit and a VA option or something

 

[Duckhunterbrad]

I don't think living in a dump of a house is all that honorable if you can afford to do better for you and your family. On the other extreme, putting your family in a financial situation because of your desire to be in the big house is just as dishonorable. Debt is an absolute burden for most people and has a stranglehold on them and how they are able to navigate life. Once someone feels the pressure relief of no longer being burdened with a debt load that is hard to maintain, they no longer need the big house, fancy car, boats, UTV's, or lake house. Finding that happy medium can be a difficult journey for younger people/couples. Everyone has different financial motivations and how they navigate that is probably very similar to how they saw their parents work through things as a child.

Make good purchases relative to value and keep your combined DTI to below 30%(home, vehicles, other debt) and you should be just fine. Just because a bank that is regulated by the government says you can have a DTI of 43% doesn't mean you should! Car dealers will absolutely loan you in a bad situation as well.

 

[Rich M]

Do not consider myself house poor been in same house for 21 years and it is about 7% of income. I could sale it and make 3x what I paid for it and then move back to the family farm in TN but my wife likes it in GA and kids are at Geoegia Tech so right now we staying.

I do find it interesting so many people want to retire early. I honestly love my job and as long as they keep me around I am going to keep working. My dad at 69 has not retired and my grandfather worked until his brain cancer shut his mobility down. (Both loggers and farmers) We just like to work.

Similar, we bought house in 2000 - still in house. Value has increased a bit. Refinanced it from 8.25% to 6% and then to 3.75%. Kept it at 30 yr loans. We purchased a reasonable price house in case "life happens" and that has happened. Planned on a long term purchase - where we didn't plan to upgrade, but may do so in retirement.

Spent about 20 yrs looking for land - saved $ and would find something we liked, was always more than we had saved so would step back, save more and get to it - the prices always went up. We were looking in 3 states. Bought in 2024 and building for retirement.

As for retirement - it depends on what your job is and who you work with and what the history there is. A job is a big wild card. It also depends on what else you have to do - do you want to live in the burbs and commute to office every day or have you got better things you could be doing with your dwindling time on earth?

All I can say about buying a house is to plan stuff out as best anyone can and leap when you are ready/able. Saving for a down payment on a "big house" has always been a big thing.

 

[JakeSCH]

I think it depends on what your definition of "house poor" is. We have bought 3 houses as "house poor" from a month to month standpoint, but I always made sure to keep a large buffer of cash available if needed.

We just bought our most recent house where 50% of take home goes to house. Not great, but we also choose not to touch any of our investments and put minimal $$ down so we have a 6 figure buffer for when / if things go wrong.

We have no other debts other than the house.

 

[MountainTracker]

I think sometimes people feel house poor bc they are also carrying way too much “bad debt” like vehicles, boats, sxs and high credit card debt with high %. When you take those types of things out of the equation you don’t feel so house poor. There will be a sacrifice or give and take. Does a guy want a good home on land, or a $100k truck, $30k sxs and $20k in credit card debt?? I know everyone’s situation is different but this has worked well for me so far. Always be watching the rates to lower when available.


Sent from my iPhone using Tapatalk

 

[fngTony]

I should also add that we measure house poor, or better yet overall house/ wealth health as home value as percentage of our total assets. Income to debt service is just not a good way to measure financial health in my opinion. I feel it's one of the reasons why home prices are so out of whack. All anyone cares about is the monthly payment, not the actual value of the real estate.

You are doing good if the net value (value minus mortgage) of your home is 20% of your total assets. This doesn't include crap like your car and fishing boat. I'm talking true assets that increase in value over time. You are doing exceptionally well if it is only 10%.

Now, this is not possible when you are first starting off. But it's an interesting thing to monitor as you age, and something to consider as you step up in homes and get closer to retirement.

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?

 

[180ls1]

I want that for the kids

Do the kids truly want that as well? Have you explored mitigating this by purchasing/renting land or a cabin?