Max "safe" rent?

[Chiropteran]

Originally posted by: Phokus
Are you guys talking about pre-tax or after-tax dollars when you use those 1/2, 1/3, 1/4th figures?

I'm talking about take-home, after taxes and other deductions. If you are supposed to go by gross pay, I could get a fairly decent place for 1/3, but my understanding was that it's based on take-home pay.

 

[Chiropteran]

Originally posted by: Naustica

It does work. You just need to get 2nd job or move to a cheaper place.

If you move to a cheaper place you spend the difference in gas. If you move to a cheaper place and get a new job your paycheck is smaller so you lose the difference.

The second job idea... I actually seriously considered that. Simply put if I move to the place I'm thinking about, that cuts my 2-way commute from about 1.2 hours to .1 hours. That is an extra 5.5 hours a week, if I could get a second job to get money out of the extra time I'll have the difference becomes even smaller. I wouldn't get a second job and work it just 5.5 hours a week, I'd get a weekend job where I can get 16+ hours.

 

[HyTekJosh]

In NYC many people pay 50%+ of their take home pay

 

[sjwaste]

Originally posted by: Chiropteran

Originally posted by: Naustica

It does work. You just need to get 2nd job or move to a cheaper place.

If you move to a cheaper place you spend the difference in gas. If you move to a cheaper place and get a new job your paycheck is smaller so you lose the difference.

The second job idea... I actually seriously considered that. Simply put if I move to the place I'm thinking about, that cuts my 2-way commute from about 1.2 hours to .1 hours. That is an extra 5.5 hours a week, if I could get a second job to get money out of the extra time I'll have the difference becomes even smaller. I wouldn't get a second job and work it just 5.5 hours a week, I'd get a weekend job where I can get 16+ hours.

So what places are you looking at, anyway?

 

[alkemyst]

Originally posted by: Jumpem
My mortgage is 17% of net, 11% of gross.

kthx.

 

[Skeeedunt]

I always thought those percentages were BS. There are way too many factors involved to be able to say everyone everywhere should only pay XX%.

As long as you have enough to survive, save (retirement, etc), and have an emergency fund saved up (taking into account whatever rent you decide to pay), I think it's really up to you whether you want to spend your disposable income on random junk or a nice apartment. Obviously a higher-rent place will be a greater liability if you manage to lose your job and burn through your savings, but if that's the biggest risk you take in your life, I think you're doing alright.

 

[cw42]

40% in the NY area

 

[ultimatebob]

Originally posted by: Jumpem
My mortgage is 17% of net, 11% of gross.

My mortgage was 30% of my net income, and about 25% of my gross income when I got it two years ago. Once you add the property taxes and condo fees, that goes up to about 40% of net and 33% of gross. That seems high, but I was able to handle it without too much trouble.

I got a higher paying job since then, though, so now it's more like 20% of the net income. That's one nice thing about 30 year fixed mortgage as opposed to rent... Your income grows but the payments basically stay the same. I'm also taking some of that extra income to make extra payments to get rid of that mortgage faster.

 

[poncherelli2]

Originally posted by: HyTekJosh
In NYC many people pay 50%+ of their take home pay

To be fair, many people have no cars and therefore no car payment, no car insurance payments, and don't need to buy gas.

I buy a monthly subway ticket (pretax) and spend 20-50 bucks a month on cabs probably.

 

[Mxylplyx]

Originally posted by: Chiropteran

Originally posted by: Mxylplyx
If your paying 50% of your pay on an apartment, what is the point of even working? I would relocate. If I wanted to spend almost all my paycheck just to keep a roof over my had, I'd move to Mexico.

Whats a bigger benefit of working than having a nice place to live? What else would I spend my money on, junk I don't need?

I agree you should afford yourself a nice place to live if you can. However, spending 50% of your income on housing is not affording it. That my friend is house poor, or should I say apartment poor. If you are a young professional and foresee alot of job/income growth in the near future, then go right ahead and suffer for a little bit. If you are already matured in your career and paying that kind of rent, then you are living to work, not working to live.

 

[Chiropteran]

Originally posted by: Mxylplyx
I agree you should afford yourself a nice place to live if you can. However, spending 50% of your income on housing is not affording it. That my friend is house poor, or should I say apartment poor. If you are a young professional and foresee alot of job/income growth in the near future, then go right ahead and suffer for a little bit. If you are already matured in your career and paying that kind of rent, then you are living to work, not working to live.

I get what you are saying but maybe you don't understand my exact situation. I feel like *now* I am working to live. I am living out in the sticks with family. It's nice that my rent is low, but I have to drive 40 minutes to work and 40 minutes home every day, and that is working off hours to avoid traffic. I don't have the option to cook whatever I want or do laundry because there are family members here I need to share the house with. I am thankful for having this place to stay and being able to save a little money here, but it's not what I want.

This is not living life.

With the new apartment, I'll have at least an extra hour a day, if not more. I'll come home without being stressed out from driving behind idiots on the interstate. I'll be able to cook/clean/whatever without worrying about other people. I could care less about spending a little bit more money a month, I'll be happier and what else really matters?

Originally posted by: sjwaste

So what places are you looking at, anyway?

In the $1500-$1900 range, Rosslyn apartments within about a .5 mile radius of the metro stop. Rosslyn Heights, Gallery at Rosslyn, Park Georgetown, Bennett Park sound promsing based on the information I have found online, I'll have to take a look at each of them in person to really make a decision.

Other than that, I'm checking various sites for shared rooms and roommates, under the right circumstances I'd be worth sharing a room to save $500-$600/month.

I don't want to compromise for a small benefit, though. It's not worth saving $200 if it means I have a 20 minute commute instead of a 5 minute commute.

Originally posted by: poncherelli2

Originally posted by: HyTekJosh
In NYC many people pay 50%+ of their take home pay

To be fair, many people have no cars and therefore no car payment, no car insurance payments, and don't need to buy gas.

I buy a monthly subway ticket (pretax) and spend 20-50 bucks a month on cabs probably.

I might fall into that category. My car is almost paid off, if I have no need for it I might just sell it after a couple months of making sure I can live without it.

 

[KillerCharlie]

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.

That would mean that though I make over 10% more than the average salary as an engineer, I'm living beyond my means in a 1 bed 1 bath apartment.

 

[nageov3t]

I always go with the NYC rule...

your yearly salary should be higher than your monthly rent * 40

 

[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.

 

[PricklyPete]

Wow....that seems like a high percentage of your pay check. You need to do what you need to do...but I would definitely work hard at minimizing those expenses until you move up the money ladder.

 

[Chiropteran]

As it turns out, I found 2 people looking for a 3rd roommate in the same area as I was already looking in. My own bedroom and bathroom, almost as much privacy as getting my own apartment, for about 3/5 the price. Going to go with this unless some unexpected problem comes up before I can move. The rent will be less than 1/3 my take home pay, a little less than 1/4 gross pay.

 

[TallBill]

It's all relative. If I made a million dollars a year, I'd still only have a 1500 sq foot house at this point in my life.

 

[RaistlinZ]

Originally posted by: Chiropteran

Originally posted by: Mxylplyx
I agree you should afford yourself a nice place to live if you can. However, spending 50% of your income on housing is not affording it. That my friend is house poor, or should I say apartment poor. If you are a young professional and foresee alot of job/income growth in the near future, then go right ahead and suffer for a little bit. If you are already matured in your career and paying that kind of rent, then you are living to work, not working to live.

I get what you are saying but maybe you don't understand my exact situation. I feel like *now* I am working to live. I am living out in the sticks with family. It's nice that my rent is low, but I have to drive 40 minutes to work and 40 minutes home every day, and that is working off hours to avoid traffic. I don't have the option to cook whatever I want or do laundry because there are family members here I need to share the house with. I am thankful for having this place to stay and being able to save a little money here, but it's not what I want.

This is not living life.

With the new apartment, I'll have at least an extra hour a day, if not more. I'll come home without being stressed out from driving behind idiots on the interstate. I'll be able to cook/clean/whatever without worrying about other people. I could care less about spending a little bit more money a month, I'll be happier and what else really matters?

Originally posted by: sjwaste

So what places are you looking at, anyway?

In the $1500-$1900 range, Rosslyn apartments within about a .5 mile radius of the metro stop. Rosslyn Heights, Gallery at Rosslyn, Park Georgetown, Bennett Park sound promsing based on the information I have found online, I'll have to take a look at each of them in person to really make a decision.

Other than that, I'm checking various sites for shared rooms and roommates, under the right circumstances I'd be worth sharing a room to save $500-$600/month.

I don't want to compromise for a small benefit, though. It's not worth saving $200 if it means I have a 20 minute commute instead of a 5 minute commute.

Originally posted by: poncherelli2

Originally posted by: HyTekJosh
In NYC many people pay 50%+ of their take home pay

To be fair, many people have no cars and therefore no car payment, no car insurance payments, and don't need to buy gas.

I buy a monthly subway ticket (pretax) and spend 20-50 bucks a month on cabs probably.

I might fall into that category. My car is almost paid off, if I have no need for it I might just sell it after a couple months of making sure I can live without it.

Eck, there's no way in hell I'd consider sharing an actual room with somebody.

 

[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.

 

[Chiropteran]

Originally posted by: RaistlinZ
Eck, there's no way in hell I'd consider sharing an actual room with somebody.

Not sure where you got that from. The place I settled on was a 3br/2ba where I get my own bedroom with a private bathroom.

I wouldn't share a room either, unless it was with a SO.

 

[Scarpozzi]

Please don't forget inflation is going to be really bad this year. Energy costs (utilities) are going to be rising which is going to cause general inflation across most everything. You might be better off waiting it out until after the presidential election and see what happens with the economy. If I could live at home right now, even with a 40 minute commute I would do it simply because it would allow me to save a lot of money/pay off debt.

Once you start paying rent, you're essentially throwing money away. If you put that money toward an asset (house/condo), at least you'll have something of relative value to sell when you move. The problem is that you're in a tough market. It's probably going to be tough to find affordable housing up there. I don't know what your income is, but do consider the roommate approach if you rent. Just make sure you pick a professional to room with...someone responsible that doesn't plan on relocating to another city any time soon.

 

[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.

Doh, I calculated the yearly percentage, not the monthly. Nevermind.

 

[Nitemare]

Lol at 25%, in most major metro markets that would be impossible for most.

I'm at 1/3 which is including a part-time job

 

[mchammer187]

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?"

7,000*12/ 220,000= 38% of gross

 

[Chiropteran]

Originally posted by: Scarpozzi
Please don't forget inflation is going to be really bad this year. Energy costs (utilities) are going to be rising which is going to cause general inflation across most everything. You might be better off waiting it out until after the presidential election and see what happens with the economy. If I could live at home right now, even with a 40 minute commute I would do it simply because it would allow me to save a lot of money/pay off debt.

With the place I found, living at home wouldn't save me any noticeable amount of money. I don't live at home for free, I still pay rent, and the $250 commuting cost associated with my car's gas consumption pretty much makes up the difference. Add in another $100/month for wear and tear on my car associated with the miles added and I am breaking even. There is no holding anything off.

Originally posted by: ScarpozziOnce you start paying rent, you're essentially throwing money away. If you put that money toward an asset (house/condo), at least you'll have something of relative value to sell when you move.

Been paying rent since I was 18, all this is changing is reducing my commute cost by X and increasing my rent cost by X and getting a better place overall

If I could buy for similar money to what it costs to rent I would do so, but it's impossible. In fact I bet the portion of my monthly payment that goes to interest alone would be higher than my share of rent.

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