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Recently we have been looing around to buy our first house and we tried to break down all the expenses. Below is what we've came up with based on a $500K house with 20% down payment. Are we close, way off, or right on? All expenses are broken down by month.
House Expenses
$2,003 mortgage ($500K/20%DP/30yr/4.4%)
$916 Tax ($11K/year)
$83 Home Insurance ($1K/yr)
On-going Expenses
$500 Utilities (water, gas, electricity, oil)
$150 Phone bill (family plan with 3 lines)
$300 Groceries
$650 Transportation (LIRR, subway, gas, insurance)
$240 Lunch money
$100 Cable bill
$800 College fund
$500 MISC (friends & family events)
The house expense is about $3,000 and other on-going expense is about $3,240. Total expense comes down to $6,240 a month (you can add additional car loan, student loan, other monthly debt if any. don't forget other expenses that come with kids.)
We did this calculation so we know what we are about to get ourselves into. Please share if we missed any other expenses. (I know I didn't include life insurance yet). Thanks.
Oh we also like to put some money away for savings (say $2K/month?)
see my comments in red - can't think of any other significant expenses at this hour
A lot depends on the size of your family and how "comfortable" you envision your life style...
Quote:
Originally Posted by A&H
Recently we have been looing around to buy our first house and we tried to break down all the expenses. Below is what we've came up with based on a $500K house with 20% down payment. Are we close, way off, or right on? All expenses are broken down by month.
House Expenses
$2,003 mortgage ($500K/20%DP/30yr/4.4%)
$916 Tax ($11K/year)
$83 Home Insurance ($1K/yr) you're low on HO insurance, at least $100, very likely more
On-going Expenses
$500 Utilities (water, gas, electricity, oil) maybelow, depending on sqft of house, insulation, life style, as well as CAC? pool? in-ground sprinkler?
$150 Phone bill (family plan with 3 lines)
$300 Groceries how many people are you? two? at $70/wk for food and other grocery items (personal care, laundry/cleaning supplies, etc.)? this should be more IMHO
$650 Transportation (LIRR, subway, gas, insurance) how many/what kind of cars, how many miles driven - can change this
$240 Lunch money
$100 Cable bill
$800 College fund
$500 MISC (friends & family events) -plus Maintenance and repair - depending on condition of house and ability to do-it-yourself -clothing - possibly dry cleaning
-barber/hair salon ??
-yard maintenance (or do-it-yourself with proper equipment)
The house expense is about $3,000 and other on-going expense is about $3,240. Total expense comes down to $6,240 a month (you can add additional car loan, student loan, other monthly debt if any. don't forget other expenses that come with kids.)
We did this calculation so we know what we are about to get ourselves into. Please share if we missed any other expenses. (I know I didn't include life insurance yet). Thanks.
Oh we also like to put some money away for savings (say $2K/month?)
Pretty good estimates, just by looking at those numbers and then guesstimating plus/minus to my monthly bill sheet I run every month to track my expenses.
The only part you excluded were any home repairs, landscaping, and crap that creeps up every now and then.
Example)
I moved in October 2009. We just had a newborn baby. We had our attic renovated before we moved in for $9k because we were concerned that an open attic would be a health issue for our newborn. We bought furniture literally every month because we just got married and lived in a 1 bedroom apartment. IKEA runs, catalog books, etc.. The heat pump in one of my zones crapped out in subfreezing weather at the start of winter. That was a $350 repair because it was a Sunday. The green painted walls we thought looked great in our bedroom was actually very depressing during the winter. Spent a weekend painting our own room. Had to go with the expensive non-VOC paints ($55 for primer, $55 for paint) since we have a newborn. Spring time came around. Still buying furniture to fill the house. Decided to do my own landscaping. Bought a $300 mower, $90 trimmer, and some garden stuff (fertilizer, hose, sprinkler, etc...). Water hose to refrigerator leaked and went down into the basement. Tried to do all the repairs myself. Made countless mistakes. Ended up costing me over $200 to just replace a hose, dehumidifying the basement, redoing the sheetrock on the affected area to make sure moisture isn't trapped between the walls. Countless trips to home depot and countless nights after work. AC in the baby room broke. Went to Lowes to pick up a $100 6000BTU AC. By end of summer, decided the landscaping was too hard to keep up. Paid $250 to clean up the overgrown weeds I could not control around the bushes and trees. Looking into landscaping right now to do everything but the mowing and trimming. Didn't realize my boarder trees needed to be pruned and trimmed. Getting quotes at $750 right now since they are overgrown in one season. Will need to pay $250 every year to trim them. Just too many trees to do myself. Tried to do it after buying a $120 8 foot ladder from Sears and a $70 hedge trimmer. Gave up. One of my overrgown trees are now leaning 45 degrees into my lawn. That needs to get fixed too before the soil gets cold so that the roots can settle 7 year old kenmore dryer broke in the summer. Paid a repair person $80 to fix it. A month later, the washer broke. Turned out to be a $200 repair job. Decided to get a new washer and dryer set from lowes for $1300, since they were having a 20% off laborday sale with an additional 10% coupon I got in the mail. Decided that the the third bedroom needed to match the paint on our beroom. Again, we used the more expensive non-VOC paint and primer.
It seems to be endless... and we bought a fairly mint condition home with almost everything renovated within the last 5 years... roof, sidings, insulaton, electric, plumbing, kitchen, bathrooms, etc... and still I end up putting money into the house.
Plan on getting a snow thrower since last window, I was armed with only a 3 foot shovel that was in stock in only 1 local hardware store.
Pretty good estimates, just by looking at those numbers and then guesstimating plus/minus to my monthly bill sheet I run every month to track my expenses.
The only part you excluded were any home repairs, landscaping, and crap that creeps up every now and then.
Example)
I moved in October 2009. We had our attic renovated before we moved in. We bought furniture literally every month because we just got married and lived in a 1 bedrrom apartment. We just had a baby. The heat pump in one of my zones crapped out in subfreezing weather. That was a $350 repair becuase it was a Sunday. The green paited walls we thought looked great in our bedroom was actually very depressing during the winter. Spent a weekend painting our own room. Had to go with the expensive non-VOC paints since we have a newborn. Spring time came around. Still buying furniture to fill the house. Decided to do my own landscaping. Bought a $300 mower, $90 trimmer, and some garden stuff (fertilizer, hose, sprinkler, etc...). By end of summer, decided it was too hard to keep up. Paid $250 to clean up the overgrown weeds. Looking into landscaping right now to do everything but the mowing and trimming. Didn't realize my boarder trees needed to be pruned and trimmed. Getting quotes at $750 right now since they are overgrown in one season. Will need to pay $250 every year to trim them. Just too many trees to do myself. Tried to do it after buying a $120 8 foot ladder from Sears and a $70 hedge trimmer. Gave up. One of my overrgown trees are now leaning 45 degrees into my lawn. That needs to get fixed too before the soil gets cold so that the roots can settle 7 year old kenmore dryer broke in the summer. Paid a repair person $80 to fix it. A month later, the washer broke. Turned out to be a $200 repair job. Decided to get a new washer and dryer set from lowes for $1300, since they were having a 20% off laborday sale with an additional 10% coupon I got in the mail.
It seems to be endless... and we bought a fairly mint condition home with almost everything renovated within the last 5 years... roof, sidings, insulaton, electric, plumbing, kitchen, bathrooms, etc... and still I end up putting money into the house.
Plan on getting a snow thrower since last window, I was armed with only a 3 foot shovel that was in stock in only 1 local hardware store.
Nothing like real life experience!!
I think I'll print out your "story" and give it to some of my first time home buyers, the ones that I feel are buying more than they can afford . Of course they may end up not buying at all
I think I'll print out your "story" and give it to some of my first time home buyers, the ones that I feel are buying more than they can afford . Of course they may end up not buying at all
You might want to check back a few times. I seem to add more into what was a short paragraph.
And mind you, this is all stuff related to the house ONLY. There other stuff I could mention, but were not house related, like the car breaking down... then finally buying a new car with AWD since last winter got us stuck in the house a few too many times... also health insurance with a kid is no joke... and thinking that we lived so close to the LIRR train, that my wife didn't need to get her license. After two $600 classes, she finally passed.
see my comments in red - can't think of any other significant expenses at this hour
A lot depends on the size of your family and how "comfortable" you envision your life style...
Thank you for the comment. I def. left out some other expenses like gym, vacations, etc. I will probably add another $200 a month to the MISC and make it $700 intead of $500.
This exercise is based on we don't have any loan, debt, children; plus the house we are considering is in mint shape that doesn't require much work in the next few years. (at least that's what we are hopping so).
I posted this wanting to get some real advice from readers here as well as sharing some realistic numbers to others who are or about to be in our shoes. We really didn't know how much it cost to maintain a house until we did this exercise.
You might want to check back a few times. I seem to add more into what was a short paragraph.
And mind you, this is all stuff related to the house ONLY. There other stuff I could mention, but were not house related, like the car breaking down... then finally buying a new car with AWD since last window scared me a bit... also health insurance with a kid is no joke... and thinking that we lived so close to the LIRR train, that my wife didn't need to get her license. After two $600 classes, she finally passed.
I hear you, jshlee!! I've been a homeowner for - yikes - 40 years (started young ) and have been through a lot myself (in three different homes)!
For my purposes it's better if the info comes from an independent third party...
BTW, I wouldn't change it for the world! Love being a homeowner, "warts" and all
You might want to check back a few times. I seem to add more into what was a short paragraph.
And mind you, this is all stuff related to the house ONLY. There other stuff I could mention, but were not house related, like the car breaking down... then finally buying a new car with AWD since last winter got us stuck in the house a few too many times... also health insurance with a kid is no joke... and thinking that we lived so close to the LIRR train, that my wife didn't need to get her license. After two $600 classes, she finally passed.
I agree. There are much more expenses one cannot think of until it happens. I should of mentioned in my original post that those numbers I listed are just the min. at the end of the month. As a friend of mine joked he died once a month looking at his monthly budget.
I agree. There are much more expenses one cannot think of until it happens. I should of mentioned in my original post that those numbers I listed are just the min. at the end of the month. As a friend of mine joked he died once a month looking at his monthly budget.
If you want a ball park figure, I think your 6k a month estimate should about do it if you have a fairly lean expense sheet. I would realistically think, for those who can afford a $500k home with 20% down, the raw expenses should be more like $8k with spikes into $10k a month. The $2k-4K additional is for things that is personal to that family. If you can't handle spikes to that amount every other month, then I don't think you should be buying a $500k house. That's my take. Anything less goes into savings for a rainy day.
I think $8k a month equates to a $150k yearly base income where you get a paycheck every month to pay the bills. I don't count investments and bonuses, and small business owners who have a more complicated tax issues to sort out.
If you want a ball park figure, I think your 6k a month estimate should about do it if you have a fairly lean expense sheet. I would realistically think, for those who can afford a $500k home with 20% down, the raw expenses should be more like $8k with spikes into $10k a month. The $2k-4K additional is for things that is personal to that family. If you can't handle spikes to that amount every other month, then I don't think you should be buying a $500k house. That's my take. Anything less goes into savings for a rainy day.
I think $8k a month equates to a $150k yearly base income where you get a paycheck every month to pay the bills. I don't count investments and bonuses, and small business owners who have a more complicated tax issues to sort out.
I think 500K is a bit too high even for someone in the 150K range. My family income is a bit above that and I wouldn't consider looking at anything over 450K, and expecting to low ball to around 420-430K, when you factor in an additional $800 a month in taxes. We have $0 debt other than our current mortgage.
Don't forget day care expenses if you have those. I don't want my kid to grow up too fast, but Kindergarten is going to put another 10K back in my pocket.
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I think I'll print out your "story" and give it to some of my first time home buyers, the ones that I feel are buying more than they can afford 
. Of course they may end up not buying at all 
