Last week my family and I signed a lease to rent a house that is $400 CHEAPER than what we were renting. Yes, you read that right. Four hundred dollars less in rent we save. It took a lot of searching, but we are here. Now, we can actually breathe. Are you currently renting a house that is over 30% of your net pay? If you are, you’re house poor. Being house poor is keeping you from being debt free. It sure did for us. Here are 4 ways to find your own Dave house and stop being house poor.
How To Stop Being House Poor And Find A House That Fits Your Budget
Dave Ramsey suggests renting a house that is at 20-25% of your net pay (after taxes). I feel comfortable taking it a step further and renting a house that is 20% of your take home, after taxes and health insurance. But this is not always the case for everyone
In order to stop being house poor, you have to be aware of what your safe zone rental price should be.
In order to know what 20-25% of your take home is, you have you assess your paystubs for a month. Here’s an example, if you get paid bi-weekly, and say your paystubs shows a take home pay of $1,500 you have to multiply it by two, which makes your monthly take home $3,000.
Now that you know what the monthly take home pay is, you multiply it by .20 or .25; 20% of your take home will be $600, 25% of your take home will be $750.
Filter Out Any Places That Are Not In Your Safe Zone Price
Gazelle intensity is that, intense. I’ve heard of families sacrificing their own bedroom to rent an apartment to save on utilities and overall costs. I’ve pitched that to my husband, but he called me a loca and said, “nope, not happening”. We compromised and got a
small cozier house. Our bedrooms are significantly smaller than our last rental, so we gave our daughters the master bedroom and took the smallest room, that only fits our king size bed. Live like no one else, right?
Seeing what your safe zone price is (20-25%), it allows you to filter out searches and perhaps even zip codes. Thankfully, we moved only a mile away, so I’m comfortable with the area, but that may not be your case. I heard an episode on His and Her Money podcast about how a lady moved to the ghetto in order to get out of debt. You do what you have to do, but safety always comes first.
Remember, this is not the time to be thinking about extra bedrooms for “playrooms or offices”, the day will come when you can BUY your house, but it’s not today. Today is about changing your family tree and leaving a legacy. But keep your eyes open, you’ll be shocked at what you can find. I have a house now with a yard, my previous rental, that had me house poor did not even have a yard! (Welcome to living in the city.)
Make Technology Work For You
Two or three months before your lease ends, start price checking. There are so many apps and websites out there that you can enter the bedroom amounts and the “up to” price on each site/app. Here are some of my favorites:
- Craigslist (always use caution, never give out information online)
- Facebook Groups (enter your county + “yardsale” or “rentals” and ask around for so and so bedrooms at so and so price)
- Offer Up (enter “Rentals”)
We found our current site through Trulia, a lot of landlords are beginning to use property managements places. Don’t pass up on a house that is in your safe zone price out of fear of credit scores or neighborhood. Call them and tell them your plan to get out of debt. The biggest thing they look for is evictions.
Now that you’ve found areas that have listings within your price range, write down the numbers for those landlords. Although the houses may be off the market come time when you’re ready to move, you’ll have some contacts to call and see if they have other available units for when you desire to move.
Approach your landlord with the research you’ve done. Ask him if he’d be willing to lower your rent for signing another year lease. Show him what you’ve found. We did this, and the landlord was willing to go down $50 a month, but that wasn’t enough for us. But for you, it may be.
Increase Your Income To Make Your Current Rental Fit Into Your Safe Zone Budget
Fastest way to stop being house poor is to make more money. Mathematically that is correct. But if you’re going to take on an extra job or two, it’s best to use that money towards your emergency fund and getting out of debt. Be realistic, is the house you live in what’s the average for your town/state? Or are you wanting a champagne house on a beer budget….ouch, don’t hate me!
Do the math, how much more would you have to make a month to stop being house poor? If it’s only an extra $100 dollars, consider pet sitting or babysitting a few hours a week.
Want to see a quick walk-through of my Dave house? This was day one. It’s definitely a fixer-upper! But I hope everything works out, and we stay until it’s time to purchase a house.
Stay strong fellow misfits! This debt-free journey is going to be filled with memories, moves, and lots of paperwork. But in the end, it’s about changing our family tree. We’ve got this, you are the secret sauce. Si se puede! Stop being house poor and get gazelle intense. Pack up the house, sell as much as you can and rent in your safe zone price.