You may not have heard of the term “house poor”, but you probably know what it means. The family that owns a three-bedroom house but can’t afford to pay their credit card bill. There’s a difference between being poor and being “house poor”, and it’s possible to avoid with a little patience.
Picture: Stan Houseman/Flickr
As personal finance blog Canadian Budget Binder explains, being “house poor” is something that happens over time. When you’re living month to month, not because you don’t have a better option, but because you choose a lifestyle that’s more expensive than the one you can actually afford. The solution to avoid this is dead simple: employ a little patience.
Becoming house poor doesn’t happen overnight, rather it happens month over month after moving into your home or when situations arise that you are unable to cope with financially.
The seller told me that a couple of their friends bought big houses after graduating because they thought they would try to get ahead of everyone else.
Many friends in his circle graduated finding work right away and the money was good so they played the role of “look at how good I’m doing” which they didn’t want to do.
Lifestyle inflation is a hard thing to avoid, but it’s key to financial health. While it may be hard to live in a smaller house than you really want while you save up, patience can keep you financially solvent while you work towards your dream.
Young adult teaches us about being house poor in 15 minutes [Canadian Budget Binder via Rockstar Finance]