Picture this: A young couple has just closed on their dream home. They’re debt-free and have $80,000 in savings. The wife is on maternity leave, and after crunching the numbers, they realize they’ll have just $200 left over each month after paying their bills.
It’s a classic case of being house poor — a financial situation where mortgage payments leave little room for anything else.
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This hypothetical family isn’t really that hypothetical. According to the Bureau of Labor Statistics, U.S. households spent an average of 32.9% of their income on housing in 2023. That’s a significant chunk, but still manageable.
But, if that number creeps closer to 40% — especially with tight cash flow and limited income — it’s time to reassess.
Here are four ways this couple could stay on track financially.
1. Build a bare-bones budget around any surplus
When your financial margin is razor-thin, every dollar counts. The first step? Create a strict budget where every dollar has a job and no money goes to waste.
The couple should:
- Break down fixed expenses like mortgage payments, insurance and utilities.
- Track variable costs including groceries, gas, baby supplies and subscriptions.
- Eliminate non-essentials like takeout, streaming services or unused memberships.
Budgeting apps can help visualize spending and find areas to trim. Even cutting $50 here or $100 there can stretch that $200 into something more sustainable.
2. Treat $80K like a six-month lifeline
Their $80,000 in savings is a huge asset — but it needs to be used wisely.
Here’s a potential breakdown:
- $10,000 Emergency Fund: Set this aside and don’t touch it unless it’s a true emergency, like job loss or a major medical expense.
- $20,000–$30,000 Maternity Leave Cushion: Use this as a buffer for the next six months. That’s roughly $3,300–$5,000 per month to help fill in gaps while they’re living on one income.
- $40,000+ Long-Term Savings: Keep this intact for future goals like investing, education or improvements. Don’t dip into it unless absolutely necessary.
Assigning a purpose to each dollar can help the couple spend confidently without jeopardizing their long-term financial stability.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
3. Find temporary ways to boost cash flow
With one income on hold, now’s the time to get creative. Some short-term strategies include:
- Starting a side hustle — something low-commitment like freelancing, tutoring or delivery apps.
- Selling unused items. Many people have barely-used goods that could bring in extra income.
- Leveraging cash-back items. When used responsibly and paid off in full, rewards cards can stretch everyday spending.
- Delaying major purchases like furniture upgrades, vacations or large discretionary buys until the budget loosens up.
They could also consider adjusting tax withholdings. If they usually receive a large tax refund, reducing withholdings could boost their monthly income.
4. Plan for post-maternity leave finances
This tight stretch won’t last forever.
Once both partners are working again, the couple should shift their focus from surviving to thriving. That means:
- Budgeting for child care now, since it can significantly reduce net income.
- Replenishing any money used from the cushion fund.
- Resuming long-term saving and investments — whether for retirement or their child’s future.
They may also benefit from speaking with a financial advisor to map out a long-term strategy.
If they can get through this tight stretch without touching their emergency fund or long-term savings, they’ll emerge stronger and more financially resilient.
Being house poor doesn’t have to be a life sentence. With disciplined budgeting, a smart savings plan, and short-term income boosts, this couple can navigate the squeeze — and still build the future they’ve dreamed of.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
