What % of income do you spend on housing? (Seattle, Tacoma: renters, insurance)

[wannabeaTexan]

Originally Posted by cringer

I think the $2000/mo income was a little misleading. It's more like $2300/mo, and that's after taxes/health/401k. I'm sitting right at about 40K a year. However, when my average paycheck is around $1100, I tend to get stuck in the mindset that I'm only making $2000/mo.

I guess if I look at the "big picture", I'll only be spending 1/4th my income on rent. It's just gonna feel like half.

That being said, does $1000/mo seem like too much to be spending on rent with the cost of living there?

I would only consider what I take home for budget reasons. So $1000 a month with your scenario is almost half for rent...and is alot. I've always found that even if it looks doable on paper, it doesn't always seem to work out like you think it will.

Unfortunately, $40K a yr won't get you very far in Issaquah or Bellevue. This is not a cheap state to live in, hence my screen name and one of the main reasons I'm considering a move to TX.

[irrational exuberance]

I studied Finance in college and the stat I got from this question is the Average American spends 2/3rds of their income on shelter and transportation. So depending on how much you spend on your car if any I would say 50% is under the average

[haggardhouseelf]

If you meet with a personal financial advisor (they are usually available to meet with you at no cost to you through your school, credit union, etc. TAKE ADVANTAGE OF THIS SERVICE) they will advise you not to spend more than 30% of your after taxes take-home income on your housing - and this includes your utilities and everything involved in keeping your home running.

This is why my husband and I choose to rent. If we were to purchase a home - especially in this area (We live in Redmond, WA) we would be spending 50% if not more on housing. With crazy property taxes, high cost of utilities, high home owners insurance rates, and just the insane cost of the actual homes in the Seattle/Eastside area and even surrounding areas - it is just insane. My husband makes over 100K a year and trying to buy a home would still stretch us too thin. We opt to rent so that we stay within our budget and we make investments, put money away, contribute the max amounts to the retirement accounts, put money in our emergency funds, etc. If we tried to buy a home in this area we wouldn't be able to do any of that. It's ridiculous living here.

[haggardhouseelf]

Originally Posted by wannabeaTexan

This is not a cheap state to live in, hence my screen name and one of the main reasons I'm considering a move to TX.

I'm a Texan! Texas is WAY affordable, and the people are way friendly! Good luck and I hope you get there!

[haggardhouseelf]

Originally Posted by cringer

I think the $2000/mo income was a little misleading. It's more like $2300/mo, and that's after taxes/health/401k. I'm sitting right at about 40K a year. However, when my average paycheck is around $1100, I tend to get stuck in the mindset that I'm only making $2000/mo.

I guess if I look at the "big picture", I'll only be spending 1/4th my income on rent. It's just gonna feel like half.

That being said, does $1000/mo seem like too much to be spending on rent with the cost of living there?

Also you have to consider the sales tax on everything. Somehow this just makes buying food/groceries really hard. Every time I go to the grocery store I spend an extra five or ten bucks just for the sales tax. It adds up. Also there is the cost of gas - if you drive you have that added expense. There seem to be a lot of hidden expenses here that you don't really plan on. There are the emergency situations when the power goes out... there's the coffee trap that a lot of people fall into when they get here!

Good luck... be careful... I agree with the other people who suggested you finding a place for closer to $750. 50% of your income is just too much - and your rent will go up every year. Don't ever go month to month or sign 3 or 6 month leases if you can help it. Apartment places will ALWAYS increase your rent at the end of your lease when you go to renew... sign for one year and then you at least have one year before your rent goes up.

[Tesaje]

Originally Posted by irrational exuberance

I studied Finance in college and the stat I got from this question is the Average American spends 2/3rds of their income on shelter and transportation. So depending on how much you spend on your car if any I would say 50% is under the average

If this number is correct, it is pretty scary. I keep reading articles saying the average American has over $20K in credit card debt, less than $50k in retirement savings of any sort, no pension benefit, and oh, there's this huge economic problem of so many people in danger of defaulting on their mortgages it is dragging the whole economy down.

This is a nation over its head in debt and living beyond its means. Averages only tell a terrible story, not how wise it is to join the lemmings jumping over the cliff.

I always followed the old rule of keeping my shelter costs at 25% or less of my income. I now have substantial retirement savings, a nice pension (a dying benefit I know I am lucky to have and not available to most people anymore), enough other savings to support myself for well over a year, my house is paid off and worth quite a lot more than every penny that I put into it including the interest, and I will get to retire in 2 years at the minimum eligibility and have a comfortable and secure retirement. And I don't have a credit card debt - I pay it in full every month and haven't paid CC interest in over a decade. And I'm not really pinching my pennies to get all this. I make a comfortable middle class income - higher than average but not in the wealthy class. I think I was wise.

[irrational exuberance]

Originally Posted by haggardhouseelf

If you meet with a personal financial advisor (they are usually available to meet with you at no cost to you through your school, credit union, etc. TAKE ADVANTAGE OF THIS SERVICE) they will advise you not to spend more than 30% of your after taxes take-home income on your housing - and this includes your utilities and everything involved in keeping your home running.

This is why my husband and I choose to rent. If we were to purchase a home - especially in this area (We live in Redmond, WA) we would be spending 50% if not more on housing. With crazy property taxes, high cost of utilities, high home owners insurance rates, and just the insane cost of the actual homes in the Seattle/Eastside area and even surrounding areas - it is just insane. My husband makes over 100K a year and trying to buy a home would still stretch us too thin. We opt to rent so that we stay within our budget and we make investments, put money away, contribute the max amounts to the retirement accounts, put money in our emergency funds, etc. If we tried to buy a home in this area we wouldn't be able to do any of that. It's ridiculous living here.

__________________________________________________ __________

30%. Where do you find this stat at? By the numbers if you make $80k After tax dollars a year then you spend $24k a year in rent? That would be nice but I dont think you can live in any metro area (Seattle/Tacoma/Bellevue/Everett) and purchase a home for a mortgage that cheap. My wife and I are in a similar situation in South King county. We are trying to buy a home and even at $310k at 5.5% we would be paying about 2100 (PITI) but your husband and you are a smart person to have the idea about finances. I was always taught there are two types of people. 1. People who think income - expenses = savings and 2. income - savings = expenses. Obviously, you are in the 2nd type. My wife and I figure a house mortgage the same way. There are savings objectives we must meet before we consider a mortgage and that drives realtors crazy. Finding a couple with good credit and nice incomes is a rare commodity in todays market especially in South King County and Tacoma area. But I think with the price of living today it would be very hard to pay only 30% of after tax income on a mortgage. But then again I prefer to own over rent and now we sit and watch prices go down.

[irrational exuberance]

Originally Posted by Tesaje

If this number is correct, it is pretty scary. I keep reading articles saying the average American has over $20K in credit card debt, less than $50k in retirement savings of any sort, no pension benefit, and oh, there's this huge economic problem of so many people in danger of defaulting on their mortgages it is dragging the whole economy down.

This is a nation over its head in debt and living beyond its means. Averages only tell a terrible story, not how wise it is to join the lemmings jumping over the cliff.

I always followed the old rule of keeping my shelter costs at 25% or less of my income. I now have substantial retirement savings, a nice pension (a dying benefit I know I am lucky to have and not available to most people anymore), enough other savings to support myself for well over a year, my house is paid off and worth quite a lot more than every penny that I put into it including the interest, and I will get to retire in 2 years at the minimum eligibility and have a comfortable and secure retirement. And I don't have a credit card debt - I pay it in full every month and haven't paid CC interest in over a decade. And I'm not really pinching my pennies to get all this. I make a comfortable middle class income - higher than average but not in the wealthy class. I think I was wise.

__________________________________________________ _________

In 2005, 70% of Americans had no real plan for retirement. Meaning if you adjust income to reflect inflation and the cost of living today that they would be unable to retire until they are much much older if not at all. Its scary when you look at the statistics. But you are where I want my wife and I to be when we retire. One of the most valuable things you can learn in college is Time-Value-Money. Once you understand rate of return and the little bit of money it takes to amass a huge fortune in 20/30 years. Putting away 400 a month for 30 years at 10% rtn (historical S&P 500 rate) will yield you about $905k. Thats starting from zero. But system is set up to get people to spend, spend, spend! In a time like today when people arent spending and consumer confidence is down that gets unnecessary media coverage. Weird world we live in but I have only like in it for just over 25 years.

[chris]

I always thought it was 30% pre-tax income. I'm a real stickler for this rule btw. So much in fact that I refuse to live in an area where I can't meet this requirement on a solo income. Going over 20% makes me uncomfortable.

[mayfair]

When we bought our house, the banks simply wouldn't lend more than 2 1/2 times our gross income. So it was a moot point... even at 2 1/2 times gross income, there wasn't much money left over. The house takes money in others ways... utilities, repairs and maintenance.