Max "safe" rent?

[Chiropteran]

Originally posted by: Special K

Originally posted by: Turkish
Don't be fooled by percentages. I have a friend paying $7K/mo for an apartment in Chelsea with a yearly salary of $220K gross. He still pockets more than 4-5K a month after rent. It all depends on your income.

Ummm, that works out to about 3.2% of gross income, which is well below any threshold mentioned in this thread. What exactly do you mean by "don't be fooled by percentages?"

I'm pretty sure he means $220K YEARLY. Which is $18.3k monthly gross, probably a bit less than $14k take home, spending $7k/month on an apartment would be over 50%.

 

[Special K]

Originally posted by: Chiropteran

Originally posted by: Special K

Originally posted by: Turkish
Don't be fooled by percentages. I have a friend paying $7K/mo for an apartment in Chelsea with a yearly salary of $220K gross. He still pockets more than 4-5K a month after rent. It all depends on your income.

Ummm, that works out to about 3.2% of gross income, which is well below any threshold mentioned in this thread. What exactly do you mean by "don't be fooled by percentages?"

I'm pretty sure he means $220K YEARLY. Which is $18.3k monthly gross, probably a bit less than $14k take home, spending $7k/month on an apartment would be over 50%.

My mistake. I calculated the yearly percentage instead of the monthly.

 

[Chiropteran]

Originally posted by: Scarpozzi
When you throw out a fraction like that, it's misleading. You cannot judge this based on a percentage of your income. As net income increases, the percentage becomes less important. (as you have more money leftover) If you make very little money, the percentage might not be reasonable enough.... Also, keep in mind that your utility bills will increase substantially if you are in a larger residence.

What you need to do is simply write out a monthly budget.
Living Expenses
--Food
--Gas
--Incidentals (clothes, pr0n, etc)
Short Term Debts
--Credit Cards
--School Debts
--Other Loans/short term debt
Housing Expenses
-- Mortgage/Rent
-- Electricity
-- Gas
-- Water/Sewer
-- Phone
-- Home Owner Association fees (suckers!)
-- Home Owner's Insurance
Transportation
-- Car Payment
-- Car Insurance
Savings/Retirement Funds

Don't forget to factor in Savings and Retirement....even if you're in debt. It's a good idea to set aside some extra cash for home repairs or car repairs and, of course, retirement.
Once you fill in the Transportation, Savings, and Living Expenses....what you have left over should be what you can put toward housing. You're going to need a buffer there....whatever that is should go into your Savings or be used to pay down your short term debts.

This is something I do already, but mostly I just keep it all in my head and I don't bother to put it on paper.

Monthly Expenses

Living Expenses
--Food $200 (eating out) + $200 (groceries)
--Gas $20 (estimated with new location, I rarely drive other than commuting to work)
--Incidentals (clothes, pr0n, etc) $100
Short Term Debts (none)
Housing Expenses
-- Mortgage/Rent $1070
-- Electricity $33
-- Gas $33
-- Water/Sewer $33
-- Phone $40
Transportation
-- Car Payment $0
-- Car Insurance $25
Savings/Retirement Funds

Total $1755

If I went with my own apartment, instead of sharing the 3 BR I found, rent would be $700 higher and total would be $2455.

All in all, I'm happy to save the money, but if I didn't find the place I did I'd probably just as soon pay for my own apartment rather than continue to commute. I value my free time too much and every day I drive the interstate I worry about meeting a cop having a bad day who decides to pull me over- I drive with the flow of traffic which means 10-15 mph over the limit most of the time.

 

[alkemyst]

Originally posted by: Chiropteran

Originally posted by: Special K

Originally posted by: Turkish
Don't be fooled by percentages. I have a friend paying $7K/mo for an apartment in Chelsea with a yearly salary of $220K gross. He still pockets more than 4-5K a month after rent. It all depends on your income.

Ummm, that works out to about 3.2% of gross income, which is well below any threshold mentioned in this thread. What exactly do you mean by "don't be fooled by percentages?"

I'm pretty sure he means $220K YEARLY. Which is $18.3k monthly gross, probably a bit less than $14k take home, spending $7k/month on an apartment would be over 50%.

With higher incomes the ratios aren't so applicable. The standard ratios are designed for the average joe in mind.

 

[alkemyst]

Originally posted by: Chiropteran

Is throwing money away in interest any better than throwing it away in rent?

Why is it being thrown away?

Also I don't get how you can compare the privacy of your own apartment to sharing one with 2 others just because you have your own bedroom and bathroom.

 

[Turin39789]

you found the solution. 1br living solo is a luxury in many places. Now get 6 months expenses saved up, throw into a retirement account, start saving for your home's downpayment, and it wouldn't be a bad idea to start saving cash for your next car.

 

[Zee]

get a room in a house to rent until you get your own place

 

[Chiropteran]

Originally posted by: alkemyst

Originally posted by: Chiropteran

Is throwing money away in interest any better than throwing it away in rent?

Why is it being thrown away?

Also I don't get how you can compare the privacy of your own apartment to sharing one with 2 others just because you have your own bedroom and bathroom.

Why is interest being thrown away? Well, it's money you spend and get nothing concrete for it, what would you call it?


The privacy is obviously less than having my own place, but with the bathroom connected to the bedroom I will rent, it's better than I have now. The main reason to move though is to reduce my commute time and remove the need to spend money on gas.

 

[mugs]

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

28% of gross is a pretty standard guideline for mortgage payments, so I think you're wrong. 28% of gross would be 35+% of take home.

 

[Deeko]

My rent is 29% of my net pay, 31% if you include parking. I get by just fine.