How to Buy a House You Can Afford to Live a Life You Love

By purchasing a house affordable enough to pay off within three years, the author was able to enjoy life while only working two days per week.

| June/July 1995

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    If you stick with a house you can afford, you can pay it off, then use that extra money to work less.

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One Sunday afternoon while I was mowing my lawn, my neighbor, the meter reader, came out to mow his lawn as well. We happened to turn the corner at the curb and match step as we proceeded down the property line toward the garages. I looked at him as he looked at me, then I looked beyond him to see the row of identical suburban tract houses. It was as if I was between two large mirrors, seeing the endless repetition of my own flaws fade into eternity. I killed the motor and came stumbling inside and cried out "June, oh June, I need to change my life or go in for that frontal lobotomy." My wife replied, "Ward, is that you Ward?

I was sick of making $40,000 a year, yet still feeling the quiet desperation of being broke. I wanted to be the master of my time, and therefore my fate. I wanted to have a three-day weekend every week for family, reading, gardening, painting classes, volunteer work, my spiritual path. I wanted to have this time without sacrificing the basics of a house and cars, as well as enough surplus funds to support a high F.Q. (Fun Quotient) lifestyle of camping, skiing, workshops, and conferences. What's more, I wanted to have integrity in my work life; I did not want to work as a leveraged buyout villain or high-paid hustler of any type. I wanted to work no more than 30 hours per week at my challenging, creative, flexible service job at the charity that was so rewarding and definitely made the world a better place. Oh, and I wanted to flap my arms and fly to the moon, too.

All those goals seemed not only in conflict with each other, but also with reality. This dream was such an impossible dream it made the Man of La Mancha look like an amateur. But, I am writing this article at the end of a 10-year plan that allowed me to meet all of my goals. It took some patience, but I now live well—cheaply—because of this simple, slow plan.

To free myself of the vicious mortgage cycle, I decided to do two things: Change the rules to the real estate game, and change the rules to the car ownership game. These are the causes of the quiet desperation experienced by most working men and women who cannot get ahead because they start out each month in the hole. First, let's talk dream home (next month, I'll take on automobiles).

The Barrier to My Dreams

The rules to the real estate game for people in pursuit of the American dream are: Buy a house on a 30-year note, get the biggest house you can afford by spending 30 percent of your income on the monthly payment. We followed those rules and got the first glimpse of the nightmare behind the American dream when the amortization schedule arrived from the bank as we purchased our first home. After five years of $668 per month payments we were only going to have about $1,000 equity in the house. Multiply $668 times 60 months and you get $40,000. If you subtract the tax savings impact of interest expense deduction of $11,000, it still takes a net output of $29,000 to get $1,000 in equity. AAAAGGGGHHHHH!

That day I started the plan. I bought a house that I could pay for in five years. By that time I could afford a monthly payment of $933 (principal/interest/taxes and insurance) per month. With my $5,000 in savings I began to look for a $45,000 house. According to the realtor's formula I could have afforded a $100,000 house with a 30-year mortgage. I figured that I could live in a dump for a few years to escape the vicious mortgage cycle for the rest of eternity. The logic was to pay off the house in five years, sell it, take the $45,000 equity, then buy the $100,000 house, which would be paid off five years after that.

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