Buy a House You Can Afford!
If you are looking to buy a house this year, think about buying a house that you can afford. Here’s a simple will rule to follow when considering just how much you can afford.
Do not go by what the bank tells you that you can afford — the bank makes more money if you buy a bigger house, so you simply can’t trust them. Be your own advocate.
If the bank tells you that you can buy a $300,000 house, buy a $200,000 house. As a general rule of thumb, shoot for a value that’s about 65% to 80% of what the bank tells you that you can afford. Alternatively, if the bank tells you that you can afford a house over $400,000 in value, consider spending less just so that you don’t have to spend money on something you do not really need. Warren Buffett, one of the richest men in the world, lived in the plain House in the suburbs driving a 20-year-old car for many years without having to go out and purchase a house that he could “afford”.
It is definitely tempting to go out and purchase as big of a house as you can afford, and who wouldn’t want to live in a mansion or at least a Mc-mansion. But remember, you have to pay the bill, the entire bill and not just a single monthly payment from time to time, so consider what you are really getting into here.
- Do you really need to spend a half million dollars on a house?
- Duty to spend $300,000 on a house?
- Could you be perfectly happy living in a house that cost $200,000, $100,000, or $80,000?
- Would you be happier living in an apartment, not a condominium but an apartment at someone else owns?
The great American dream is to own a home. The great American dream is not to purchase a home. Purchasing a home is not owning a home there is a distinct difference. When you finance a home and purchase it, you do not yet own that home. Making the purchase of a massive McMansion, is not achieving the American dream, and it might just lead you into the American nightmare of foreclosure.
So be careful with your money and your finances and don’t just go purchase a home because you can, because a bank allows you to make that purchase, like a dealer in Vegas would allow you to place a bet. Because that’s what you’re doing when you purchase a house, you were betting on the value of that house and you are betting on the ability of your self and your wife to pay for that house every month until you finally do Own that house.
Car donations
as a side note I like to mention a charitable organization that accepts a car donation, so that they can use the money and the proceeds from selling those cars to make videos for kids. The organization has some admirable goals, and for some people it’s just too difficult to get rid of that old clunker in the front yard. This could be one way that you could do it and you could be helping some other kids when you get that eyesore out of your front yard and make your home a little more appealing for sale. If you have the time, I recommend that you sell the car yourself and just donate cash if you feel like donating the cash. However, the donation of a car could save you some time and effort and might be a little less hassle when you have other things to take care of.
