We Bought a House… Then Spent $99K in 12 Months 😭

Everyone tells you that buying a house is the smartest financial move you'll ever make, but no one tells you how easy it is to waste tens of thousands of dollars doing it. We didn't realize it at the time, but we spent $99,000 in our first year of home ownership. Let's unpack the true cost of home ownership. I'll reveal the costs you can expect during closing, the unexpected costs that we incurred during year one, and the sacrifices and shifts we've had to make from renting to owning. When we first bought this house, everything was calm. The chaos was over. The paperwork was signed. We knew our numbers. Our mortgage payment, inclusive of the actual payment, interest, taxes, and insurance, that was the number that we obsessed over. And when we bought in 2024, mortgage rates were around 7%. And even at that time, it felt manageable because we told ourselves we'll just refinance later. But before we could get used to the mortgage payment, we had to take care of the closing costs and they were huge. I want to share the statement we received that outlines all the closing costs we incurred. We bought our house for $640,000. We also put down earnest money of $10,000, which actually I learned was a lot of money. Most people do earnest money of like maybe a thousand, $2,000. And then we took out a loan for $512,000. County taxes that were prorated from the beginning of the year to the time we bought in June was about $3,100. We also had proration of HOA dues and then the seller paid for some of our closing costs totaling $2,500. Now we also had some prepaid interest of about a thousand dollars and then other loan charges, including flood certification. There was a tax service of $70 and then the title fees from the title company. So there was an e-filing fee from both title companies from us and the sellers. Then there was a settlement fee, a title insurance. So that added up to close to a thousand dollars. Plus there was compensation to our realtor firm of about 3,800 bucks. And the recording fees from the deed was about $450 and then miscellaneous fees from our HOA and being able to pay for the HOA dues upfront of about $895. So in total, what was due was more than $647,000. We put down $119,361.63 in closing costs alone. So when you're looking at $120,000 in closing costs, you're like, this feels like the biggest financial hit we'll ever take with this house. It wasn't. The first shock hit almost immediately, the utilities. Now we rented in California for nearly 10 years. Most of that time being in San Diego, the water bill was bundled into our rent and the electricity and natural gas bill was $108 per month combined. We moved to Kansas city and the utilities are so much higher here. When you own a bigger house and utilities are paid separately, you get a massive reality check. Our old utility budget wasn't wrong. It was just completely irrelevant. Since becoming homeowners on average, electricity and natural gas costs us $279 per month. We spend an average of $99 per month on water. So effectively owning has more than tripled our utility costs. And then came the repairs. One of the biggest mental shifts when you go into home ownership is that you should actually expect the unexpected to happen. And there's heavy costs involved for us in year one of home ownership. It was fixing a retaining wall, a flooded basement, the dryer broke emergency fixes that we didn't necessarily budget for, but couldn't delay. These showed up faster than expected. And every single one required cash. When I didn't mention the actual fun stuff, we wanted to spend money on like a kitchen renovation for $28,000 or adding an office for $6,000 to accommodate our work from home lifestyle. Then there was all of this stuff. When you buy a house, you don't just buy the house. You buy everything the house requires, a tools, lawn equipment, Christmas decor, new furniture, the list goes on. Even trying to thrift and use things like buy nothing groups or Facebook marketplace really added up. This wasn't just lifestyle inflation. This was ownership inflation. This is the part I think where we realized the problem wasn't just the house. It was that the system for tracking everything once life got more complicated, needed a rework. And that's why today's sponsor is Monarch. Monarch is a personal finance platform that tracks your spending credit score and net worth. So you can stay on top of your money without ads, without 20 notifications a day. I personally use a hybrid of a spreadsheet and an app. So I have access to my budget on the go. What I love about Monarch and that I haven't seen anywhere else is that you have the option to use flex budgeting where you can separate fixed from flexible spending without getting granular. You can also customize the rules and categories to keep things organized without feeling rigid. And when something looks off Monarch's AI actually explains it like why spending at Home Depot jumped in plain English. How much am I spending on home repairs? It says you spent $8,551.08 on home repairs over the last 12 months, which works out to about $713 per month. That's based on expenses in your home improvement category only using a standard 12 month look back. That's insane. This is how, you know, homeownership has me in a chill cold. I think Monarch is intuitive and clean, and it connects to over 13,000 financial institutions. Start your free trial and get 50% off your first year at monarch.com and use the code DFM50 at checkout or use the link in the description box below. Thank you Monarch for your long-term partnership of the channel. And with home ownership comes taxes. One of the most painful parts of owning a home are the taxes that come with it. And now when our home was reassessed in the year, our property taxes jumped along with it. In fact, property taxes jumped $964 from year one to year two. That was a 12 and a half percent increase for us. Now our mortgage payment technically didn't change, but the amount leaving our bank account for property taxes absolutely did. And disclaimer here, we actually pay our property taxes separate from our mortgage, meaning we don't have a separate escrow account. We did that on purpose because we wanted to be able to put property taxes inside of a high yield savings account and let that savings build. When it was time to pay the property taxes, we actually got to earn a little bit of interest in our high yield savings account and still pay the taxes on time. Check with your mortgage lender. If this is an option for you, we had to get manager approval from our lender to make sure this is something available to us. And it was just literally calling and asking, and they just said, yes, this is a really easy way for you to continue to grow interest in a high yield savings account. Now, if you have an HOA, this is also a cost that never goes down. In year one, we paid $880 for annual HOA dues. Now, actually, this is a lot less than what we were paying when we were living in our condo in San Diego. The building we lived in San Diego, for example, had an HOA of $800 per month. In insurance, we paid $2,200 for coverage on our house. While when we were renting in California, it was only $262 for the year. And don't forget the quote that you receive when you buy is not the price you pay forever. That insurance premium continues to climb. So when you're considering the principal interest taxes and insurance payment, that's just a snapshot. The actual housing costs that are rolled into homeownership is a moving target. And this is the part that most people don't talk about. Not the money, but the trade-offs. We spend a lot of our free time working on the house. Whereas when we were renting, we spent a lot of our free time doing activities that we actually loved. Now, every decision starts running through the filter of what needs attention next. And you're constantly negotiating. Do you DIY, do this yourself, or do you pay someone? Either option has a cost. DIY takes time. Hiring someone takes money. Either scenario, you're paying. This is why it's so crucial to have an emergency fund or a home repair budget, which we have. We just didn't realize how quickly we would actually run through it. I thought it'd be interesting to compare our sunk costs versus the home equity and the results were eye-opening. Now, I keep a spreadsheet of all home repairs and updates that we've done since we've moved into the house. And that really kicked off in August. So about a month after we moved in with a major kitchen renovation. And keep in mind, this wasn't a complete teardown. We actually kept the original cabinetry. We just reconfigured the island and added a little bar area and redid the countertops. That was $28,000. Next was an in-ground sprinkler system of $450. We did the fun things of adding an upstairs office of about six grand. And then came some of the like random stuff that isn't as sexy. New basement lighting for 90 bucks. We replaced like five toilets for $500. The dryer broke for $1,200. We mentioned the property taxes. In year one, it was close to $6,700. Then the unexpected, our basement flooded because our sump pump failed. Now the sump pump alone was $400. And keep in mind that basement is still concrete floors and the bottom two feet of drywall is completely ripped out. We have to move as fast as cash and we don't have the funds to completely renovate it today. Then we did a tree removal for $800. We had homeowner's insurance of $2,200. The retaining wall, which was actually related to the basement flooding because we had a massive rainstorm, cost us $17,000. I also wanted to take a look at the mortgage interest. In year one, we paid over $35,000 in interest to that mortgage loan, which totaled $99,408 in sunk costs. Now I was curious, what is the estimated home value and how much equity have we actually built? And then how much equity minus the sunk costs are we actually profiting here? According to Zillow, our estimated home value is $660,000. Now we owe about $499,000 on the mortgage, which leaves us an estimated home equity of $161,217. Not bad, right? You remember we put in $119,000 in closing costs and so we've grown that significantly. Well, if you factor in the sunk costs of the 99K, what we're actually left with is about $62,000. So I have to ask myself, are we building wealth here? Home ownership isn't bad. It just requires a lot of time and money, whether you're ready or not. And I truly still believe renting isn't throwing away money. Predictability has value. Flexibility has value. And better budget behavior isn't about renting or owning. It's about knowing what you're actually signing up for. I think it still remains to be seen how this home is going to impact our net worth and how it's going to increase our nest egg over time. I think a house can build wealth or it can quietly drain it if you're not careful. Which housing costs surprised you the most? And if you want a realistic monthly overview of our expenses, then you'll definitely want to check out this video next.