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Old 07-29-2011, 09:48 PM
 
14 posts, read 90,244 times
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I've read different numbers on this, usually around 30%, but considering NYC rents, it has to be higher.

I'm looking at a place that is $1800 which is a little above what I want to pay, but what should that equate to annually?
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Old 07-29-2011, 10:50 PM
 
Location: Brooklyn, NY
194 posts, read 434,003 times
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Quote:
Originally Posted by yankeeah View Post
I've read different numbers on this, usually around 30%, but considering NYC rents, it has to be higher.

I'm looking at a place that is $1800 which is a little above what I want to pay, but what should that equate to annually?

No one else can really answer this for you. For some people I'm sure 20% is plenty, for other 50% is just fine.

Do the math and figure out how much take home pay you'll have (paycheckcity can help calculate after-tax pay). Then subtract how much you spend per month on everything else (groceries, eating out, shows, drinks, cell phone, etc.).

So if you bring home 4k per month, and spend 1k on everything, you're left with 3k. That 3k is going to be split between rent and savings. To avoid the stress and pain of living paycheck to paycheck, try to save at least hundreds of dollars per month. If I were left with this 3k, I would try to spend less than 2k on an apartment. This gives me a little leeway to be wrong with my spending estimation, and still save several hundred dollars per month.

Trying to generalize this to a percentage that applies to everyone is a waste of time. If you bring home 3k per month, you simply can't allocate a large percentage to rent, or you'll have 0 ability to save. On the other hand, if you bring home 10k per month, you can put 60% towards rent, and still end up saving a couple grand per month if you want.
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Old 07-29-2011, 11:58 PM
 
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I've heard something like the 40-1 rule.

That's 40 to 1, Salary to monthly rent. So an $1800 rent would mean a $72,000 salary. If you want more spending/saving cash per month, go with a 50-1 or 60-1 ratio.
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Old 07-30-2011, 04:01 AM
 
Location: Beautiful Pelham Parkway,The Bronx
6,624 posts, read 11,570,764 times
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Quote:
Originally Posted by yankeeah View Post
I've read different numbers on this, usually around 30%, but considering NYC rents, it has to be higher.

I'm looking at a place that is $1800 which is a little above what I want to pay, but what should that equate to annually?
20% or 25% of your gross income,tops.

And no,it doesn't have to be higher because this is NYC.You just have to adjust and find a borough or neighborhood or situation you can afford to live in.

Anyone who spends 40 or 50% of their income on rent needs to seriously think about how they are mishandling their finances.
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Old 07-30-2011, 07:49 AM
 
Location: Manhattan
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You cannot generalize because the larger your income the larger percentage you can pay towards rent and still have ehough left to support a decent lifestyle.
For example someone making $50,000 per month could pay 60% in rent and have $20,000/month disposable income to frolic with...NICE frolic!

On the other hand, for someone barely afloat, paying 30% as rent could sink the boat.
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Old 07-30-2011, 01:36 PM
 
Location: Confines of the 101 Precinct
10,352 posts, read 18,805,565 times
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Originally Posted by bluedog2 View Post
20% or 25% of your gross income,tops.

And no,it doesn't have to be higher because this is NYC.You just have to adjust and find a borough or neighborhood or situation you can afford to live in.

Anyone who spends 40 or 50% of their income on rent needs to seriously think about how they are mishandling their finances.
Why gross and not net? Isn't that misleading?

For example let's say I take month $4000 p/mo gross, which means theoretically I can afford a place thats $1000 a month.

But now lets say out of that $4000 p/mo my net is really $2800 a month, now meaning that thats what you're really working with. So then it drops to $700 a month. To me using gross is really counting money you won't ever see, so I don't understand why calculate a budget on gross income. I calculate my budget on my net income. That way I see exactly what I get.
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Old 07-30-2011, 02:28 PM
 
Location: Springfield Gardens, NY
1,119 posts, read 1,759,520 times
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Originally Posted by SeventhFloor View Post
Why gross and not net? Isn't that misleading?

For example let's say I take month $4000 p/mo gross, which means theoretically I can afford a place thats $1000 a month.

But now lets say out of that $4000 p/mo my net is really $2800 a month, now meaning that thats what you're really working with. So then it drops to $700 a month. To me using gross is really counting money you won't ever see, so I don't understand why calculate a budget on gross income. I calculate my budget on my net income. That way I see exactly what I get.
Yea I don't use the gross income thing higher. The only reason it's used is because income tax vary so wildly across the board, therefore it creates the best apples to apples comparison. A person will always have a gross pay of $4000/mo whether they're in Texas or Australia.
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Old 07-30-2011, 02:52 PM
 
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Up to 30% monthly net pay on rent.
Up to 35% for a mortgage.

It's always net. Never gross. Gross is bull****. What's real is the money that you actually have. Gross pay is not the money you're making. It's the money that you and the government( local, state, federal) is making.

If anybody tells you different than they are fools.

Assuming that you are single and pay an all inclusive tax rate of say 28%, in order to really afford an 1800/month rent, you'd have to be making about 100k gross at minimum.

People come up with BS number for rent because when you actually run the math, many in NYC live beyond their means and do not want to admit it. Therefore, they start to justify it by ratcheting up the percentage of income as rent requirement.

Many people in NYC live beyond their means. It's as a simple as that.
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Old 07-30-2011, 08:44 PM
 
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There is no percentage of income as rent requirement, except as imposed by landlords. As one of Dickens characters said: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

If you want to spend more on rent to live in a nicer place or in a better/more convenient neighborhood, and can adjust your other expenses to make it work, go for it.
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Old 07-24-2013, 01:59 PM
 
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hi
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