I read in our local paper that a third of our paycheck tends to go to housing, either rent or a mortgage and that also includes utilities. Why do we spend so much on housing? I know we need a place to live, but why do we have to max out so much of our budget doing it?
The banks tell us that we’re allowed to have something like 38% of our gross income be a mortgage payment. Are they serious? I wouldn’t have enough left over to do anything like eat. We bought our house with a starting house payment of $800 and it made me crazy. The bank said we could have afforded about $1200 a month and I thought they were nuts. $1200 a month? That would have been literally a third of our income. How would we save for retirement? How would we have money for eating out or saving for college, or watching movies? We worked hard to reduce our payment down to about $500 by paying down the principle and refinancing at a lower interest rate.
Sometimes you live in an area that gives you no choice. Houses in a more reasonable price range are often not livable. Condemned even. But if you’re lucky enough to have a choice then make a wise one. Don’t stress out your budget just to buy the house on the hill. Work you way up there smartly and save money for a future event.
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