Stupid Tax: Buying a House Before We Were Ready

What's stupid tax? Check out our first installment of stupid tax that we paid on our honeymoon. What's next on the list after you get married? Buy a house, right? That's one of the biggest questions we were asked once we were married: "Are you looking for a house?"

It seemed like the logical next step. Sure, we had more than $30,000 in student loan debt, but that's "good debt," right?

Not exactly. Our student loans were at a pretty good interest rate, but why would we want to owe anyone money? Think of what we could do with an extra $200 in our pockets every month. Instead, we listened to the people that told us we were throwing away our money by renting. Don't get us wrong, we liked the idea, too--but it felt a little rushed.

So we started looking at houses, and when the bank pre-approved us and told us what we could afford, for some reason we thought we could really afford something a little more expensive than that. So we bought a house out of our price range. Just like they always do on the show "House Hunters." Every time we watch that show now we scream "Noooooo!" because we have discovered the truth that owning a home is way more expensive than we expected.

This was probably just us not being very mature at the ages of 22 and 23, but did you know that when you buy a house, you need a lawn mower ($200)? And that a brand new house doesn't come with window coverings ($1,500) or a garage door opener ($500)? These are just a few of the unexpected, never-thought-about things that came up after we bought our house. And since we bought our house, we have not had the money to do some things that we've wanted to do (save money, save for retirement, go on a vacation).

We should be spending 25% or less of our income on our home, but we spend closer to 33%. This allows us to get by, but we feel strangled most of the time, and when we were trying to pay off our debt, it forced me to get a second job so we could gain some momentum.

Now that we are debt-free, we are starting to dream about what we want our lives to look like financially. With our current home, we don't see any of these dreams coming true. So, before we any Kels Jrs. or Ric rugrats running around, we are hoping to sell our house and start over.

Here's Our Plan

  1. Sell our house
  2. Rent an apartment, townhouse or house that allows us to live on my income
  3. Save Kels' income and any extra we can for our next house (we hope to save 50% down in one to two years)
  4. Look for a house that we can fix up and add our own flavor to it
  5. Buy a house with a 15-year mortgage that costs less than 25% of one of our incomes

With this scenario, we'll achieve the dream of financial peace!

We realize this is going to be a very difficult time for us, but we are committed to the dream. The painful lesson we learned from having to pay this stupid tax is that a home is like the church: It's the people, not the building that make it special. We don't need a fancy new home to be happy, we simply need each other.

Who thinks we're crazy?

Update 12/5/12:

Since writing this post, a lot has changed. We had a baby, paid off our second mortgage and decided to stay in our current home for the next few years at least. The principles still apply, we still think we purchased the home way before we were ready but have fought hard to dig ourselves out of the hole we made. We have and updated budget breakdown post that explains our current situation.

Other posts in this series