Affordability: Looking at the Whole Equation

lhpersonalfinancia
3 hours ago
5 min read

Affordability is complicated.

Yet when we're struggling financially, it's easy to identify one reason we can't get ahead:

Housing prices
Interest rates
Inflation
Student loans
Wages

And if I believe there's one reason I can't get ahead - and that reason is completely outside my control - where does that leave me?

STUCK.

That's exactly where I don't want the affordability conversation to leave us.

Because affordability isn't driven by just one thing.

It's an equation with a lot of variables.

Some are outside our control.

Some are influenced by choices we've already made.

And some we can change starting today.

Understanding the difference doesn't minimize the very real financial challenges people are facing.

It helps us figure out what to do next.

🏠 Housing is a great example

There's no question that buying a home has become more challenging for many people.

Today's buyers are dealing with several things at the same time:

Home prices that have risen significantly
Limited housing inventory in many areas
The basic economics of supply and demand
Mortgage rates that are higher than the historically low rates we became accustomed to
Higher costs in other parts of their financial lives

When there are fewer homes available and demand remains strong, prices are pushed higher.

Mortgage rates add another variable.

For many years, we became accustomed to rates below 5%. In 2020 and 2021, average 30-year mortgage rates were just over 3%.

When something lasts long enough, it starts to feel normal.

But mortgage rates change.

They climbed above 15% in the early 1980s. When I bought my first home in 1993, my mortgage rate was around 8%.

I couldn't control the mortgage rate in 1993 any more than a buyer can control mortgage rates today.

It's one of the variables we have to account for, not one we get to choose.

But the mortgage rate isn't the only variable.

Neither is the price of the house.

That's where I think this conversation gets much more interesting.

🏡 Why is the first-time homebuyer now 40?

I was recently talking with a friend who's a realtor, and he mentioned that the typical first-time homebuyer is much older today.

The median age of a first-time homebuyer is now 40.

In the 1980s, the typical first-time buyer was in their late 20s.

It's tempting to look at that statistic and conclude:

Houses cost too much.

Housing costs are certainly part of the equation.

But are they the entire equation?

What else has changed?

🎓 We're starting adulthood differently

College is one example.

Over several decades, college tuition increased substantially even after accounting for inflation. At public four-year colleges, average published tuition and fees in 2025-26 are roughly double what they were 30 years ago after adjusting for inflation.

That trend has actually improved recently - inflation-adjusted published tuition has declined over the past five years - but many adults are still carrying student loan debt accumulated along the way.

That matters.

Someone can graduate with a degree that increases their earning potential while also beginning adult life with a monthly student loan payment.

That payment competes with:

Building an emergency fund
Saving a down payment
Investing for retirement
Paying for a car
Starting a family
Buying a home

Education may still be a very worthwhile investment.

But every financial choice has an opportunity cost.

That's another variable.

💍 We're also getting married later

In 1975, the median age at first marriage was about 24 for men and 21 for women.

Today, it's approximately 31 for men and 28 for women.

Marriage certainly isn't a requirement for homeownership.

But buying and maintaining a home with two incomes can look very different financially than doing it with one.

Again, I'm not suggesting people should get married earlier so they can afford a house!

I'm pointing out that our lives don't look exactly the way they did 40 or 50 years ago.

That matters when we compare financial milestones across generations.

🚗 And then there are all the other expenses

Student loans aren't the only monthly payment competing for our income.

Car payments can be significant.

Childcare can dramatically change a family's budget.

Then add:

Technology
Smartphones
Subscriptions
Eating out
Travel
Children's activities
Convenience services
Lifestyle expectations
And all the other expenses that make up today's version of "normal"

As I wrote about recently, none of these things is automatically bad.

Some are necessities.
Some add tremendous value to our lives.
Some are choices.
Some fall somewhere in between.

But they're all variables in our personal affordability equation.

In fact, research on recent successful first-time homebuyers found that high rent, student debt, credit card debt and car loans were among the things buyers said made saving more difficult.

So when we ask why someone is buying their first home at 40 instead of 28, the answer probably isn't one thing.

And that's my point.

Facts, Influences & Choices

This brings me back to the lens I've been using throughout this series.

Facts

Housing prices matter.
Interest rates matter.
Inflation matters.
Student loans matter.
Car payments matter.
Childcare matters.

And how we choose to spend our money matters.

All of those things can be true at the same time.

Influences

Our choices don't happen in a vacuum.

The economy influences us.
Housing supply influences us.
Technology influences us.
Advertising and social media influence us.
Our stage of life influences us.
Our past financial decisions influence us.
And what we've come to believe is "normal" influences us.

Choices

Here's the part I care most about:

We decide what to do next.

We can't change mortgage rates.
We can't change housing inventory.
We can't undo the inflation we've already experienced.
We can't go back and change what college cost.

But we can become aware of all the variables in our own financial equation.

We can ask:

Where is my money actually going?
What expenses are truly necessary?
What am I choosing because I genuinely value it?
What has quietly become "normal"?
What past decisions am I still paying for?
What could I change if a particular goal mattered enough to me?

That doesn't make the things outside our control disappear.

It keeps them from becoming the whole story.

Awareness changes things

I see this happen with clients all the time.

They start by becoming aware of where their money is actually going.

Then they get intentional about spending on what they value.

They question habits and beliefs about money they've carried for years.

They begin to see options they couldn't see when they were focused only on the problem.

And they start making different choices.

One client recently shared this after completing my six-month coaching program:

"Working with her through her 6-month program has completely changed my relationship with money, my mindset and she taught me SO many valuable tools and skills to help me get my finances where I want them to be."

That gets to something I believe deeply:

Changing our finances isn't only about changing the numbers. Sometimes we have to change our relationship with money, too.

💭 Look at your own equation

Think about a financial goal that feels difficult right now.

Maybe it's buying a house.
Paying off debt.
Saving.
Retiring.
Or simply making your monthly income stretch further.

What's the variable you've been focusing on?

Now zoom out.

Is it the whole story - or is it one variable in a much bigger equation?

Understanding the whole equation doesn't mean everything in it is within our control.

It means we can stop putting all of our energy into the variables we can't change and start identifying the ones we can.

Because we can't control every variable affecting affordability.

But we can control what we do next.

If you're feeling financially STUCK and would like someone to help you look at your whole financial picture, I'd love to have a conversation.

Liz