You can have the most beautiful house in the world, but if it makes you bankrupt, it’s totally not worth it!
House poor is what happens when you buy a home you can’t afford and then end up spending all of your money on your mortgage, emergency fixes, or fixing the home up.
It’s always sad when I see people in this predicament because it’s totally avoidable.
When you’re buying a home, you need to be realistic and honest about your budget and make compromises when needed to ensure you end up with a mortgage that leaves you room to save. Then, you need a high interest savings account dedicated to home emergencies.
The amount to save in your emergency fund depends on your home and your situation but it’s a good idea to have at least your typical monthly expense multiplied by 3. This will give you a good buffer in case you have your AC break in the middle of summer or have a rough income month.
