How Much for the House?

The biggest expense in most households is housing. So, if you want to balance your budget, if you want to live within your means, it is wise to look over your housing expenses first. If you bring this one under control, you have a much better chance of making your whole budget work.

Financial experts advise you keep "Housing" at 40% of you total income.
I would actually give a slightly different advice to most families: Keep your housing expenses to 40% of the husband's income. This way:

• The wife's income can go to paying off debt or into savings, or just be used for play if there is no debt and savings are at a sufficient level. 
• If either person gets too sick to work, or worse, dies! all expenses are already set at the one-income level. The other party has a much better chance of maintaining the current housing level.
• When God blesses with children, you have the option of one parent staying home with the child instead of sticking them in some institution (daycare). If your housing is figured on two incomes, you will find yourself with no choice but part-time-orphanages for your babies.
• Both Husband and Wife have more freedom for volunteer work or changing careers. 

What does "Housing" include? 

• Rent or mortgage
• Taxes
• Insurance
• Utilities
• Repairs (often forgotten in budgets, but they must be done)
• Maintenance
• Improvements (including replacing appliances as needed. Hubby and I try to replace one appliance a year so that they don't all break down at the same time.)

If you are an older couple (married for a few years or more and already established in a house or apartment), you may need to make some hard decisions here. You may need to consider down-sizing. This is not necessarily a bad thing. Smaller houses are easier to clean and cheaper to heat. There is less maintenance, too. More and more people are intentionally buying the smallest house they can just for these reasons.

And think about it; you are paying for a place where most of your time is spent sleeping.

Really, how much of your space is actually used regularly and how much is more for show and storage? How many hours a week do you work so you have a dining room big enough for your whole family once a year? Would you be better off just renting a banquet room for the family Christmas and working fewer hours the rest of the year, having a stay-at-home mom caring for the children, or just simply not being enslaved to debt?

And if you get rid of anything that you are not using or think is beautiful, you don't need all that storage.

Don't take the Advice of "Professionals"

Real Estate Agents make their living on commission. This means that the more expensive house you buy, the more money they make. They have no interest in you buying something you can afford in the long run.

Banks make their money on the interest for your mortgage. The bigger your loan, the more money they make. And if you end up defaulting on your loan, they just resale your house for an even higher price, so they  don't really have an incentive to advise you to keep you loan affordable.

No, you must do the math yourself and discipline yourself to keep your housing costs at 40% of ONE income.

Now, the truth is, you don't have to follow any percentages I give to the T. In fact, my family spends way less than 40% on housing. God blessed us with a foreclosure house at way below current market value. But because we have such a large family, our grocery bill is astronomically higher than the recommended percentages for food I will talk about in a later post. It is, in fact, our biggest expense. So, our family spends what we save on housing on groceries instead.

That is how percentages work: you adjust them back and forth as needed, but the total MUST be 100%.

So if you want to spend 50% on housing, you must spend less than recommended in another category. If you spend less on housing, you can spend more in other areas.

When it comes right down to it, housing is the biggest, most important decision you will make budget-wise. Do it carefully, and prayerfully.