The Personal Finance Podcast - How Much House Can You Actually Afford (By Income!)

Episode Date: April 19, 2023

In this episode of the Personal Finance Podcast, we're gonna talk about how much house you can afford by income. How Andrew Can Help You:  Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel!  Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Thanks to Ka’Chava For Sponsoring the show! Go to kachava.com/pfp and get 10% off on your first order.  Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Policygenius: This is where I got my term life insurance. Policygenius is made so easy. To get your term policy go to policygenius.com and make sure your loved ones are safe. Hello Fresh: Check out Hello Fresh www.hellofresh.com/pfp50 and use promo code PFP50 for 50% off your first order and free shipping!  Links Mentioned in This Episode:  The Stairway to Wealth (Where to Put Your Money In Order!) The Stairway to Wealth 2.0 (The Order You Should Put Your Money in!) Buy VS. Rent: Is Buying a House a Good Investment? 4 Online Side-Hustles That Can Turn into $1M Businesses!  Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. On this episode of the personal finance podcast, we're going to talk about how much house you can afford by income. Thanks, everybody, and welcome to the personal finance podcast. I'm your host, Andrew founder of mastermoney.com. And today on the personal finance podcast, we're going to be talking about how much house you can afford by income. If you guys have any questions, make sure you hit us up on Instagram or Twitter at Master Money Co.

And follow us on Spotify, Apple Podcast, or whatever podcast. You're listening to this podcast on right now. And if you want to help out the show, leave a five-star rating and review on Apple Podcasts or Spotify. I cannot thank you guys enough for leaving those five-star ratings and reviews. They truly mean the world to me. And make sure you are checking us out on Master Money on YouTube. We are creating now two videos every single week and we are creating fresh content for you guys. And some of the recent videos coming out are going to be 13 Roth IRA mistakes that you need to avoid.

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So really excited for that as well. make sure you check that out today. Now in this episode, we are going to go through the home buying process and how much home you can afford. I'm going to give you the step-by-step guide on how to figure out the calculations to get to the point where you understand how much home you can afford. But in addition, I'm going to talk through how do lenders figure out how much you're approved for and some of the things that you need to avoid when lenders approve you. I'm going to give you how much house you can afford by income and we're going to go through seven or eight different incomes to show you some examples of how much house you can afford by income.

Then we're going to talk about what level of the stairway to wealth does buying a house fit into because this is a big question that we get a lot. So I want to make sure that we clarify where that falls in with the stairway to wealth. And if you're not familiar with the stairway to wealth, it is our order of operations when it comes to building your wealth and building generational wealth. So any wealth builder out there, it's the order of operations to learn how to do that. And we're going to talk about things to consider when buying a house on this episode, including the biggest housing myths that you want to avoid. And I want you to ingrain some of those into your brain. So if that's something you're interested in, let's get into it. All right. So off the

top, the first thing I want to talk through is how lenders figure out if you're approved. Because this is a massive misconception for folks who do not understand how this process works and they think a lender approved them. So that's how much house they can afford. I want you to a avoid that at all cost. In fact, I want you to look at a lender and the amount that they approve you for, I want you to understand it is not even remotely close to how much house you can afford. For example, when my wife and I built our recent house, we had to go get pre-approved for a specific loan so that we could build the house. And when we are pre-approved, we were approved for an amount that was absolutely way too much for the amount of house that we were willing to actually pay.

And so you have to understand how to identify that fine line. So here's exactly how lenders figure out if you're going to be approved. When you apply for a mortgage, lenders are going to usually look at something called your debt to income ratio. And sometimes they call this the DTI and abbreviation. And this is your total monthly debt payments divided by your gross monthly income. Now, gross is before tax. It's your gross monthly income written as a percentage. So that's going to be your debt to income ratio. Now, how do they figure this out? Lenders usually use something called a 2836 rule as a healthy sign of debt to income ratio. meaning that you will not spend more than 28% of your gross monthly income on mortgage payments.

So gross meaning before tax, you will not spend more than 28% of that income on mortgage payments or more than 36% of your income on total debt payments. So total debt payments meaning your mortgage and this also includes student loans, car loans, credit card debt, all those different things. So for example, if you have a ton of debt, then the amount that you're going to be approved for is actually going to go down across the board because they do not believe in you being able to afford a mortgage and all these debt payments as well, which is a good thing for both sides. It's a good thing for you and it's a good thing for the lender as well that they take into

consideration what your other debts are. Now, if your debt to income ratio is outside of the 2836 rule, then some lenders may approve you for a loan. And this is how we got in trouble in 2007 and 2008, where too many a lenders were approving people who did not qualify within this range. but they may charge you a higher interest rate if you are outside of this qualification range. Listen, rule number one, this is actually higher than what I'm going to tell you that you can afford for a house payment. So you need to understand if you are above that, then you cannot afford a house yet. And if you think you can afford a house, then some other expenses outside of this 2836 range

needs to be much lower than the average bear. Because you need to understand that if you buy a house for more than you can afford, you will become completely house poor. and I want you to avoid that at all costs. Why? Because I want you to build generational wealth. And the way to build generational wealth is to reduce your expenses on some of the big items

and don't overpay for some of the big items so that you can ensure that you are putting as many dollars as possible towards wealth building activities. And once you start to do that, you take your extra dollars and put them towards wealth building activities, that means that you can pursue financial freedom. This is the goal. And so the entire goal is to make sure we don't overpay for a house

and we don't buy more house than we can afford. That is what we are talking about here, making sure that you do not buy more house than you can afford. Now, let's dive into the step-by-step guide on how to decide what you can afford. All right, so step one is to figure out what 30% of your net income is. Now, you notice I'm saying net income. This means the amount of money that is on your paycheck

that hits your bank account every single month. So the quick math to do this, if you don't know how to do the math, is take your take-home pay. Whatever your take-home pay is every single month, go into your bank statement, add up how much money hits your account every single month, what your total income is,

and multiply that by 0.30%, because what we're trying to figure out is what 30% of our net income is. Now, why do I want it to be 30% or less of your net income? The reason for this is if you've just spend more than that, you are going to be toting a very fine line on being house poor.

And we do not want that. We just talked about why. because if you are house poor, you are not going to be able to build wealth. Now, if you live in a bigger city and you have lower costs in other areas, maybe like transportation costs, for example, is much lower, then maybe you have to spend a little more, but you have to reduce your costs somewhere else. This has to be a balance.

There's a fine line here, and you have to be able to balance this out. And you may be saying to yourself, well, I can't afford that in this city. Well, the problem there is you don't make enough income then. And we do have an income problem in this country. I understand that because, are rising and incomes truthfully are not rising. And in fact that there are layoffs and all these other things happening shows that. But at the same time, you have to do what is right for you. Otherwise, you're going to be digging yourself into a financial hole that you are not going to be

able to get out of very quickly over time. And the longer you wait to build wealth, the harder it gets. So I want you to understand this as early as you possibly can so that you can get to that point. There's got to be a balance here. Either reduce your costs somewhere else or pay 30% or less of your income. Now, if you are pursuing financial, financial independence and you want to become fire or you want to retire early, then 25% or less or 20% or less on housing costs, because you still want to hit those investment goals. So as long as you're hitting your investment goals and your other expenses are reduced, you're still hitting your investment goals and it goes above 30%, then fine.

If you're hitting those goals, that's what truly matters. But if you're not hitting your investment goals and it is at 30%, or if it's even slightly below 30%, then you need to reduce those housing costs to get to that point. This goes for people who rent as well. 30% or less on housing costs is the number one key that you need to understand because housing, food, transportation are three of the biggest expenses out there. And if you can control those big three, what happens is you really can build generational wealth. Stop focusing on the coffee and start focusing on the things that actually matter when it comes to building wealth. Step two is I want you to utilize something like a mortgage calculator to figure out what your home budget is.

because there are some other things that you have to factor in to make sure that you can afford this home. Most people think it's just the mortgage. That's it. I got to pay the mortgage. But there are other factors such as your insurance, for example. So you're going to have to call up an insurance broker, ask them what it would cost in this price range on average to have a house and how much the insurance is going to cost.

You're going to add that into your total cost. You're going to add in taxes on specific properties. Now, how do you find taxes on properties? So you can search your town and then search properties. appraiser and you're going to figure out what the tax rate is on specific properties in your area. So say, for example, you're looking at a specific neighborhood. My neighborhood, for example, has additional fees called CDD fees because they built a brand new neighborhood. And around here, we have to pay additional fees on top of our taxes. So our taxes are much higher than the average person.

You need to know that before you buy a house. Otherwise, it's going to really eat in to the amount of house that you can buy or you're going to become house poor if you don't understand what the taxes are. So you need to look at what the taxes are for each specific house that you're looking at and factor that into your equation because taxes vary from different locations depending on what's going on in that location. So start to get a good idea of what the taxes would be for the areas that you're looking at when you buy a house so that you have those numbers available. And then lastly, if you are putting less than 20% down on this house, you're going to have what is called PMI. And PNI is mortgage insurance for folks who do not put 20% down. It's just actually.

fees and extra insurance that you have to carry, and it's basically a penalty for not putting 20% down on a property. We'll talk about how much you need to put down on a property, depending on your financial situation a little bit later in this episode. But you need to factor in PMI if you're putting less than 20% down. This also goes into your housing equation. That's step two. Step three is you got to factor in closing costs as well. Most people don't do this. So most people go into buying a house and they maybe think about closing costs, but they don't factor them into the actual total price of the house, which is exactly what you need to be doing. So mortgage calculator could help you do this as well, but you got to cover the most important parts of the home buying

process. Number one is appraisal fees. If you have any appraisal fees associated with the house, maybe you want an appraiser to go out to see how much that house is worth. And if you on the buying side need to pay for that, sometimes the seller pays for it, you can negotiate that, but sometimes the buyer pays for it. So you've got to look at those appraisal fees and see how much that can be. For example, an appraisal can be anywhere from $500 to $2, $200 to $2,000. thousand dollars depending on where you live and the size of the home if you have a much larger home it could be even more home inspections the next one you have to always do a home inspection if you're going to buy a house as your primary residence or any property for that matter if someone's trying

to get you to waive inspection never ever do that i bought and sold dozens of properties in my lifetime and every single time they're going to find certain things that you cannot see a home inspector is three four hundred dollars you can do a seven day inspection period on no matter what house that you buy, but you have to have that inspection period there. Never ever waive your inspection period. Loan origination fees, an additional fee that you got to factor in. Credit reports are more fees that your lender or the title company is going to charge. If there's attorneys involved, you have to make sure you factor in those fees. And obviously, home insurance and property taxes we just talked about. So making sure that you factoring your closing costs in your overall home

budget is a very important thing to do. So you need to make sure that you're looking at right around 4% of the price of the house is right around where you want to be. So if you're buying a $200,000 home and you multiply that by 4%, you're going to get closing costs of $8,000. Yeah, I know it's a lot, but that is right around where it's going to land in many situations, depending on, especially if you're getting a mortgage. If you're getting a mortgage, your closing costs are going to be even higher. Add that to the 20% down that you have to put down and say for a $200,000 house, you're looking at $48,000 that you need to have available in down payment plus close. closing costs. This is a huge factor that you've got to make sure that you put into the cost of buying a

house. Now, some other things that you've got to consider on step four is you've got to consider home ownership costs. This is very important. And it's one that a lot of people don't see some of what we call invisible costs when you go and buy a house. There are tons of invisible costs when you buy a house. And a lot of people realize it later on. In fact, an article just came out that 90% of homeowners did not realize how much a home would cost because of invisible costs. This is something you got to know this up front. So what I'm going to do is I'm going to give you some of these invisible costs that you may see on average.

And then you've got to figure out in my specific area because this is very location dependent. What would this actually cost for the houses that I'm looking at? So one thing to consider first is utilities. Now when it comes to utilities, if you have an older house, your utility bill is going to be higher because it's much harder to heat and it's much harder to cool house when it's older if it doesn't have the proper insulation and other pieces inside of that house. So when you are looking at a house, consider the age because the utilities are going to be very, very different. For example, I had a three-bedroom, two-bathroom house as our starter house

that was 1,200 square feet. And in that 1,200 square foot house, I paid more in utilities than my brand-new house now, which is three times the size. Why? Because my brand-new house had proper insulation, it had the proper things in place. My older house, which was much smaller, significantly smaller, which means less room had to be cooled and heated, but it still cost me more because my AC had to run harder and it was not as efficient as my new house that had all the modern technologies and all these different things. So you got to factor in that timeline when it comes to utilities. So do you have electric? You got to factor in water. You got to factor in gas, trash. Those four things are going to be things that you really need to think through how much is this

going to cost me because if you're off on this, you could be off $3,400, that's $36 to $4,800 per year that you're off that you're going to be having to pay out of pocket. And it can really change the amount of money that you can afford for a house. Next, you want to consider maintenance and repairs. This is the big one that most people do not realize how much is going to cost. Again, age of house matters. So if you have an older house, there's going to be more maintenance and repairs on that house. And if you have a younger house. Now, one thing to consider first is CAPX or capital expenditures. What does that mean? That is a thing that we use when we invest in rental properties to look at things like the roof. When does that need to be replaced? Most roofs last for 20 to 40 years depending on what type of roof it is.

So how much life is left in that roof, your inspector is going to be able to tell you that, your AC unit. How much life is left in that AC unit? Look at the plumbing. Do you have very old plumbing? I used to own a property, a duplex that was built in 1957. It had metal pipes in all the metal pipes eroded. I had to pay $3,000 to line those pipes. And that was costs I did not anticipate having. you need to have an inspector looking at plumbing as well to make sure you know what type of pipes are down there, especially if it's an old house. If it's an old house, you've got to check that out. Make sure you understand those costs. In addition, how much is it going to cost you for landscaping services? Are you going to mow the lawn on your own? Or are you going to have somebody else come out? What does that cost to

for maintenance costs? Like having your AC unit tuned up every single year, HVAC tuned up every single year. You got to think through all of these things. So one thing I would do if you are brand new to buying a house, as I would Google, hey, what are the things that I need to be aware of on the maintenance side of a house? And we'll link up one down below so that you can check it out as well, like a checklist, so you can figure out what those costs are going to be because this goes into your housing cause. This is part of your 30%. Next part, upgrades and additions. How much do you need to pay for upgrades and additions?

My wife and I built a new house, but we still put a bunch of upgrades and additions inside that house after it was built. Why? Because the builder was more expensive than it would be for us to do it on our own. own. So you've got to factor in those costs. If you want to remodel the kitchen, like you're buying a fixer-upper, for example, you got to figure out how much is that going to cost and does that fit into your budget plans? And then step five is if all of this is too much, how do you reduce that housing cost? Well, one way to reduce that housing cost is that you can save for a

bigger down payment. Now, I understand at the time I'm recording this, housing prices are going crazy. So saving for a bigger down payment sounds like a scary thing to do. Why? Because you may be considering, well, are housing prices going to go even higher in the future? Well, none of the of us know if they're going to go higher or lower. I hear people all the time saying they think it's going to go higher for the next 10 years. They think it's going to go lower for the next 10 years. Nobody knows exactly what's going to happen. But what you need to do is do what's best for you to make sure that you don't overpay for a house. Because a house, we've talked about this before in our Bivers rent episode, which we'll link up down below. But in Bivers rent, I explained to you how a

house is not that great of an asset. In fact, houses on average across the country have appreciated four percent on average over the last 70 years because of these invisible costs. These invisible costs eat into the return of a house. Your primary residence is a subpar asset at best. So making sure that you know that. And if it is not affordable, then you've got to save more for a down payment on a house. Now, first time homebuyers, I am okay with you putting down 5 to 10% or even getting an FHA loan because it's your first house. But if this is your second house, then you need to be putting at least 20% down.

Why? Because you can roll over the equity in the old house into your new house if you need to. So putting 20% down as imperative on your second house. If it's your first house, I understand sometimes it's hard to scoop up that down payment, making this easier, especially in a housing market where it's absolutely crazy. If you can afford the monthly payments on what's going to happen, including maintenance, mortgage, taxes, utilities, all these other things. If those fit into your 30% range, but you can put only 5, 6, 7, 8, 9, 10% down,

then I am completely fine with that if it's your first house. Second house, you are rolling equity in. You need to make sure that you are at least putting 20% down because you already have a property that you own. And those are the steps that you need to think through before you buy a house. Now let's get into how much home you can actually afford. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking

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I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IG Private Wealth.com. Okay, so we just talked about the calculation on how to get to this point to figure out how much house you can afford. But I'm going to give you some examples by income of how much house you can afford as we go through this process. So the formula again, 30% of your net income, how much house can you afford?

So let's say, for example, that you make $4,000 every single month. If you make $4,000 every single month, the range that you can be in is $1,200. So either you're going to have to be in a lower cost of living area, and maybe you're in a state where housing prices are not crazy yet, like Ohio has some areas like this, Alabama has some areas like this. So if you're in a lower cost of living area, then maybe you can fit in that range. If you make $5,000 a month, and this is combined, obviously, with you and your spouse, or whoever lives in your home, if you make $5,000 a month, $1,500 is what you can spend on housing.

$7,000 a month, $2,100 is what you can spend on housing. $10,000 a month is $3,000 on housing. $15,000 a month is $4,500, $20,000 is $6,000, and $25,000 a month is $7,500 is what you can afford. Now, some of these numbers may sound like, especially if you're on the lower end of the spectrum, these may sound like, well, how am I ever going to be able to afford a house? There's a couple of things that you can do when it comes to this. The only things you can do is reduce expenses, which when you don't make a lot of money, reducing expenses a lot of times is not an option because you only have so much that you can cut back,

but if you earn more, you have infinite earning potential. So that is my second suggestion is looking at your earning side. This is why we always talk about earning more income on this podcast is because your earning potential is infinite, but in addition, it solves a lot of problems, especially when you don't make a lot of money. So a couple of ways to earn more income is to negotiate your salary at your job. Look for another job because the average person who job hops makes 15 to 25% more when they find their next job. That's number two. Number three is to find a side hustle that can create an income for you on the Master Money YouTube channel.

We just came out with a video called the four side hustles that can turn into a million dollar business. In that video, I talk about the four different businesses that I absolutely love that you can start as a side hustle and they can turn into a full-time business. So make sure you check out that video because those are the four that I think are awesome right now. Now, what level of the stairway to wealth should you be on in order to afford a house? So some of the steps before buying a house are these. You have to have all high interest debt paid off, meaning that high interest debt needs to be gone. Anything above 6% interest needs to be paid off before you can get to the point where you're buying a house. Unless it's your mortgage payment.

Because if mortgage interest rates are high, but you can still afford a house within that 6% range, then that's a different story. But anything outside of that mortgage above a 6% interest rate needs to be paid off in order to be able to afford a house. If you have credit card debt, you should not be buying a house. If you have a car loan with a 15% interest rate, you should not be buying a house yet. You need to pay off that car loan. Number two is you need to have an emergency fund fully funded in order to buy a house. Why? Because there's a lot of emergencies that happens when you own a house.

And that is on you. It's not on your landlord anymore. That is on you completely. So you need to have at least six months of at least one person. income in your household saved up in an emergency fund because if there's two incomes in your household one person loses their job then you at least have the other income to supplement and you have six months of one person's income available to you and that needs to build up to two months eventually once you build that house but you got to have that six month emergency fund fully funded to make sure

that you have the protection available to you when you buy a house now in my budget line items we have one called home maintenance and we have one called home repair home maintenance is for the regular maintenance every single month that we have, from lawn care to pool care to landscaping that we do. I just put a whole bunch of flowers and stuff in last weekend. And so that came out of home maintenance. Home repair is things that happen that you do not expect. Things like your AC breaks down or you need an electrician to come out to fix some lighting. Those are things that comes out of home repair. So between those two line items, hopefully that helps you with your budget. That's how I separate it in my budget to make sure that I have those available. And then number three is,

you need to be hitting your investment goals before you buy a house because you need to have that funding available. You're hitting those investment goals because if you're not hitting your investment goals, you will never be able to retire. And if you buy a house, it's going to make it even worse. You want to make sure that you can pursue financial freedom and you can afford that before you are buying a house. If you're not able to hit your investment goals that are going to hit you to your retirement number by whatever age you want to retire, then you're going to have to back it up a little bit, figure out and reassess exactly where you need to be hitting those investment goals. So for a lot of people, this could be the Roth IRA level on the stairway to wealth. If you're maxing out that

Roth over the course of 30 years, you're going to have over a million dollars in that account, is that enough for you to retire? That is the question that you have to ask yourself before you hit that point. So if you're at the Roth HSA level and you're maxing those out, then that would be the level that I would start to consider buying a house. Now, let's look at some things to consider before you buy a house. All right, so here are some things I want you to consider before buying a house. And before you buy a house, these considerations are very important to evaluate for your own personal situation, especially when you're talking with a spouse or a partner or anybody else. You've got to make sure that you are talking through some of this stuff before you buy that

house. So as you start to make this decision, make sure you're asking yourself these questions. There are three myths that I want to go through. So the first one is if you're paying rent, you were throwing a money away. So you see that we just talk through how to run the numbers on buying a house. And for a lot of situations, renting may be the better option than buying a house because there are so many costs associated with buying a house that most people do not understand. It's not just your mortgage payment. It is everything else involved in buying a house. Whereas if you're renting a house, your landlord's going to take care of a lot of those

additional expenses because it's baked into your rent costs. And so they will take care of that. So 30% or less on your rent is also the number that you need to be hitting when it comes to making sure that you can still build wealth. So paying rent is not throwing a money away. There's a couple of reasons to pay rent. One, you run the numbers and see renting is a better situation. Number two, if you get more of value out of renting than you do buying, maybe you don't want to deal with all this maintenance stuff.

Maybe you don't want to have to worry about paying for if the roof caves in. You could just call up your landlord and they can handle that. So the two considerations are what value are you getting out of renting? If you're getting a ton of value out of not having to worry about that stuff, that's amazing. And the second consideration, if you run the numbers and you see that renting is a better option, then I would go with renting. Myth number two is that housing prices always go up. It may seem like that right now.

At the time I'm recording this, housing prices have been going up. for over a decade. And so it may seem like that right now, but this is not the case. In fact, it is very normal for housing prices to go down during certain time frames as well, like a recessionary periods. You can look at 2007, 2008, how far they went down. I don't anticipate that happening anytime soon. But what do I know? I don't have a crystal ball. So if you want to make sure that you are going to have a house that is sustainable for you, you got to anticipate living in that house for 10 years. So when you buy that house, you need to make sure that you are willing to live there for 10 years because if the market comes down, you need to stay in that house in order to not go underwater.

Houses go underwater all the time when prices are reduced and you want to make sure that's not you. Number three, buying a house is always a good investment. Because of all these invisible costs that are associated with buying a house, it is not always a good investment. In fact, in a lot of situations, it's not a great investment when it's your primary residence. When it's a rental property or it's for investments, guess what? Your tenant wakes up every single day. your tenant goes to work, they come home to pay down your mortgage. That's a good investment because you're not plowing away money every single month into that house and said your tenant is paying for that, especially if you run the numbers correctly.

What is not a good investment is your primary residence. Your primary residence increases in value at a very small percentage every year. Now, this is coming from someone who's owned a house for over 10 years, and I'm telling you this. And people always argue with me about this. But if you run the numbers and you do the math, your primary residence is not a good investment. Do the math. Byverse rent episode, we talk about this. Make sure you're running the numbers.

You do the math. You can see the increase over time. Now, sure, I have made six figures on buying and selling my own primary residence. I understand that, but I also did it during a up swing in the market. So there are times where buying a house is not always a good investment. It does not always go up. There are invisible costs that are involved. So making sure you run those numbers and just have an educated decision before you go and buy a house. Now, the second thing I want you to consider is making sure that you're buying a house because it fits into what your dream life is. If you've always wanted to own a house and you just want to own a house and that's part of your dream life. That is A-OK.

Listen, don't let anybody else tell you it's not okay to buy a house if you want to buy a house. Just because it's not a good investment, there's a ton of other reasons to buy a house, which are some of the reasons why I bought one. Maybe you want your kids to grow up in a nice area that has good at school districts. Their friends are in that area. You have the scenery of the woods in your background or maybe a lake or an ocean. And it's calming. It makes you happy.

It brings you joy. Guess what? That's a great reason to buy a house. Maybe your aging parents are moving in and you need more space. or you need more space because you have a growing family that's a great reason to buy a house maybe you love to design a house with you and your spouse you want to build a house you've always wanted to build a custom house and you love designing spaces that's a great reason to buy a house because you can make it your own you can do what you want with that house maybe you love

home repair and you love tinkering around in the garage and doing little things to your house that's a great reason to buy a house if that's your passion if that's what you love to do and people love to do stuff like that then that would be a great reason to buy a house you still got to buy it right, but that would be a great reason to buy a house. Or if you just want to, you don't have a good reason, you just want to own a house, more power to you. That is a great reason to buy a house as well, even though you don't have a reason. So thinking through this, making sure you're willing to stay for seven to 10 years, making sure it's 30% or less of your net income. These are two rules that really, if you're willing to do some of these things, you run the

numbers, you do the math, and you figure out it's still a good decision based on what your desires and goals are for your dream life. There is nothing wrong with buying a house. Listen, I don't want to discourage you from buying a house. I want you to make sure that you are running the numbers so that you can buy a house properly so that you can build generational wealth and become financially free for you and your family. Thank you guys so much for listening to this episode. I hope you learned a ton about how to run the numbers on buying a house. If you guys have any questions, make sure you hit us up on Instagram or Twitter at Master Money Co. And follow us on Spotify, Apple Podcast, or whatever podcast player, you're listening to this podcast on right now. And I cannot thank you guys enough for listening.

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