- Income: $90k/year (me). Take-home: ~$4,800/mo.
- Assets
- Shared Savings: $62,000
- Personal Savings: $20,000 (We each have $10K)
- Checking: $10,000
- $5K in shared for bills and expenses
- $2K in mine
- $3K in hers
- Monthly Expenses:
- $2,450 (Rent: $1,950, Utilities: $295, Phone: $90, Insurance: ~$115).
- Retirement:
- $500/mo to 401k (no match yet)
- I used to contribute to a Roth IRA before my wife was laid off
- Debt: $0. (No car payments, student loans, or CC debt).
My spouse and I are at a crossroads. We live in a moderately expensive area where starter homes are around $350k. We have a 20% down payment ready to go if we wanted, and while our money is currently earning about $300/month in interest in our HYSAs, we’re feeling the pressure of "throwing away" nearly $2k a month on rent. There are also some first time home buyer programs that we would consider taking advantage of (basically zero interest loan paid back at the time of the sale of your home when that day comes).
However, the timing feels precarious. My wife was recently laid off and is looking to pivot careers. I work in advertising, which is a volatile industry, and while I’m stable now, I know I'm not immune to market shifts. On a single $90k income, a $350k house with 20% down feels like it might leave us "house poor" once you factor in taxes, insurance, and the inevitable maintenance costs of homeownership.
Beyond the numbers, there is a psychological element. Both of us are deeply dissatisfied with our current corporate paths and often talk about starting a small business in our community. We recognize this is risky, but we worry that locking ourselves into a mortgage right now will effectively kill that dream by forcing us to stay in jobs we dislike just to service the debt.
We are struggling to decide if we should strike now while we have the cash, or if we are doing the right thing by staying liquid. Is the flexibility of $95k in cash worth the cost of renting during a career transition, or are we being too paranoid about the risks? We have no kids (just a dog) and don't plan on any, so our lifestyle is flexible, but the "American Dream" of homeownership is starting to feel like a potential anchor.
$90k Income, $95k in HYSA, Wife Recently Laid Off. Should we buy a house or keep saving
byu/Far_Prize7787 inpersonalfinance
Posted by Far_Prize7787
12 Comments
I would definitely not buy a house and sign on to a bunch of expenses with an unemployed spouse. The down payment, closing costs, and monthly PMI is just the start. Home ownership can be extremely draining to finances. I like the saying that a mortgage is the least you’ll pay on housing every month while rent is the most you’ll pay.
Don’t buy a house until you are both settled into stable jobs.
>>> we’re feeling the pressure of “throwing away” nearly $2k a month on rent
You’re not throwing anything away. You’re paying for housing. Remember that a mortgage is the least you’ll pay on housing every month, a rent is the most. There are a lot of associated expenses that come with home ownership.
Wait until you’re both employed to get a house.
What if you need to move for work? Don’t buy a house until you are fairly certain what the next 5 years looks like.
If your wife is currently unemployed then you would have to be able to qualify for a mortgage solely based on your income.
If that works for you and you are confident the wife can find a job in a reasonable time period, then move forward with buying the house.
Otherwise you will have to wait.
First – no you should not lock in a huge, irreversible purchase with ongoing financial requirements while one of you is out of work.
Second – I don’t know your financing situation but you’re unlikely to get pre-approval without both of you working. Even when she gets a new job you will probably need to wait.
I think the most interesting thing about your post is you’re wondering if you should buy a house because you’re risk averse, and talk about starting your own business which is the most risky thing in the world. You are saying the average house cost $350k. What do you need to spend that amount? Could you find a house that satisfies your needs for $300 or 250? If you were wouldn’t having a fixed monthly cost that you can swing now on one income be the least risky thing you can do? Just food for thought.
If you can get a mortgage with a lower monthly rate(and reasonable interest rate/term) than you’re paying in rent then I’d consider it, otherwise it’s fine to wait to be in a better position.
Rent is the max you pay for a place.
Mortgage is the minimum you will pay. Average I think its only about half (dont quote me, going off memory).
Throw in that currently most houses are a bad buy… (youd financially make more by keeping renting and investing the entirety of the difference).
The idea that you are “wasting” money on rent is at its basis dumb and feels like housing propaganda. Living in an apartment is so convenient, living in a house strips you of that totally not to mention a 30 year bill that you pay more for than the actual price of the house that was listed.
A bank would look more favorably on lending a mortgage for a household with two income streams versus one. Keep your savings liquid until she’s employed again because if you ALSO get laid off, you can’t sell your kitchen to help pay your bills. You need cash reserves, especially if you want to start a business.
Renting is not throwing money away. Just like you need groceries to survive — despite them “disappearing” every month, you need housing.
As a homeowner, the same saving for downpayment practices we developed while renting were needed to save for eventual home repairs.
Wait till both earning and saving, then decide if home buying is the right choice.