![]() ![]() One person's 100K income could be wildly different from another person's in terms of upward mobility, job stability, recession resistance, automation resistance, adaptibility to changing markets, personal risk factors such as health, etc. Just how much risk you can tolerate *is* entirely personal. There's no way around it, being house poor does increase your risk, so it does put your future in more jeopardy. Only you can know what degree of risk you are willing to take with respect to leveraging yourself in primary home real estate. You want to know how much you should spend on a house? Nobody can really decide that for you. He wouldn't be if he was just describing what every ol' American already does. Most people are leveraged up to their eyeballs and well outside the realm of what anyone like Dave Ramsey would approve of. How do most people do it? By not following rules of thumb, that's how. If the rules say you can't afford where you live, then you are going to have to think long and hard about just how overextended you are willing to be in order to own where you live. That would make no sense.Īs I said before, rules of thumb are very rough guidelines. ![]() ![]() There's no "rule of thumb" for just how house poor you can go. If housing where you live is unaffordable based on your income and resources, then you will have to make a very, very individualized decision as to whether or not owning in your city is worth it to you, or even continuing to live in your city for that matter. I'm not really sure what you are looking for here.Īre you looking to be told that in VHCOL areas that ultra expensive houses are somehow more affordable than they are just because they're the only option? ![]() it's just a determination of whether buying the house would put your financial future and stability, including saving for retirement, in jeopardy. I don't think it's an individual situation, affordability is supposed to be agnostic to whether one wants to spend that much or not. Everyone has wildly different ideas and there does not seem to be any standard. Since this is the Personal Finance forum perhaps we can get some opinions as to what is the current standard to determine how much one should put down, what should be the % of gross or take home pay etc. The housing costs and taxes were partial factors despite a high income.Īctionable in the sense that there is a huge amount of confusion about what exactly is affordable in terms of buying a home, there used to be a consensus 2 decades ago - 20% down, 28% back end ratio, 32% front end ratio etc. IMO Dave is good with the behavioral aspect and shakey on the math. 'Buy vs Rent' is a much more sensible method than Dave's methods. In LA, the rents have gotten ridiculously high. The thing is you have to live somewhere and that somewhere is renting. I don't agree with everything Ramsey says but with regard to home ownership I think he is spot on.Īnother LA native here*. I was just curious if there are any others who actually believe in his philosophy or if I am an outlier, that is all. I'm not a homeowner because I strictly agree with the Dave Ramsey philosophy on home ownership. Personally, as an LA native, no, if HHI wasn't significantly more than $100k I wouldn't even consider trying to buy (at least at this time).Īlso an LA native, but currently live in TX. $100k just ain't what it used to be.Īnd? You're the one with the mortgage, up to you to decide what you are comfortable with. He only recommends saving 15% of your income towards retirement until your house is paid off.Īnd then you ignore the fact that $100,000/yr income doesn't entitle you to own a home in LA. He recommends only saving in your 401k up to the match and then using a Roth IRA. Dave doesn't recommend maxing an HSA or a 401k before buying a house. In other words, add all those voluntary deductions back into your income. Dave doesn't consider any insurance premiums or 401k contributions when calculating "take-home pay". What is your take on how much home one should buy if one wants to be financially conservative? So someone who makes six figures in LA can afford a $168,990 home? Per Ramsey's calculator, maximum affordable home - $168,990 $100,000/yr gross (Bi-weekly pay - considered monthly since that is the monthly cash flow):ĭeductions - 401k (Max), HSA (Max), Health Insurance (Employee contribution) Sample case, single guy with good income living in LA. Only 15 year mortgage allowed since the goal is to pay off the home in a reasonable amount of time Total Home payments (including all taxes and fees) shouldn't exceed 25% of take home pay What is your take on the Home Affordability Calculator by Dave Ramsey? This follows his core rules of home buying: ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |