That One Time We Bought a House that We Couldn’t Afford

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The truth of the matter is that if we are being honest, we knew we purchased too much home before they could tack the “SOLD!” tag onto the sign in front of the new home. However in practical terms it took us about 7 months to fully comprehend.

Starting Credit Card Debt (01.01.19): $126,310.77
Current Credit Card Debt: $109,570.87
Total Paid Off: $16,739.90
Income Going to Savings: 2%

My wife and I bought a house in June of 2018. We actually bought our 3rd home to be exact. Now before you think I’m some well-to-do, let me tell you a bit about my first two houses…

Our first home was a very modest rambler that was located just a stone’s throw from a Federal Correctional Institution, or in other words… a prison. It was close enough to our home that we could hear the prisoners playing softball on warm summer evenings, and I often took advantage of the way the yard lights illuminated my darkened house to navigate to the bathroom in the middle of the night.

Long before “Orange is the New Black” made prisons chic and hip, people would often asked us, “Aren’t you worried about living that close to a prison? What if someone breaks out?”

My response was always that if someone was going to break out, they sure as hell weren’t going head to the modest rambler a few blocks away and hang out for a month. At most they were going to steal one of our cars to get as far away as possible as quickly as possible.

When we moved into that home, we had a nice retired couple living on one side of us and a young family on the other. Across from us were some well maintained and relatively new duplex apartments, and all of this combined to make our dead-end street a pretty great place for a first home.

Within 3 years however, the retired couple moved to Arizona and sold their home to a rental agency. That agency in turn rented the home to a man who (get this) worked on race cars that he raced at the local race track on weekends. Apparently when you work on race cars, it requires that you rev them up to deafening volumes at all hours of the morning and night, usually while blaring Megadeth or Iron Maiden.

Within a month of this happening, the married couple with the kids on the other side got a divorce, and things went really sideways for the dad. The mom moved out, leaving the teenage kids behind, and the dad began drinking heavily. I know this because he offered to drink with me at least 5 times a week. His 15 year-old son held parties almost every weekend, usually with dad partaking, and we had the pleasure of catching young men standing on his roof peeing on to our roof next door on more than one occasion.

Yup… you read that correctly.

The duplexes across the street also fell into a state of disrepair in that time, and all of this coupled with finding the plunger on our front lawn made us realize it was time to go.

Luckily for us we sold at the exact right time, at the height of the housing bubble in 2006. We got a huge chunk of money above what we originally paid that we were able to put down on our next house, which was 5 years old and in a brand new community on the other side of town.

The problem is that the housing bubble completely burst in 2008, and like so many other families, it put us upside down for many years. Not that we would have wanted to sell, but knowing we were that far in the hole was scary for a long time. Eventually prices somewhat recovered and we got our money back, and we figured it was the right time to sell.

Oh… and we had a real-life “Weeds” house just down the street from us.

My wife and I are both from the same small rural town, and one thing we hold a lot of value in is having room for our kids to be kids. My wife grew up on 10 acres, and I grew up on well over 100. We rode ATVs and snowmobiles, and explored and fished all of the creeks and streams in the area. With our son being 10, we knew time was limited in getting that land for them to goof around on.

As we set out to look, we had a budget in mind and had worked with our Agent to arrive on a number we all felt good about. Six months of looking later, we realized that we weren’t going to get any land for what we wanted to pay. The most we were going to get was a half acre in a neighborhood similar to the one we were already in. In order for us to get the kind of home we truly wanted, we were going to have to increase our budget by around $200,000!

Now most people in our situation would have stopped right there and said, “Well then, let’s pay off some debt. Let’s really attack some of our bills and get things paid off so that we can comfortably afford the substantial increase in mortgage. Then in a year we’ll come back with this new price point in mind and find the home of our dreams.”

Except we aren’t most people.

Nope… we headed out the next day and started looking at our new price point. We didn’t have a dime in savings and here we were setting out to buy a home far beyond the price point we had established as our “comfortable” mark.

Turns out when you throw in an extra $200,000 to your budget, you find a lot more houses. We found one within a month, put in an offer (despite raised eyebrows from family, friends, and even our Agent), and closed on our current house in June of last year.

Go ahead… ask me how long it took us to realize we bought a home that we couldn’t afford.

The truth of the matter is that if we are being honest, we knew we purchased too much home before they could tack the “SOLD!” tag onto the sign in front of the new home. However in practical terms it took us about 7 months to fully comprehend.

7 months brought us to this past January when the poop hit the fan.

I don’t resent buying the house. It has caused an incredible amount of stress for me and my family, but it’s also a fantastic house that has given our kids the space we so desperately wanted them to have. We have deer in our yard almost every morning, my daughter had two wild “pet” skinks that she found in the woods and raised last year, we adopted and nursed a baby bunny to health and then released him back, and my son and I jog around our beautiful community several times each week. As I look into my backyard while typing this, I see my daughter out with 3 of her friends in a tent that overlooks our land, where they have spent the last two days gathering flowers and hunting for frogs and other little critters.

That’s not to say I’m summing this entire blog post up by saying, “Eff it! I’d do it all again!” I certainly would not. I would do that thing that we should have done where we paid some stuff off and purchased a home we could actually afford when we could actually afford it.

As I’ve chronicled in previous posts, we’re probably going to survive our financial crisis by the hair on a frog’s butthole (thanks again for that saying, Grandpa), and that crisis was brought on in no small part by the decision to purchase our house on top of all of our pre-existing dumb financial choices. Learn from our mistakes, and make sure to purchase a home you can comfortably afford. Do your research, and above all else, heed the advice of experienced people when they tell you just how much home you can afford.

Even if it happens to be three blocks from a prison.

If you’ve got thoughts about this post or any other post on Digging Out, I’d love to hear from you! Leave me a comment below the post, or send me an email via my Contact Page . If you like what you’re reading on Digging Out, and think others would enjoy the blog, please share the page with them and subscribe. Thank you!

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