Have you bought too much house?

[stephaniekirkpatrick@hotm]

I did it, something I thought I would never do, it goes totaly against the frugal life I have led for many years now...I bought too much home! I am debt free with the exception of my new mortgage, but I bought too much home. After all my bills are paid, including food, utilities, insurance, etc etc I have $500.00 left over per month, and this is a little unnerving to me. I've made decent money the last year or so in a new job (it's the first time I've actually made a wage where I could save enough money to actually buy a home, and I am nearly 40 years old!) so when this townhome came up in a very desirable part of Seattle, I jumped at it! This job is the first I've had to even offer a 401k (which I now cannot afford to contribute to) And now, I wonder if I have just run myself too thin. I guess my question is , and sorry this is so long, has anybody else found themselves in a similar predicament? I know it's a gamble but I just have to believe that considering this is a two bedroom in a well established neighborhood that is highly desirable that it will pay off in the long run.....anybody else? How do you make it work?

[Tree0164]

I haven't done it. Most financial experts recommend no more than 33% of your income going towards your housing.

Most people would like to have $500 a month extra-so I think you are doing ok there.

Make sure you have a good emergnecy fund-I would put atleast 1/2 of that $extra$ a month towards 6-8 months e-fund.

The other half until your e-fund is fully funded is sign up for 401k-you can afford it

And make sure you take out your spending money too.

[Scanner]

$500/month after all bills are paid doesn't sound too bad to me. . .yeah sure. . .you can't fully furnish your house for a few years but that's $500/month in discretionary income.

Is that bad?

[PauletteGoddard]

Hi Stephanie:

The first few years of homeownership hurt. Take it from a fellow Seattle homeowner. On the plus side, when you do your taxes this year you can deduct mortgage interest and real estate taxes!

Can you calculate some scenarios showing your net income if you should contribute 1 through 5% of your gross to a 401(k) program? Is there an employer match? Have you considered altering your tax withholding to accommodate the greater tax credits?

[bjl584]

No. I bought within my means, but there are a lot of people across the country that would answer yes to this question. Just look at the meltdown in the financial sector that has been going on as of late.

[cschin4]

I can afford my house and I am frugle. I say I bought too much house because it is big 2490 sq plus triple garage for three people . The basement is unfiinished 1245 sq ft but my DH basically lives down there playing computer games but because he is in the basement we no longer ever see him.

I so miss only having a 1000 sq foot apartment to keep clean.


We "upsized" 5 yrs ago from 1800 sq ft with 1 car garage to 2700 sq feet with full basement, attic, 2 car garage and shed.
And, all I have found by having more space is that we have so much MORE junk and it is exhausting to clean. (I hate cleaning).
Anyway, our old home came up for sale and we bought it back. Presently, we are rennovating it and putting a small addition on so when finished it will be about 2000 sq ft but still with 1 car garage. That is big enough for us. There are 5 of us, my spouse and I and 3 school age kids.
If I were you, I would move the computer upstairs. We keep our computer in the family room. That way I can see what the kids are reading, etc. At least you would get to see your DH!

[simple987]

I live in the suburbs of Houston, Tx and its hard to find a house under 2500 sq ft. A typical new home out here has close to 4000 sq ft!

[disneysteve]

Lots of people, especially in recent years, have bought too much home, spending way more than they should. The traditional rule of thumb is that your monthly housing costs shouldn't exceed 28% of income and the home shouldn't cost more than 3 times your income. If everyone had stuck to that, along with 20% downpayments, we wouldn't have the economic mess we now find ourselves in.

We bought in 1994. We put down 20% and the house price was 1.67 times our income. Now, 13 years later, our income is higher, we've refinanced so our mortgage payment is actually lower and we are doing just fine. I have no idea what all these folks who spent 5 and 6 times their income are going to do.

[Fern]

I bought a 1650 sf home for myself, a single person, 12 years ago. It was hard to find a house under 2,000 sf when i was looking, but even with what i have, i'd really like to 'downsize' and could easily see myself living in a 1200 to 1400 sf condo. A bigger house has repercussions in many ways, meaning it will cost you more to heat it in winter, cool it in summer, furnish it, more time cleaning it, etc. Smaller is better.

[disneysteve]

A bigger house has repercussions in many ways, meaning it will cost you more to heat it in winter, cool it in summer, furnish it, more time cleaning it, etc.

Suze Orman gives a rule of thumb that your monthly housing costs will be about 40% more than your mortgage payment. So if your payment is $1,000, your actual costs counting everything will be around $1,400. That's just a ballpark figure, of course, but it is worth keeping in mind when deciding what you can afford. Many people look at whether or not they can handle the mortgage payment and forget to look at all of the other costs involved in owning a home.

[gackle]

We bought too much house as well. We haven't been in financial difficulty, but haven't been able to fully furnish it as well. A coworker wisely said (after we had bought the house of course) that if can't afford to furnish a house then you shouldn't buy it. We were looking to downsize before the market when south.

[Frugalicious]

We bought too much house as well. We haven't been in financial difficulty, but haven't been able to fully furnish it as well. A coworker wisely said (after we had bought the house of course) that if can't afford to furnish a house then you shouldn't buy it. We were looking to downsize before the market when south.

Well, do not worry about furniture. Save money and keep the house!
You coworker sounds like a Sheeple to me.

Sure, it seems like everyone is running away from their homes, a few are however, this is a cycle.

Prices will go up again, and having an unfurnished not landscaped home is better than no home at all.

Ask me how I know this.

[gackle]

You're right, Frugalicious, but there's more to it. We bought a 5 bedroom house so each of our planned three kids could have a bedroom, 1 room for office/guest, and our room. We had to move further away from the city than we cared to in order to afford the price/square foot. I drive 45 minutes to work, the wife drives 30 minutes to work, we drive 30 minutes to church, 20 minutes to our daughter's school and it's all south of here where the home prices are more expensive. Most of our friends are south of here as well and we only have two kids now instead of three. If you ask me we're done having kids, the wife is a different story. If we downgraded while moving south we could both be a lot closer to work and friends.

[snafu]

advertise for a roommate to split expenses. We hosted a foreign student to help with expenses. it was a terrific experience. He invited us to visit his home country when his term was up. His family hosted us provided an apartment at no charge etc. Of course they were very wealthy able to send their DS to private school in the west.

[Frugalicious]

You're right, Frugalicious, but there's more to it. We bought a 5 bedroom house so each of our planned three kids could have a bedroom, 1 room for office/guest, and our room. We had to move further away from the city than we cared to in order to afford the price/square foot. I drive 45 minutes to work, the wife drives 30 minutes to work, we drive 30 minutes to church, 20 minutes to our daughter's school and it's all south of here where the home prices are more expensive. Most of our friends are south of here as well and we only have two kids now instead of three. If you ask me we're done having kids, the wife is a different story. If we downgraded while moving south we could both be a lot closer to work and friends.

Well, I do not know about roommates, but just be frugal> look on Craiglist for free stuff!

Look for furniture too. Try thrift stores and yard sales and bargain for it.

A lot of people are selling their nice new stuff to pay off debt. They are likely desperate, divorce, foreclosure, relocating etc...so make an offer!