Comments on: House Poor

By: Nancy

Nancy — Wed, 17 Feb 2010 22:24:00 +0000

Well Gail, I emailed you before Christmas to get your advice about doing exactly this – getting out of being house poor – you sent me a very brief message saying I knew what I had to do so I DID IT. We sold our money-sucking, mind you gorgeous, home in a week and now we are looking for something half of the price and size. This will pay off all of our debts, mortgage, credit line, give us money for our kids tuition and then some. We haven’t found a house yet and we are being really careful to stay way under budget. It does feel good. I will miss this house but I think I will enjoy peace of mind more. Thanks for your excellent, straight-forward, common-sense money advice.

By: jim

jim — Sat, 23 Jan 2010 09:29:41 +0000

Good stuff here. Can’t wait for more. Keep it up.

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Property Selling Tips That Earn You Profits - The Blog Planet — Sat, 12 Dec 2009 03:30:59 +0000

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¤ Why Toll Free Numbers Make Your Business Look More Professional ¤ — Thu, 10 Dec 2009 02:50:51 +0000

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By: West Coast Lady

West Coast Lady — Sat, 05 Dec 2009 20:13:18 +0000

I find it funny how here, in North America, people take up so much space! In Europe and Asian, people live on a lot less space. I know a couple who kept moving to a bigger house with each child they have! What’s wrong with siblings sharing a room?

Another argument for a smaller space? Kids grow up and move out. Yes, you are going to feel crowded during those teen years but it is temporary.

Having said that, it is tougher for us in the city. If you are want a nice neighbourhood and even if you are willing to accept a small, old fixer-upper, you are paying half a million and then some…and I don’t think we make 50% more than people in rural areas or small towns.

That is the price we pay for living in the city but does explain the house poor phenonmeon. In the big cities, in good areas, housing prices just don’t drop much, not even during this financial crisis. I don’t blame those who take a risk and jump in because chances are, if they don’t jump, they WILL miss the boat. Having said that, living in the city means you have public transportation, probably close to community centres and libraries, access to free festivals, etc. and other ways to live cheaply.

By: Geoff

Geoff — Fri, 04 Dec 2009 15:06:58 +0000

Christine – the days of buying a house in a good area, in disrepair, for a steal… are long over in most major cities in Canada. In Toronto you might get a 50K discount, but that still means writing a cheque for $400,000.

As an aside, if you invested $40,000 the 1st year and received an annual 8% return you’d have a value of around $470,000 after 32 years. If you achieved a 10% return, you’d have $844,000. Yes it might be difficult to achieve that every year, but from 2008 and backwards to ending 1981, there’s been no 30 year period in which the stock market returned less than 8% and many where it returned more than 12%. This doesn’t guarantee future performance, of course.

http://www.milliondollarjourney.com/investing-for-the-long-term-historic-market-data.htm

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Fri, 04 Dec 2009 06:50:48 +0000

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Fri, 04 Dec 2009 03:49:57 +0000

[...] Gail has some tips for not becoming house rich and cash poor. [...]

By: christine tripp

christine tripp — Fri, 04 Dec 2009 02:47:34 +0000

One other reason people end up house poor…. they look for a house that needs nothing, has everything. If you are not willing to buy a house, in a good location, that needs TLC or more… but want a home already worked on past it’s value, then do not think of it as an investment but as a home. Be ready to LIVE in it for a long, long time before it’s value increases.
That’s fine, if that is what one wants but buying a house in disrepare in a great location can be a wonderful investement.
Our home, land value alone, over the last 32 years has increased from $40,000 to $425,000.00 Let alone the work we have done on the house itself which has added to the value. There is no stock out there that could have offered us this return, let alone allowed us to live in it.

By: Risa

Risa — Thu, 03 Dec 2009 23:18:09 +0000

Maureen,

The archives section is a recent addition. Glad to see it there as I had voiced a similar comment about finding older posts to Gail privately a week or so ago. I’ve been very busy with other things, and finally had some space to catch up with her blogposts of recent weeks–and then couldn’t find them! So glad to see an archives button again. Thanks Gail and your computer minions!

By: Maureen

Maureen — Thu, 03 Dec 2009 22:29:16 +0000

Joanne and Christy: Thanks for the suggestions and instructions. Have tried both and they work. I am a bit puzzled about the drop down menu for archives under the recent comments section. I have always had the word “archives” there but no drop down menu – until today. Either I missed it or it was playing hide and seek.

By: Christy

Christy — Thu, 03 Dec 2009 21:02:31 +0000

Re: Older Posts
If you look under the “recent comments” section on the blog home page, you will see a drop down menu for archives. It allows you to search by month as well.

By: joanne

joanne — Thu, 03 Dec 2009 20:12:45 +0000

Maureen; you asked a bit ago how to find older posts. The only way I can find the older posts on the new website is to go to the side bar (on this page) near the top and select the RRS feeds. It will open another window and on the side bar of the new window you can choose this month, last month, etc. You then can scroll down and see the post you are looking for. By using the links at the bottom of the post it will bring you back to the main post and allow you to post to it if you want.

Hope that helps.

By: Maureen

Maureen — Thu, 03 Dec 2009 17:39:00 +0000

@Suzanne: When we bought our first house 30 years ago our bank manager (who I had known since I was a kid) turned us down for the house we fell in love with so we ended up with door number two. At the time I was really angry with him but he did us a favour by keeping us from being house poor. After that every house we bought through our many moves was more than what we should have bought but hey!!!! the bank said we were good for it. We never made a profit on any of the houses we bought. Always seemed to buy in a fast market and ended up having to selling in a slow market. All in all with our moving/transfer/debt lifestyle we should have stuck to renting and banked the difference.

When we moved up here we rented a large two bedroom place with a garden for $600 a month plus utilities. At the time there were a lot of empty rental units so prices were good. There were not many houses for sale but the prices were great compared to the rest of Canada. We bought our small house three years later and it was a great price and a great mortgage rate. We only had a 6% down payment so had to mortgage 94% so we instantly had to pay $600 more a month plus utilities and maintenance. Although we managed to just make it within Gail’s 35% housing budget I still miss the $700 rent and the freedom it gave us. This is the time when we were able to really get our budget together and pay off our debts aggressively.

This time around we were not all that prepared for home ownership – at least NOW I know that thanks to Gail. We should have waited but we did get in on the market right before it skyrocketed. We went through a housing boom up here. Quite literally thousands of new homes built over a 7 year period. All land is owned by the Territory so lots are sold through a lottery and the government determines the price. The prices for houses more than doubled. And they are still building lots of new ones.

I suppose that I am glad that we are home owners and I know that to own your house outright when you retire is a form of security and comfort but…..it is expensive. Houses are an investment and you can make money out of it but you have to sell well or do that stupid thing where you borrow against your equity and the current real estate value. We could make a big profit by selling our house right now but then where would we move to? Could not afford to buy anything new or bigger and the rents have almost tripled up here. If we move south for retirement we will not be mortgage free as the housing prices are so much more down there – unless their market totally collapses while ours stays high.

I guess what I am trying to say is that renting can be comfortable and smart too. I did the math the other day and if we had put the difference between rent and mortgage away taking an average of $400 a month over 30 years (although I know it was way, way more sometimes) we would have just over $400,000 in the bank. None of our houses was ever worth that.

By: Kerry

Kerry — Thu, 03 Dec 2009 13:35:59 +0000

Thanks Jenny, makes sense! I was thinking of RRSP for the investments (still have room leftover from previous years – thats another story). My husband is very mathematical and likes to just compare rates & [expected] returns, but for me there is an emotional side. I think I will feel more comfortable when the mortgage is gone so that is a high priority for me.

Suzanne, I don’t know how much different salaries are in cities like Edmonton, Calgary, Victoria, Ottawa. I’m sure there are a lot of higher salaries but I would have though government jobs for the average person would be similar everywhere. I’m sure cost of living is higher but I don’t know how much more people make. Maybe people just have more debt .