Owning a home can be a great blessing, but it can also be a great burden. There are many advantages to owning a home like building equity, the freedom to customize it, and various tax advantages. But, homes are not cheap and they come laden with expenses. You have homeowner’s insurance, property taxes, home maintenance, home improvements, and the list goes on. Some people buy homes at the wrong time in their life or they buy too much house than they could afford. When this happens, homes can be a real burden and so much that selling it may be the only option to getting ahead with your finances. Here are three signs to help you know when the house is the root of your financial problems.
Sign #1: When your monthly payment is 50% or more of your take-home pay.
If you bring in $4,000 a month and your mortgage payment is $2,000, you’re going to have a really hard time paying all of your bills and necessities, especially if you have a family to support. You might be able to make it work for a short amount of time, but it will catch up with you.
Sign #2: You can’t afford the utility bills and/or home maintenance bills
If you bought a house without an emergency fund, then one emergency like the water heater bursting would force you to pull out a credit card and get into debt. Buying a home means that you have enough money to take care of it. Also, you need to remember that the utility bills go up significantly, because your maintaining a larger area, you have grass to water, and many cities now charge for trash pick-up and stormwater drainage fees.
Sign #3: You cannot get ahead or achieve your financial goals.
If most of your income is going to your house, then you won’t have anything left over to pay down debt, invest for retirement, save for kid’s college, or pile up cash for other large purchases. If you find that it’s hard to achieve these goals and you have nothing left over at the end of the month, then you either have a mortgage payment that’s too high or your spending habits are out of control.
If all three of these signs apply to you, then you need to seriously consider selling your home. It has become a financial burden, and you’ll never get ahead with money if you keep the home. Your home should be the last resort. If the payment is in line with your income and it doesn’t cost too much to maintain, then find every other alternative to achieve your goals. But if you find that nothing is working, then it usually means that the house is the problem and you need to dump it.