When I got married we lived in the hood. I don’t mean the hood as in just not a nice part of town, I’m talking about trains going by at 2am and gun fire in the background type hood. Like most married people, we were broke. Our dining room table was the card table I stole from my parents house, the appliances worked 50% of the time, and we had no cable or internet just because the cost was too much. All of that, but hey, rent was only $400/month. We were able to pay off the debt we had incurred from the wedding very quickly.
Like most married people though we found out that if you’ve been married for more than a day it’s time to buy a house. I guess it’s the 11th commandment that renters are sinners because it all of a sudden became very important to us to buy a house. 3 months after getting married we began our search and couldn’t find anything we liked so decided to sign a contract to build a house. We closed a few months later and moved in to begin our lives as homeowners. We had no savings, no money to put down, no money to buy the furniture for the house, but we had a house. So like most Americans we now had a house, and our house had us.
Looking back the was a prime example of how we couldn’t control stupid. This idea of Sacrificing to Win in the housing area is huge! If you’re able to hold off on buying a house until you have the cash to pay for it, do you have any idea how rich you’ll be? Just investing a house payment from age 30-65 results in $5.8 million. If you combine that with the principles from college and cars in the previous posts, you’ll have over $15 million at retirement and you never had to earn or try to find extra dollars to invest.
Here’s the Sacrifice to Win method for housing. Find the cheapest rent you can find while still feeling safe and meeting the basic needs of your family. The cost of this rent has to be less than 20% of your take home pay, the lower the better and the faster you’ll get a house. Get out of debt, fast. Build your emergency fund of 3-6 months expenses, fast. Now that your financial foundation is built, you can start saving for your house. Because I hate debt so much and know that the borrower truly is slave to the lender I won’t ever borrow another dime again, not even for a house. My preference is that you save every dollar over essentials towards your house fund until you have enough to pay cash, but I know that for many of you it will take 5+ years to be able to save that much and you’ll want a house faster than that. If that’s the case, it’s ok to get a mortgage (literal root of the word is death pledge) but make sure that you have saved at least 20% for your down payment + the closing costs for the house and that your monthly mortgage payment is no more than 25% of your net take home income and that its at the longest a 15 year mortgage. Yes I know this is conservative and yes I know that you’ll qualify for a lot more. Remember we are sacrificing to win. If you can wipe out your mortgage in 5-10 years, you’ll be able to invest long term and become a multi-millionaire. Then you can go buy any house you want.
Did you buy a house too early and now instead of owning a house, your house owns you? Can you sacrifice to win in the area of housing? Is this too tough? Leave your thoughts in the comments