When I finally reached the peak of the property ladder with my latest home purchase, I didn’t feel the joy I expected, even after five months. Every congratulation on the new home left me cold, mainly because all I could think about was the increased bills. While I was polite and thanked everyone, inside, I was questioning my decision. My family had been perfectly content in our smaller home, so why did I choose to pursue this?
The new home has drained my savings due to unexpected financial demands, leaving me strapped for cash. This financial strain has reintroduced a level of stress I hadn’t felt in over a decade. Now, I’m on a mission to restore my financial independence by 2029.
Despite the lack of increased happiness, I’ve noticed a significant shift in one aspect of my life due to the new house. This change might ultimately prove more valuable than the fleeting happiness I anticipated.
Since owning multiple homes since 2003, I’ve always taken time to reflect on my feelings post-purchase, which helps others prepare psychologically and financially for such a big decision. Documenting these experiences is crucial, not just for crunching numbers but for understanding the emotional impact of home-buying.
Recently, I’ve had to reevaluate my home-buying guidelines based on my experiences. These rules are designed to protect buyers and ensure confidence in their decisions:
1. Spend no more than 30% of your gross income on a mortgage, including all housing-related expenses for a conservative approach.
2. Make a down payment of 20% and keep a 10% buffer in savings.
3. Ensure the price of the home doesn’t exceed 3-5 times your household’s gross annual income.
While I initially suggested following at least two of these rules, I’ve learned that meeting all three is crucial for true satisfaction in a home purchase.
I recently found myself in a tricky situation because, although I adhered to the income-related rules, I lacked the recommended 10% liquidity buffer. This oversight has forced me into a position where any significant unexpected expense could mean serious financial trouble. My focus for the next few years is to rebuild this buffer and avoid any further financial strains.
For those of you aspiring to scale the property ladder without regrets, I strongly recommend adhering strictly to these rules. They’re not just guidelines but shields against potential stress and financial instability.
Additionally, I’ve refined my net worth home-buying guide. Previously, I suggested keeping the cost of your primary residence below 30% of your total net worth. However, my recent experiences have led me to believe that a limit of 25% is more prudent. Staying within this limit ensures less financial stress and better liquidity, allowing you to handle emergencies without drastic measures.
Despite these guidelines, home ownership and moving up the property ladder do not always equate to increased happiness. Known as hedonic adaptation, the initial joy of new purchases fades quickly. Instead of lasting happiness, what remains is a deeper sense of satisfaction—particularly from knowing you’ve made a well-considered decision that secures your family’s comfort and future.
In the end, it might not be about chasing happiness but rather about seeking a life of satisfaction where your home is a sanctuary that supports your life’s best moments, not a source of financial strain.
