GRAND RAPIDS TOWNSHIP, Mich. — If you thought the price of eggs were high, try buying a house.
In the United States, the median household in 2023 made a little more than $80,000, according to the US Census Bureau. So, how should this family budget to buy a home in West Michigan, where the average sale price in 2024 was $381,039?
"Do the math," says Roger David. "What is my income and what are my expenses?"
The senior financial consultant at Rinvelt & David, LLC in Grand Rapids Township says budgeting to buy a home is about meeting your goals without sacrificing your lifestyle.
"You might want to own the home, but do you want to give up everything for home ownership? Probably not," he said.
Rather than going "cold turkey" on certain spending habits in order to save up, David recommends living life a little differently.
"Instead of flying on vacation, maybe drive. Instead of going to the fancy restaurant and dropping a lot of money, maybe go to some place that's not quite as expensive," he said.
So, once you've "done the math" and have possibly made changes so you can safely become a buyer, a more affordable mortgage can be attained through a 20% down payment. While financial planners typically say housing costs should amount to no more than 28% of your annual income, David says this percentage is not always so simple.
"That, to me, is a little high," he said, referencing taxes, utilities and other costs associated with home ownership. "You really need to look at your specific situation... to make sure [you] can afford the house in its entirety."
Affording retirement is important, too, but David says it's not such a bad idea to temporarily move it to the back burner — putting less money into your 401k by contributing only enough to meet your employer's match — so you can crank up the heat on purchasing a house.
"It's a balancing act," he said.
Finally, the financial consultant recommends maintaining an emergency reserve fund of six months worth of living expenses.
"Remain disciplined," he said. "Find different ways to do the things that you love and still accomplish some of these larger financial goals."
The other half of Rinvelt and David, Jake Rinvelt recently bought a home with his wife in Lowell.
"I always thought to myself, 'Wow, it would be great to live there," he said, speaking about his childhood in the Cascade and Ada area. "But then you start to see the home prices and how expensive they are."
Living in Lowell, Rinvelt finessed his housing situation to fit his finances. It was his path to affordability. A path others can follow.
"Lowell, Kentwood, some of these areas are still in Grand Rapids, but maybe a bit more favorable from a pricing perspective," Rinvelt said. "For us, it is the best of both worlds."
Roger David and Jake Rinvelt co-host a podcast called Life and Finances Together. You can listen to the latest episodes here.
