A FINANCIAL life coach who makes over six figures has revealed that despite her salary, she can't afford a home in her high-cost-of-living area.
Tawnya Schultz (@tawnyaschultz), a TikToker and personal finance expert, encouraged others to look at homeownership only when they were ready.
The content creator brings in $200,000 living in Lake Tahoe, California, outside of the Bay Area.
That's where she attempted to close a deal on a home last fall — unsuccessfully.
Although she was initially in contract for the $760,000 property, the seller ended up pulling the deal after a hard reconsideration of her eligibility.
"I qualified for up to $600,000 and he was going to loan me the rest so I could afford to buy the home… he just decided that wasn't smart of him to do," she said.
The 41-year-old instead continues to rent, coughing up $1,700 a month for her part in a four-bedroom place a few miles outside of the Bay Area.
"It's really good for this area. I have a good relationship with the landlord so she hasn't raised it on me," she said.
Tawnya admitted that at moments during her search, she felt discouraged seeing the interest rates on homes around San Francisco.
"Growing up, you think when you reach six figures, you'll be able to do all of these things you thought you'd be able to do," she said.
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"The reality of that is, in the last three to four years with Covid, the prices on houses went insane so now you need to save to have more of a down payment."
The expert explained that on top of issues arising from the pandemic, it was already typically much harder for millennials and Gen Z to purchase homes compared to older generations.
According to the U.S. Census Bureau, the median home cost $11,900 in 1960, with the median income at $5,600, indicating a price-to-income ratio of 2:1.
The gap has widened dramatically over the decades, with the median cost of homes in 2019 at $240,500, while the median income was only at $68,703, a price-to-income ratio of 3:5.
Not only that, but the price-to-income ratio fluctuated wildly depending on the area you lived in, Tawnya said.
Although it had been a few years since she made an income over six figures, the coach explained that at one point, she was still considered low-income in California.
According to a report released by the California Department of Housing and Community, if a single person earns $104,400 or less, they are considered to be low-income.
Despite her failed home purchase, the finance coach said she was in no rush to jump right back on the market for a home.
"My goal right now is to save another $50,000 to $75,000 in the next year or two and hopefully interest rates will come down that time too," she said.
For prospective homeowners, the coach highly recommended taking steps to ensure financial stability in order to avoid being house-poor.
"Some people, 50 percent of their income is their house payment, that can make you house-poor really quickly," she said.
On top of saving, Tawnya explained paying off consumer debts such as credit and student loans, and having realistic expectations about what you can afford, were critical.
Not only that, the coach urged prospectives to make sure they set aside funds for fees and home repairs that often go under the radar.
"Knowing all the costs, like having homeowners' insurance, HOA fees, know all of those things in advance because those are all extra things that come on top of that," she advised.
While Tawnya isn't in the market for a home anytime soon, she explained she was more than content to keep renting in the meantime.
"I promote that it's OK to still rent until you're fully ready and have the money saved," she said.
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"Renting isn't throwing your money away, renting is an investment in your future self.
"And until you really know where you want to live, owning a home might not be the right decision for you right now."
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