Money Expert Reacts to House Poor TikToks
In this YouTube video, personal‑finance guru Ramit Sethi reviews a series of TikTok clips from people who feel "house‑poor"—stretched thin by mortgage payments, maintenance costs, and limited lifestyle flexibility. He repeatedly points out that many of these creators made avoidable decisions: buying too early, ignoring total cost of ownership, failing to run a buy‑vs‑rent analysis, and overlooking legal and partnership risks. Sethi debunks common myths about generational wealth through homeownership, the supposed equity advantage, and the belief that houses always appreciate. He explains his own framework for evaluating a home purchase, which starts with calculating the total monthly cost of owning (mortgage, taxes, insurance, closing‑cost amortization, maintenance, HOA, and opportunity cost of the down‑payment) versus the total monthly cost of renting (rent, utilities, renters insurance, moving costs). He stresses the importance of flexibility, long‑term horizon (≥10 years), and aligning the decision with one’s rich‑life goals. The video also critiques advice from realtors, highlights the emotional and social pressures to own, and offers alternatives such as renting and investing the difference, buying a duplex, or co‑living. Throughout, Sethi promotes his Money Coaching program and a sponsor, Gelt, a CPA service for business owners. The overall message is that buying a house should be a deliberate, numbers‑driven choice, not a cultural default.
Chapters
Home buyer regret is exploding right now. And if You've watched even two seconds of TikTok lately, you may have seen some of these house poor meltdowns. These are people who are stretched to the limit. They're often struggling to pay for anything because all of their money is going towards their mortgage. I'm Ramit Sethi, host of Netflix's how to Get Rich. My team pulled together some very painful house poor TikToks, and I haven't seen any of them yet. Some of the people in these videos have real legitimate problems. Others, I'm told, well, some of their decisions were avoidable. And at the end of this video, I'm going to show you how I decided whether to rent or buy. Even as a multimillionaire, who can afford to do either one? Let's jump in to the first TikTok video.
I am selling my house and I'm getting ready to move back with my parents yet again. I am single. I do have a 9 to 5 job where it does not pay me nearly enough to cover the bills. And I've had this house for about three years now.
Let me stop you right there. Why would somebody who's single and been working for just a few years want to buy a house? It's actually very confusing to me, the idea that you are young, you're in your 20s, you are on the steep incline part of your career, and suddenly you want to buy a house. Make that make sense for me. Because when I think about what I did in my 20s, I wanted to be mobile. I wanted to be able to move from city to city depending on jobs and friends and social environment. I didn't want to geographically lock myself down. I wanted to give myself the most important thing in my 20s, which was flexibility. Not to mention I made more money renting and investing the difference than I ever would have by buying a house. And I lived in Menlo Park, Palo Alto, San Francisco and New York. Why would I have bought a house in my 20s?
It's very confusing to me and I am just exhausted. I am drowning, barely surviving, not being able to make repairs because the house is now falling apart and I have no money in my savings to fix it.
This is one of my financial nightmares. It's taking all of my money, locking it up into an illiquid, geographically undiversified asset with massive transaction and holding costs. And the only thing I get out of it, besides a roof, which is nice, is that when I go up to somebody and I shake their hand, they go, oh, are You a homeowner? I go, yes, I bought this house even though I have a 29 year mortgage left. And they go, wow, that's so cool you're a homeowner. What the. Why are you all seeking approval from so many people? Have you ever run the numbers yourself? You're about to make a multi hundred thousand dollar purchase. Did you ever sit down and ask yourself a few questions, hey, Ramit, or whatever your name is, do I actually want to buy a house? Why? And then you play the five whys game. Because that's how I create generational wealth. Why? Oh, because I need generational wealth. I'm only 24, but I need to pass it to my kids and grandkids. Why? That's too much for everybody. Just buy the house, hurry up, because prices are only going up and you're never going to be able to afford it again.
I have been saving for the past three years. All I've been doing is working and going straight home. I don't go out.
Another nightmare of mine is spending all my money to buy a house and then I can't do anything else. Especially in my 20s and 30s, but actually for the rest of my life. Hard to eat out, hard to take a trip. When people say like, hey, you know, we're 26, we have this bachelorette party and the first thing I think of is like, I can't do that because I have a mortgage. I'm like, is this really what I want?
And like, I just don't want any of it anymore. So I'm selling it. I don't know what my plans are going to be after I sell my house and maybe leave this 9 to 5 job that I'm at.
Hold on. I like that this person is considering selling it, but she goes, I don't know what I'm going to do after that. Stop right there. The same way that you got into this major purchase is the same way you are getting out of it. And that's a big mistake. I really wish that this creator would slow down, run the numbers. How much do I expect to make? Okay, I'm going to lose money. What does that mean for me? What am I going to do to pay that off? What is my subsequent rent going to be? Or am I going to go live with my family if possible? What kind of job am I going to switch to? These are core critical questions you need to do right now before you simply jump into another trap. With that said, I do think that as part of the full analysis of what to do Next, this creator should analyze whether renting it out would make sense or not. Next Comment Everyone tells me to buy a house, but I'm happy renting and saving $25,000 a year. That's pretty much how I felt since 2005. People have been calling me stupid, dumb, ignorant, even though even I run a freaking bit. Look at these books. I wrote the books on money and I said, you know, I'm saving tens of thousands of dollars in the difference between renting and owning. So you can say that renting is dumb and you're not building equity. But I prefer living in a better neighborhood, in a better housing unit, not having to repair things and being able to invest tens of thousands of dollars in the difference every single year. If you run a business, your taxes are not just a once a year task. They're an ongoing system. And when that system is not set up right, you feel it. Stress, uncertainty and those awful surprises that show up at tax time. Which is where Gilt, the sponsor of this video, comes in. Gelt is a modern CPA firm built specifically for business owners who want clarity and control instead of chaos. They work with you year round to create a proactive tax plan tied to your goals, your cash flow, your P and L. They give you guidance on credits, deductions and entity setup to optimize your structure and they stay organized with a clean, modern platform. If you're a business owner and you want to stop dreading taxes and start feeling confident about your numbers, check out gilt, go to joing.com ramit or click the link in the description below. All right, let's keep going.
One of the most common types of comments I get whenever I talk about the trade offs of buying real estate is parents saying that they are buying home for their children to leave it for them as inheritance and quote unquote generational wealth.
I already need to lay down the law when it comes to generational wealth and real estate. It is so funny that in America almost nobody talks about investing or wealth generation except for two freaking examples. Can you catch what they are? Number one well, I'm getting married, but I would really prefer to have a small simple wedding and instead put a down payment on a house. And then the second one we had kids. We need to buy a house so we can pass on generational wealth. Why are you not talking about a random Tuesday? Hey, we really should increase our investment contribution rate from 7.5% to 8.5% of gross income. That would be great. That would actually be worth hundreds of Nope, you don't do that. You only equate it to real estate. And you don't even know why. The real estate industrial complex has inserted themselves into these core moments of your life to make you think that by having a wedding you're being stupid, that you should buy a house. Maybe, maybe not. Or that your kids want your decrepit house in an old aging neighborhood. Think about it. I asked my audience on Twitter, what would you rather inherit, a house or stocks? And they were like, overwhelmingly, I want the stocks. I want an investment portfolio. Think about it. Your parents live in a city that you probably don't want to live in. They live in a house that probably you don't want to live in. It has not been renovated since 1984. Also, what if you have siblings? You have three siblings and suddenly you're given one house. How are you all going to do it? One person wants to sell it, the other wants to keep it, but they can't afford it. Third one says, I'll do whatever the other person says. Now you're in a pickle. Now you don't talk to each other for the next six generations. They would rather you just build a nice vanguard portfolio and then give it to them in their 30s and 40s.
I think in general, leaving a home to your children is probably one of the worst ways that you can financially help them. I of course think this is very well meaning, but I think it's not very much thought out. For starters, when would you be leaving this home to them? By the time you die of old age, hopefully. Your child is probably 50 something years old.
This is such a good point. How old would you be when you leave this house? You know, assuming you die when you're 80 years old, your kids are 60 years old. 60 freaking years old. What are they going to do with your suburban McMansion? It's in a different city. Wouldn't they have better benefited from generational wealth if you could have given them $10,000 when they turned 35, $45,000 when they turn 40. That time period in people's lives is very financially challenging. They have a family, they might have childcare or education costs. Maybe they have a mortgage. That money would have been way better allocated when your kids were 35, 40, 45, even 25 versus when they're 60 years old. What are they going to do? Luckily, people are now much more sophisticated. Financial advisors, wealth advisors, even just general people understand that that money is better served when they are younger, not when they're 60 or even 70 years old.
And lastly, if you have multiple children, how are you going to split it up amongst them? Are you going to give, uh, one of them the house and another person other assets?
This is a great point about how do you divide a house among different kids? I once had a comment on YouTube where somebody said, buying a house is the way for generational wealth and I'm going to pass it along to my kids. And I was like, you have multiple kids. What if one of them wants to sell it, the other wants to live there, Et cetera, et cetera. And you know what this person said? They said, I'll be dead. They can figure it out. I actually couldn't believe it. It's one of the most selfish things I have ever heard as a parent. Imagine you don't give your children money that you have accumulated over time. That's fine if that's your choice. You're the one who earned it. It's up to you. But then you wait until you're on your geriatric deathbed and you hand over a house like a bomb to three kids. You go, good luck, suckers. I'm out of here. You're dead. Meanwhile, your kids, who are 60 something, are now left to fight over this house because you didn't take the responsibility of clearly discussing what you wanted and how it should be properly apportioned. You literally said it. I'm out of here. Here I come. But the problem is you didn't go to heaven. You're in hell because you left your kids defenseless. You thought you were doing something good, but you were lazy.
You.
You did not actually think about how is this going to affect my children and their children? Absolutely outstanding video. I love this creator. I think this is a fantastic video that a lot of people should watch. This is the perfect example of why people end up house poor. They skip the planning and they jump straight to buying the house. A house is too big of a decision to make it like that. I want to show you how to be deliberate and methodical about the biggest purchases of your life. I have a program called Money Coaching. Inside Money Coaching. We show you how to run your numbers carefully, how to factor in the kind of lifestyle that you want, and ultimately how to make the right decisions that power your rich life. And when you do this, you can immediately tell whether buying a house will make your life better or whether it's going to trap you for decades. If you want help making that decision before you make the biggest purchase of your life, I recommend you join Money Coaching. It's going to give you clarity. It's going to show you exactly what math to run and also how to factor in all the lifestyle questions that you're thinking of. You can scan the QR code on screen or click the link in the description below to join Money Coaching today. Okay, what's Next? It's day 143 of trying to sell our house, and everybody's saying it's the price, it's not the price. Oh, my God. I already know what this video is. I. I've been following this creator for so long. Okay, this is a creator who had a house she was trying to sell. Something about they needed to switch locations for a job or something like that. The whole premise of her videos is it's not the price. It's not the price. Nobody will buy this house, but it's not the price. Newsflash. It's the price. I don't care if you think your house is especially unique because you have gardenias in the back or you have a little reading nook that you installed in 1998 and you have a special wood paneling from Kyoto. Nobody cares. The market doesn't care. You think it's so sentimental. I want to find a family that's going to buy this house and treat it like it's literally a freaking house made of wood. So people are simply treating it like a commodity. And they look at comps, they look at the price, and that is that. And this is why it's important to understand the reality that if you're trying to sell a house and it's not selling, there's one problem. The price. When we originally listed it, our price was fantastic. And we've lowered it three more times since then. Can I just repeat what I'm hearing here? When we listed it, the price was fantastic. Since then, we've lowered it three times. Hey, everybody. When I cooked Thanksgiving dinner, it was fantastic. Three people vomited. So I changed the recipe slightly. Then two people dropped dead. But it was fantastic. It's not the food. It's not the food. It would be ridiculous to lower it anymore. It would be ridiculous to lower it anymore. We've only been in this house for two years. The human mind is absolutely fascinating. We've only been in this house for two years. Why would we lower the price? Hello, everybody. I've only been in this apartment for two years. Why would I switch the protein shake that I'm drinking? Like, what is the connection? There's no connection at all. We're getting pretty Close to like our purchase price at this point. Ah, ah. It's all explained. Does everybody understand what this means? In America, we have a belief that when we buy a house and then we sell it, we have to make a profit. Nobody is entitled to making a profit. A lot of people actually lose money. It is one of the greatest shames in America because everybody else tells you, oh, I bought my house for 250k, I sold it for a million bucks. I'm a genius. But when people actually sell their house for the same price lower, or they even sell it for more and lose money, which is very possible, they simply go silent. It is shameful. In America, they do not want to talk about it. And it's painful to actually lose money on a house. That is because you have to still pay the purchase price. So you got to come up with the money somehow. And it feels wrong somehow when all your neighbors and your stupid friend from elementary school is making a bunch of money on a house and you are not. That is why there are a few things you can do to minimize the chances of this happening. Number one, you can carefully run the numbers. Number two, you can buy a house when you are confident that you are going to be in that house for at least 10 years. That way, you can amortize the costs, things like closing costs, transaction fees, maintenance, etc. Over 10 years, which increases your chance of actually making money. But on a larger, more systemic level, I want to point out, why the hell do you think that your house should always go up? Do you think the same thing about your car? And if you want to feel confident about the biggest financial decisions of your life, especially buying a house, hit subscribe. Okay, next one. Hey, have you ever wondered what House Poor looks like? I love this guy. His videos, I get tagged in them all the time. He's always posting about this disastrous house. I love this. I'm in my kid's playroom. That's right. We have a whole playroom for the kid. What the. Is this normal? Everybody these days has a playroom for their kids. What? I'm mentally still stuck in how I grew up in a. What was it? 2,000 square foot house with four kids. We didn't have a playroom. Playroom? What is that? I'm eating pot noodle for lunch because that's what we can afford. What's the problem here? This guy's eating ramen noodles. I love ramen noodles. He's got a fat playroom and he's eating ramen noodles. It sounds like heaven. What's the point of this video? Moving on.
I am regretting buying a house. My fiance and I have not even lived in it for a year.
Why would you buy a house with a fiance? That's not a good financial decision, almost universally, unless you have a legal agreement aside. But already buying a house with someone you are not married to presents massive problems. If you don't believe me, just go and search Bought a house, split up, boyfriend, Reddit, girlfriend, Reddit. You will see tons of stories about people who bought a house. They usually do it because they're living separately. They go, oh, we might as well. It couldn't hurt. We got to combine and then we'll save some money. And they buy a house. They never think about what might happen if they split up. Legally, they're not protected, and now they're in a really tough position.
And we had to buy an AC unit already, which is thousands and thousands of of dollars. Obviously necessary and worth it, but very unfortunate. We're also trying to plan a wedding.
Another mistake is doing too many major financial decisions at once. Buying a house, planning a wedding, having kids, taking a vacation. I sometimes see couples on my podcast and they're doing three or four major life changes at once, and I'm kind of like, why'd you do all this at once? Why not space it out a bit and give yourself room to breathe? It's the same in my business. We want to take on one major initiative, maybe two per year, but if we try three or four or five, we're almost guaranteed to fail at all of them.
So that was not ideal for the budget. And then we had at gutters. And then on top of that, we now probably have to replace our water heater.
I'm just trying to think what my immigrant parents would have done if all this stuff happened. And I'm like, I think they just would have been like, time to put a coat on. Heater doesn't work anymore. Put a coat on. Here you go.
Just can't catch a break. Before anyone comes at me. We did have an inspection. None of it was flagged. So it's been a rough day.
It's been a rough couple months. You know, let's give some grace to this creator. When you buy a house, it's a very complex organism. It's a complex business, and things are going to break. Like, in any system of any complexity, things are always breaking. In my own business, things are breaking. You have to expect it. The key is not to blame this creator. It's not her fault. That some of these things broke. But the real decision was made way back here when the decision was made to buy a house, to not set aside 1 to 3% annually for maintenance. And to be sure that you could afford that, to perhaps not discuss with a fiance, we need to have a legal agreement in place that in case things don't work out. That's really morbid to think about, but we have to do it. This is a massive business purchase together. All of those things that were skipped over and some of these things are showing up in pipes or gutters. But that's not the actual problem. The actual problem was done way back here. And that is what you need to know so that you can tackle those things first before you ever decide to buy a house. Okay, what's next?
Yep, a lot of people are house poor and a lot of them are not discussing it. And maybe they're not discussing it because the alternative is to be rent poor.
Oh, I can already see the username says the word realtor in it already. I have a big problem with this. First, I'm going to listen. I'm going to listen, but I just want to tell you point blank, never ever take financial advice from a realtor, ever. Let's just see what this realtor has to say. I have a feeling maybe house poor is bad, but rent poor, you're actually not building any equity. You're not accumulating anything. You're just throwing your money away. Let's see. I have a feeling. I have a hunch. Let's see.
And they would prefer to be house poor before they become rent poor.
How about not poor at all? How about I don't have to decide between being rent poor or house poor, just not poor. How about that? How about we choose to be rich? I will teach you to be rich. Ever heard of it?
Because there's a lot of people who are renting and they are struggling to save.
If you are renting and you are struggling to save, you cannot afford to own. Because it is far more expensive to own than to rent. It is more expensive to own in 100% of the top 50 US metro cities in America. This makes no sense to say that if you are struggling to afford rent, then you should buy. Hey, everybody, I'm struggling in my Toyota Corolla. That's why you should buy a Rolls Royce. It makes no sense. I need you to think critically about this.
And at the end of their lease, they have no equity or anything to pull for Equity. The magic word, equity.
Hey, everybody, I got A few questions for you about equity. All right, sit down. Let's talk about this. First of all, what is equity? Where is it? Where's my equity? I want to buy a book, I want to buy headphones. Where? Where's my equity? Where do I get it? How do you access it? Nobody knows. How do I accumulate equity? Oh, I pay my mortgage. Oh really? So you just pay your mortgage and if you pay a dollar into your mortgage, how much equity do you get? Do you know? No, you don't know because nobody knows. Something called an amortization table. Let me explain a shocking statistic to you. On a typical 30 year mortgage right now, when you pay your mortgage that you own your house for, you are paying more towards interest than towards the principal for almost 20 years. That means you are throwing money away on interest. How come nobody talks about that? No, they just say, oh, you're building equity. Guys, if I'm spending $10,000 to make $200 in equity, is that a, that a good trade off? As we say in personal finance, you don't spend a dollar to make a dime.
And before you know it, you're in the cycle where you've been renting for five years.
Cycle is a dog whistle. The idea that you're stuck in this cycle of debt. No, we're not in a cycle. We are making methodical decisions for ourselves. Or you could say Ramit Sethi, you've been in a cycle of being stuck paying rent for 21 years. You think I'm stuck? You think I'm in a cycle of anything? I chose consciously to rent because I carefully ran my numbers and that's exactly what I'm showing you in this video.
In 10 years. In 20 years and you're still rent poor.
I've been renting for 20 years and I'm not poor at all. In fact, I made more money renting than I would have ever made owning. I lived in better places with better maintenance, with more money and I could travel and eat out and do all kinds of cool stuff. I need you to realize that you've got to carefully consider the source of information.
So we have to start thinking about the alternative.
What is the alternative?
Right, what is the alternative? I don't have all the answers.
Wait, wait, wait, wait. What is the actual alternative? Her answer is I don't have all the answers.
I don't think everybody should own.
Oh, she said, I don't think everybody should own. Okay, I agree.
I don't think everybody should rent. But we need to start discussing what exactly is the alternative.
But I'm like, is there like a part two to this? Or is this like a cliffhanger or something? Because here, let me give you some alternatives. You can rent and invest the difference. You can increase your earning. You can move in with roommates. You could purchase a duplex. Carefully running the numbers. As always, there's so many different alternatives. These are not a mystery. I've been talking about these for 20 years. Let me look at the comments. Oh God. Comment number one from this creator. And there are some people struggling to pay their mortgage, but they can look forward to equity at some point. Renters never get a return. Hey everybody, I never got a return on my headphones. Never. Where's my return? Does that make any sense? No, I bought it. It was a purchase. It provided utility to me, just as my apartment roof provides utility to me. And then one day I leave and I go get the next thing. That's the way it works. Or I can buy a house. Carefully running the numbers. Sometimes I might make a profit. Other times, many times I might not make a profit. Especially when you factor in opportunity, cost, transaction costs, maintenance, taxes, interest and everything else. Next comments. I understand all this, but soon you miss a payment or tax. At the end of the year, they take it back. Okay, this realtor's response is I just sold a property where my client was three years behind on her taxes. Another person says, I'm house poor, but the fact that it's me working towards mine, I can live with struggle. Right now I really dislike this idea that you have to struggle because you are working towards this magical end result of equity and generational wealth. I can almost guarantee that the person saying this has not run a simple buy versus rent calculation. This is a multi hundred thousand dollar purchase that will affect every part of your life. What you eat, what you wear, how you raise your children, how often you can travel, even how often you can spend time with your family. If you want to know how to run the numbers, join my money coaching program. You will join thousands of other people who have done exactly this and I will answer your questions in my monthly Q and A, why I rent and how to know if you should buy or rent. You know, a lot of people are very shocked and angry when they hear that my wife and I have decided to continue renting for the foreseeable future. It actually offends people personally. That's because in America our number one religion is is home ownership. We don't make decisions based on logic. We certainly don't run the numbers we simply repeat faith based phrases like I don't want to throw money away on rent or I want to build equity. Here's what happens for the biggest purchase of our lives. Most people only look at the monthly mortgage to decide if they can afford it. They don't actually look at the real cost of owning a house. The total costs. That is a huge mistake because it's not the mortgage that you need to be paying attention to. It is tco the total cost of ownership. Let me show you how I evaluate the biggest financial decision of my life. Buying a house and the exact way that I recommend you do it too. First you compare two numbers. Total monthly cost of owning versus total monthly cost of renting. Notice that we are starting with the numbers and we will certainly factor in the non financial considerations like school district or renovation or you just want to buy a house. But we always start with the numbers first. The total monthly cost of owning includes your mortgage, taxes, insurance, closing costs which need to be amortized or spread out over the number of years that you own the house. Maintenance, which almost nobody properly factors in. You can use 1 to 3% every year of the purchase price of the house. That's a lot of money. Upgrades, HOA fees and the biggest one that people ignore, the opportunity cost of your down payment. That is the down payment that you are putting towards the house which you could have otherwise invested. Now on the other hand, the total monthly cost of renting usually just includes rent, utilities and renters insurance. Maybe you want to factor in how often you're going to move. You should factor in those moving costs as well. Once you have those two numbers. Here's the question that I ask myself. The same one I want you to use. Does buying this house lead me to my rich life? Does buying this house create more freedom for me or less? Not. Isn't it time to buy or hurry up, we better buy because if we don't buy now, we're never going to be able to afford it. Never make a decision like that based on scarcity. A lot of people say am I throwing money away on rent? What the hell does that even mean? Did you ever say I'm throwing money away on sushi? I'm throwing money away on that amazing vacation in Mexico. You never said that. You only use this phrase because some realtor shoved it down your throat and you never stop to think critically about why would I be throwing money away on a roof over my head? For me, every time I have run this math, buying would have cost me way more than renting. Buying would have reduced my freedom financially and emotionally. And buying is just something I don't want to do right now. My wife and I both have agreed at this point in our lives. Not interested. At some point, sure. But right now, no, thank you. So we rent not because renting is better for everyone, but because it's better for us. Now, if you want to go deeper, I want you to watch this video next. It'll show you the exact math I use to decide whether buying a house ever makes sense.
