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Not counting coastal cities and high cost of living cities, how do most people not afford homes? I used a mortgage calculator, and if a couple has a income of 80k (40k a person), 600 in monthly debt, and a down payment if 10k, they could afford a home of 300k! Even 200k will get you something decent. That’s a pretty nice home in most of America, and making 40k a year isn’t hard. What am I missing?
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Originally Posted by Flamingo13
Uhhhh - the fact that not all households have a yearly income of 80k???? Is this a real question?
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Originally Posted by Berteau
40k a year is like $20/hour. Minimum wage in many parts is $15 an hour. How can someone who’s halfway motivated not reach that income by their late 20s?
Do you not see the disconnect between your two statements? The $15 Minimum wage is basically in those coastal and high cost-of-living cities, not in locales where you can find a nice home for $200k.
People can "afford" these homes, but afford is obviously a subjective term. You seem to think it is a good idea, I don't. We aren't going to change each other's minds so...
Yep one person says he can afford that home he means he can afford the home and still have money in the bank and enough left over to have a life, while someone else says he can afford that home he means he can afford it if he lives on peanut butter and Ramon noodles, rides a bicycle to work, and only buys clothes twice twice a year at thrift stores and all his furniture comes from peoples curbs on bulk pickup day.
Do you not see the disconnect between your two statements? The $15 Minimum wage is basically in those coastal and high cost-of-living cities, not in locales where you can find a nice home for $200k.
yep, $15 an hour in NYC or LA is like $3 an hour in Ardmore Oklahoma.
Which is why the answer is to live at home and commute. The 7,000 undergraduate state university in my town is $14,408 in tuition and fees. There's bus service so you don't need a car on the days you can't get to campus on a moped/scooter. Minimum wage is $13.50. There aren't many jobs that pay less than $20. You can at least do your first two years there without needing any student loans. Work full time during summer break and Christmas break banking pretty much all of it. There are lots of part time jobs where you can study much of the time during the 7 months you're actually in classes.
That sounds great except it's not possible for many people. Where I live, the closest state 4 year school is over an hour and a half away. I live in the snowiest area of the nation. Gas here is one of the most expensive in the nation. There is NO bus service where I live. None in the town the college is located either. I don't know where you're living where unskilled labor is making $20 an hour. Most places won't hire you for the 3 weeks for the break between semesters.
Some of your key words are "in my town", there is a huge percentage of young adults, at least in my state, who are not close enough to a state college or even a community college "to live at home and commute". And, even our former state college system (now connected to the University system) has specialties on each campus. So, even if you wanted to go to a nearby college the one with your main interest or specialty may be a two to four to six to eight hour drive away. Obviously, too far to live at home and commute.
Your state may be completely different.
Exactly! The closest state school to my home is 1.5 hours away in good weather. We get winter here. Real winter. Where it snows every day for days in a row. The snowiest metro in the US is just a hop skip and a jump away. That school also does not offer every major out there. Far from it.
If someone is commuting 3 hours a day how do they have time to work? If they have classes from 8 am until 3 pm when do they do their homework and still work? Homework can take hours especially when you have to write a paper or study for an exam.
I strongly encourage people to look for a home in a location that is within commuting distance of a state university, and preferably a flagship state university.
I do know people who do this. Again, this is for people who are looking for ways to save money when it comes to the costs of attending college.
And what if your kid isn't accepted? State schools do not accept all students. Far from it.
Oh, come on. Be realistic! How many people do you actual know, and discuss finances with, in the target age range?
My children and many of my nieces and nephews and friend's children are in the late 20s to early 40s. All are from middle class to upper middle class families. College expenses and student loans were a very common discussion among my friends and relatives for the last 20 to 25 years. Unless they had an unusual situation where their parents/grandparents paid all, or most, of their college expenses or they lived at home for two to four years, they all had fairly substantial student loans, even with working and being frugal. Most of the college grads that I personally know in that age range finally paid off their student loans in twelve to fifteen years, in their middle 30s. And, then could finally start saving for a house.
Of the many, many people that I know in that age range perhaps only 25 to 30% started out with a job that paid today's equivalent of $40,000 a year. And, those were mostly engineers or had similar high tech jobs. The others had much, much lower paying jobs, a few at minimum wage or only slightly above for the first few years out of college. You certainly can not start saving for a house when you are earning minimum wage or slightly above AND paying off student loans.
Of the dozens of college grads where I know them, or their parents, well enough to know their financial situation (at least roughly) only two were able to buy a house in their mid to late 20s. One received a substantial amount of money as an inheritance (which she used as a down payment) and this was after her college education was 100% completely paid by a combination of scholarships and money from her parents and both sets of grandparents.
My wife and her three children graduated with no debt. I graduated with < 50k and had it paid off in 4 years. 2 of my 4 co-workers who graduated recently had no debt. My best friend bought a starter home when he was 25 and now, at 37, owns a home valued over $500k in a better area. Etc.
Here are facts:
- If somebody is not going to be making a large amount of money with their degree from their school, they need to re-evaluate what they are paying for,
- If it's a high COL state, numbers are increased, and if it's a low COL state, numbers are decreased.
- Student loans don't need to be paid off before becoming a homeowner, it's simply a better situation if they are,
- How much debt are these people taking out if I'm made to believe that they're living frugally, gainfully employed, and are taking that long to save for a down payment? You cite an example of two people who lived at home for several years in order to pay down debt and save for a home. If they're not paying rent or utilities, where is the money going? If they are, I can't imagine it's more than what I gave in my example. If they have 6 figures of debt and are making 28k a year, see my first point. If they have 40k in debt and are making 35k a year, why did it take so long to pay it off?
Exactly! The closest state school to my home is 1.5 hours away in good weather. We get winter here. Real winter. Where it snows every day for days in a row. The snowiest metro in the US is just a hop skip and a jump away. That school also does not offer every major out there. Far from it.
If someone is commuting 3 hours a day how do they have time to work? If they have classes from 8 am until 3 pm when do they do their homework and still work? Homework can take hours especially when you have to write a paper or study for an exam.
Where there’s a will there’s a way. I lived with my grandparents for a time in college and would commute close to an hour each way. I was in Michigan too, so I had to deal with snow.
I worked some evenings after class, weekends, and the days I didn’t have class. If you’re full time taking 12-15 units per semester you’re not in class M-F, 8am-3pm. Far from it. Plenty of time for class, work, studying, and a social life if you prioritize your time right.
Salary = $90K
401K Max = $19,500
Health Insurance (average for one person with co. provided insurance) = ~$2,400
Gross Annual Income = $68,100 or $5,675 per month
Income tax on $68,100 per year in California = $17,293
Net annual income = $50,807
Net Monthly Income = $4,233.92
How is your take-home pay $5000 a month? My guess is that you aren't really maxing out your 401K.
Yeah, I was wondering that as well. I made about $90K gross last year. I did not max out my retirement, but still brought home WAY less than $5K a month net.
Even if he did bring home that much, other things are proportionally more expensive with a lower income. You may be able to spend more than 50% of your income when you bring home $5K a month. If you are bringing home about $3K a month, it’s not like gas, food, utilities, car insurance, and other essentials are going to cost proportionally less to allow you to feel comfortable spending $2K a month.
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