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.
OMG -- can SOMEBODY please get this person to see that what is well affordable at 90K, that is not affordable on making 50K has NOTHING TO DO WITH buying too much house!..or what the average or median income in America is...or what most people should be able to live on.
Calm down. Go to the top of the page, click on My Settings, scroll down the Your Control Panel List, click on Edit Ignore List, and put his name in the box. Click Okay, and breathe deeply...
Indy - so can the person making 50K in Indy - who didn't buy too much house, has been fruglal and paid down debt -- afford to take a pay cut down to 25-thou? I guess so with your logic.
Twentyfive thousand would be hard to pay a mortgage with, along with the bills that incur in owning a home.
I had a plan in my late twenties to have a paid off house upon retirement. It needn't be a mansion at all, but a home I could love. My plans worked, and we have owned two homes mortgage free.
Still being frugal is a good thing right now when a jar of coffee is ten dollars!
I cringe when I pick up a peach at a dollar "each."
Actually, when I was in the city(NY) last week I didn't see people with lots of shopping bags.
I remember about two people with two bags in each hand. It made me think maybe people are
"getting it." They are seeing and feeling the punch...
All the home expences are high now, there is not a lot left over for fun and joy.
My husband and I had exactly this happen. We bought our house based on what we could qualify for with my income alone. We each make about $30-35k a year, so $60-70k total (gross in both cases). Then my husband lost his job and was out of work for a full year. So our income when we bought the house was say $65k a year, and we could totally afford it easily. But then we got cut back to $30k a year. We survived, but it was a struggle. We not only couldn't save anything, but we went through most of the savings we had getting through that year. But now that he is back to work, we save/invest 40-50% of our gross income every month.
Personally, I would say that is pretty much the very definition of "buying a house I could afford". When a major life change struck, we were able to get through it without losing the house or incurring any new debt.
Indy - so can the person making 50K in Indy - who didn't buy too much house, has been fruglal and paid down debt -- afford to take a pay cut down to 25-thou? I guess so with your logic.
Obviously that depends on a lot of factors. A person making $50K could afford a $150K home here (and actually, there are plenty of $120ishK homes all around the metro area that would make very good shelters with very good school districts) if they saved for a proper down payment and had a six month emergency reserve.
I will admit that if you magically lose your job after just buying a home, it might be hard, but if you purchase a $150K home, you should only be carrying a $120K mortgage. Given a 4% interest rate, a $120K 30 year fixed mortgage will have a monthly payment of $572.90. If you add in taxes and insurance, it is around $772.90/month. If one makes $25K/year, they will likely end up taking home around $20K/year (maybe more, I'm not sure). This is $1,600/month after taxes (again, might be more given the mortgage deduction and other deductions). So basically half the paycheck goes to the house payment. Not the best situation, but given the proper cash reserve and frugal living, one can survive for a while.
The issue seems to be how one defines "survive." Most people think that if you can't have a smart phone, you may as well be dead. Others think once a vehicle hits 50K miles or four years, they need and/or deserve a new car. Then you have people who will buy a home and then want to immediately change the kitchen or bathroom to something they are happy with. So you immediately go into massive debt, only to turn around spend another $10K or so on a remodel.
People make choices, and before making such choices, people should prepare accordingly. If there is any possible way that your $50K/year job could go away at any moment, and all you can get is something for $25K/year, you should already have planned for that. I bet 90% or more haven't, so when things get bad, they hit up the parents, hit up friends, steal, etc.., and a certain % will do any or all of those things before cutting the cable, turning off the cell phone data plan, etc.. There are also the issues of wasting thousands upon thousands before getting into too much debt. Buying a vehicle with a "luxury package" that adds an extra $3,000 to the final bill, buying boats, jet skis, etc. while still owing over 50% of your mortgage. Taking a $7,000 cruise vacation instead of a $3,000 cruise vacation. The list goes on and on. This is the current state of the US. This attitude is why our elected leaders go on spending sprees. It is how most Americans live their daily lives, so why should we expect anything different from governments?
I don't know what the future holds, but hopefully for those younger folks reading this thread, they may decide that drinking away $50+/weekend at the trendy club district might not be the smartest thing to do.
Quote:
Originally Posted by Lacerta
My husband and I had exactly this happen. We bought our house based on what we could qualify for with my income alone.
Even this is a problem, or at least was. On my income of $40K (give or take)/year, I was told I qualified for a $150K or more home loan (I know it was under $200K, but definitely was way, way more than even I knew I could afford). Of course the banks didn't care about foreclosures and crashing home values. If push came to shove, they knew the government would come and bail them out.
I will admit that if you magically lose your job after just buying a home, it might be hard,
This actually happened to a friend of mine a couple years ago. Bought their first home, finalized the paperwork, moved in, and exactly one week after moving in, they were laid off from the company they had been at for almost 20 years. The entire department was just cut. Took them about 8 months to find another job with worse benefits, hours, and pay.
Twentyfive thousand would be hard to pay a mortgage with, along with the bills that incur in owning a home.
I had a plan in my late twenties to have a paid off house upon retirement. It needn't be a mansion at all, but a home I could love. My plans worked, and we have owned two homes mortgage free.
Still being frugal is a good thing right now when a jar of coffee is ten dollars!
I cringe when I pick up a peach at a dollar "each."
Actually, when I was in the city(NY) last week I didn't see people with lots of shopping bags.
I remember about two people with two bags in each hand. It made me think maybe people are
"getting it." They are seeing and feeling the punch...
All the home expences are high now, there is not a lot left over for fun and joy.
It should not be hard because of the emergency funds and if you don't even have that you could not afford that house in first place.
My husband and I had exactly this happen. We bought our house based on what we could qualify for with my income alone. We each make about $30-35k a year, so $60-70k total (gross in both cases). Then my husband lost his job and was out of work for a full year. So our income when we bought the house was say $65k a year, and we could totally afford it easily. But then we got cut back to $30k a year. We survived, but it was a struggle. We not only couldn't save anything, but we went through most of the savings we had getting through that year. But now that he is back to work, we save/invest 40-50% of our gross income every month.
Personally, I would say that is pretty much the very definition of "buying a house I could afford". When a major life change struck, we were able to get through it without losing the house or incurring any new debt.
One should not buy a house just because of the standard qualifications. It should be based on living below your means which means if you lose your job then you are still ok with your rainy day funds.
If the whole country goes frugal there will be harder times for those who already are. No more gently used clothing available, no almost new cars. Prices of many things would soar as capital costs are spread among smaller volume. For example if everyone cuts their water use by 25% the water department would raise their rates to cover debt service.
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.
