"Nothing in excess is good, even if it's a good thing," she says -- and she adds that homeownership is a good thing.

So are relaxing vacations, delicious restaurant meals, comfortable furniture and sufficient retirement savings. You have to find a balance among all your wants and needs and devote enough money to each.

"For every dollar that you put into a house, that's a dollar that you can't use for other things," Hira says. "Ask yourself: Is this where you want to spend that dollar?"

Some folks who seek debt counseling pay $600 to $700 a month on tricked-out pickup trucks, says Rudy Cavazos, spokesman for Money Management International, which runs debt-counseling services in Arizona, New Mexico, Illinois and Texas. "I think, 'Oh my God, it's a pickup,'" he says. "But they say, 'It's my pride and joy.'"

Don't let your pride and joy turn into a money-munching monster, whether it's a pickup truck or a house. Cavazos's rule of thumb is that the house payment -- principal, interest, taxes and hazard and mortgage insurance -- should add up to 28 percent to 30 percent of take-home pay.

That leaves 70 percent to 72 percent for pickup-truck payments, leisure, savings and all those crazy expenses that renters often don't consider: maintenance, repairs, homeowners association dues, bigger utility bills and lots more.

Leaves and leaks
Financial planner John Sestina says to count on spending double the cost of principal and interest. If you figure the principal and interest on your mortgage will cost $500 a month, "figure that maintenance, taxes, et cetera, will cost another $500 a month," he says.

"The cost of ownership is a major problem that people do not forecast when they're looking into homes," Sestina says. "They have to buy a lawn mower and insurance, and then the roof leaks -- the thousands of things that basically cost double the mortgage."

Sestina, a fee-only financial planner and president of John E. Sestina & Co. in Columbus, Ohio, offers this rule of thumb: Don't buy a house that costs more than 2½ times your salary. That's your current salary, not what you think it will be someday.

Hira agrees that you should borrow based on current earnings, not expected earnings. That raise might not come through. And if it does, "ask yourself what other expenses will come with that position." You might want to upgrade the car, the wardrobe, the retirement plan, the kids' school.

"I certainly don't think people should live under their means," Hira says. "But my question is: What is the upper limit that you can pull out of your pocket today to meet housing and yet meet other demands until your next raise?"

Go ahead and wait
Financial advisers say the house-hunting process should begin with a thorough look at one's financial condition -- everything from credit score to retirement and college savings to life insurance. Are you in control of your spending? Do you need to improve your credit score? Can you handle adding debt on top of what you owe on your credit cards, student loans and auto payments? Do you need to write a will?

Don't buy a house until you are sure you're ready.

"A premature purchase of a house is probably the No. 1 financial stress factor in a person's life," Sestina says. He notes that money troubles are at the root of many divorces.

That point is seconded by Elizabeth Lewin, author and co-author of several books about financial planning, most recently Family Finance: The Essential Guide for Parents.

"Being house poor isn't any fun," Lewin says. "To stretch yourself to the limit, where you're not doing anything else builds up anger between spouses."

Lewin remembers feeling that way in the early 1970s, before her divorce. "The house seemed to gobble up everything, and there wasn't the money for vacations and eating out because we were house poor."

Their financial condition, she says, contributed to the divorce.

Real estate agents rely on commissions, and lenders make more money on bigger loans, so both will encourage house shoppers to spend as much as possible. "People have to stick to their guns," Lewin says. "You can always move up."

-- Posted: July 1, 2003