Last updated Mar. 11, 2023 by Charles Zemub

If you’re not careful, home ownership can significantly drain your finances. Even if you have a stable income and can put away money for the future, it’s easy to get overwhelmed by unexpected expenses or overspending on things like appliances or renovations. To help avoid becoming house poor, follow these tips:

Save 20% for a down payment.

The last thing you want to do is be house poor. You feel trapped, anxious, and stressed out, and your finances are in the wrong place. So what can you do to avoid this? Save 20% for a down payment.

It’s essential to save for a down payment when buying a home. This is because lenders require that you have held the minimum amount required by federal laws before they will approve your mortgage application.

The law states that buyers must have saved at least 5% of the purchase price in cash as an initial payment at closing time, 10% if buying with little or no money down, and 20% if buying with no money down (this includes closing costs).

Keep your home expenses to 28% or less of your income.

If you’ve been following along, you know the best way to avoid becoming house poor is to ensure your home expenses are 28% or less of your income.

To arrive at this number, you must grasp how much money you bring in each month. You’ll also need to know what kind of expenses are coming up soon—for example, if any significant repairs or renovations are planned for the near future.

If so, it might be better for you and your family if those repairs were done when another source of income (i.e., unemployment benefits) was available instead of draining all of your savings accounts just before retirement age hits, and everything goes south from there.

Avoid taking on excessive debt.

No one wants to go into debt, but sometimes it’s unavoidable. However, there are different types of debt, some more manageable than others. “Good” debts—such as student loans or mortgages—can positively impact your life because they help you buy something that will increase in value over time, such as a house or an education.

But bad debts—like credit cards or payday loans—tend not to fall into this category and can lead to financial trouble if not managed properly.

The key is finding the right balance between the two kinds of debt so that you’re not paying more each month than necessary while still building up some savings for emergencies and plans. Here are some tips:

Borrow wisely.

Borrowing wisely is essential. You won’t be able to buy a house without getting a loan, but you can save yourself some trouble by understanding how your bill payments relate to your income.

For example, having too many monthly bills and insufficient money coming in from your paycheck is a bad sign for long-term financial health. In other words, ensure that what goes out the door doesn’t exceed what comes in the door (unless it’s an emergency).

Don’t overspend on a mortgage.

If you want to avoid becoming house poor, make sure not to overspend on a mortgage.

The rule of thumb for most people is that they shouldn’t spend more than 28% of their income on housing.

But if you’re single and just starting, or it’s been a while since the last time you bought a home, this may be a little high for your situation. The 30% mark is also legal advice—it’s similar enough to the 28% mark that it should also be reasonably safe. It isn’t until 33% and above that things get risky territory; some financial advisers recommend aiming for no more than 35%.

As long as your mortgage payment fits within these parameters (or doesn’t cost more than 25%, depending on who you ask), then it’s probably okay for now—but keep an eye out for changes in income or other circumstances that might affect how much money goes toward rent each month.

Plan ahead for maintenance and repairs.

Setting aside funds for minor maintenance projects is a good idea, whether in your budget or not. When unexpected problems arise, you’ll be glad you have backup cash to pay for them without hassle or stress.

There are many different ways to set aside money each month: automatically depositing it into your savings account, using an app like Digit that rounds up purchases at checkout and invests the difference, or even just separating a few dollars from every paycheck and putting them in an envelope labeled “emergency fund.” Being prepared can save you time and money down the road—and keep you out of the house-poor territory.

Keep track of your expenses.

Tracking your expenses is the only way to get an accurate picture of your spending and how much you can afford to spend on housing. You can use a spreadsheet, a budgeting app, a personal finance app, a personal finance website or book or blog (or forum), and a personal finance coach or mentor.

Understand the difference between house poor and bad debt. Before becoming house poor—and taking out loans that will become bad debt—you’ll need to be able to tell the difference between the two. They have different causes (housing vs. credit) and consequences (having no money left over vs. having less money than expected).

 As such, they should be treated differently as well: being house poor means saving up so that when an emergency comes up, everyone has enough left over after paying rent; bad debt means borrowing money from friends or family while waiting for payday so that bills don’t go unpaid because there isn’t enough cash in hand when due dates come around each month.

Know which bills come due first each month.

When it comes to paying your bills, you need to keep track of a lot of information. You must know which statements are due first and last, when they’re due, and even what day or time of the week they are typically received. While this can be confusing, you must stay on top of your payments, so they don’t pile up while other expenses accrue.

To make sure that you’re getting their finances in order quickly and effectively:

  • Know which days of the week each bill is received by the company (typically Sundays through Thursdays)
  • Pay attention to whether the company sends an email or text reminder before each payment becomes past due.

Consider an emergency fund.

An emergency fund is a pool of money you have saved and can access in an emergency. You should have enough money to cover your emergency fund for six months or more of living expenses, not including mortgage payments.

The goal is to make sure you have enough cash on hand so that if something unexpected happens – such as a job loss or medical crisis – you’ll still be able to pay all your monthly bills until the situation passes without needing to borrow from family members and friends, take out a high-interest loan, or sell off assets (like jewelry).

Emergency Fund

If you don’t already have an emergency fund, start small and work toward building one over time: try putting away $20 per week for four weeks, then increase the amount each week by another $20 until you’ve reached your goal amount.

Once it’s built up, maintain it by transferring $200 into an interest-bearing savings account every month from wherever else in your budget would allow room—such as credit card payments—and avoid using this money unless necessary.

Don’t be fooled by large tax refunds.

Don’t count on getting a large tax refund. Don’t spend it all at once. Don’t use it to pay off debt or reduce your mortgage balance, even if you get a windfall of cash that puts you in the hole for a while (like when you receive an inheritance from a relative).

It would be best to have some cushion in emergencies and unexpected expenses, so keep money on hand. If necessary, put away any extra funds until the next paycheck.

Avoid spending nonessential items like vacations and gifts; these things should be saved for later dates when needed (and not just used as an excuse to go shopping).

File your paper bills in a designated place.

A simple way to keep track of your monthly bills is to file them in a folder. You can create a filing system that works for you, but we recommend making sure there’s one bill review session per week to go through all the bills in your folder and pay what needs to be paid.

Some people like using an actual calendar or spreadsheet to schedule their billing reviews, while others prefer using a budgeting app like Mint that has online bill tracking built in.

If you’re going with the latter option, here are some tips:

Use separate “Bill Pay” accounts so that you know exactly how much is available each month without having to do any math yourself (this also allows time for late fees and interest).

Set automatic reminders so that if any payments are due soon, they’ll pop up on your phone or computer screen at least 24 hours beforehand. This will help prevent forgetting about upcoming checks.

Set a calendar reminder to schedule regular bill review sessions.

If you’re not keeping track of your monthly expenses and the balance in your bank account, it’s easy to get caught up in the day-to-day busyness and lose sight of how much money is coming in or going out. Setting reminders to review your bill payments regularly will help prevent this from happening.

There are several ways to do this:

  • Google Calendar has a built-in feature that allows you to schedule recurring events, so setting up a reminder for yourself is as easy as choosing an event type (e.g., “Reminder”)

Entering the time and date of when you want it to occur, then select “Repeat Monthly.” If there are specific dates when bills are due during the month, choose those dates instead of “Every Month.”

  • Apple Calendar can also be used for this purpose by scheduling repeating events using its “Repeat” option under its “Calendar” menu item. The process applies to Google Calendar’s method mentioned above (iTunes) – open Apple’s calendar app, choose which days or weeks each bill should repeat over, and add them accordingly.
  • Microsoft Outlook has similar features; however, they’re called “Recurrence” instead of “Repeat Monthly.” To set up multiple reminders at once (e.g., all four quarterly electric bills), click on “Edit Recurrence…” under Scheduling Options within one specific event window; then click on New Recurrence…” beneath Create New Recurrence Wizard.” Finally, enter all details needed, including start date/time/interval, etcetera, into the fields provided before clicking Save.”

Try to align your bills’ payment cycles.

If you have a monthly rent or mortgage payment, try to make it on the same day each month. That way, you can pay all of your bills at roughly the same time each month, making it easier for you to track and budget.

If that’s not possible (or if this is one of those weeks when nothing goes as planned), don’t worry; options are still available! If you can’t pay a bill on the same day each month, try paying it on the same day each week instead—and use a calendar app or physical calendar to help track those days.

You might even consider setting up an automatic transfer from savings into checking so that every Friday night has $100 more than usual in it—that way, there will be less temptation to spend money on something frivolous during what should be “fun money Friday” nights out with friends.

What is house poor?

House poor is when you’re spending more than 30% of your income on housing. It’s a state of being that can happen to anyone, but it’s especially common among young people who want to live in an area with better job opportunities and rising home values.

Frequently Asked Questions

How do I know if I’m house-poor?

If you’ve got a mortgage and are having trouble making ends meet, you’re probably already familiar with the term “house poor.” But if you aren’t sure whether or not you’re in that boat, here are some ways to know:

1.         You’re spending more than 30% of your income on housing

2.         Your emergency fund is gone, and/, or you’re having trouble paying off debt

3.         Your budget feels like it’s spinning out of control.

How do I stop being house poor?

There are a few ways to stop being poor and save money.

Take a look at your spending habits. Are there any expenses you can reduce that won’t affect your quality of life? Maybe you can stop buying lunch out every day and pack a sandwich instead. Or maybe it’s time to say goodbye to cable television.

What is the 36 rule?

The 36 rule is a productivity hack that involves doing just one thing at a time for a maximum of 36 minutes. It was created by productivity expert Tim Ferriss, who says it’s the most effective way to get things done and create sustainable habits.

There are a few reasons why this method works: first, it helps you focus on an activity for as long as possible; second, it forces you to finish what you start; third, it helps you avoid distractions like social media or YouTube videos; fourth, it allows you to create mini-habits that eventually become ingrained in your daily routine.

What is house Poor Canada?

House poor Canada is a term used to describe a person’s situation where they spend more money on their mortgage than on food, clothing, and shelter. It is typically used to refer to Canadian homeowners who have taken out a mortgage larger than the value of their home or property.

At what point are you house poor?

House poor is when housing costs consume a large portion of your income, making it difficult to afford other things. For example, if your mortgage payments and property taxes consume more than 30% of your monthly income, you are probably house poor.

How much of a house can I afford if I make 70000?

If you make $70,000 a year, you can afford a house that costs about $200,000.

How much of your income should go to a mortgage?

If you’re buying a home, the mortgage payment is one of your biggest expenses. Make sure it doesn’t take up too much of your income.

Mortgage payments should be less than 30% of your monthly income. That way, you’ll have money for other things, like taxes and utilities.


Avoiding house poor is a matter of planning, living within your means, and knowing how much you can afford. The key to avoiding being house poor is to start saving for your home loan as soon as possible.

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