How To Survive The Most Dangerous Time After Buying A House

The first year after purchasing a house is the most dangerous and potentially challenging period. This is particularly true for first-time homebuyers who likely stretched their finances to achieve a 10 percent or greater down payment, leaving their liquidity quite thin.

Once you've secured the house, you are inevitably confronted with unknowns that only become apparent after moving in. Despite thorough inspections and contingencies, unexpected issues are bound to arise. Therefore, maintaining a financial buffer is crucial to address unforeseen quirks or maintenance issues.

Beyond home maintenance issues, there are external risks to consider—such as a recession, illness, natural disasters, or job loss—that can put your finances under pressure. The more expensive the home you buy, the more financial stress you’re likely to feel.

During this precarious phase, it’s essential to proactively fortify your financial foundation.

More Stress And Anxiety After Buying A House

I wrote this post because, for six months after buying our latest home in October 2023, I experienced a noticeable spike in stress. If you just bought a home or plan to buy a home in an uncertain environment, you will likely feel more stress than normal too. I'm here to help you get through this difficult time.

Even though we paid all cash and followed my 30/30/3 home-buying guide, the pressure didn’t go away. We still had a hefty annual property tax bill, and because the house is larger, there were more things to maintain and fix.

So far, we’ve managed to cover all the unexpected post-purchase costs through cash flow. There were minor issues like a leaky sink pipe and loose gutters that rattled during fierce storms. But during those first six months, I found myself praying nothing major would happen—like a giant tree splitting the house in half during the next atmospheric river.

What made things more stressful was a wave of capital calls from private funds, which drained what remaining liquidity we had. There was a flurry of venture capital activity in early 2024 as the asset class bounced back, and I was fully committed.

On top of that, selling stocks and Treasury bonds to fund the home purchase meant a reduction in passive income. Since my wife and I are Dual Unemployed Parents, I felt the financial pressure even more acutely.

If you’re feeling more stressed after buying a home, I want you to know this: what you’re experiencing is completely normal. I’ve felt this way to varying degrees after the first year of ownership for every home I’ve ever bought (seven since 2003).

Your #1 goal in the first year of homeownership is SURVIVAL.

How To Survive The Most Dangerous Time After Buying A House

So what are you surviving when I talk about surviving the initial year of homeownership? I'm talking about two main areas of survival:

• Surviving the cost to own your home
• Surviving any potential layoffs, bear markets, or recessions

Buying a home is supposed to improve the quality of your life, not hurt it. Buying an expensive home can absolutely derail your path to financial freedom if you’re not careful. And I will admit for the first two months after purchasing our home, my quality of life got worse due to financial strain.

Here are my thoughts on helping you get through the toughest year of homeownership. After the first year, things should get easier.

How To Survive The Cost Of Owning A House

The first year is the riskiest year because you don't know all the little nuances of your home until after you move in. In addition, you won't really know how your home holds up until after a particularly strong winter.

1) Create a Comprehensive Home Operating Budget

Develop a detailed budget that includes mortgage payments, property taxes, insurance, utilities, and maintenance costs. Account for all possible expenses to avoid financial surprises.

Your goal is to build a reserve fund for unexpected maintenance issues that will inevitably arrive. Consider saving up 1-2% of the value of your home to account for these surprises. Being house rich cash poor is a significant stressor that only gets better with more savings.

2) Prioritize Home Repairs

Identify and prioritize essential home repairs ASAP. Deferred maintenance can make problems much worse. Tackle urgent issues first, and plan for the rest over time. This approach can help manage costs effectively.

Out of my 22+ years of homeownership, the biggest damage to a home comes from water. Therefore, check under all sinks, toilets, and crawl spaces for leaks. During and after each rainstorm, meticulously scan the walls for any drips or wet spots. Go into the crawl space and inspect the pipes for rust and holes, especially while raining.

Here are 10 warning signs to look out for when buying a house. You must be as thorough as possible during the escrow period. Get as many experienced people you can to inspect the house before purchase. You are bound to miss something.

3) DIY When Possible

Learn basic home maintenance skills to handle minor repairs on your own. DIY projects can save money and give you a sense of accomplishment. YouTube will teach you everything there is to know about fixing and improving your home.

One of the positives of being a landlord for a couple of decades is learning how to paint, landscape, and fix basic plumbing issues. For things I don't know how to fix, I've got long-term relationships with tradespeople who do.

Develop a list of contacts for plumbing, electrical, landscaping, and general handiwork. Once you have these contacts, you will feel much better because you know there will be professionals to save you.

4) Maybe Get A Home Warranty

A home warranty is usually a waste of money, partly due to the deductible you need to pay to fix the problem. Sometimes, the cost to change an appliance is not that much greater than the cost of the deductible.

However, if you're super anxious about appliances and systems breaking during your first year of homeownership, get a home warranty. Tradition has it that your real estate agent buys one for you. This can provide financial protection in case of unexpected breakdowns.

5) Track Home Remodeling Expenses

Keep a record of all home-related expenses and remodels. This not only helps with budgeting but also provides valuable information for potential tax deductions.

When it comes time to sell your home years into the future, you want to have a nice online spreadsheet that includes the date, cost, category, and service provider. This way, you can add up most of these costs to your purchase price to reduce your potential capital gains tax.

I highly recommend remodeling major areas—like kitchens and bathrooms—with permits. While you might save money by skipping permits upfront, it can cost you later. When it’s time to sell, unpermitted work often won’t be fully valued, and some buyers may even walk away entirely.

Also, take your time getting furniture for the first year of home ownership. You don’t know exactly how often or how you will use a particular space in your house. Less furniture and decor in the beginning, the better.

6) Review Your Homeowners Insurance Policy

Regularly review your homeowners insurance policy to ensure it adequately covers your property and possessions. Update it as needed, especially after significant purchases or renovations. If you haven't renewed your insurance policy in three years, you may be under-insured given the likely appreciation in your home.

For greater peace of mind, get a replacement cost value (RCV) home insurance policy. It will cover whatever is damaged at whatever it costs to replace today. If you want to save money, you could get an actual cash value (ACV) home insurance policy, which doesn't cover as much due to depreciation.

As we saw with the Pacific Palisades fire in Southern California, disaster can strike at any moment. Without adequate insurance coverage, your finances could be devastated in an instant. Here are all the details of a home insurance policy you need to know to ease your worries.

7) Explore Government Programs To Save Money

Many governments offer incentives for homeowners to make energy-efficient upgrades. This could include tax credits, rebates, or low-interest loans for installing solar panels, energy-efficient appliances, or improving insulation.

Some jurisdictions provide property tax exemptions for certain groups, such as senior citizens, veterans, or individuals with disabilities. Check with your local tax office to see if you qualify for any exemptions to save money.

In times of economic hardship, there may be government-sponsored mortgage assistance programs to help homeowners avoid foreclosure. These programs could include loan modifications, refinancing options, or temporary payment assistance.

The government wants Americans to own homes and keep their homes. It knows homeownership is one of the most dependable ways the average American can build wealth and achieve financial security.

8) Connect with Neighbors

Build a relationship with your neighbors. They can provide valuable insights, recommendations for service providers, and even assistance during emergencies.

For safety reasons, it's also great to befriend your neighbors and exchange telephone numbers. Instead of just having a couple sets of eyes and a security system protecting your home, you can develop multiple sets of eyes across the entire block to help keep your home safe.

When we are away for an extended period of time, we let our neighbors know and vice versa. We help each other put out our garbage bins and bring them back on our properties after pickup. We also help water each other's yards.

Every single neighbor has had to fix something in their house at some point or other. Leveraging their long-term relationships with their service providers is a great strategy. Thanks to getting to know my neighbors, I've been able to find trusty roofers, landscapers, and handymen.

9) Long-Term Financial Planning

Finally, develop a long-term financial plan that considers your homeownership goals. This could involve paying off the mortgage by a certain date and deciding when to rent out your home or a room for semi-passive income.

Once you have a plan in place, and you're on the same financial page with your partner, you will feel a lot more relief during your most tenuous time of homeownership. You'll also gain clarity and more motivation to achieve your homeownership goals.

How To Protect Your Main Source Of Income During Your First Years As A Homeowner

For most homebuyers, their main source of income is their job. Therefore, it is imperative to not only keep your job during your initial years of homeownership, but to also get raises and promotions over time.

Once you get to the three-year homeownership market, you're likely in the clear due to more liquidity, a rise in your home's value, and knowing most of your home's unknowns.

Here are some tips to help you safeguard your job and increase your chances of surviving layoffs.

1) Understand Company Signals

Pay attention to any signs or signals that the company may be going through a challenging period. This could include financial reports, changes in leadership, or industry trends. Being aware of your company's situation will help you better prepare.

If your company feels like a sinking ship, you had probably start searching ASAP for a new job. It's much easier to get a new job if you already have a job. You also want to get ahead of the curve if mass layoffs begin to regularly occur due to stagflation or a recession.

2) Excel in Your Role

Strive for excellence in your current position. Consistently deliver high-quality work, meet deadlines, and exceed expectations. Demonstrating your value to the organization makes you a less likely target during layoffs.

Your goal after the first three years of homeownership is to become irreplaceable. If your company were to lay you off, it would have to go through months of searching to find your replacement. Then it would have to spend months of training to potentially get your replacement up to speed.

In fact, the difficulty of replacing you is one of the key reasons why employees are able to negotiate a severance package. By being irreplaceable and then agreeing to stay on for however long it takes to find your replacement and train them will dramatically increase your chances of getting a severance.

3) Diversify Your Skills

Acquire a diverse skill set that aligns with your current role and the needs of the company. This could involve learning new technologies, acquiring certifications, or expanding your expertise to make yourself more indispensable. Leveraging AI to be more productive is probably the #1 thing you can do today to safeguard your future.

In addition, keep working on your side hustles. The more you can diversify your skills and your income streams, the more secure you will feel during the initial year of homeownership. If I had a job and lost it, I would probably teach tennis, drive for Uber, and find more sponsors on Financial Samurai.

4) Build Strong Work Relationships

People hire, promote, and pay people they like. Therefore, cultivate positive relationships with colleagues, superiors, and other key stakeholders within the organization. Networking and maintaining a positive reputation can play a crucial role in job security.

If you haven't already, treat some of your colleagues out for happy hour. Ask if you can take your boss out to lunch and talk about shared interests, not work. When it comes to lay people off, it's much easier to lay people off you don't know well or like versus the colleague you've shared personal stories with.

5) Be Adaptable And Open To New Work

Adaptability is a valuable trait in times of change. Be open to new responsibilities, projects, and roles. A willingness to take on challenges demonstrates your commitment to the success of the company.

Don't just wait for a project to get assigned to you. Volunteer to solve a known problem.

6) Contribute to Cost Savings

Look for ways to contribute to cost savings or increased efficiency within your department. This could involve streamlining processes, reducing expenses, or identifying areas for improvement. Due to the new administration and DOGE, cutting costs is all the rage today.

A manager who sees an employee who is cost conscience has a harder time letting them go because the manager themselves is in cost cutting mode. Getting on the same financial page is important for your survival.

7) Document Your Achievements

Keep a record of your achievements, completed projects, and positive contributions to the company. Having a documented track record of success can be valuable during performance evaluations or when demonstrating your value.

It is up to every employee to manage up. Managers have enough on their plates and can't possibly remember all the great things you've done in the first half of the year or the previous year. Human nature results in taking people for granted the longer they are there. It's your job to shine a bright light on your value.

8) Maintain a Positive Attitude

A positive and solution-oriented attitude can go a long way. During challenging times, employers value employees who remain optimistic, adaptable, and focused on finding solutions.

Are you going to let go of the complainer or the optimistic employee who always finds a way to look on the bright side of things? Team chemistry is even more vital during difficult times. In fact, one of the best ways to get revenge on an old employer is to implant a virus that eats the company from within!

Conclusion: Survive First, Then Thrive

The first year of homeownership is often the most precarious—mentally, emotionally, and financially. That’s why adopting a survival mindset is key. Focus on shoring up your finances, managing expenses, and staying disciplined until the dust settles.

You may find yourself living paycheck to paycheck for a while, but don’t lose hope. With each passing month, as you rebuild your cash reserves and liquidity, your confidence will grow.

Once your liquid net worth equals at least 10% of your home’s value, you’ll start to sleep better. And when your primary residence drops below ~20% of your total net worth, that’s when real peace of mind kicks in.

Hang in there. Survive the first year, and you’ll put yourself on a much stronger financial footing for years to come.

Reader Questions And Suggestions

Do you feel an elevated amount of stress during the initial years after buying your home? If so, how did you cope? After how many years did owning a home no longer feel like a burden?

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With pent-up demand building and a volatile stock market, it's comforting to diversify into a real asset that tends to outperform during times of chaos. Financial Samurai is an investor in Fundrise and Fundrise is a long-time sponsor of Financial Samurai.

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