Congratulations on your home purchase and welcome to the world of home ownership. Almost every family who has purchased a home remembers those early years of homeownership that we thought we could never endure. Here are some tips to help get you through the lean years when folks sometimes say they are "house poor."
Start in the garage
If you have a beautiful car in the garage for which you are making big payments, you aren't house poor, you're "car poor." Sell the big, beautiful car and get rid of the payment. Buy a clunker for cash and drive that for a year or two.
Check your W-4
decrease the taxes
When you bought a home, you may have put yourself in a position to exceed the standard deduction on your income tax return because the mortgage interest is deductible. (If you have a modest home and you financed at very low interest rates, you may not.) Talk to your tax advisor to determine if your mortgage interest would allow you to file a new W-4 with your employer, changing the number of "allowances" you claim. Increasing the number of allowances will decrease the taxeswithheld from your paycheck and also reduce the refund you'll get after you file your return.
Sell the big boy toys
You know the old saying that the only difference between men and boys is the price of their toys holds some truth. If you have four-wheelers, RVs, expensive hunting and fishing gear, you may have to sell some of this. If you still have loans on any of this equipment or have credit card balances that can be reduced by selling it, this is a good step. It would be much better to sell an RV that gets used three weekends every year and one week every summer than to lose your home, right?
Cut back
In the first years of home ownership it is customary to find yourself cutting back on eating out, entertainment, vacations, hobbies, etc. Discretionary spending becomes a thing of the past for a time.
Ask for a raise
Your financial circumstances don't really interest your employer. Your boss isn't going to give you a raise because you bought a home you are struggling to afford. That said, if you haven't had a raise in a while - and that's a lot of people these days - and your company is thriving again, it isn't crazy to make a thoughtful request for salary increase.
Get another job
Just after buying a home is a scary time to change jobs - changing jobs is risky. If you're convinced you're under paid, you can look for a higher paying job. If not, you may look for moonlighting opportunities that you can hold down just until your income at your primary job catches up to your expenses.
Sell the house
This should be your last resort. After the housing debacle of 2008-2010, mortgage lenders learned their lessons. They had allowed people all across America to buy homes they couldn't afford on the hope that the home would appreciate and bail everyone out. If you just recently bought your home, the mortgage lender should have been convinced that you actually can afford to make the payments. If something has happened to your income or the lender somehow goofed and you really can't afford the home. Sell it. Your down payment may be lost forever, but if you lose the house to foreclosure, not only is your down payment lost but your credit is, too. If you can't make it, sell it before they take it.
Home ownership is a wonderful way to build a stable and happy home life for your family, giving you the opportunity to put down roots in a community, build lasting friendships and help your children succeed in school. Making home ownership a priority in your financial planning is wise. Almost always there is a way to make ends meet during those first few years of home ownership. Keep your head up. Lots of people have done it before you and you can, too.
This article was originally published on FamilyShare.com. Check out these other related articles: 10 things first-time home buyers should know, To buy, or not to buy: 5 signs you should not buy a house and Top 15 things to know while house hunting.
