House Poor

Referring to someone as “house poor” is a cute way of saying they spend so money on their house that they don’t have money for much else. There’s no hard and fast equation for determining whether or not someone is house poor, but in general, if we’re paying so much to keep and maintain our home that we can’t afford other things, like car insurance or credit card payments, then we just might fit the bill.

When we first buy a house, lenders try to make sure that the mortgage, taxes, and insurance we’ll pay every month won’t amount to more than about 28% of our total monthly income. That’s handy, but when it comes to actually budgeting for life as a homeowner, we need to look at other costs as well. How much are our utility bills? Do we have gardeners that come and mow our lawn every week? Those costs are also part of home ownership, and just because lenders might not take them into account when we’re applying for a mortgage, it doesn’t mean we shouldn’t take them into account when figuring out what we can afford. So that we don't end up...in the poor house.