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

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Elite Member
Super Moderator
Oct 28, 1999
62,483
8,344
126
THink about hte cost of:

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

This stuff is not cheap.

Not sure I really follow. Most of that stuff is a one and done (or a done for a really long time) purchase.
 

Jumpem

Lifer
Sep 21, 2000
10,757
3
81
Alot of people on this last page that don't understand what bills with a family and running a household can come to.
 

tfinch2

Lifer
Feb 3, 2004
22,114
1
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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.

LOL
 

dullard

Elite Member
May 21, 2001
25,476
3,976
126
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.
Some of Spidey07's numbers were a bit extreme. But, Kroze, you have the retirement idea all wrong.

This $8k/month post-tax person is earning about $125k/year pre-tax. If that person puts away $1200 a month, that is only 11.5% of the salary. That is quite a small percentage for a realistic retirement. 20% or more of your pre-tax income is what is really needed if you don't want to have a drastically reduced lifestyle.

Assuming 8% growth (typical historically) over 35 years (I'm giving this guy a lot of time to save) and 3.5% average inflation (typical historically), then that $1200 a month will turn into $2772 a month in retirement if the person is conservative and $4158 a month if that person is aggressive (both numbers adjusted for inflation to today's dollars). Then possibly pay taxes on that amount.

Sure, there may be social security money, but going from $8k a month pre-retirement to $2772 a month post-retirement is a massive budgetary shock. That person really needs to save at least $2400 a month for retirement if he doesn't want to drastically cut back on spending just as he has lots of free time to spend.
 
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Slew Foot

Lifer
Sep 22, 2005
12,379
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Hopefully they won't have a 4k mortgage and they won't need to save for retirement anymore so it's not terrible.


Some of Spidey07's numbers were a bit extreme. But, Kroze, you have the retirement idea all wrong.

This $8k/month post-tax person is earning about $125k/year pre-tax. If that person puts away $1200 a month, that is only 11.5% of the salary. That is quite a small percentage for a realistic retirement. 20% or more of your pre-tax income is what is really needed if you don't want to have a drastically reduced lifestyle.

Assuming 8% growth (typical historically) over 35 years (I'm giving this guy a lot of time to save) and 3.5% average inflation (typical historically), then that $1200 a month will turn into $2772 a month in retirement if the person is conservative and $4158 a month if that person is aggressive. Then possibly pay taxes on that amount.

Sure, there may be social security money, but going from $8k a month pre-retirement to $2772 a month post-retirement is a massive budgetary shock. That person really needs to save at least $2400 a month for retirement if he doesn't want to drastically cut back on spending just as he has lots of free time to spend.
 

dullard

Elite Member
May 21, 2001
25,476
3,976
126
Hopefully they won't have a 4k mortgage and they won't need to save for retirement anymore so it's not terrible.
Yes, you are partly correct. They can drop from $8k per month needs to $6.8k per month and be fine when they drop the $1.2k retirement savings. And they can stop paying $5k per month if they properly paid off the mortgage (something that Spidey07 actually is arguing against).

But still the taxes/insurance on that house alone would run $1.2k in retirement. It isn't like the home costs just go away. $1.2k eats up a whole lot of that $2.77k that they have (using the commonly cited but conservative spend 4% of your retirement savings/year plan).

So, they'd be left with $1.57k a month for food, utilities, living expenses, and medical bills. That isn't much considering how much medical bills run for the elderly. Medicare premiums alone could in some cases eat up much of that (it can run up to $1114/month for a couple if they didn't work 40 quarters although it is much more likely to be closer to $300/month). And it isn't like you turn 67 and suddenly stop driving, vacationing, or other expensive things.

The very least a person earning ~$125k can do is to max out the 401k for one of the people in the family. That is $16,500/year or $1375 a month. Better yet, also max out an IRA for a total of $1791/month.
 
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LurkerPrime

Senior member
Aug 11, 2010
962
0
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Alot of the expense numbers everyone is throwing around can change drastically depending on if you're married and how many kids you have.

Anyway I spend 14.9% of my net income on my mortgage, that'll drop to around 9% or less after my wife gets a job in the near future. I don't think I could pay all the bills and still afford food if I had a mortgage eating up more than 50% of my take home pay.

My mortgage was around 21% of my take home pay prior to my refi, now that its only 14.9% its not even that noticable. Hell I pay alot more to the tax man every month that I pay on my mortgage.
 

spidey07

No Lifer
Aug 4, 2000
65,469
5
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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.

I gave you reality. Just because you don't understand doesn't mean it's not reality and why putting half your money to a mortgage is a really bad idea no matter what you make. Your premise was "you can live like a king on the rest!" Your comment on the bills/car/insurance means you just cannot comprehend monthly expenses. I have a paid for car, wife is on a 200 buck lease. That was my budget about 6 years ago.

I gave you reality. Just because you can't understand it doesn't make it real.
 

ponyo

Lifer
Feb 14, 2002
19,688
2,810
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Alot of the expense numbers everyone is throwing around can change drastically depending on if you're married and how many kids you have.

Anyway I spend 14.9% of my net income on my mortgage, that'll drop to around 9% or less after my wife gets a job in the near future. I don't think I could pay all the bills and still afford food if I had a mortgage eating up more than 50% of my take home pay.

My mortgage was around 21% of my take home pay prior to my refi, now that its only 14.9% its not even that noticable. Hell I pay alot more to the tax man every month that I pay on my mortgage.

Rich people might live in expensive houses with good public schools but they still will send their kids to private schools. ~15k a year for one child. 2 or 3 kids and it's like $50k a year for grade school. And the school will still hit them up for donation so add another couple thousand per kid.
 

IronWing

No Lifer
Jul 20, 2001
70,165
28,814
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When we bought our house the payments were 26% of gross and 39% of take home (P&I plus PMI). Now the payments are 14% of gross and 24% of take home. As our income increased we have been able to make additional principal payments. If our payments were consuming 50% of income, we would not be able to pay down principal as easily.
 

Slew Foot

Lifer
Sep 22, 2005
12,379
96
86
Rich people might live in expensive houses with good public schools but they still will send their kids to private schools. ~15k a year for one child. 2 or 3 kids and it's like $50k a year for grade school. And the school will still hit them up for donation so add another couple thousand per kid.


In the Bay Area, crazy asian parents will send their 4 year old to $25K/yr preschools. F'n nuts, I know of at least 4 families that do this. Not a chance for my kids, shit, my wife and I both did med school for less than that.
 

ponyo

Lifer
Feb 14, 2002
19,688
2,810
126
In the Bay Area, crazy asian parents will send their 4 year old to $25K/yr preschools. F'n nuts, I know of at least 4 families that do this. Not a chance for my kids, shit, my wife and I both did med school for less than that.

Lol. It's like that here too but slightly cheaper. And it's freaking competitive to even enroll. You need connections and your 4yr old need to score certain %. I feel bad because all my relatives and most of my friends send their kids to private schools. I feel the peer pressure but I can't justify the cost when we're in a good public school district. I am saving the money I would have spent and will give it to her later but sometimes I wonder if I'm making a mistake.
 

sdifox

No Lifer
Sep 30, 2005
96,906
16,174
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In the Bay Area, crazy asian parents will send their 4 year old to $25K/yr preschools. F'n nuts, I know of at least 4 families that do this. Not a chance for my kids, shit, my wife and I both did med school for less than that.

asian parents think education is everything for a kid. I guess the thought process has some of "No fucking way my kid is going to make me look bad"
:rolleyes:


Got the crap beat out of me in school back in the late 70s and early 80s. Particularly 83... I got enrolled in a particular class that is basically all the kids from the rich and famous (except us of course, we just happended to be friends of the chair of the board). The home form teacher told us she has always come in at number one (we had like 20 classes of the same grade. Would be grade 7 in North America). Context being we are being prepared to write entrance exams to high schools and if you get into better high schools your chances of making it to university is higher.

we had weekly quiz, and the standard for our class was 80%. You get whacked in your palm (or butt) once per percent below 80.
so your subject teacher beat you up, then your home form teacher gets the results and beat you up again.

My class number was 1...and I suck at school... you can imagine how much whacking I got.

And the home form teacher was preggies at the time... so hormones also play a role.

She broke quite a few 4ft long rattan staff on us...
 
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Dr. Zaus

Lifer
Oct 16, 2008
11,764
347
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asian parents think education is everything for a kid. I guess the thought process has some of "No fucking way my kid is going to make me look bad"
:rolleyes:


Got the crap beat out of me in school back in the late 70s and early 80s. Particularly 83... I got enrolled in a particular class that is basically all the kids from the rich and famous (except us of course, we just happended to be friends of the chair of the board). The home form teacher told us she has always come in at number one (we had like 20 classes of the same grade. Would be grade 7 in North America). Context being we are being prepared to write entrance exams to high schools and if you get into better high schools your chances of making it to university is higher.

we had weekly quiz, and the standard for our class was 80%. You get whacked in your palm (or butt) once per percent below 80.
so your subject teacher beat you up, then your home form teacher gets the results and beat you up again.

My class number was 1...and I suck at school... you can imagine how much whacking I got.

And the home form teacher was preggies at the time... so hormones also play a role.

She broke quite a few 4ft long rattan staff on us...

Are you 70 years old?!!
 

Fingolfin269

Lifer
Feb 28, 2003
17,948
31
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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.

This is a good point but really when you are kidless it frees up so much cash that you can go ahead and just buy into that nice neighborhood *just in case* and still save up tons of cash for awesome vacations.
 
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Dr. Zaus

Lifer
Oct 16, 2008
11,764
347
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thy math fails...grade 7 in 1983 makes me 70 year old?

I'm starting to put this together... you are Asian and they beat you because you are Asian... so you where in china or some such?

I ask because the mindless barbarism shown is something we haven't seen in the US for a very long time; and if your horrible abuse was anything more modern those involved should be outed and publicly humiliated.

The use of hurting children into learning has been shown to be bull fucking shit/bat shit stupid since Skinner's early work in the 60s.
 

NetWareHead

THAT guy
Aug 10, 2002
5,847
154
106
Pretty sure my mortgage+taxes+insurance was more than 50% of my take home when I bought my first place as a single childless guy. Worked out really well for me. I had all kinds of cash to spend on stuff, paid off my large student loans in four years, maxed out my retirement contributions, greatly increased my non-retirement savings...

A different time, a different place, a different buyer with different luck, might work out horribly.

Truth right here. MY mortgage and related expenses was also high as hell in relation to my income, but with enough research and applying, I found a mortgage that didn't require income verification and got a great rate out of it too (5%). As a 24 year old new homeowner, I had no other expenses and spending 50% of my income on my house didn't seem like a bad thought. Also worked out very well for me, 6 years later & more income, I've made a decent dent in my mortgage.
 

QuantumPion

Diamond Member
Jun 27, 2005
6,010
1
76
Instead of getting a million dollar house, get a $300k house, pay it off in 10 years, and still have more money left over every month.
 
Jul 10, 2007
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Where things get tricky is if one spouse makes an exceptionally higher amount of money than the other. Like in my case, we can make the house payment on just one of my wife's paychecks. But both of mine added up wouldn't cover it.

That's harder to account for.

what does your wife do? work for the gubment?
 

bignateyk

Lifer
Apr 22, 2002
11,288
7
0
Instead of getting a million dollar house, get a $300k house, pay it off in 10 years, and still have more money left over every month.

Instead of a 300K house just get a cardboard box and live under an overpass. Think of all the dough you could rake in then :awe: