How much should a family of 3 have to live on, iyho? (apartment, to rent)

[MobiusStrip]

Say net pay after mortgage, auto payment and insurance are considered? HSA and 401k are being funded. One mom, two young kids. No day care cost. I am trying to convince myself that I can afford more house than I think I can. I am just accustomed to having more discretionary income than I will have once I buy and it's hard (painful) to reduce that by much but I need to suck it up and stop frittering money away.

[MckinneyOwnr]

Give us some real numbers here. You were looking for a house in the $300k range, correct? How much are you putting down? That's going to affect any calculations you do. Also, do you have any debt? Credit cards, student loans, etc.

Personally, I am ok with housing costs being as high as 1/3 of my gross income. Lenders will approve up to ~43% or so, at the max. But I don't have a car payment, no credit card debt, or any other debt obligation except my mortgage.

I think the ideal ratio to shoot for is about 25-30% of your gross income.

[MobiusStrip]

I was hoping to stay under $210k. Am planning on an FHA loan and putting down 3.5%. No credit card debt to speak of (maybe $200?) and low student loans. I bring home a little over $5000/mo. Have a decent annual bonus (10k this year) but of course you can't count on that. The thought of spending over $1500 to 1600 a month pains me. Should I be willing to part with more in the name of decent housing? Car payment and insurance come to $600/mo. HSA is funded each year to meet my deductible, currently $3000. I have had a habit of piddling money away on Amazon orders - my kids have more clothes and books than they could possibly need but I am learning to change this habit. So, anyway, $2800/mo seems like so little for food, utilities, frivolity etc. Maybe I am just a terrible money manager. :|

[octo]

Originally Posted by MobiusStrip

The thought of spending over $1500 to 1600 a month pains me.|

Have you owned a house in the past?

Unless you are really frugal and defer everything that is not absolutely critical, you'll sink a lot of money into a house vs. an apartment.

Utilities can peak during a hot summer, insurance will go up, taxes will go up (especially if prices increase as they have lately), your AC will break (minimum $500 just to diagnose), the furnace will break, all appliances will break eventually, the roof will need repair, the lawn will need maintenance and repair, the HOA fees will go up, more rooms = furniture will have to be bought...

I wasn't on a strict budget when I moved from an apartment to a house but it did shock me how much money it cost vs. living in an apartment even if PITI was similar to rent at first.

[MckinneyOwnr]

Originally Posted by MobiusStrip

I was hoping to stay under $210k. Am planning on an FHA loan and putting down 3.5%. No credit card debt to speak of (maybe $200?) and low student loans. I bring home a little over $5000/mo. Have a decent annual bonus (10k this year) but of course you can't count on that. The thought of spending over $1500 to 1600 a month pains me. Should I be willing to part with more in the name of decent housing? Car payment and insurance come to $600/mo. HSA is funded each year to meet my deductible, currently $3000. I have had a habit of piddling money away on Amazon orders - my kids have more clothes and books than they could possibly need but I am learning to change this habit. So, anyway, $2800/mo seems like so little for food, utilities, frivolity etc. Maybe I am just a terrible money manager. :|

For the house you are looking to buy that is under $210k, utilities shouldn't be that expensive. For comparison, my yearly average utility bill is $500... That's electricity, gas, water, trash collection, combined, for a 5500+ sq ft house.

$2800 should be leaving you plenty of money for food and fun.

[MobiusStrip]

I have not owned a house but know how high electric bills can be. My prior house was 2100 sf with highish ceilings and even closing off all vents I could live without and keeping the air at 78, had $300 electric bills all summer. And of course I have never had to pay for repairs unless they were my fault. I feel much better about mortgage+insurance+PMI+taxes+HOA of under $1600. But wonder if I should be willing to accept up to $2000. :/ Gack.

[TurtleCreek80]

Originally Posted by MobiusStrip

So, anyway, $2800/mo seems like so little for food, utilities, frivolity etc. Maybe I am just a terrible money manager. :|

Depending on the size/efficiency of your home, you'll need somewhere in the ballpark of $500-700/mo for utilities. I would think 1 adult and 2 kids could *generously* live on $1200-1500/mo for food and entertainment, kids activities, etc. Put the balance of $600-1100/mo in savings. You'll be glad you did when you have two kids in college!!

I don't mean to judge, but if you are currently spending more than $36,000/ YEAR on food and Amazon orders, yes, you're a terrible money manager. You should not be spending 60% of your take home on consumable crap.

[MobiusStrip]

All my money doesn't go to frivolity. I spend a fair bit on animal rescue efforts. I'd say about $800 so far this year. I provide for my mother in the nursing home to make sure she has all she needs - her $60/mo that is supposed to meet her needs does not go very far. I help other people. I spend about $300/mo on a housekeeper for my sanity. But yeah, I waste too much money. No 6 year old needs as many shoes as mine have.

[oldoak2000]

You should also 'run the numbers' on your tax-return to see how owning a house might make a difference (itemizing with home mortgage interest AND property tax as deductions). you normally don't get these deductions when renting (but essentially pay them anyway - cost factored in on your rent).


and fwiw, you should be putting money away NOW for kids college, home down payment (to avoid MIP), home repairs & updates, etc. don't waste a penny.

[Wittgenstein's Ghost]

Originally Posted by MobiusStrip

All my money doesn't go to frivolity. I spend a fair bit on animal rescue efforts. I'd say about $800 so far this year. I provide for my mother in the nursing home to make sure she has all she needs - her $60/mo that is supposed to meet her needs does not go very far. I help other people. I spend about $300/mo on a housekeeper for my sanity. But yeah, I waste too much money. No 6 year old needs as many shoes as mine have.

I commend you for your generosity to an important cause. This is unrelated to your question here, but are you aware of Animal Charity Evaluators? It is an organization that researchers and analyzes animal charities based on effectiveness per dollar of input. They have great insight, and their recommended charities are extremely effective at producing measurable results: Top Charities | Animal Charity Evaluators