In a “former financial life” I lived in a situation where my rent was half of my net pay. My net pay is what I put in my pocket after I pay my income taxes via withholding, or self-disciplined savings. Obviously the latter is a better way to live.
Since 50% of my cash was going towards rent alone, I was robbing myself of about 25% of my savings potential. I had no idea I was doing so, because all that mattered was that I had a roof over my head. I also like the amount of space I had, and felt like I needed it.
Being house-poor is probably one of the most common things that I have seen in families over the past few years. When you commit more than 25% of your net pay to rent or mortgage payments (that would include Principal, Interest, Taxes, AND Insurance), you fall on the side of “house-poor,” meaning your house is causing you undue financial stress by preventing you from applying that extra money towards your future, or in most cases, towards debt you have been carrying.
The real problem we are encountering is a bloated American lifestyle where we have been convinced that we “need” things that we really don’t “need” and it’s a tragedy, because the sacrifice now would make for a much more enjoyable future. If you move towards a more frugal lifestyle, sacrifice in ways that are hard to work with, you will become a stronger person.
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