The other day I overheard someone talking with their friends about their new house. They were describing how nice their yard was, how much bigger their home was than their previous one, and all the remodeling they wanted to get this year. But I couldn’t help but chuckle to myself when I heard them say half jokingly
“I love my house . . . that is breaking my budget.”
You have to laugh at that quote because if you didn’t you might just cry. How many of us are in that exact same situation? We found a house we really really liked that is just a bit above our price range. We tell ourselves that with a little cutting back and a little sacrifice in some other areas of our finances, we can afford it.
But then we don’t account for other expenses like new furniture for the bigger house, repairs, an increase in taxes, as well as the time investment involved with a house and it starts to add up quickly. Not so much that you lose the home and go bankrupt. But more like how it puts a clamp down on us from doing other things such as paying off debt, saving up for things we truly want and need, and investing for our future.
The thing is that a house doesn’t have to become a budget breaker. But we sometimes can assume that it does because it feels like everyone else’s home is. I recommend having a mortgage payment between 25-30% of your after tax income which will allow for some breathing room in your budget. This can be achieved by doing a monthly budget which tells you where your money is going each month and by saving up and having a nice down payment which will put you into a position to love your house . . . while not busting your budget.