Question: My husband and I are renting an apartment for $1,200 a month. Together, we bring home about $7,000 a month, and we’d really like to buy a house soon. Right now we have about $10,000 in debt on a boat along with ongoing stable bills, food and upkeep for our three horses. What price range of houses should we look at in our situation?
Dave: Homeownership is a great goal, but first you two need to clean up your debt and build an emergency fund of three to six months of expenses. After that, I want you to save up enough for a down payment of at least 10 to 20 percent. When buying a home on a mortgage, I always recommend the monthly payments be no more than 25 percent of your monthly take-home pay on a 15-year, fixed-rate loan.
Now, let’s get to the other issues. You have some things in your life that are pulling at you financially. At some point, you may have to take a long look at the situation and ask the hard question, “What is more important to me: horses and boats or homeownership?” Getting rid of that boat, or finding new homes for one, two or all of your horses, would bring in some cash to put toward your debt and cut down on at least some of the animal maintenance.
Anyway, that’s how I would look at it. My wife and I are big fans of boats and horses. But we like boats more. One reason is because they don’t eat as much! I can’t get mad at you about either one, but right now you have three things pulling at you as financial priorities — homeownership, a boat and three horses. They’re all pulling at you, and they’re pulling at each other and limiting each other.
Of course, you can always buy a lot less in a house. But what it really comes down to is what’s most important to you. That’s the big question, and it’s one that only you can answer.
