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All you need to do is determine one month of expenses, then multiply it by 6. But, also don't forget to include expenses that don't occur monthly, such as an annual motor vehicle tax, tax return payments, or auto insurance (if you don't pay monthly), etc.
All you need to do is determine one month of expenses, then multiply it by 6. But, also don't forget to include expenses that don't occur monthly, such as an annual motor vehicle tax, tax return payments, or auto insurance (if you don't pay monthly), etc.
Alternately, to catch some of those less frequent expenses, add up all your expenses for a 12 month period, and divide by 2. If you balance your account in a program like Quicken or Quickbooks, this is easy to do. If you do everything on a cash basis, and don't keep track, it will be much more difficult. But then, that means you aren't living with a budget either, and that is not the way to get financially healthy.
My income affects how much I can afford to pay as rent. What I can afford as rent is the same as what I can afford as a mortgage payment.
If I can afford to pay $1000 a month for rent, then I can afford to pay $1000 for mortgage and real estate taxes...and no more.
YOu may make decisions that way(by calculating the absolute max you can pay for rent and still put food on your own table) but other people don't and to do this this way is not smart.
Most people have a maximum price they will pay for rent(which is less than what they can actually afford) and then try to find a place that meets their needs at the lowest they can. Often this price is much lower. So like I previously said in this case and most cases rent has nothing to do with what you can afford in a mortgage payment.
General rule-of-thumb with home ownership is you're going to pay 0.8% to 1% of the cost of the home per year for all the expenses of maintenance, insurance, taxes, etc.
If your house payment is more than your rent, then you would be living beyond your means. Get a smaller house.
What are you talking about?! Do you think everyone lives in a tiny home?? Rent has nothing to do with housing costs whatsoever. Plenty of people rent a one or two bedroom apartment, almost nobody buys a two bedroom house nor do they even make those anywhere lol. Maybe a townhouse has two bedrooms, not a real house. Beyond your means is defined as unable to afford the house payments reasonably, that’s it. If I’m making $50,000/month and move from a temporary one bedroom at $1,300/month to a house with $10,000/month in payments that’s not beyond my means.
Quote:
Originally Posted by ackmondual
General rule-of-thumb with home ownership is you're going to pay 0.8% to 1% of the cost of the home per year for all the expenses of maintenance, insurance, taxes, etc.
Guess whoever wrote that is an absolute idiot then. The average property taxes alone are more than 1% per year! Nevada has some of the cheapest property taxes in the US and it’s still 0.78% effective tax. There’s no way your maintenance costs averaged over 20 years are going to run low enough to be 0.80% even in Nevada. It would be much closer to 1.5-2% most places, especially in Texas where property taxes alone are well over 2%.
General rule-of-thumb with home ownership is you're going to pay 0.8% to 1% of the cost of the home per year for all the expenses of maintenance, insurance, taxes, etc.
not in these parts ...taxes alone on a 600-700k average home are 12-18k
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