They said you shouldn't have a mortgage payment 50% of your take home pay.....

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Texashiker

Lifer
Dec 18, 2010
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197
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It's the internet, everyone is talking out of their behind. Everyone here make it sound as if people buying houses are putting down at least 20%. I know that is very rare, but yet everyone on this forum swear that is the norm.

My wife and I had to move 3 times to find a community where we could afford to buy something.

First we lived close to Conroe Texas - there is no way we could afford to live there.

Moved back to my home town, Bridge City, Texas. Housing was so expensive we could not afford to buy there either.

We finally moved to a rural town in east Texas where the housing prices were "somewhat" affordable. Even for where we live now its still too expensive. Maybe after the market finishes crashing the average middle class family will be able to buy a house like they did 20 years ago.

Part of the problem is finding a nice community where the housing market is not bloated, and go from there. My wife and I agreed it was in our best financial interest to live in a place where we could buy something without spending a fortune.
 
May 13, 2009
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It's the internet, everyone is talking out of their behind. Everyone here make it sound as if people buying houses are putting down at least 20%. I know that is very rare, but yet everyone on this forum swear that is the norm.

Believe what you want. My house is under 20% of my after taxes income. I know I'm very fortunate to be in that situation. I know with the way things are it could all change in a instant. I've been in the situation where your mortgage is 50% of your income. It's a burden I don't wish on anyone. No house is worth that. Sounds like you've got your mind made up so have at it.
 

pcguru78

Member
Nov 13, 2001
60
0
66
Just counting my salary, my mortgage payment is 32% of my take home pay. Counting the rent from my rentals it drops to 21%. I can't wait until it drops down to 0% because I paid it off.
 

Modular

Diamond Member
Jul 1, 2005
5,027
67
91
Mine's about 24% of my wife and I's combined income (net pay).

The problem for us isn't the mortgage, it's the damn student loans. We're chipping away at them, and I'm looking for a new job that pays more. If I get one, we'll put all the extra towards the lowest student loan and just snowball our way out of debt in a year or so.
 

AMDZen

Lifer
Apr 15, 2004
12,589
0
76
My wife and I had to move 3 times to find a community where we could afford to buy something.

First we lived close to Conroe Texas - there is no way we could afford to live there.

Moved back to my home town, Bridge City, Texas. Housing was so expensive we could not afford to buy there either.

We finally moved to a rural town in east Texas where the housing prices were "somewhat" affordable. Even for where we live now its still too expensive. Maybe after the market finishes crashing the average middle class family will be able to buy a house like they did 20 years ago.

Part of the problem is finding a nice community where the housing market is not bloated, and go from there.

Based off your thread where Credit cards were the devil and everything else, you are hardly the basis on which a financially responsible person / family would base their experiences on.
 

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
Exactly, its all based on how much you make.

If you make $1000 a month, then you shouldn't be paying a $500 mortgage.

If you make $10k a month, $5k is nothing and you can still live like a king.

No it's not and it's a terrible idea to do so. We've already covered this, there isn't a whole lot left over after bills/saving, you will not be living large. You'll just be living normally within your means comfortably and be able to do a few nice things a year.

So if you take home 10k

5000 mortgage
2000 bills (cars, home bills, insurance, etc)
800 food
500 entertainment
500 savings for vactions
1200 retirement/investment

not a lot is it? Change that to 2500 mortgage, keep other expenses in line and now you have 3700/month for retirement/wealth building. HUGE DIFFERENCE.
 
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Texashiker

Lifer
Dec 18, 2010
18,811
197
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Based off your thread where Credit cards were the devil and everything else, you are hardly the basis on which a financially responsible person / family would base their experiences on.

If I said that credit cards were the devil, please quote me and post it here.

If I said anything, it was that I do not like being in debt. And that is a rule of thumb that just about everyone can live by. Stay out of debt, spend within your means.
 

AMDZen

Lifer
Apr 15, 2004
12,589
0
76
No it's not and it's a terrible idea to do so. We've already covered this, there isn't a whole lot left over after bills/saving, you will not be living large. You'll just be living normally within your means comfortably.

You were a terrible idea too, but I'm sure you're happy someone finally nailed your mom.

I doubt you have any idea WTF you're talking about. I have supported myself fine for several years with mortgage close to 50% of my pay, and I have a large savings on top of it.

You go ahead and believe whatever you want to believe.
 

Timorous

Golden Member
Oct 27, 2008
1,748
3,239
136
Well my mortgage is about 30% of our joint net income. I could lower this percentage a bit by moving our let house onto an interest only mortgage rather than keeping it on a repayment but at the moment the rent covers the mortgage, landlord insuarance and a little bit for repairs.

In the UK house prices always trend up, there is a current blip which means they have dropped a bit but it will bubble again because there is more demand for homes than there is supply so interest only is not that bad a proposition because over the term of the mortgage chances are the value has increased by more than the interest payments cost anyway, you just make less.

I just wish I had more capital, as the banks are not lending as easily it means more people are forced to rent and it also means there are fewer buyers so its a great time to get into renting. Once we come through the current climate and the economy is recovering the banks will loosen up and it will be a sellers market which will push prices up.

As an example, there was a house we went for since there was some easy profit to be made because the grounds were quite large and the garage was in a position to be demolished and replaced with a new house. Unfortunately we got gazumped by a cash buyer while our mortgage application was going through. They got the property for £210,000, would have probably spent less than £10,000 on improvements and they got planning permission to destroy the garage and build a new 3 bed house. We saw the property in the paper for £300,000 and when we checked it was sold so even allowing for some haggle room they probably got atleast £280,000 for it which was a pre tax/fees profit of around £60,000 with a turn around time of about 6 months. It is gutting when you see a great opertunity like that but cannot capitalise on it.
 
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Modular

Diamond Member
Jul 1, 2005
5,027
67
91
No it's not and it's a terrible idea to do so. We've already covered this, there isn't a whole lot left over after bills/saving, you will not be living large. You'll just be living normally within your means comfortably and be able to do a few nice things a year.

So if you take home 10k

5000 mortgage
2000 bills (cars, home bills, insurance, etc)
800 food
500 entertainment
500 savings for vactions
1200 retirement/investment

not a lot is it?

I fail to see how this is NOT living like a king. If you're in a $5,000/mo home then it's a mansion. You have 800/mo being spent on food and 500/mo on entertainment...not to mention the 500/mo being spent on vacations (that's a DAMN nice vacation EVERY year), plus saving the max into retirement accounts so you'll be able to live this same life in retirement...


How is that not living like a king?! You're not even "spending" all of your money. You're wasting about 1500 a month on ridiculous shit.
 

her209

No Lifer
Oct 11, 2000
56,336
11
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I fail to see how this is NOT living like a king. If you're in a 5000/mo home, with 800/mo being spent on food and 500/mo on entertainment...not to mention the 500/mo being spent on vacations (that's a DAMN nice vacation EVERY year, plus saving the max into retirement accounts so you'll be able to live this same life in retirement...

How is that not living like a king?! You're not even "spending" all of your money. You're wasting about 1500 a month on ridiculous shit.
Not to mention 2000/month on a car + insurance + bills.
 

IndyColtsFan

Lifer
Sep 22, 2007
33,655
687
126
Not to mention 2000/month on a car + insurance + bills.

I was more amazed at the $500/month vacation savings. If you're saving $500/month for vacations, you better be going to Europe for a few weeks every year.
 
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AMDZen

Lifer
Apr 15, 2004
12,589
0
76
No it's not and it's a terrible idea to do so. We've already covered this, there isn't a whole lot left over after bills/saving, you will not be living large. You'll just be living normally within your means comfortably and be able to do a few nice things a year.

So if you take home 10k

5000 mortgage
2000 bills (cars, home bills, insurance, etc)
800 food
500 entertainment
500 savings for vactions
1200 retirement/investment

not a lot is it? Change that to 2500 mortgage, keep other expenses in line and now you have 3700/month for retirement/wealth building. HUGE DIFFERENCE.

Now that you've decided to throw a bunch of obscure numbers out there. Obviously it varies for different people, for me - my bills are no where CLOSE to 20% of my income.

If you were saving $500 EVERY Month for vacations? Jesus, I could travel the entire world every year. So that number obviously doesn't make any sense. $500 a month for food is plenty, not $800. $500 entertainment is about right.
 

Slew Foot

Lifer
Sep 22, 2005
12,379
96
86
Also note that at higher incomes the tax break gets larger, so you end up getting a decent chunk of the interest back ($2.5k/mo for me on my ~$7k mortgage).
 

JTsyo

Lifer
Nov 18, 2007
11,816
952
126
$6K for a family vacation abroad might be right but I doubt people do that every year. $500 for the entertainment seems right for a coke habit.
 

bignateyk

Lifer
Apr 22, 2002
11,288
7
0
6K for a family vacation abroad isn't going to get your very far. My wife and I spent $8K on a 3 week trip to Italy last year. Throw in a couple kids and you are easily looking at $4K/week.

Partly why my wife and I save so much money is so we can take nice vacations every year and not have to blink and eye about how much it cost. This summer we've got a two week Mediterranean cruise.

Is it worth living in a smaller home and only driving 1 car so we can do things like that? I think so.
 
Dec 26, 2007
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6K for a family vacation abroad isn't going to get your very far. My wife and I spent $8K on a 3 week trip to Italy last year. Throw in a couple kids and you are easily looking at $4K/week.

Partly why my wife and I save so much money is so we can take nice vacations every year and not have to blink and eye about how much it cost. This summer we've got a two week Mediterranean cruise.

Is it worth living in a smaller home and only driving 1 car so we can do things like that? I think so.

+1

I totally agree here.
 

vi edit

Elite Member
Super Moderator
Oct 28, 1999
62,483
8,344
126
Just an observation I see...those who favor smaller homes in exchange for vacations are also kidless.

Priorities do change when there are more bodies in a house, a school district to be concerned about, and yards/neighborhoods are more of a desired feature.
 

bignateyk

Lifer
Apr 22, 2002
11,288
7
0
Just an observation I see...those who favor smaller homes in exchange for vacations are also kidless.

Priorities do change when there are more bodies in a house, a school district to be concerned about, and yards/neighborhoods are more of a desired feature.

Yeah, that's true. But we are also saving at a rate that by the time we have kids (2 years is the plan) we will have saved enough cash to put a down payment on a larger home that will result in the same payment we have now. I don't ever plan on having a mcmansion though. If I drop money on anything it will be land. I'm not moving until I have enough cash to take neighbors out of the picture.
 

IndyColtsFan

Lifer
Sep 22, 2007
33,655
687
126
6K for a family vacation abroad isn't going to get your very far. My wife and I spent $8K on a 3 week trip to Italy last year. Throw in a couple kids and you are easily looking at $4K/week.

Maybe not an entire family, but $6K can go far if it is just two people. My wife and I spent 2.5 weeks in France and Italy in 2009 and spent around $6K. And that was a vacation we planned ourselves. You can get package deals much cheaper.
 
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Kroze

Diamond Member
Apr 9, 2001
4,052
1
0
No it's not and it's a terrible idea to do so. We've already covered this, there isn't a whole lot left over after bills/saving, you will not be living large. You'll just be living normally within your means comfortably and be able to do a few nice things a year.

So if you take home 10k

5000 mortgage
2000 bills (cars, home bills, insurance, etc)
800 food
500 entertainment
500 savings for vactions
1200 retirement/investment

not a lot is it? Change that to 2500 mortgage, keep other expenses in line and now you have 3700/month for retirement/wealth building. HUGE DIFFERENCE.

Where did you get these ridiculous numbers? It seemed like they have a very bad drug habit, drive a $100k car, eat out every meal, and party every week. Yet they still have plenty of money left for a ridiculous vacation fund and stashing away a crapload of money for retirement. That's not struggling buddy, that's living large.
 

thegimp03

Diamond Member
Jul 5, 2004
7,420
2
81
I don't know what planet you're living in but when the average income for a family in america is $50k pre-tax, and you're making $8k/month AFTER tax, that is a crap load of money.

I saw something in the last 6 months that the average salary for my area is roughly $100k pre-tax and that's "middle class" when homes are going for $500/sq. ft. and prices everywhere are inflated.
 
Sep 29, 2004
18,656
67
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THink about hte cost of:

rugs
repairs
furniture (dining room alone is expensive enough)
pots/pans/silverware

This stuff is not cheap.
 

wiredspider

Diamond Member
Jun 3, 2001
5,239
0
0
It holds true for higher income folks as well, of course there are exceptions. However, in general, if they are spending $5k on their mortgage payments, their other expenses are also somewhat proportionally higher. They will be driving more expensive cars, eat out more/spend more on food, buying more expensive clothes, etc. That makes the other half of their income go quickly.