Your bucket system failed us

Scott,
 
The bucket system outlined in your book is now failing us. With interest rises and inflation, our cost of living has increased significantly, and now our mortgage takes up 55% of our daily expenses bucket. Given these changes, how would you amend your system to accommodate this?
 
Heidi
 
Hi Heidi,
 
Where in my book did I say take out a loan where the repayments are more than half your take home?
 
That’s right, I didn’t.
 
However, I did devote pages and pages to explaining why interest rates would eventually rise … and my answer was to borrow less than the bank offered and to set up different money buckets to prepare for it.
 
So what can you do now?
 
You need to get your home loan repayments down to a more sustainable level – around 30% of your take-home pay is a good rule of thumb – and you need to do it pronto. After all, what are you going to do if rates go higher from here?
 
And you’re not going to get there by cancelling your Netflix or swapping burrata for baked beans. You either need to earn more money – by getting a raise, or taking a second job, or both – or you need to think long and hard about whether you can afford the house.

Scott.