Anonymous wrote:We are thinking of stretching for our dream home. The first year will be tight, but we will be more comfortable after that. We would still plan to have 6 mos of expenses in cash, and another 12 months in liquid assets. We will need a few furniture pieces eventually, but most everything we currently own is relatively new. We are also planning for issues that aren’t caught in the home inspection, but no reno needed.

We bought a home unexpectedly (landlord needed to sell and it was an opportunity we couldn't pass up), so we were tighter than what you're describing when we started out. It was fine, we had to be a little extra thoughtful for the first year, but now we're in a very good position. If your income is as high as most homebuyers in this region, then something that is "tight" from a debt-to-income perspective often actually isn't that tight at all in terms of surplus dollars at the end of the month. Many of the expenses that many people take for granted on this forum are things that many or even most people in this country live without. You can too.

I would do it again for a good opportunity. Obviously, make a comprehensive budget and try to stick to it. Also, learn to do home maintenance and repair tasks yourself (within reason).

Anonymous wrote:

Anonymous wrote:We are House limited. The stretch in our budget for housing means we have to pick and choose the extras. We can do a vacation, but that might mean we wait on doing the interior painting we want to do on the house. Big, unplanned expenses- like appliances breaking down, or whatever- mean that our vacation budget might be tighter.

It has required us to be diligent in our budgeting, plan ahead for most expenses, delay certain fixes/home preferences, etc.

Totally manageable, and worth it to us.

Isn't this normal budgeting? We are not house poor or limited, but we don't expect to do all the things every year.

Yeah but there are all sorts of levels of budgeting. We didn’t push our housing because for example I never want to think about how much we spend on groceries. But some people don’t want to NOT think about how much they spend on groceries even if things aren’t tight. I prefer to have enough budget for day to day stuff that I just check every month that the credit card bill (we use one for joint/household expenses and just pay it in full every month) is not insane and then don’t think about it again until the next month. Repairs always get done and there’s no worry about it (possibly we should have less cash in savings but that’s another question).

Anonymous wrote:We are House limited. The stretch in our budget for housing means we have to pick and choose the extras. We can do a vacation, but that might mean we wait on doing the interior painting we want to do on the house. Big, unplanned expenses- like appliances breaking down, or whatever- mean that our vacation budget might be tighter.

It has required us to be diligent in our budgeting, plan ahead for most expenses, delay certain fixes/home preferences, etc.

Totally manageable, and worth it to us.

Isn't this normal budgeting? We are not house poor or limited, but we don't expect to do all the things every year.

I'm not sure 2020 is the year I'd feel comfortable with "tight." The economy and housing market could crash hard at any moment. No one knows, but it's pretty clear that the situation isn't good. We extended ourselves a few years ago and it did work out for us, but the world wasn't nearly as precarious.

What happens if we start getting vaccine readouts in November which show that a vaccine won't have efficacy? What is the market going to do?

Can you only swing it if your situation changes within a year or two? As others have said, raises and promotions never happen, big expenses do, medical needs arise, pandemics happen, etc.

You can't plan for it all. But, if your budget will simply be tight but manageable you may be able to move forward. If you will be burning through savings until XYZ happens, you may not want to push your luck.

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.

OP said it would be tight for a year or so. I agree with you if it’s for several years, but I’d happily forego a year or two of vacations and extras to trade off for a house. Especially now that we’re home so much.

It really depends how tight and why they expect it to get better. When my parents bought they thought it would be tight temporarily, but then expected promotions and raises didnt come through. Then there were some unexpected but necessary home and car repairs. Then there was a drop in home values so selling wasn't an option. Add in some minor health issues that caused some medical bills, and things got really tight. They never dug themselves out of the decision to buy that house.

We are House limited. The stretch in our budget for housing means we have to pick and choose the extras. We can do a vacation, but that might mean we wait on doing the interior painting we want to do on the house. Big, unplanned expenses- like appliances breaking down, or whatever- mean that our vacation budget might be tighter.

It has required us to be diligent in our budgeting, plan ahead for most expenses, delay certain fixes/home preferences, etc.

Totally manageable, and worth it to us.

We did this - purchased at the top of our range knowing rhat one kid would go to K in the fall so we just needed to survive for 9 months with no big splurges (plenty of savings to cover true emergency).

Joke is on me because he isn’t going to K, thanks to the pandemic. But generally it has been fine because we had the cushion we could use if the water heater breaks, etc.

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.

OP said it would be tight for a year or so. I agree with you if it’s for several years, but I’d happily forego a year or two of vacations and extras to trade off for a house. Especially now that we’re home so much.

House poor means relative to the lifestyle you had before purchasing said house, you'd have to forego a lot of things, e.g., no eating out, scaled back vacation or no vacation, can't do the same activities you used to do with your friends.

It also means a smaller safety net. This is crucial.

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.

We did this. It was fine. I’d prefer doing that (within reason) to buying a house we weren’t happy with and wanted to trade up.

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.

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.

It's not hard to start out house poor when you are young. But, it's really hard to go backwards after you are used to not being house poor. Remember what it was like eating Ramen noodles so you could pay your bills when you first got out of school? It's like that. Worst thing though is unexpected house or car repairs.

We are thinking of stretching for our dream home. The first year will be tight, but we will be more comfortable after that. We would still plan to have 6 mos of expenses in cash, and another 12 months in liquid assets. We will need a few furniture pieces eventually, but most everything we currently own is relatively new. We are also planning for issues that aren’t caught in the home inspection, but no reno needed.