House Poor

[Beendare]

I think just about every young married couple that buys a house is house poor. They just haven’t built equity in it yet.

 

[S.Clancy]

I think just about every young married couple that buys a house is house poor. They just haven’t built equity in it yet.

I think you are missing how many people get help from parents/family that are younger (20's - 30's). So many people I know got mid-high 5 figures or 6 figures to put down on a house from their parents or grandparents.

The rest of them are debt burdened for sure.

 

[CorbLand]

I think you are missing how many people get help from parents/family that are younger (20's - 30's). So many people I know got mid-high 5 figures or 6 figures to put down on a house from their parents or grandparents.

The rest of them are debt burdened for sure.

I use to work/hunt with a kid that built a nice house, not big or fancy but above average back in 2020, 2021ish range. Drives relatively nice, newer cars. Has quads and a boat.

Anyways, another friend of mine was talking to him and the kid was making fun of all the people his age that "couldn't afford homes" and how they just needed to "do what he did and take some risks to make money." He works at the jail.

His parents gave him 80K for a down payment on his first home. Gave his wife a car as a wedding present. Floated the mortgage payment for 6 months for him when he got a job in a new city and couldn't get his house sold. Gave him the money to finish the bathroom in the basement in his old house because that was part of the deal to get it sold. Gave him a pickup when he totaled his. The kid had over 100K in help before he was 30 years old.

Edit to add.
I had a roommate in college that was in tears mad at his dad because he took his, as in his dad’s “his,” credit card away and gave him a debit card. The dad would put 400 dollars a month on the debit card so he could buy groceries. The kid was pissed that his dad would only give him 400 dollars a month for groceries….for one person and this would have been 2011-2012 range.

 

[BigMiss]

I think you are missing how many people get help from parents/family that are younger (20's - 30's). So many people I know got mid-high 5 figures or 6 figures to put down on a house from their parents or grandparents.

The rest of them are debt burdened for sure.

We're in our late 20's. Lots of our acquaintances who were in the same grad program as my wife get help from family. We know of two separate couples our age who purchased 600-750k homes after grad school. They went to grad school with my wife, same career/wages, and we know the rough household income. They admitted they got help, and the parents paid for the 130k of grad school out of pocket as well. At a minimum, the parents gave them the 20% down for the homes otherwise, the payments wouldn't be possible. Absolutely insane. They're good people, and I don't fault them for taking the gift. I am certainly jealous, but it's bizarre how many parents just gift insane amounts of money to their children. Even if you can afford it, everyone needs to struggle a little in life to grow and learn ownership and responsibility. I'd have been so grateful if my parents could gift us 10k to help with a down payment or closing costs, but I also have a ton of pride about where my wife and I are at especially being made by ourselves. These folks are 28-30, never bought their own car, still on the parents phone plan, didn't pay for undergrad or grad school, never paid their own rent/groceries in college, and were gifted 100+ thousand for a house. That is one hell of a way to get ahead in life, and I sure hope they pay it forward to others.

 

[CorbLand]

We're in our late 20's. Lots of our acquaintances who were in the same grad program as my wife get help from family. We know of two separate couples our age who purchased 600-750k homes after grad school. They went to grad school with my wife, same career/wages, and we know the rough household income. They admitted they got help, and the parents paid for the 130k of grad school out of pocket as well. At a minimum, the parents gave them the 20% down for the homes otherwise, the payments wouldn't be possible. Absolutely insane. They're good people, and I don't fault them for taking the gift. I am certainly jealous, but it's bizarre how many parents just gift insane amounts of money to their children. Even if you can afford it, everyone needs to struggle a little in life to grow and learn ownership and responsibility. I'd have been so grateful if my parents could gift us 10k to help with a down payment or closing costs, but I also have a ton of pride about where my wife and I are at especially being made by ourselves. These folks are 28-30, never bought their own car, still on the parents phone plan, didn't pay for undergrad or grad school, never paid their own rent/groceries in college, and were gifted 100+ thousand for a house. That is one hell of a way to get ahead in life, and I sure hope they pay it forward to others.

I don’t care that their parents help them. I just hate when they get that level of help and act they did everything on their own.

 

[MountainTracker]

Comparison is the thief of joy. We all do it at some level. In my experience people like to appear they are something they’re not, by “having things” they didn’t earn themselves, it doesn’t take long to figure out who’s done the work and who hasn’t.

Doesn’t really have anything to do with the original question, but maybe it does……


Sent from my iPhone using Tapatalk

 

[Johnny Tyndall]

I mean, I wish I could buy a house in Montana at 2018 prices and refinance it at 2022 rates. We all get good breaks and bad ones.

 

[S.Clancy]

We're in our late 20's. Lots of our acquaintances who were in the same grad program as my wife get help from family. We know of two separate couples our age who purchased 600-750k homes after grad school. They went to grad school with my wife, same career/wages, and we know the rough household income. They admitted they got help, and the parents paid for the 130k of grad school out of pocket as well. At a minimum, the parents gave them the 20% down for the homes otherwise, the payments wouldn't be possible. Absolutely insane. They're good people, and I don't fault them for taking the gift. I am certainly jealous, but it's bizarre how many parents just gift insane amounts of money to their children. Even if you can afford it, everyone needs to struggle a little in life to grow and learn ownership and responsibility. I'd have been so grateful if my parents could gift us 10k to help with a down payment or closing costs, but I also have a ton of pride about where my wife and I are at especially being made by ourselves. These folks are 28-30, never bought their own car, still on the parents phone plan, didn't pay for undergrad or grad school, never paid their own rent/groceries in college, and were gifted 100+ thousand for a house. That is one hell of a way to get ahead in life, and I sure hope they pay it forward to others.

I know a lot of people like that too. I turned down help from my in-laws when we bought a house, I didn't want anyone holding shit over my head because they gave us $$$ for something. I'm lucky I was in a financial position to do so. I'm also probably an idiot for doing it...

 

[WannaBeRambo]

Do you consider yourself house poor? Or have you been house poor? Do you regret it? Would you do it again? Any gotcha things to think about other than the obvious?

Nope. Started out as house poor, since buying a house usually means a cashectomy. For a while we had curtains up in the front and sheets over the back windows. Minimal furniture too. But that was in 2003. we paid off 30 yr note in 17 the usual way, Then the price run up came, we’re doing very, very well.

I look at home proposition (vs renting) even if I broke even, I am paying myself to rent the place the last 30 years, so all that tied up capital is going to come back at some point. I am my own bank once the note is paid off. (Our mortgage burning party was shooting it at the local range.)

You need to prepare for adverse conditions…
If I got laid off, then our plan was to minimize expenses and with paid off house, not hard to do. When we had a mortgage, the strategy was funding a Roth IRA for each of us, since you can take principal out to cover the mortgage if it comes to that.

Not planning a layoff strategy to keep the house is a HUGE mistake. Even self-employed can get effectively get laid off in a bad economy. You see this spiral, they get foreclosed, sharks circle and invent new fees and penalties you never heard of designed to keep the homeowner in permanent debt as part of the foreclosure process. The banks seem to also get most of your equity, like you are paying them to take your home. Add to that, when you lose the house, what do you do with all your stuff? Where do you sleep? How do you cook? It gets really bad for those poor people. So keeping the home is job #1.

The other thing you MUST do is have a fund for major expenses, like new roof. Do this after the Roth, or better yet- concurrently.
Yes, I know people think it’s too difficult, but I’ll tell you I made from $50k-$65k most of my career and still pulled all this off. ($192k purchase price, and enough down payent to avoid PMI… Zillow says it’s worth $500k today).

This country has tons of eye candy designed to separate you from your money. This is simple… identify assets and investments and put your money there. Identify liabilities and depreciating assets (cars, in particular) and spend as little as possible while ensure in it’s safe, reliable fit-for-purpose. (You don’t need a big truck to take the kids to school or $2000 rifle to take an elk).

There will be sacrifices… I drove a former company Crown Vic for 10 years while I had a mortgage. Paid $7000 for it and drove it for 120k miles before it died. The did the same thing again, five years duration. Lots of staycations, or HomeRepaircations although we did cheap trips to the beach or park or fishing so it was not a title grind. But you will suffer for this, but things that come hard, tend to have more value that will have a price to be paid.
Most critical, every stat I’ve ever seen indicates home ownership is one of the major indicators of financial stability and generational wealth (you can pass on, or just live large with your $4000 rile and Big truck!
Best wishes.

 

[JDMBEND]

House poor is the standard condition for pretty much all new home buyers……

Stick with it and the inevitable inflation will make you glad you did.

This 100%.

 

[Rich M]

Nope. Started out as house poor, since buying a house usually means a cashectomy. For a while we had curtains up in the front and sheets over the back windows. Minimal furniture too. But that was in 2003. we paid off 30 yr note in 17 the usual way, Then the price run up came, we’re doing very, very well.

I look at home proposition (vs renting) even if I broke even, I am paying myself to rent the place the last 30 years, so all that tied up capital is going to come back at some point. I am my own bank once the note is paid off. (Our mortgage burning party was shooting it at the local range.)

You need to prepare for adverse conditions…
If I got laid off, then our plan was to minimize expenses and with paid off house, not hard to do. When we had a mortgage, the strategy was funding a Roth IRA for each of us, since you can take principal out to cover the mortgage if it comes to that.

Not planning a layoff strategy to keep the house is a HUGE mistake. Even self-employed can get effectively get laid off in a bad economy. You see this spiral, they get foreclosed, sharks circle and invent new fees and penalties you never heard of designed to keep the homeowner in permanent debt as part of the foreclosure process. The banks seem to also get most of your equity, like you are paying them to take your home. Add to that, when you lose the house, what do you do with all your stuff? Where do you sleep? How do you cook? It gets really bad for those poor people. So keeping the home is job #1.

The other thing you MUST do is have a fund for major expenses, like new roof. Do this after the Roth, or better yet- concurrently.
Yes, I know people think it’s too difficult, but I’ll tell you I made from $50k-$65k most of my career and still pulled all this off. ($192k purchase price, and enough down payent to avoid PMI… Zillow says it’s worth $500k today).

This country has tons of eye candy designed to separate you from your money. This is simple… identify assets and investments and put your money there. Identify liabilities and depreciating assets (cars, in particular) and spend as little as possible while ensure in it’s safe, reliable fit-for-purpose. (You don’t need a big truck to take the kids to school or $2000 rifle to take an elk).

There will be sacrifices… I drove a former company Crown Vic for 10 years while I had a mortgage. Paid $7000 for it and drove it for 120k miles before it died. The did the same thing again, five years duration. Lots of staycations, or HomeRepaircations although we did cheap trips to the beach or park or fishing so it was not a title grind. But you will suffer for this, but things that come hard, tend to have more value that will have a price to be paid.
Most critical, every stat I’ve ever seen indicates home ownership is one of the major indicators of financial stability and generational wealth (you can pass on, or just live large with your $4000 rile and Big truck!
Best wishes.

Exactly!

The ROTH strategy is excellent.

We leased our house out when we lost our business. Kept from losing it. A couple crazy years later we moved back in. Been a crazy climb back.

My wife made all the difference in the world, still does. Gotta appreciate someone who is in it with you and willing to help with the lifting.

Getting tired tho - final leg before retirement. Hoping our health holds.

 

[KsRancher]

I don’t care that their parents help them. I just hate when they get that level of help and act they did everything on their own.

Exactly. Most of the people I grew up around had this exact same situation. And they look down on you wondering why you aren't where they are at in life. I dont mind the situation they are at in life. But the way they look at and treat people that didn't have that just pisses me off.

It took a lot of years to figure it out. I always heard from people how everyone was living on credit cards, bank loans, dealership loans, etc. And how it would all come crashing down. Well its sure not that way around my area. These people are living just fine.

 

[5MilesBack]

This last year our home insurance USAA for 30+ years almost doubled. We've had one claim in the last 21 years since we've owned this home, back in 2012 (new roof from hail). So I selected the 3% deductible a year ago and that cut our insurance bill in half. Today I get this next 12 months bill and it went up 40%. SMH. I guess I'll go with the 50% deductible option. Maybe that will keep the bill reasonable. Sheesh. We're not house poor, we're insurance and property taxes poor. You add insurance, taxes, and utilities together and that's another decent house mortgage.

 

[dtrkyman]

Just poor…but I work as little as possible


Sent from my iPhone using Tapatalk

 

[MountainTracker]

This last year our home insurance USAA for 30+ years almost doubled. We've had one claim in the last 21 years since we've owned this home, back in 2012 (new roof from hail). So I selected the 3% deductible a year ago and that cut our insurance bill in half. Today I get this next 12 months bill and it went up 40%. SMH. I guess I'll go with the 50% deductible option. Maybe that will keep the bill reasonable. Sheesh. We're not house poor, we're insurance and property taxes poor. You add insurance, taxes, and utilities together and that's another decent house mortgage.

Yep it’s the insurance and taxes that will eat you alive.


Sent from my iPhone using Tapatalk

 

[Beendare]

Comparison is the thief of joy. We all do it at some level. In my experience people like to appear they are something they’re not, by “having things” they didn’t earn themselves, it doesn’t take long to figure out who’s done the work and who hasn’t.

So true....sage advice.....
Now I need to get over my jealousy of how much more crypto you own than I do.......grin

Someone always has more....and along those lines, my dad used to tell me, "Don't go writing a check your ass can' t cash," translation, Son, there is always someone who can kick your ass.

 

[Beendare]

I think you are missing how many people get help from parents/family that are younger (20's - 30's). So many people I know got mid-high 5 figures or 6 figures to put down on a house from their parents or grandparents.

The rest of them are debt burdened for sure.

I suppose you are right. I would pitch in for my kids....as long as they don't expect it.

 

[MountainTracker]

So true....sage advice.....
Now I need to get over my jealousy of how much more crypto you own than I do.......grin

Someone always has more....and along those lines, my dad used to tell me, "Don't go writing a check your ass can' t cash," translation, Son, there is always someone who can kick your ass.

Man if I had half the knowledge you do


Sent from my iPhone using Tapatalk

 

[Weldor]

This last year our home insurance USAA for 30+ years almost doubled. We've had one claim in the last 21 years since we've owned this home, back in 2012 (new roof from hail). So I selected the 3% deductible a year ago and that cut our insurance bill in half. Today I get this next 12 months bill and it went up 40%. SMH. I guess I'll go with the 50% deductible option. Maybe that will keep the bill reasonable. Sheesh. We're not house poor, we're insurance and property taxes poor. You add insurance, taxes, and utilities together and that's another decent house mortgage.

Amazing how they manage to get increase after increase. Sad. You can hardly get insurance down this way. The insurer's cry wildfire danger. Somehow they all manage to get in your pocket one way or the other.

 

[7mm-08]

This last year our home insurance USAA for 30+ years almost doubled. We've had one claim in the last 21 years since we've owned this home, back in 2012 (new roof from hail). So I selected the 3% deductible a year ago and that cut our insurance bill in half. Today I get this next 12 months bill and it went up 40%. SMH. I guess I'll go with the 50% deductible option. Maybe that will keep the bill reasonable. Sheesh. We're not house poor, we're insurance and property taxes poor. You add insurance, taxes, and utilities together and that's another decent house mortgage.

Thanks for posting this. We've had USAA for ten years and have seen virtually no rate increases in that period. I'll be watching our invoices a lot more closely going forward. Like you mentioned, our deductibles are high, so that may be saving our bacon.