I have this discussion with each one of my buyers at our initial consultation. It has become less of an issue with the tighter lending restrictions, however, some still qualify for more than what they can truly afford. I make a couple suggestions to my buyers to gauge what they can afford AND still live life not married to the mortgage:
*Create a budget - it is amazing to me how many people don't have a budget in place to organize their finances. I will say that many more people with the turn in values, have given this much more direct attention. 
*Define what spending can be scaled back - without a budget (or for businesses, a business plan), it is very easy to spend money on unnecessary things, while being unaware of how much you're actually spending. I realized this in my business plan. I became so busy that I was just spending money without making it accountable to work for me!
*Be prepared for the unexpected - owning a home can be expensive. It is not only important for homeowners to maintain their home, but you can also be less stressed knowing that you've saved for a rainy day. Sometimes it's just impossible to know whats at the end of the tunnel!
Ultimately, many of these activities get a way from us when life happens. Just keeping track of where you stand and where you want to be can make the difference!
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