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Problem is people are trying to make comparisons but using different definitions. "Net Income" means different things to different people, and some people aren't including taxes and insurance in their housing cost.
Yeah, the OP should have defined "net income". True net income is income after taxes paid, and nothing else. But not everyone sees it that way.
19% of net, last I checked. We are moving very soon though and I think our rent in the new place is 20.2% of our new salary. It's a little higher than we wanted to pay but doable.
Nope. Those deduction and contribution choices are exactly why gross is NOT the better measure.
Choose wisely, contribute what you can afford to them, live off the rest. The net.
Some people do not have CHOICES in deductions or contributions. e.g. my contributions are zero because I lack discretionary income.
My mortgage is 32% of my net. I know that's high, but if I stayed in the apartment I used to rent, with the increases the landlord has made, I would be paying 37% in rent today. My mortgage was the same as my rent when I bought the house.
I'm actually pretty comfortable with it. I also save about 33% of my income and don't consider all of it "net" (I don't think of my 401(k) when considering my net income because I don't see it in my take-home pay and in my bank account ). Other savings I considered part of net and I pay it like a bill. So my way of thinking of net income is kind of screwed up. If I really had to, I could save less. But I live pretty comfortably as it is, have every thing I need and a few "wants" now and then... so there is no need to save less.
I should also add that every year I get a raise at work. Whatever percentage they raise my pay I just add my 401(k).
Buying is where the upfront costs are high and become more affordable over time. Renting is where the upfront costs are low but you die the frog-in-heating-water death.
What percentage of your net do you spend on rent (or your mortgage)?
Background behind this question:
I'd lived in Atlanta for over a decade and moved away to Chicago from 2012-early 2017. When I left Atlanta in 2012 I was spending 21% of my net on rent. I had a grand plan/hope to gain more experience and earn a higher income...then within 5 years return to Atlanta for the lower cost of living so that since I'd be making more, I could pay less of my income to housing. Long story short, I returned to rental prices as much as 30-70% higher than when I left. I am looking at an apartment that is indeed nicer than the one I used to live in in 2012, but it means I'd be paying 6% more in rent (27% of my net) than when I left. (I'm not really willing to compromise 'much' on the place as I'm living without a car so there is some additional savings transportation-wise whereas before I had a car and related expenses. I also now am working from home 100% of the time so I really need an appropriate space that I like since I'm home 'all' the time.) Spending 21% of what I earn (net) now puts me in the $900s 'max' for rent which wasn't too hard to do in 2012 but I find is much harder to do now.
So long story short I'm wondering where others are at as I know there are many wise people in this section of the forum. I'm going to be willing to bet that many of you who have made great financial strides aren't paying more than 15%-ish in rent (or mortgage) each month. Let's see what it pans out to be. I'm 38 and have always rented and now am finally actually starting to feel like I would come out better trying to find a super cheap place (one bedroom condo?) to buy next year. I've always liked renting and never really felt like it was a 'waste' like some do, but the rising rent amounts are starting to make me feel different fast.
What does "wise" have to do with it? If you make minimum wage and you're not living with mommy and daddy, being wise won't exempt you from the necessity to pay market rent - which won't be 15% of a minimum wage income anywhere in the developed world.
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