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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.
by maxing 401k, I meant to contribute so my employer matches the most, I only contribute 5% at the moment while employer contributes 5%. I never contribute IRS max monthly so that I have the option to buy traditional IRA come tax time to save more tax, my wife contributes way high% to retirement
maybe it's different for other parts, but health insurance is employer sponsored and not count against the 90k
I don't have the exact math, but I want to say that things usually changes for the better after buying houses. salary can go up slowly, and rates can go down to allow refinancing.
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.
I took 15-19 credits every semester. Depending on your major you may have a lot of labs. I was in class from 8am until 3pm Monday - Thursday and 8am - 1pm on Friday. Yes I had an hour break occasionally but it wasn't enough time to get much homework done. Certainly not enough time to have a job.
You spend over 50% of your take home monthly income on a mortgage? Yes, it is too high. And 1.7 isn't much left over at all with saving for things like eventual new car, roof, etc. in addition to having to buy groceries and other needs.
You have rental property. Okay, that still has a condo fee, taxes and fund for maintenance and that is if you own it outright. Hope the rent is high so you make at least 1000k profit every month.
is 50% of take home on piti really too high?
keep in mind the 1.7k left over doesn't include my wife's income, I spend about 1k on food and still have 700 left for utilities and stuff
I'm only talking about routine monthly expenses, for any other one time thing of course I would have to tap into my wife's income or savings
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.
All of those arguing that it is impossible to get a college degree without amassing a huge debt, are aware that it is possible to earn a hefty living without having a college degree?
This country is full of people who own their own house and never went to college.
1. There is contrast for most people between where they want to live and where they could actually afford to live, and where they can afford to buy is not necessarily where they want to live.
That is where the concept of sacrifice comes in.
If people don't want to struggle in the short term so that they can have a better future in the long term, then whose fault is that?
If people don't want to struggle in the short term so that they can have a better future in the long term, then whose fault is that?
There's only so much a person can sacrifice. Plenty of areas are unaffordable. Many areas of what is affordable today are filed with gangs, drugs, violence, etc.
I took 15-19 credits every semester. Depending on your major you may have a lot of labs. I was in class from 8am until 3pm Monday - Thursday and 8am - 1pm on Friday. Yes I had an hour break occasionally but it wasn't enough time to get much homework done. Certainly not enough time to have a job.
Our program was very strict, it was just one class of 40-50 students and our schedule was set for us every semester. Some classes early in the a.m. but 2 days a week we also had a lecture class at 6pm. The projects they assigned to us required going to very specific libraries off-campus (yes, back in the old days, lol) and we also had assignments that required us to go into the community to people's homes all over the city. A couple days a week we had clerkships where we went individually to a hospital or other health care setting that was assigned to us, where we spent a full 8 hours plus commuting time. I commuted over an hour a day by train just to get to school. It would have been virtually impossible to work any sort of job that had a set schedule. I worked full time when at CC but had to stop when I began the OT program at my transfer school.
The people who keep pointing out though "I was able to do this because I worked while in college" keep ignoring the vast difference between what we paid back in the day and what students pay now. Like I said, my school was $16,000 a year back then, it's $42,000 a year now, and the requirement is a year longer because it's now a Masters. It's a whole lot different paying $64,000 for school vs $200-some thousand. Salaries are really not all that much higher now than they were then because demand vs supply is not as high as it was then. Certainly ot anywhere 3 times higher. Plus I also was able to save more than because my health insurance was free, while now it's several hundred per pay period.
There's only so much a person can sacrifice. Plenty of areas are unaffordable. Many areas of what is affordable today are filed with gangs, drugs, violence, etc.
I would agree with that.
But I also think there are plenty of instances where people can afford to buy a house in a decent neighborhood, but it's not as big as they want, doesn't have all the HGTV-esque updates, etc. Then they declare that real estate prices are out of control and how can anyone afford to buy a house. Or end up buying the bigger/nicer house and being overextended financially.
The people who keep pointing out though "I was able to do this because I worked while in college" keep ignoring the vast difference between what we paid back in the day and what students pay now. Like I said, my school was $16,000 a year back then, it's $42,000 a year now, and the requirement is a year longer because it's now a Masters. It's a whole lot different paying $64,000 for school vs $200-some thousand. Salaries are really not all that much higher now than they were then because demand vs supply is not as high as it was then. Certainly ot anywhere 3 times higher. Plus I also was able to save more than because my health insurance was free, while now it's several hundred per pay period.
I have a different perspective now than when I was 23 and fresh out of school. I agree with a lot of what you're saying. To play devil's advocate, I think it is still possible to make it work. A lot of people aren't willing to make the sacrifices needed to get there though. And that's the devil's advocate part of my story.
For instance, I graduated with $50k in student loans and made approximately $30k/yr. in my first job. Those first few years out of college starting in 2008 were tough. With a $525/mo studio apartment, a $350/mo student loan payment, and a $280/mo car payment, I had about $500/mo left over after all food and other expenses were paid. That was what I considered "play money", and it didn't last very long. Fortunately, I was very frugal.
As the years went by, rents starting going up in the city I was living, as it was becoming "the next big thing". So I started slowly drifting out of the urban core and eventually found myself living in suburbia in my mid- to late-20s. It wasn't great for my social life, but I made it work. It probably also helped to keep the costs down since there weren't a lot of attractions nearby to spend money at. I lived this way until I bought my first home.
This is where a lot of people get tripped up. A lot of people in their 20s want to live in the trendier, more expensive areas. They want to go out a lot, which often is accompanied by more expenses. So while I kept moving further and further out to keep my rent well below what I could afford, others don't do this. As a result, they forego saving money that could be used to pay down debts and/or for a down payment.
Another thing that people get tripped up on is their unwillingness to "start small". My first home purchase was a 2BR/2BA 1000 sq. ft. condo without a garage in the suburbs for $180k I had a roommate to keep expenses low. When I started dating my wife, it was the three of us under that one roof for quite a bit of time. When I planned on marrying my wife, I started shopping for an upgrade to a townhome. We ultimately landed on a 2BR/2BA 1500 sq. ft. townhome with a 1-car detached garage for $285k. The roommate came along to live with us in the 2nd bedroom. Between the three of us, it helped keep costs low. When the roommate moved out on their own after we married, we decided to look for a SFH. We now had the equity and income to buy a SFH which ran close to $500k in our area.
This didn't happen until my mid-30s. But I made a lot of sacrifices so that it could happen. Whenever I try to give advice to others, such as my younger sister, she snubs her nose at the idea at living in a condo to start off in, because "she doesn't want to move again". A lot of people share her unwillingness to make sacrifices to get to her final goal of a SFH. So they scrounge up whatever loose change they have for a down payment and hope that it keeps up with the home prices in their area.
With all that said, I'll add the caveat that it was a painstaking process and I had my fair share of grievances along the way. So this isn't to discount anyone's struggle. It's real, and I get that, as I personally lived it.
Last edited by modest; 07-20-2021 at 01:42 PM..
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