When you are considering building a house, the most important thing you need to do is figure out how much you can afford to spend.

You may not know how much house you can afford, but I can tell you one thing...the bank will give you the ability to borrow a lot more money than you probably should...especially if you have good credit.

The easiest way to get an idea of how much money the bank will give you is to get pre-qualified using Countrywide loans. They are one of the largest lenders in the country and can quickly give you a good idea of what they will loan you.

You want to find out the maximum amount of money that you can get based on your financial situation.

Don't even think about borrowing the most amount of money possible. I don't know where the banks and mortgage companies get their formula for how much money they will loan, but its my belief that bowworing as much as they will let you will 99 out of 100 times make you house poor.

House poor is a condition that many people get into when they buy too much house and then find themselves with very little money left over at the end of the month. Any kind of an unexpected expense puts them in financial distress.

It may be hard to believe, but there are a lot of people who are living in the nicest homes in the most expensive neighborhoods in your area who don't have a stick of furniture in their house.

YOU need to decide how much money you are willing to put toward your new house. When my wife and I prepared to buy a new house (before we decided to build) we used what I call a bills spreadsheet.

It is a simple spreadsheet I created on Microsoft Excel that allowed me to track all of my expenses and all of my income.

By putting everything in one place, I was able to track where all of my money was going and I was able to do "what if?" calculations to determine how much money I really wanted to spend on building a new house.

By doing this I was able to reduce the amount of anxiety and remove the possibility of making an emotional decision that could result in being in financial distress.

I wish I could tell you how much you should spend on building your home, but that is something that is personal and based on your own comfort level as well as your lifestyle.

If you're willing to make a sacrifice you may want to spend more on your house and not got out to eat as much. But if you want to go out to eat, go on nice vacations, buy a new car every couple of years, then you may want to spend less on building your new house.

The whole point of this is that you need to have all of the facts in front of you so you can make decisions on a practical level and not on emotion. Having a practical decision making approach will also keep you from overspending when building your house.

If you'd like a copy of the spreadsheet, send me an e-mail and I will be glad to forward it to you.