Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We've always operated on using 1/4th of our TAKE HOME pay for rent/mortgage--or less. When you use your gross income you don't factor in costs like health insurance or other deductions to 401K plans, etc. If you bring home $1000/month, don't spend more than $250 in rent. You will find that your life is a lot easier doing this, you are better able to save money.
Half of all low-income renters (49 percent to be more precise) pay at least half their income for rent, according to Mortgage News Daily. They might "also want to save and eat and the twenty other things they should be doing" but there's only so much money to go around.
Got a solution?
Yes what is the solution?
I am a single mom of two kids, in a higher cost of living area. I am currently unemployed, however last year I made $32k. My housing expense is $1400.
We've always operated on using 1/4th of our TAKE HOME pay for rent/mortgage--or less. When you use your gross income you don't factor in costs like health insurance or other deductions to 401K plans, etc. If you bring home $1000/month, don't spend more than $250 in rent. You will find that your life is a lot easier doing this, you are better able to save money.
So let's say I bring home $1700 on unemployment. Where would I find a place to accommodate 3 people on $425. Certainly not in Maryland.
So let's say I bring home $1700 on unemployment. Where would I find a place to accommodate 3 people on $425. Certainly not in Maryland.
I think most people would acknowledge that your time on unemployment is a temporary condition; you're not going to base your long-term budget on a short-term income.
That said, if you were paying $1400 for housing out of a 32k household income, this might be the time to start considering drastic options (roommates? Moving in with another single mom and her kids? Relocating?) to bring costs down (although with luck your next job will have a higher income so that things aren't so tight), even if you're still paying more than you'd like for housing. That's not sustainable in the long-run. Although yes, easier said than done.
We've been struggling with similar issues lately, as we have seen our household income disappear at the same time that we're facing major medical bills and stress (and COBRA payments are astronomical!). I anticipate that once we are back on our feet, financially, we'll be living a cheaply as possible for years to come so that we can rebuild our savings. I'm a big fan of Elizabeth Warren's book on personal finance; she divides things into needs, wants, and savings, which makes sense to me. She acknowledges that during periods of big change or crisis (including unemployment) your percentage of income devoted to needs is going to be different than when you're back on your feet and out of treading water mode.
I think most people would acknowledge that your time on unemployment is a temporary condition; you're not going to base your long-term budget on a short-term income.
That said, if you were paying $1400 for housing out of a 32k household income, this might be the time to start considering drastic options (roommates? Moving in with another single mom and her kids? Relocating?) to bring costs down (although with luck your next job will have a higher income so that things aren't so tight), even if you're still paying more than you'd like for housing. That's not sustainable in the long-run. Although yes, easier said than done.
We've been struggling with similar issues lately, as we have seen our household income disappear at the same time that we're facing major medical bills and stress (and COBRA payments are astronomical!). I anticipate that once we are back on our feet, financially, we'll be living a cheaply as possible for years to come so that we can rebuild our savings. I'm a big fan of Elizabeth Warren's book on personal finance; she divides things into needs, wants, and savings, which makes sense to me. She acknowledges that during periods of big change or crisis (including unemployment) your percentage of income devoted to needs is going to be different than when you're back on your feet and out of treading water mode.
I agree with all of this. By the way, the name of the Elizabeth Warren book you mentioned is:
We've always operated on using 1/4th of our TAKE HOME pay for rent/mortgage--or less. When you use your gross income you don't factor in costs like health insurance or other deductions to 401K plans, etc. If you bring home $1000/month, don't spend more than $250 in rent. You will find that your life is a lot easier doing this, you are better able to save money.
I read that you should spend no more than 1/3 of your gross income on housing expenses, rent and utilities, but I don't think that's manageable. Up to 1/3 of take home pay seems more realistic. I spend 18% of my gross on rent and utilities and save the other 15% for emergencies and towards buying my own place.
Yeah, all this financial numbers sound great, and are true, but are really impractical in places with a high COL. I really wonder how people making minimum wage manage to live here, because finding a place for a family (2 BR) for less than $900 or so is very, very difficult. If you manage to find it, there's a lot of trade-offs (old, ugly, bad insulation, dangerous neighborhood, and so on). And that's for a family making the average salary in the US (around 48K).
I don't even understand how the rent prices manage to keep so high when people's income is falling, either due to unemployment or because employers don't want to pay. We have noticed that they are offering now $15 - $18 for jobs that used to pay more than $24 3 years ago. Highly skilled machine jobs, with experience.
I don't even understand how the rent prices manage to keep so high when people's income is falling, either due to unemployment or because employers don't want to pay.
Simple.
People pay those prices.
If no one moved into those high price rentals, the prices would have to drop.....
I really wonder how people making minimum wage manage to live here, because finding a place for a family (2 BR) for less than $900 or so is very, very difficult. If you manage to find it, there's a lot of trade-offs (old, ugly, bad insulation, dangerous neighborhood, and so on).
In that case, move.
Seriously.
IF you are only working at minimum wage,
and IF you have to pay $900 where you are...
go to where you can buy a house for less than that price.
There is no need to stay in a high COLA when you do not have a career to keep you there. Minimum wage jobs are available anywhere.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
