The Money Pit – Avoiding the Perils of Being House Poor
A good financial planner can help those in the residential real estate market to sort through their best available options. Here’s how.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Home ownership for some is the ultimate statement that they have made it in life. And for many, it also represents a significant portion of their net worth. It’s an asset that can become an appreciating investment--or a financial albatross around their neck. This is not a discussion about whether to buy or rent, where you should live, or what a home is really worth. Instead I want to help you look at something often overlooked: what to do with your home when a family is growing or when two families combine into one household through marriage.
Here’s our example: A young couple has just recently married. He owns a large house, she a smaller one. They have five kids between them. Their initial thought is to sell both homes and buy a brand-new, bigger house customized to their liking. They also consider buying an older home, and just fix up the parts inside that are most important to them to make it fit their new lifestyle. Or is there another option? What should they do? What makes the most financial sense in this scenario?
As financial professionals, our real value to clients goes beyond investment recommendations; it is uncovering the questions that are often overlooked. We asked this couple if they might consider keeping the bigger house and selling the smaller one.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
They could put the proceeds from the sale of the smaller home toward upgrading the kitchen in the home they kept. Result: they can create the dream kitchen they saw in that new custom home. And with the bigger home they keep, there aren’t many unknowns with regards to upgrading or repairing the infrastructure (no bathtub falling through the floor).
The biggest unknown to this couple is what does a household of seven (parents and the five kids) really cost to run? A new budget needs to be planned, and proper allocation towards their education and retirement goals need to be assessed. Your own solution may have been different, but ultimately our goal as financial planners should be to give a family peace of mind and give them a life to enjoy on their new journey without felling trapped in their home.
Kevin Kaplan is a partner at Silicon Hills Wealth Management in Austin, Texas. He is passionate about photography, travel, pizza and live music.
-
The Cost of Leaving Your Money in a Low-Rate AccountWhy parking your cash in low-yield accounts could be costing you, and smarter alternatives that preserve liquidity while boosting returns.
-
I want to sell our beach house to retire now, but my wife wants to keep it.I want to sell the $610K vacation home and retire now, but my wife envisions a beach retirement in 8 years. We asked financial advisers to weigh in.
-
How to Add a Pet Trust to Your Estate PlanAdding a pet trust to your estate plan can ensure your pets are properly looked after when you're no longer able to care for them. This is how to go about it.
-
This Is How You Can Land a Job You'll Love"Work How You Are Wired" leads job seekers on a journey of self-discovery that could help them snag the job of their dreams.
-
2026's Tax Trifecta: The Rural OZ Bonus and Your Month-by-Month Execution CalendarReal estate investors can triple their tax step-up with rural opportunity zones this year. This month-by-month action plan will ensure you meet the deadlines.
-
Have You Aligned Your Tax Strategy With These 5 OBBBA Changes?Individuals and businesses should work closely with their financial advisers to refine tax strategies this season in light of these five OBBBA changes.
-
A Financial Plan Is a Living Document: Is Yours Still Breathing?If you've made a financial plan, congratulations, but have you reviewed it recently? Here are six reasons why your plan needs regular TLC.
-
Your Guide to Financial Stability as a Military Spouse, Courtesy of a Financial PlannerThese practical resources and benefits can help military spouses with managing a budget, tax and retirement planning, as well as supporting their own career
-
3 Steps to Keep Your Digital Data Safe, Courtesy of a Financial PlannerAs data breaches and cyberattacks increase, it's vital to maintain good data hygiene and reduce your personal information footprint. Find out how.
-
Here's Why You Can Afford to Ignore College Sticker PricesCollege tuition fees can seem prohibitive, but don't let advertised prices stop you from applying. Instead, focus on net costs after grants and scholarships.
-
'You Owe Me a Refund': Readers Report Challenging Their Attorneys' BillsThe article about lawyers billing clients for hours of work that AI did in seconds generated quite a response. One law firm even called a staff meeting.
