Housing/rent should never be more than 25% of your TAKE-HOME pay, not Pre-taxed Income. for us, we have a complete written budget that we stick too fairly strictly. take home for both of us totals $6,600 a month. We're a family of 4. $1,350 - mortgage $350 - Cable/Cell phones/Internet $480 - Groceries/food $220 - Water/Trash/Electricity $450 - Gas $125 - Car Insurance $180 - School Lunches (teacher wife & 2 kids daily) $160 - Various memberships/gym/netflix/etc $550 - cash for the month for me & the wife (snacks/going out/sonic drinks/fun/etc) $150 - Christmas (we save a little for Christmas out of every paycheck) $500 - $700 Student Loans (trying to pay them off ASAP) $500 - Saving for Disney Trip this summer $500 - had to buy a new Home AC unit($5,500) & have to pay it off before the interest starts $500 - Medical Bills (Wifes had surgery each of the last 3 years) Should have the student loans, the surgeries, and the AC paid off by the end of the year and we'll double our retirement funds and begin 529's for the kids.
$1400-1700 is now the going rate for new apartments (1BR/1BA) inside the loop nowadays. Without a roommate it is pretty hard to get below $1000/mo in a desirable area.
at the very least you should be maxing out your IRA ($417/month) which you shouldn't have a problem doing. decrease your spending by $217.
I pull in about 1800/mo. $400 - car/car washes $1000 - rent $300 - food $100 - lotto tickets The rest I just charge on a credit card.
And it baffles my why people pay that. In my opinion, paying rent in general is just throwing your money away. I realize not everyone has the resources or history to get a mortgage, but you really just piss money away on rent and leases. With the exception of those who move often for work, I suppose. I know living in trendy areas can boost your score total, but in the long run you might as well just visit a massage parlor and call it a day. Nice 3-4 bedroom rental houses in the suburbs are going for that price range. Housing is high all over Houston because the economy is booming... and Exxon world headquarters is skewing the market slightly at the moment. Best advice in the entire thread. Max an IRA yearly ($5,500 below 50, $6,500 above 50), you'll get $1500-2000 back in taxes every year because of it - all while tremendously boosting your retirement. $100 a month or lottery tickets? That's $1200 a year!
You look into it too much. My base salary is only aobut $55k but I made $85k this year. I get lots of sporadic overtime. Check hits bank, usually $1900-$2000 after taxes, and $730 is taken out for my mortgage. Truck note is $324 and I pay my credit cards off each month. I know I don't spend more than I make because I keep track of it in my head. I keep that s simple. If I had a budget made out like that it would drive me crazy.
15% - Retirement (half IRA, half 401k) 20% - Savings 40% - Mortgage/Rent 0% - Car (paid off) 15% - Utilities/'Necessities' (gym, cable, cell, insurance, groceries) 10% - Discretionary (entertainment, clothing, more savings, etc)
I know how you feel. Uncle Sam got over $20,000 from me this year, then 401k, benefits, etc... take home almost ends up being only 50% of salary. I highly suggest Mint. It breaks down your spending habits automatically based upon your charges or checks that process your account. They have apps for every major device platform. They also track credit and loan accounts if you want them to. And, it is free.
I feel your pain. I paid uncle sam about $14k this year. They F me good since I'm single with zero dependants. I did get $3k back though, which was nice.
Never understood this. How is it throwing your money away? Your paying for a place to live. It seems insignificant, but this kind of out-dated realtor speak and line of though is one of many things that helped contribute to the housing bubble and subsequent recession. In many parts of the country, buying a house is simply not as great of a financial move as it was in prior decades (before the bubble). Besides, you're also "throwing away money" on closing costs, insurance, property taxes, maintenance, and that huge percentage of your mortgage payment the first several years that mainly goes straight to the bank. And most people sell before they get deep enough into their mortgage term to really start rapidly building up equity. There's also risk involved, since the value of your home is no longer guaranteed to always go up with how shaky and volatile the housing market has been lately (with a deluge of government intervention propping it up). I'm sure in Texas it still makes sense to buy the majority of the time, but in many places the financial benefits of owning a home is all about how long you plan on staying in the house, which is a risk since you can never really be sure. I think where I live we're talking anywhere from 7 to 10 years before you break even with renting over the same time period (and that's assuming the market didn't crash around the time you were beginning to sell.) It's also nice not having to stress about maintenance, your home value, or whether or not you're underwater on your loan.
I'm single and zero as well. Once you hit that 28% tax bracket it gets tougher to swallow, as you could make far less and bring home the same amount. Maximizing IRA, having a mortgage and various other things help ease the sting somewhat. Those first few years may to go the bank, but you always get to write off mortgage interest on your taxes - which makes a huge difference in total returns. Not to mention the money you also save on your homestead exemption. Obviously there is risk, as there is with any investment. But there is also risk of signing a 12 month lease on a place when you could lose your job the next day. At least with mortgage insurance (which is built in to your loan until you pay off 20% or for a few bucks a month) your butt is covered in that case. Never bite off more than you can chew, purchase a home that will retain value (not difficult) and do your due diligence and it makes tremendous sense. And you're right, I was referring to Houston because that was the context of the conversation.
Yeah, I've made this mistake before where I mistakenly argued with someone who was only referring to the houston/texas housing market. I just feel like there is a lot of bad/outdated advice given about housing, and it always irks me.
Well, that brings up a better question as to why the hell people live where it is too expensive to begin with? I've been all over and I love San Francisco and Seattle. I adore the cities, the weather, the culture, etc. But I would never move there, it just doesn't make fiscal sense. I realize if you have "roots" it is tough to move, but if and when I have a family I could provide them a much better life and more importantly a much better future in a place that was cheaper to live and more prosperous. Which is about 90% of Texas over the rest of the nation.
Taxes and Condo fees on nice condo's rip you off bad. The one I was looking at was like a grand a month.
