Underhouse yourself to live more life

I'm with you. I have no idea what in the hell this blog title actually means. But it's exactly what I'm talking about. If you don't push the limits on your budget allocation towards housing, then you will have the freedom to have more interesting life experiences.

Want to experience life? Then you need to get out of your house. Want to get out of your house? Then make sure that your house isn't holding you as a financial prisoner.

Paging Dr. Hypothetical. Dr. Hypothetical, you have a call on line 1:

Let's say that your household income is $75,000. After taxes, healthcare, and other paycheck deductions, you bring in about $4300 per month. Pete the Planner's ideal household budget tells you that you can spend up to 25% of your net income on housing. And in this example that would equal a maximum housing expense of $1,075. What most of us do (and yes, me included) is try to spend as much on housing as we can up to the point of restless nights. Not only does this manufacture undue stress, but it precludes us from spending money on other things. This is true whether you are buying or renting.

What would happen if you only allocated $750 per month to housing? That's 17% of your net income. What would be different? A great deal would be different. And this is because many of us spend MORE than 25% on housing. We spend 30-40% of our net income on housing. This is not only dangerous, but restricts you from living life. For example 35% of a $75,000 gross household income is $1,505 per month. This high payment can prevent vacations, prevent savings, and prevent you from living and enjoying life. Compare that to having a housing expense of $750 per month, and you can quickly see life becomes a bit more fun.

Does this work for everyone? Nope. Could it work for you? Possibly. There is no reason to make yourself house poor. It just doesn't make financial sense. We often justify getting in over our heads by calling a home an investment. Whether it is or not is certainly debatable. You know what else are investments? Investments. But you don't see anyone busting their ass and stressing out in order to invest.

And don't forget that pushing the limits on housing will also force you to spend more on utilities, insurance, and furnishings. That house that you are forcing yourself to afford costs a great deal to fill with stuff.

There will be a time in your life when allocating 25% of your income towards housing will make sense. Until then, live. Go do stuff. Get a passport. Get it stamped. Just be smart about it. You could have awesome vacations and experiences 5-10 times per year if you financially allow yourself to do it. There's nothing wrong with spending money on fun, as long as you do it responsibly.