You Should NOT Buy Your Dream House – The truth about keeping up with the Joneses and why you NEED to find a house that fits your budget, not make your budget fit your house!
If you are a person living in the world today, you have heard of the “American Dream.” The big house with the white picket fence in the perfect neighborhood with perfect design and garden and everything.
We’ve all been brought up to believe that this was kind of the goal in life was to get this beautiful, perfect house. But what they don’t tell you is that there is a very low possibility that you will be able to afford your dream house. Especially if you’re just starting out.
There are still some people who will never own a home in their entire life. Not because they don’t want to, but because the reality of needing to pay for the “American Dream” is too expensive.
I can’t tell you how many people email me every day asking about where they can cut their budget because they just can’t afford their life right now. And these are hard-working people! But they live in houses that they can afford or rental properties that they can’t afford. Most are spending more than half of their income just on their housing costs (it’s supposed to be about 30% of your income goes to your house costs).
These are people who truly do work very hard for their money but are just not living within their means. They’re trying to keep up with the Joneses in a race that they can’t win.
Does that sound familiar to you? It sounds all too familiar for my family.
Trust me on this one, you will be much happier when you stop trying to keep up with the Joneses. [clickToTweet tweet=”Don’t keep up with the Joneses. To quote @RachelCruze, “the Joneses are broke.”” quote=”To quote Rachel Cruze, “the Joneses are broke.””]
I’m here to tell you why you should NOT buy your dream house.
You can’t afford it.
Plain and simple. The house that you want is out of your price range. And that’s okay! The house that I want is out of my price range too!
The important thing here is that you know that you can’t afford it. Don’t stretch yourself too thin trying to pay for something that there’s just no way that you can afford.
When it comes to your dream house, you might have to edit what you want to fit what you can afford. And once you find something that you can afford, go even lower in price.That’s one of the biggest keys to making sure that you can stay in control of your money.
You need to start living below your means if you want to save money and get out of debt or whatever other financial goals you may have. And one of the biggest places that people struggle with living below their means is in their house.
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You can’t maintain it.
There are a lot of responsibilities that come along with home ownership. All of the repairs, upkeep, Landscaping, Maintenance, and everything else… they all fall to you.
When you are trying to keep up with the Joneses and have your dream house, there is a lot of upkeep the comes along with that. You very well might have a dream of living with a backyard garden that looks like the same in The Gardens of Versailles. But can you afford to hire professional landscapers to maintain that?
You might want a house that has 10 bedrooms and 12 bathrooms. Can you keep up with cleaning that? Can you afford to hire a cleaning service whole time?
Even more realistically, can you afford the upkeep on a big property or a big house? Can you keep up with the demands of an older house that needs constant repairs and updating?
If your dream house comes along with a lot of repairs and maintenance and extra work, these are all things you need to take into consideration before you ever contemplate buying one of these houses.
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You’re thinking is too short-sighted.
Sure, you might like that in ground pool or you might like the one-floor living now… but what about in a few years? Will you like it then? In a few years, will you like all the things in your dream house that you paid extra for?
Will your dream house fit your family if you have children? What if you want to have pets. Will you be happy that you have a penthouse condo if you decide that you want to have 6 Great Danes or decide that you want to have 5 kids?
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Your budget isn’t allowing you to save for the future.
This kind of goes back to the whole you can’t afford it thing. But it’s really important to remember. if you buy a house the very top of your price range you’re basically leaving yourself no wiggle room in your budget for saving or for fluctuations in income.
What if when you decide to move to a different house that the market has changed and your house is no longer worth what you paid for it. Will you have savings to be able to carry you through that time? Will you have enough money saved up for a downpayment on a new house without relying on the income from the sale of this house?
What happens if you are air tight in your budget in order to accommodate your new mortgage, and then somebody’s hours get cut. and now you’re having to deal with finding the extra money at the end of each month in order to cover the mortgage.
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This is why you should not buy your dream house. Unless you are a millionaire you should not be looking at million dollar houses.
There are plenty of other options out there that are not your dream house but that you can make into your dream house. Houses go on sale every single day. There are definitely options out there that meet all of your needs. They might not mean all of your wants, but they will provide you with everything that you need in a house. And really, is not what’s the most important thing about all of this?
This isn’t to say that you should never have a dream house in mind! Dreams really do keep us focused on an end goal. If your goal is to have a millionaire-style house but you’re making minimum wage, as long as you’re not going out and trying to buy a million dollar house it’s great to have that dream. It’s just as important though to be realistic.
You should not ever push your budget too far when it comes to finding out how much you should be paying for your mortgage or in housing costs.
When it comes to looking for a home to live in, you should not buy your dream house. Always look for something that meets your needs but it doesn’t have to meet your wants.
[clickToTweet tweet=”You need a kitchen. You don’t need granite countertops and shiplap walls.” quote=”You need a kitchen. You don’t need granite countertops and shiplap walls.”]
Making these kinds of determination between needs and wants can really help you figure out exactly what will fit your budget.
This isn’t to say that you shouldn’t buy a house! I absolutely 100% think that you should buy a house! But I also think that you should always come in under budget with your housing costs. Trust me, you will thank me later!
How much do you pay each month for your house?
Yes, yes, yes! We purchased a house two years ago at the top of our budget (what the bank said we could afford) and it has been a headache ever since.
Having a huge chunk of our budget every month go towards our house payment has greatly hindered our ability to pay off debt, save money for emergencies and vacations, etc.
If I could go back I definitely would not have purchased this house, at least not yet. Next time we will be much more prepared!
Lessons learned I suppose 🙂
Sandie recently posted…How to Save for Vacation Fast: 5 Tips to Increase Your Vacation Savings
Exactly, Sandie! The bank will say that you’re approved for a lot more than you feel comfortable paying. Definitely always stay true to what you know is right for you and your budget. 🙂
Beth @ The Money Pixie says
You’re so right. It is too easy to fall into the trap of buying more than you can afford. It happens with houses, cars, and many other things. I think people forget about how much time and money it costs to take care of a large home.
They also don’t think about the taxes, insurance, and upkeep costs associated when they are still in the exciting buying stage.
Beth @ The Money Pixie recently posted…Save Money at an Online Discount Jewelry Store -Top 9
Yes, Beth! Taxes and insurance make up more than half of my overall mortgage payment and we didn’t even think to take that into consideration when buying a home!
Exactly!!! I love this post! I sold a fixer upper last year and finished paying off a large amount of debt. When we called the bank to get a loan for our next house they tried to offer my husband DOUBLE the amount we planned on borrowing. They couldn’t believe we were 100% debt-free. (He said, “You must be the only people I’ve worked without a penny of debt.”) And I couldn’t believe they wanted to give us a mortgage payment that would be more than half of our take-home pay. That’s crazy! You have to know the numbers yourself because the banks are not on your side. 🙂
Oh my goodness, you’re kidding, Jane! That’s awesome for you guys to be debt free, though! And super great for you guys knowing yourselves and your own budget before diving into something that puts you in over your heads. 🙂
So true! Lifestyle inflation is so easy to get carried away with. You don’t need an indoor pool and a giant closet, but you do need a home that you can feel safe in. After losing our heat and A/C and having to rely on standing fans and blankets for a year, you really realize how quickly people tend to lose sight of what’s important! Don’t blow thousands on a whim and focus on your needs, not your wants (not you important wants either!).
That being said, my dream home costs about $100k, $250k if I live in a super nice and safe neighborhood. 🙂 And I am comfortable with that price, considering you’re lucky to get a home in a halfway decent neighborhood for under 200k around here! And dear god, don’t forget about all the additional costs of a home (not just closing costs, but maintenance–house prices can go up tens of thousands in a blink).
Thanks for the great post!
So true! Love your optimism! 🙂