What is House Poor? What it Means + How to Fix It (Expert Tips)

David Domzalski was just beginning to process the ultrasound images of his first son when his wife told him that she wanted to be a stay-at-home mom.

This meant becoming a one-income house, and that meant their debts would take longer to pay off.

It also meant the young family would soon be house poor.

House poor means that the majority of your income is going towards your home’s mortgage, utilities, repairs, etc. — leaving little money for other expenses such as the phone bill, groceries, and, well, everything else.

You might be rolling your eyes right now and saying to yourself, “You gotta be kidding me! Why would anyone put themselves in such a bad financial situation for a house? That’s ridiculous!”

It’s not that simple.

Being house poor is like being in a crappy relationship. It’s so easy to judge and scoff at things like, “Ugh they are so bad for each other. If they just broke up, they’d be WAY happier.”

But when you’re the one in the relationship, it’s an entirely different story. You’re almost blind to the reality around you. You’re more willing to bury yourself in excuses like:

  • “Maybe things will change if I just keep working hard at it.”
  • “I’m committed. I can’t give up now!”
  • “What if I never find another as good again?”

And sometimes all we see is the picturesque Norman Rockwell version of things when reality is much more painful.

There are a lot of reasons someone ends up house poor. Luckily, there are also a lot of ways one can recover from being house poor. That’s why I talked to two people who have first-hand experience — a college professor who’s currently house poor and a new father who recently got out.

Their insights were haunting, painful, and incredibly revealing — and they shed light on a topic many people would rather not talk about.

But, c’mon, this is IWT. I’m going to talk about it.

The house poor professor who spends half his pay on his home

Shaun / 35 / Utah



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  • Occupation: College professor
  • Current income: $44,000 / year
  • Family: Married, 3 children
  • Wife’s income: $8,000 / year
  • Purchase price of home: $189,000
    • Mortgage: $1,153/month, 30-year fixed rate
    • Loan after consolidation: $199,000

Shaun is a college professor from a small Utah town. He and his family had been renting a home for a few years before his friend approached him one day with a question: “Do you want a house?”

They found the five-bedroom home attractive and they also received a great deal on the home at $189,000 (in a state where the median price of a home is nearly $300,000).

It all made logical sense to Shaun.

“We figured that we could pay someone else’s mortgage by renting or we could pay our own,” he recalls. “That was a basic thought for me: I can just pay my own [mortgage] and it would put equity towards the house even though it’s a small amount.”

Shaun fell into a trap that many homeowners ensnare themselves in by discounting the phantom costs of owning a home. Soon he’d find himself parting with a considerable slice of his paycheck because of his house.

He adds, “Plus the place where we were staying had just risen their rent … so we went for it.”

And so Shaun bought the house and got a 30-year fixed rate mortgage at 4.125% interest.

“When my wife and I looked at the house, we thought that we weren’t going to get another deal like this,” Shaun says. “It was a brand new home and it was well built. We loved all the little features so we were okay with putting our money there.”

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  • Watch Ramit Sethi host Netflix’s “How to Get Rich” 
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Shaun’s wife also works as a professor. However, she makes $36,000 less than Shaun because she only works part time. Because of this, the family must rely on Shaun’s income to pay off the mortgage. (Luckily, the mortgage is the only big loan the family has as Shaun recently paid off his education loans.)

Unluckily, half of Shaun’s take-home pay goes towards the mortgage. And when half of your salary is fed to the house, that means that you must be a lot more judicious with how you spend your money.

“We have set things we know we have to pay for,” Shaun says. “We’re not the type to scramble to find out how we’re going to pay for things each month. We know exactly what we need to pay for utilities and the mortgage. So we have discretionary spending. It’s just a set amount.”

But still, it’s not easy watching the hit in his pay each month. It means forgoing many different things that Shaun wants to do but cannot because of his financial situation.

“I’d love to be able to pay for my parents’ home,” Shaun says, “contribute to their retirement income, and help family and friends financially when they need it. [Also] I’d like to buy a vehicle for my family that doesn’t require the cramming we currently experience with a baby seat, a toddler chair, and a booster seat all vying for limited space in a compact car.”

He continues, “It’s tough. I look at my paycheck and say, ‘Most of this is a wash. It’s already spoken for!’ Half of it goes towards the house and utilities and all the other things that come with the house. Ramit’s not big on owning a home and I can see why.”

Shaun’s house poor escape plan

To get out of being house poor, Shaun is employing several tactics:

  • Paying more money each month for the mortgage
  • Refinancing the home
  • Earning more money

“We’re going to pay [the mortgage] off a lot faster than what it’s scheduled to be,” he says. “So instead of 30 years it’s at about 18 years.”

Shaun also refinanced the home. If you don’t know what that is, it’s okay. Refinancing is like getting a new loan. It allows the borrower to get a new appraisal on the house and can result in some big wins like a lower interest rate and higher home value.

And that’s exactly what happened for Shaun.

“We got [appraised] for $189,000 originally,” Shaun says. “But with our refinance, it appraises higher now at $250,000. We also got a lower interest rate. It wasn’t a massive change, but it was enough to knock off a few hundred dollars a month.”

He adds, “Luckily, now the house is worth more than what we owe on it so we’re not underwater.”

Shaun also took up another job as a DJ for his local radio station to help offset the cost of the mortgage.

“It’s not a big money maker — just $13 an hour,” he says. “But I love it and it helps with our expenses. It’s a few hundred bucks a month for a few hours. It helps to pay off more principal on the house and helps us get out of it sooner.”

Shaun doesn’t think his family will stay in the home forever — but, for now, he’ll be paying down that mortgage as best he can. Now, let’s take a look at someone who has been in Shaun’s shoes BUT has gotten out of it …

The finance junkie who escaped being house poor

David / 33 / Pennsylvania

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  • Occupation: Auditor
  • Income when house poor: $80,000 / year
  • Family: Married, one child (another on the way)
  • Price of old home: $450,000
    • Mortgage: $2,200/month 30-year fixed (2011 rates)
  • Price of current home: $350,000
    • Mortgage: $1,300/month 30-year fixed (2016 rates)

David Domzalski is an auditor — and also the founder and writer of the blog Run the Money.

So it’s a little ironic that he found himself being house poor despite such a strong background in finances.

“Being house poor was one of the main reasons I wanted to start Run the Money last year,” David says. “It was such a huge experience. It consumed our lives.”

It all started when David and his wife got married and decided to purchase a house in Newtown, Pennsylvania, in 2011. At the time, it seemed perfect. They could both afford it on his salary as an auditor and his wife’s salary as a teacher. Plus, it was in the Philadelphia area where David grew up.

“It was the best house we could afford,” he recalls. “We were so proud of that home — just patting ourselves on the back. We were cocky twenty-somethings and just really excited about it, you know?”

They were young, optimistic, and saw that house as their own quarter-acre slice of the American dream. It wasn’t just a house. It was a badge of honor. Their signal to the world that they had finally made it.

They loved this house.

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David and his family.

“It was our first house together,” he says. “We worked our butts off to save for it. When we got it, it was us signifying to the world that we had arrived. And we really felt like we did it. We had a beautiful street in a beautiful neighborhood. It was everything that we wanted. It was just ours. We felt that we had accomplished something that no one could take away from us.”

After purchasing it, the two moved in and started turning a house into a home — painting the rooms, laying down hardwood floor, and putting in “a lot of blood, sweat, and tears” to make the house truly theirs. You know, everything you see on HGTV.

A few years later, though, David and his wife came to a decision that wound up entrapping the family into an ever-tightening financial vice.

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When two incomes turn to just one

“I’m done. I’m not working anymore.”

That’s what David’s wife told him in March 2015. The two were sitting in their car after just seeing the first ultrasound images of their unborn son.

By this time, his wife switched careers and worked in real estate. She was pulling in a lucrative $175,000 a year while David made $80,000, allowing the two to live comfortably.

But when she saw the first images of her son, she made the decision to stay at home to support her child.

“I just told her, ‘Okay.’ I fully supported my wife being a stay-at-home mom,” David says recalling that fateful moment. “Looking back now, it was definitely the right decision because my son is one of the happiest kids you’ve ever seen. But at the time, it put us in a bind.”

Part of that bind included roughly $30,000 in credit card debt. With a child on the way and the family turning to a single income, there was no way they were going to be able to pay it down anytime soon.

And then there was the mortgage payment for their home. What was once a marker that the couple had “made it” soon became a painful weight on their shoulders.

“We had the credit card debt on top of the $2,200 a month we were paying [for the mortgage],” David says. “I was making only about $80,000 a year. So it was probably close to half our income with just me working.”

Determined to keep the home, the couple began to look for solutions. His wife’s real estate business still had a few deals left, so they were able to take advantage of the extra income. They also refinanced the home twice but the payment was still sitting at $2,200 a month.

“For some people, [$2,200 a month] isn’t a big deal. But for us, it just wasn’t going to work,” he says. “We lived in such an expensive area. It was a place where you have to have two incomes or I had to get a higher paying job that required me to travel to New York every day. And that’s something I just didn’t want to do.”

He adds, “I value the time I have with my family much more than making the ‘big bucks.’”

Unless they did something soon, the young family faced insurmountable debt and even foreclosure.

“I cried.”

David and his wife began to discuss their options — including the possibility of selling their house.

“There were a lot of late nights,” he says. “A lot of car rides where we just discussed it. We knew our situation meant making decisions we didn’t want to make. And we ran the numbers every way you can think of too. We tried every way to keep us in that home and it just wasn’t going to work.”

The two looked at areas where they could cut their spending. They made their budget a priority. They considered cutting luxuries like cable and selling their car.

Meanwhile, the couple ran the numbers constantly, trying to untangle the Gordian knot of their financial debt. It went on this way for months.

His son was eventually born before they came to the only logical conclusion: They had to sell their dream home.

“There was no way we could do it,” David says. “So we kicked off the process of moving out.”

The family put their house on the market and began the search for a new home on the weekends. Throughout it all, the feeling of despair and the ever-present pang of nostalgia were always close by.

“When I realized we had to do this, and I put in for the transfer [at work], and we had the house we loved on the market, I cried,” David recalls. “We loved that house.”

He continues, “On our last night in the house, my wife and I walked to each room and we said all the memories we had for that specific room. It meant that much to us.”

What “adulting” looks like

So the family moved out and stayed with David’s in-laws until they found another home two hours away in Gettysburg, Pennsylvania.

While it isn’t exactly like their former house, the home and neighborhood did provide a number of benefits, including:

  • Lower cost of living. The house they bought ended up being roughly $100,000 less than their old house. The monthly payment is almost $1,000 less as well.
  • Close proximity to his in-laws. David’s wife’s parents live a short drive away from the home, which is fantastic in case of emergencies. “Fortunately, we were able to move to an area where my wife’s parents are just 45 minutes away and we have their help,” he says.
  • Great job benefits. With his job transfer, David was also able to negotiate a pay raise including telecommute days and the occasional Friday off — which means even more time to spend with his son.

After moving into the new home, the couple began to pay down their debt. With his wife taking on a consulting gig and David building out his side hustle in Run the Money, they were able to finally take control of their finances again.

“That’s what ‘adulting’ looks like,” he says. “It’s making decisions and sacrifices like this — and I would do it again.”

The family is almost two years into their new home, and while they miss their old house, they wouldn’t trade their current situation for the world.

“It’s amazing how it all worked out,” he says. “We’ve been really blessed. It was a difficult situation but it goes to show you that sometimes those situations you go through in life are all about taking that leap of faith. We all want things to go well. Sometimes it doesn’t, but for us, it couldn’t have worked out better.”

David adds, “I get to be home with my son and daughter. They get to grow up in a beautiful neighborhood, and it’s all because Mom and Dad made an #adulting decision.”

What to do if you’re house poor

If you’re house poor too, you’re not alone. 44% of Americans are “liquid-asset poor,” according to a study by Prosperity Now Scorecard, a nonprofit dedicated to affecting economic policy change to “rebuild prosperity in America.”

But, as evidenced by Shaun and David, there is hope. While these two homeowners are separated by over 2,000 miles and make different salaries, they both made one key decision to help them stop being house poor: They found ways to earn more money. 

And if you’re house poor, there’s a wealth of systems you can employ to help you earn more today. That’s why I want to offer something to help you out:



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In it, I’ve included my best systems to:

  • Create multiple income streams so you always have a consistent source of revenue.
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Host of Netflix's "How to Get Rich", NYT Bestselling Author & host of the hit I Will Teach You To Be Rich Podcast. For over 20 years, Ramit has been sharing proven strategies to help people like you take control of their money and live a Rich Life.