What is it like to be “house poor”?

[Anonymous]

One way to think about it is to imagine the opposite scenario. We bought a house that is much less expensive than we could have afforded - definitely what many DCUMers would call a shit shack. On the one hand, we take great vacations, have solid savings, sent our kids to private school, have well funded 529s, don’t freak out when the car breaks down, etc. On the other hand, I really hate our house. My husband doesn’t hate it. I don’t know that we’d do things differently if we had it to do over, but I do find our house awkwardly arranged, in an inconvenient neighborhood, etc.

I think there are always going to be trade offs - figure out what works for you.

[Anonymous]

Anonymous wrote:One way to think about it is to imagine the opposite scenario. We bought a house that is much less expensive than we could have afforded - definitely what many DCUMers would call a shit shack. On the one hand, we take great vacations, have solid savings, sent our kids to private school, have well funded 529s, don’t freak out when the car breaks down, etc. On the other hand, I really hate our house. My husband doesn’t hate it. I don’t know that we’d do things differently if we had it to do over, but I do find our house awkwardly arranged, in an inconvenient neighborhood, etc.

I think there are always going to be trade offs - figure out what works for you.

This is us, except we're doing public schools. My husband often comments that he feels rich, but it's really just that we purchased a house that is way below our budget. It's not a fancy house and was a tear down dump when we purchased it, but we're handy and have been fixing it up. I'd love a garage, kid playroom and mudroom, but I like the lack of financial stress more.

[Anonymous]

Is there a home warranty on the appliances gifted to you from your realtor or seller? That can help buy you a year of no expenditures on appliances.

Does everything convey - things like washer and dryer, window treatments, yard equipment, etc are things that individually aren't expensive, but really do add up and can make an unforeseen dent in your savings.

If you can be honest with yourself and truly do have that financial discipline than you have your answer.
Otherwise, you'll find yourself right back here on Dcum a year from now asking "I overbought my dream house and am drowning in debt" post.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.

Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.

This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?

We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.

We have pretty much the same take home (plus very stable jobs with generous pensions) and live in a 1.4mil house with a 1mil mortgage (5200 PITI). We paid for the location mostly, but I am wondering every day whether it was a smart move. The mortgage is one thing, but you also need to remember that every single thing in a more expensive house will cost you more. Contractors will assume you are loaded and mark up accordingly, updating a 48 inch Wolf range will cost you way more than the generic 30 inch range you could have put into a cheaper house, you will need more furniture and probably higher end furniture, your taxes will be more expensive, etc.. Are you truly financially ready for this? What will you do if one of you loses their job, gets sick or dies? Think through all of this before buying the house. The bank will most likely approve you, but that does not mean it is a smart thing to do.

PP here. Thank you for sharing this perspective; very realistic concerns we hadn't fully considered... I think we're struggling with how far to push the budget... Our jobs are also stable. One GS-15 and one O-6 about 3-6 years away from retirement, at which point our HHI will go up significantly (marketable professional + retirement)... We waited to have kids until after our careers were established. We've moved/deployed about a dozen times and now have a specialty and seniority that can stay here permanently. Oldest is mid-elementary. Question we're struggling with is should we push the budget to get into a forever house we'd love now (the 40% of net income I mentioned earlier) in a neighborhood our kids could grow up in, or wait (or stay put)... We could afford 80% LTV at about the $2M mark. First world problem, I realize, and we are thankful for the opportunities we've had.

I know anything can happen, but risks are always out there... I'm struggling with how to quantify that risk. I mean, wouldn't term life insurance mitigate the fear of cancer or death...

It's interesting because I grew up like the other poster -- parents living beyond their means and now can't really effectively retire... so I don't have a good frame of reference for how conservative to be. And this thread really hit home with me.

[Anonymous]

Anonymous wrote:Is there a home warranty on the appliances gifted to you from your realtor or seller? That can help buy you a year of no expenditures on appliances.

Does everything convey - things like washer and dryer, window treatments, yard equipment, etc are things that individually aren't expensive, but really do add up and can make an unforeseen dent in your savings.

If you can be honest with yourself and truly do have that financial discipline than you have your answer.
Otherwise, you'll find yourself right back here on Dcum a year from now asking "I overbought my dream house and am drowning in debt" post.

I spend enough time on this forum to know that we hear this warning all the time, yet I can't remember the last time someone posted a thread like this. Maybe on the Money forum from someone who experienced divorce or dual job loss. So yeah, don't stretch on a house if you think your marriage is shaky. But even in the COVID economy, there just isn't an epidemic of dual-income households in this region struggling to afford the houses that they committed to buy. Lending standards and the housing supply are simply too tight for that.

[Anonymous]

My parents did this to themselves. It meant, at first, when they really couldn’t afford it, go into credit card debt to cover basic expenses. It meant terrible fights about money. It meant refinancing to an interest only loan at one point to pay off the credit card debt. Now they can afford the house better than they could originally, but their house has some deferred maintenance. Nothing horrible, but it is stressful for them to have to fix even relatively small things that I wouldn’t bat an eyelash at getting fixed in my little townhouse. They have lived there twenty years and still have no window coverings in their sunroom.

[Anonymous]

Anonymous wrote:My parents did this to themselves. It meant, at first, when they really couldn’t afford it, go into credit card debt to cover basic expenses. It meant terrible fights about money. It meant refinancing to an interest only loan at one point to pay off the credit card debt. Now they can afford the house better than they could originally, but their house has some deferred maintenance. Nothing horrible, but it is stressful for them to have to fix even relatively small things that I wouldn’t bat an eyelash at getting fixed in my little townhouse. They have lived there twenty years and still have no window coverings in their sunroom.

All that said, your definition of house poor sounds like it involves a lot more savings than my parents ever had.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.

This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.

As a a kid, why were you burdened with the knowledge of your parents' finances? My kids are completely unaware of our financial situation.

This post is so privileged it's essentially nonsense. Only middle class and up kids get the option to be unaware of their family's financial situation. It's hard to be oblivious to having your house foreclosed on, having cars that break down all the time, moving when your rent goes up, not being able to afford school trips and instrument rental fees, etc ad nauseum. Money is the thing that shielded you from your parents' financial decisions, not discretion. If you had to eat ramen the last week of every month you would know you were poor, even if your parents never sat you down to say "we are poor, I expect you to deal with that reality."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.

This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.

As a a kid, why were you burdened with the knowledge of your parents' finances? My kids are completely unaware of our financial situation.

This post is so privileged it's essentially nonsense. Only middle class and up kids get the option to be unaware of their family's financial situation. It's hard to be oblivious to having your house foreclosed on, having cars that break down all the time, moving when your rent goes up, not being able to afford school trips and instrument rental fees, etc ad nauseum. Money is the thing that shielded you from your parents' financial decisions, not discretion. If you had to eat ramen the last week of every month you would know you were poor, even if your parents never sat you down to say "we are poor, I expect you to deal with that reality."

I will add, as an UMC kid, I wish my parents would have given me more insight into how the money stuff worked. I was always told we were "comfortable" but I never knew what that meant - and whenever I asked I was told not to worry about it. I had zero idea how to allocate resources, budget, save for retirement, save for ANYTHING. I feel like this opaque practice toward money is part of why I didn't really conceive of how bad an idea it was for me to take out $160k in student loans in my 20s - which I am just now almost done paying off, in my 40s.

I don't blame my parents or anything like that. Just, there are tradeoffs to sparing your kids having to think about money. I wish my parents had involved me more in how money was made, saved, and spent, so that I didn't have to figure it all out for myself.

[Anonymous]

Anonymous wrote:One way to think about it is to imagine the opposite scenario. We bought a house that is much less expensive than we could have afforded - definitely what many DCUMers would call a shit shack. On the one hand, we take great vacations, have solid savings, sent our kids to private school, have well funded 529s, don’t freak out when the car breaks down, etc. On the other hand, I really hate our house. My husband doesn’t hate it. I don’t know that we’d do things differently if we had it to do over, but I do find our house awkwardly arranged, in an inconvenient neighborhood, etc.

I think there are always going to be trade offs - figure out what works for you.

Hey, I could’ve written this post. It’s nice to know other people have made some of the same choices. I love that we never fight about money, and that when there’s an emergency we don’t think twice about how we’re going to pay for it. The private school our kid is in is light years better than the “excellent” public schools I attended. Kid gets whatever classes and lessons he wants.

But we live in a shit shack with one bathroom, so I don’t think many here would envy us. I would kill for another bathroom.

[Anonymous]

About 50% of our take home is mortgage. I have a secure job and healthy retirement match but our kids are still in daycare so we definitely feel the squeeze. I think I’m okay with it because we are home bodies and love hanging at home and going in the yard. Vacationing w kids is miserable for us so we aren’t going to do that until kids are out of daycare/preschool. Hopefully by then we won’t be feeling so strapped for cash. I hate moving and wanted our first home to be our forever home. I do wish I could save more for college and put away for savings but hoping that will change once kids are in public school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.

This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.

Sounds terrible. Why did your family decide to buy a house they couldn’t afford?

Probably rich public schools.

Nah. My parents had an idea in their head of success and wanted a house that matched that view of themselves. They thought their income would increase more than it did. They thought they could make it work, but they missed things in their budget. Then there were a few unexpected expenses, a drop in housing prices, a job loss, and unplanned kid, etc.

Even now they're paying for that decision in retirement. They have smaller retirement accounts because they didnt contribute as much to afford that mortgage. Now they can't afford to live near their grandkids, who live in a HCOL area. They had to sell their nice house and now live in an okay house in a very poor area. They have to worry a lot about crime--last week someone stole the gas out of their car's gas tank while it was parked in their driveway. It's a classic story of living beyond your means.

I love how you point out the long-term impact making the wrong decisions can have. I purchased home 13 years ago that was beyond my reach in reality. The decision to purchase that home haunts me to this day.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.

This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.

As a a kid, why were you burdened with the knowledge of your parents' finances? My kids are completely unaware of our financial situation.

Different scenario, but growing up poor I was very well aware of our financial situation. It would have been impossible not to be. We were "school poor"-my parents spent all of their (little) extra money on private school. Not worth it IMO.

Anyway for the OP, NBD for a year or a couple years. For an extended period, not worth it.

My kids are all grown now, but if I could redo one thing, it would be the decision to place our kids in private school over moving to a better zoned public school district. I'm not sure what we were thinking, but in hindsight it would have saved us thousands to simply move and make use of the public schools that our taxes paid. Duh.

Depends what you value. Even the best public schools don't measure up to top privates in many ways. I've not regretted my decision to place my girls in independent schools and am beyond appreciative of my parents' decision to place me in an independent school. For some, though, these advantages aren't as meaningful and for others there are countervailing considerations that can make public school a better option (as it was for my sister). These decisions are best made in light of your particular circumstances and those of your children. I wonder how your kids feel about the education they got and whether they would have rather been in public school in retrospect.

[Anonymous]

Anonymous wrote:

Anonymous wrote:One way to think about it is to imagine the opposite scenario. We bought a house that is much less expensive than we could have afforded - definitely what many DCUMers would call a shit shack. On the one hand, we take great vacations, have solid savings, sent our kids to private school, have well funded 529s, don’t freak out when the car breaks down, etc. On the other hand, I really hate our house. My husband doesn’t hate it. I don’t know that we’d do things differently if we had it to do over, but I do find our house awkwardly arranged, in an inconvenient neighborhood, etc.

I think there are always going to be trade offs - figure out what works for you.

Hey, I could’ve written this post. It’s nice to know other people have made some of the same choices. I love that we never fight about money, and that when there’s an emergency we don’t think twice about how we’re going to pay for it. The private school our kid is in is light years better than the “excellent” public schools I attended. Kid gets whatever classes and lessons he wants.

But we live in a shit shack with one bathroom, so I don’t think many here would envy us. I would kill for another bathroom.

While I wouldn't call my house a shit shack there are plenty on DCUM who probably would. We have stayed too long. Finally realized that we are in a position to maintain a lifestyle that we are happy with while upgrading. Can't wait to get into a house that is better suited to us. We may end up having to cut some expenses but will be able to maintain private schools, kid sports, country club, etc. In retrospect, we probably could and should have done this years ago. Evaluate your circumstances and see what works for you.

[Anonymous]

Anonymous wrote:My parents did this to themselves. It meant, at first, when they really couldn’t afford it, go into credit card debt to cover basic expenses. It meant terrible fights about money. It meant refinancing to an interest only loan at one point to pay off the credit card debt. Now they can afford the house better than they could originally, but their house has some deferred maintenance. Nothing horrible, but it is stressful for them to have to fix even relatively small things that I wouldn’t bat an eyelash at getting fixed in my little townhouse. They have lived there twenty years and still have no window coverings in their sunroom.

Isn't the point of the sun room to let in the sun?