Housing Calculations

chimmytime

Senior member
Jul 26, 2002
702
1
0
Say I'm making about $2500/month after taxes.

26 yrs old, single, no bills, no car payments, no school loans, living at home at the moment.
How much would you you

a.) Put into retirement (401k, IRA)
b.) Be able to spend on Mortgage
c.) Spend on housing bills (power, water, ...)
d.) Spend on living expenses (food, gas, ...)
e.) Have left to save.

 

habib89

Diamond Member
Jan 17, 2001
3,599
0
0
well you should take out bills since you don't control that.. you just gotta pay them whatever the hell they want you to...
i'd do

25
30
depends
budget
10

then your remaining 35% you budget out to how much you can spend on living expenses after you factor out bills
 

DannyLove

Lifer
Oct 17, 2000
12,876
4
76
Idiots, thats obviously per month.

Rule #1 don't request assistance for your life from ATOT. Just look at the replies.

danny~!
 

chimmytime

Senior member
Jul 26, 2002
702
1
0
Yes, that is per month.

I do like seeing the replies, its nice just knowing people out there are in worse situations.
 

IronWing

No Lifer
Jul 20, 2001
72,176
32,557
136
Put every dime you can into the mortgage. The housing market can't help but go up.
 

sygyzy

Lifer
Oct 21, 2000
14,001
4
76
1. Up to the point of company match (401k)
2. Next 10% into IRA
3. 25-30% GROSS income for mortgage/rent.
4. Whatever it takes
5. Whatever it takes
6. Rest into savings but you probably won't have much left. Points 1 and 2 take care of nearly 20% of savings off the top.
 

Demon-Xanth

Lifer
Feb 15, 2000
20,551
2
81
Originally posted by: FrustratedUser
Mortgage payment at 28 - 33% of gross income. That's what I've been told. Go from there.

You odviously don't live in California. In California that would barely get him an apartment.
 
Aug 16, 2001
22,505
4
81
Originally posted by: Demon-Xanth
Originally posted by: FrustratedUser
Mortgage payment at 28 - 33% of gross income. That's what I've been told. Go from there.

You odviously don't live in California. In California that would barely get him an apartment.

No, I live in focking Charlottesville VA and that would barely get me a tool shed.
 

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
49,601
167
111
www.slatebrookfarm.com
Too many variables!!! What is your job outlook for the future? How is the housing market - are prices rising rapidly or barely at all where you live? Are you in the same area you want to be in 5 years - any chance of moving into a different housing market? How is the resale market in your area - houses sell fast or slow? What's the difference in average rent vs. mortgage (for similar living conditions)? How long do you think you're going to live there? Where in Cali?? How long until you need a new car? More importantly, what kind of car do you want to purchase - new $20k or more car, or used car for <$5k when you DO need a new car (or will you walk, bike, public transportation everywhere)? How long until you plan to marry? For housing considerations: do you plan on having children early in the marriage? For the 401k, etc., what kind of plans does your employer have (matching contributions, etc.)?

If you're in an area where the housing market is just taking off, you may be able to increase your net worth quickly by investing more in real estate. But, if you're in an area where the housing market is kind of stagnant, you may want to invest more elsewhere. Don't forget, interest on real estate can be tax deductible, but it will depend on the amount of interest you have and how you file; some people, especially after getting married and popping out a few kids discover that the standard deduction is more and they don't get to deduct that interest.

But, as long as you don't have credit card *debt*, you're already in really good shape. This isn't to say credit cards are bad - by all means, if you have a card that gives you air miles or whatever for each purchase, go ahead and use it - - - IF you are going to pay off the entire balance EVERY month. Otherwise, CC's are a huge burden.
 

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
49,601
167
111
www.slatebrookfarm.com
Housing bills - water, power, etc. are all controlled, at least to a large degree, by your choices. Sure, go ahead and take 30 minute showers every morning and afternoon... Or, take a 3 minute shower. In cold weather, the difference between heating the house to 72 degrees vs. 68 degrees can make a difference of hundreds of dollars in heating bills in some homes, particularly older homes that aren't as air-tight or as well insulated. Power bills: do you leave the lights on all the time? Do you use 100 watt light bulbs where a 40 or 60 watt would do? Do you use compact flourescent bulbs which use only 11-15 watts to replace 60 watt bulbs?
 

DAGTA

Diamond Member
Oct 9, 1999
8,172
1
0
Many people suggest a rule of 2.5X your annual income = purchase price of house. However, that's just a rule of thumb. The reality is: you need to sit down and estimate your own bills and figure out what YOU are comfortable with.

Figure out these expenses:
Electric (avg per month in your area)
Gas (if you have it)
Water / Sewage / Garbage
Phone costs
Internet costs
Cable television (if you have it)
Health insurance
Car Insurance
Car Payment (said you don't have it, but you should try to save a set amount each month towards the future purchase of a car)
Food expenses (if you are unsure, go with $300/month to start and adjust after a few months of monitoring your habits)

When buying a house: keep in mind you will have taxes, insurance, and possible Home Owners' Association dues to tack onto your monthly costs. These are in addition to your principle and interest payment.

Also, if you buy a house that is not brand new, you may need money for fixing/changing things. You will need to purchase appliances. Etc.


 

chimmytime

Senior member
Jul 26, 2002
702
1
0
My work outlook is this.

I can stay at my current job for the rest of my life, with a 3-5% raise a year, or i can go out on my own freelancing and possibly make twice as much, but with a lot more risk and uncertainty from year to year.

I live in the Los Angeles/OC border, and i hope to stay in this area, and i'm just trying to figure out a rough estimate of if buying a house is even feasable, and worth it. Realestate market is still strong.

My car is a 2002, paid off, and very happy with it. I try to take The Metro Rail when ever possible.

I don't plan on getting married for another 4 years, no kids, no pets.

Company currently matches 50% of contributions up to $3000.

I pay off my point credit cards every month.
 

iroast

Golden Member
May 5, 2005
1,364
3
81
Don't forget about these bills:

Cable,
Electrical/gas
Water
Property tax
Cell phone
foods/drinks
Entertainment
Gas
Auto insurance
etc
 

NogginBoink

Diamond Member
Feb 17, 2002
5,322
0
0
My personal opinion:

You're young. You're most likely going to move in a few years (Mrs. Right has a habit of doing that.)

Spend as little as you can on a house that will give you a place to live that you'll be comfortable in and that is not likely to go down in value.

Put as much as possible into 401K and other savings. This is the period of your life where you will have A) the fewest expenses and B) the most time for that saved money to earn you a decent retirement. When kids, wives, bigger houses, and cars come along, A) will no longer be true.

I bought much less house than "they" say I could afford. I am very happy that I did. I'm able to save money, I'm able to enjoy going out, and I don't worry about where I'm going to get the funds to pay the electric bill.
 

NogginBoink

Diamond Member
Feb 17, 2002
5,322
0
0
Originally posted by: ironwing
Put every dime you can into the mortgage. The housing market can't help but go up.

This is not true.

Plus, if you lose a job or get into a financial bind, you lose the house.

Buy a house to live in, not as an investment.
 

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
49,601
167
111
www.slatebrookfarm.com
Originally posted by: ironwing
Put every dime you can into the mortgage. The housing market can't help but go up.

That's not necessarily true... it can't go up forever, at least not at the current rates;
in his area, (which you may not have known until he posted after your post) there is considered to be a housing "bubble" which *may* pop, causing real estate prices to go down.

And, it's not universal that real estate prices go up. I can point to at least one area where the average value of homes is going down. i.e. Buy a house for 200k this year and it may only be worth 195k next year.


Now, since your employer matches 50% up to 3000, then contribute that much to your 401k. You contribute $3000, you basically get a tax free (til later) $1500 bonus. Definitely start doing this ASAP.
 
Sep 29, 2004
18,656
67
91
As for the mortgage, go to finance.yahoo.com and d ot he how much you can afford calculator. Then spen no more than 80% of the value that they tell you. The sussion is nice for savings, etc
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,389
8,547
126
people in this country are overinvested in real estate.

if 25% of your monthly after tax income can't pay for your rent/mortgage i think you should move somewhere else.
 

MadPeriot

Golden Member
Dec 5, 2003
1,012
0
0
In my situation at 27 years old living in So Cal:

mortage: $2200
Utilities (water,trash, gas, elec, cable, internet): $240
401K: 10%
Living expense: $250

0 debt, 0 car payment, and 0 in savings. Just bought a condo with all my savings.

 
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