Debt: You Decide

Debt You Decide

Saturday: Debt
Debt is not necessarily bad.  Buying a house with a mortgage means you have debt.  Home ownership is not a bad thing.  Buying a house for more than you can honestly afford (making you “house poor”) is a bad thing.

The trick is you need to decide the level of debt you’re comfortable with.  When you decide based on your knowledge and what you can afford and how you’d like to live, then you’re in charge of your debt.

Here’s an example of how you can be the one making the decision about your level of debt.

When we bought our first house back in 1990, my husband and I met with our bank to figure out how much house we could afford.  The bank told us we could afford a certain mortgage amount (not that we were making very much money) and we decided on a number less than that.  We were both 23-years old at the time, paying off our college loans, and saving for retirement.  We didn’t want to be house poor so we decided on the amount.

Debt You Decide
Our first house (1990), a view from our kitchen into what would become a bathroom.

After we sold our first house in 1995 and moved to Portland, Oregon and started house shopping, we met with our bank to get pre-approved for a mortgage.  Again, we listened to the bankers tell us how much we could afford.  The bank said we could afford a home that cost a certain amount and we looked for a house that cost half that.

Don’t let a bank decide for you.  Just because a financial institution says you can afford something doesn’t mean you should jump in with both feet.  Take a good hard look at your finances and figure out if you can afford something or not.  Don’t let a financial institution make that decision.  That way your debt is your choice.

This post is a part of Women’s Money Week 2012. For more posts about “Debt” see Women’s Money Week 2012.

Sara

Sara, creator of Go Gingham, is passionate about cooking and feeding her family healthy, real food. She's a green enthusiast, too, who loves to grow food organically. Sara loves to travel - especially by trading houses. An avid runner, she can also be found chasing after her chickens in the backyard.

2 Comments


  1. I totally agree! When we made our most recent purchase we had a limit in mind before we talked to the bank. The bank does not know how much we pay for food, gas, clothing, etc. We do. Once we did get around to filling out the paperwork I asked them to exclude my small freelance income when they did their calculations so we could be certain that we could afford the house on my husband’s income alone.

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