Monthly Archive July 31, 2018

What Does it Mean to be “House Poor”?

If you’re a current or aspiring homeowner, you’ve likely heard the phrase: house poor. This situation occurs when a person spends a large proportion of their total income on home ownership, which likely includes mortgage payments, property taxes, maintenance, and utilities. As a result of high home ownership costs, these individuals are short on cash for discretionary items and may experience difficulty meeting other financial obligations, such as vehicle payments and childcare services.


In most cases, being house poor is a result of “buying too much house.” Put simply, the homeowner has overestimated the amount of financial contributions they are able to make toward a home. Purchasing smaller homes or waiting to save money are great ways to prevent this situation, but it is not uncommon for a homeowner to bite off more than they can chew in a mortgage agreement. This may be the result of total cost underestimation, but it may also be the result of a lost job or decreased income.


The best way to prevent becoming house poor is to clearly and strategically budget. Experts say consumers should plan to spend approximately 25% of their income on home expenses. If a homeowner has other expenses and no additional debt, they can potentially spend up to 30%. In all cases, it is important to start a savings account to help save each month to address issues around the home.


Unfortunately, even the best budgeting can’t prevent job loss or emotional trauma. Changes to a household’s spending outlook may create difficulty in making mortgage payments. There are ways to reduce spending, such as canceling vacations or downgrading vehicles. Many individuals choose to pick up a second job to pay additional housing bills, while others choose to simply sell the home and purchase or rent a smaller property.


Though becoming house poor is a scary concept, many American homeowners are experiencing the phenomenon. As a result, it is important to only spend within your financial limits—especially when it comes to large investments, like homes and cars.


5 Strategies: Get Your Security Deposit Back

Though this site’s primary purpose is to provide advice for homeowners, we want to acknowledge the population of Americans currently renting their residences. This group is significant; according to the Pew Research Center, more U.S. households are renting now than they have at any point in the past fifty years. Many of these leases require a security deposit, and retaining those funds serves as a point of stress for most renters. Below, we have detailed a few strategies for getting your security deposit back.


Have a plan when you move in. Take necessary precautions when decorating your new apartment. If you have a security deposit, you may want to consider using poster putty and removable hooks to hang items rather than drilling holes into the wall. Use felt pads to protect wood floors from scratches and put carpets under rolling chairs to limit damage.


Document everything. When you move in, photograph every room in the apartment. This will allow you to use evidence if the landlord disputes your later claims. If you notice anything wrong with the apartment when you move in, alert the landlord immediately—even if it is just a simple hole from a hung picture.


Clean thoroughly. If you want all of your deposit money back, plan to do a serious deep clean before moving out of the apartment. This includes behind and beneath appliances, plus small details like light switches, door frames, and baseboards. You may want to hire a professional.


Complete necessary repairs. Replace light bulbs, fill nail holes, and unclog drains. Paint a coat of the original paint color on walls with scuffs or holes; if your security deposit is more than what a professional asks, it may make sense to hire someone to complete the painting job.


Research local laws. Most states require a landlord to provide explanation for withholding security deposit funds. Research local renter’s rights related to security deposits at the city, county, and state level. Start your research on the website of the state’s attorney general and the U.S. Department of Housing and Urban Development.