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Why is Everybody Struggling?? (Housing)

April 19, 2018

I wonder when I hear people complaining about rent, mortgage, car payments or some bill, “Why is Everybody Struggling?? It seems like many friends and even some family members are not only complaining, but struggling with bills.

Is something wrong here? I thought we were in a great economy. Why is everybody struggling?

I am the person that you probably DON’T want to be friends with and let me hear you complain. And dont even think about asking me to borrow money. Help is what I do. And it is rare when I will tell someone NO, I cant help you. Do you want to put up with my incessant questions is really the issue.  I will want to know why, what bills do you have, what interest are you paying.  Why did you buy a $25k pick up truck that gets 15mpg and it already has 60k miles. You could have bought a $14k Honda Civic that gets 30mpg and has about 30k miles.

My wife always tells me to stop trying to solve everyone’s problems. But it really bothers me when people do stupid things to themselves that cause them to struggle. Most people dont realize they are stupid decisions because everyone on the planet is doing them also, Right?? WRONG. I am on a mission to give people the right answers. What are the right answers? I know, I know. Right answers for who?

I dont know your situation and I dont claim to be the all knowing real estate investor. I do know some basic things that might help you with your situation so that you dont struggle. As with any advice from anyone, take what will work in your life and leave the rest. Take little bits of knowledge that you gain here and there and start making some changes.

Let me cover a few topics of Housing, Cars and Food. The focus today will be housing. I know I have talked about all of these items before and I will probably talk about them a 1000 times in the future. For today lets talk about housing. I borrow some information, as I have mentioned in the past from Mr. Money Mustache and Afford Anything because I love to read their information. It also happens to be my view of the world so I cant help but say some of the same things that they do. I also get some inspiration from their eloquent writing.

Housing: Everyone wants to own a home these days. Nothing wrong with that. But then they get stupid. Here is most people’s thought process: I make 50k per year, my wife makes 50k per year. Together we make 100k. We deserve a $300k home (when median prices are about $215k in my area) because we work hard and we deserve a good neighborhood for our kids.

Do you see a problem with this thinking that almost every family has?? YES, they are setting themselves up for struggle, failure and eventual divorce. How do I get that out of 2 people buying a $300k home? Buying a home is a very emotional decision. More importantly it has to be a financial decision, without emotions.

Most people think emotionally and then financially.  Emotionally: I love the lay out, I love the colors, its close to the good schools, its the “cool neighborhood.”  Then comes the Financial: we can afford it if we put in some overtime, we are going to be tight for a little while, no new cars for a few years, but YES we can afford it, we work hard and we DESERVE a great first time purchase of a new home. I dont understand why people cant buy a home that they can afford.

It needs to be done the other way around. We can afford a $200k home, logically based on income/expense ratios. At that price we are not stretched to the limit. We can still afford a vacation every year. If one of us decides to take a couple of months off of work, we can still keep up the house payments. Now lets go look for a house in the $200k range.

With the $200k house you will probably be able to buy some new furniture. When that gets paid off in a couple of years, you will be able to buy a new car also. You will not be so stressed that you are always fighting with your spouse about money. I have been there. It is not a good situation to be in.

When you are going to buy a home or anything, do not let the emotions of the moment carry you away. Look at your purchases as smart uses of your money. That is being frugal with your money. If people could be a little more frugal, I think more people would stay married. When there is more money in your pocket, you can take more vacations like we did to Germany in 2017, Prost!!

So What do you do if you are already in a house that is way too big or should I say, the payment is too big? Try downsizing. Here is another situation where lots of compromising must take place. People seem to think that they are at a certain level in life and they can never go backwards. So not true.

When your kids are grown and you dont need a 4 bedroom house anymore, you might want to downsize. Maybe you changed jobs and you dont make as much as you did before, you might want to downsize. How about, you just dont NEED the huge house and tired of paying the big payments?

Owning a home is very emotional for people. I know. My wife was just about in tears when we sold our house at the end of last year. I kept telling her its just a house. We are going to live in a different one for a while, then another one, then another one. Maybe I am just not the most sentimental one.

I guess my whole point is that people make decisions emotionally. Sometimes you have to put the emotions on hold for just a little while and make them with a financial mindset. I am not saying that you should be a robot without emotions(like me). Just take a little time to see if you can truly afford the home. Remember there are plenty of other things that will come along. Furniture for the new house. Appliances will need to be purchased. Curtains need to be hung. Yard work has to be done. You may need to paint to your desire. Carpet wears out. Things happen.

                     

I am not Mr. Money Mustache, who is one of my Heroes. Nor am I as self disciplined as Paula Pant at Afford Anything who is another one of my heroes. But I try to make decisions with a little more logic than most people. That is what has kept my wife and I out of financial trouble. We tend to be a little more logical and not so emotional. Or at least we try to keep each other more logical most of the time.

I will talk about the second of three biggest ways that we spend money on the next blog post-Cars. I hope you will think twice when making that housing decision that stretches you to the limit of your income. Good luck on your next home purchase!! The home of your dreams is in your future, but is it right now? Take time to enjoy the little things in life along the way. If you can enjoy the little things, you will want to do little things in your life to make the big things happen. It starts right now with your home purchase.

Please comment below about situations or issues that have come up that are relevant to the discussion. If you want to email me directly, that would be great too.

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