Ask the Readers: How Much Do You Spend on Housing?
Published on - February 17th, 2012 (by J.D. Roth) Over the past few months, I’ve occasionally used the “Ask the Readers” feature at Get Rich Slowly to poll people about their budgets and spending habits. So far, I’ve asked folks to share their spending on food, clothes, gifts, and health insurance. Now I want to look at a bigger item in your budget — probably the biggest. Let’s talk about how much you spend on housing.
More than other expenses, your housing costs are influenced by where you live. Some parts of the country — and some parts of the world — are much cheaper to buy a home or to rent an apartment. It’s cheaper to live in Boise, Idaho, for instance, than to live in New York City. Generally, however, there are reasons for these price disparities. Most people are willing to pay more to live in New York than in Boise, and that drives prices higher. It’s a trade-off.
I’m a firm believer in the Balanced Money Formula, which says that if you pay too much for housing, you’ll have less to spend on other wants and needs, and you’ll always feel pinched, as if you can’t afford anything. On the other hand, if you limit your housing expense to below 25% of your take-home pay, you should have lots of breathing room.
For my own part, I pay a little more than I ought to for housing. After a few years of spending $0 per month (because we paid off the mortgage after selling the blog), I’m now paying $950 for my apartment in Portland. That’s 36% of my take-home pay, and a fine example of not practicing what I preach. But I’m able to get away with this because:
- I’m still saving more than 20% of my income.
- I have ample emergency savings.
- The rest of my spending on needs is low.
- My spending on wants is extremely low, and my relatively high housing expense doesn’t make me feel pinched.
As I mentioned before, this $950/month figure seemed high to me until I started comparing notes with other Portland renters. Yes, there are places that cost less, but they all involve compromises I’m unwilling to make right now. (The biggest compromise? Location. I want to be able to walk almost everywhere, and I can do that from this apartment. That’ll help me save money on auto expenses, which balances things a little.)
What about you? Where do you live and how much do you pay on housing? What percentage of your budget does this represent? Does your housing payment cramp other parts of your life? Or have you intentionally kept it low so that you can afford to spend on other things? If you were to start over again from scratch, what sorts of housing choices would you make? Would you rent? Would you buy? Would you move to another part of the country (or the world)?
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I live in a small town in Cambridgeshire, UK.
I normally spend £500/month on mortgage payments for a small 2up2down, which is about 25% of my net take home pay.
That figure however is a bit misleading because that includes as a massive monthly overpayment to clear the mortgage.
In fact since the end of the mortgage is now in sight, I’m just about to increase the payments to £1000/month, funded by stopping the payments into my savings account.
My savings are in good shape, and by doing this, I should be clear of the mortgage before the end of the year.
So long as I’m strict with my spending, I should then be able to take everything I was paying into the mortgage and dump that into the savings before the end of the tax year and still have max out the tax-free savings contributions. *fingers crossed*
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There are tax-free savings contributions in the UK? Does this mean you won’t be taxed on those earnings because you saved them? If so, that would be awesome. In the US, you essentially get penalized for saving because we pay taxes on interest earned in savings accounts.
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“Does this mean you won’t be taxed on those earnings because you saved them?”
There are savings accounts where the interest from them are tax free (ISAs) but you have already paid tax on your earnings from your employment which is being paid into the account (wasn’t quiet sure what you meant by tax your on the earnings so covered both ways of interrupting the sentence).
There is a limit on how much you can pay into the accounts each year, the idea is to encourage people to make long term savings. Currently the limit for a Cash ISA (there are also Stocks & Shares ISA’s) is £5340.
e.g. If you pay in £5000, then draw out £2000, you can only pay in a further £340 until the next tax year.
You are only allowed to contribute to 1 Cash and 1 Stocks & Shares ISA per year.
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Obviously that should read….
“so covered both ways of interpreting the sentence”
stupid auto-correct.
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Yes, we can save up to a certain amount tax-free each year in an ISA (http://en.wikipedia.org/wiki/Individual_Savings_Account). Interest on other savings are taxed as income.
They’re a good tool for emergency savings, I think, because there’s an incentive to save regularly (every year), and not to withdraw – withdrawn money still counts as part of the annual limit. Many accounts are “instant access” (where “instant” may mean 3-5 days in some circumstances), although you can, as always, get better rates by locking in.
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I thought I’d reply to your comment because I’m also from the UK and pay £500 a month, but we live rather differently. I live in South London, just into Zone 2. My £500 gets me both housing and bills; it’s all inclusive. For my money I get a single bedroom, which was furnished with a single bed, an open wardrobe, a built in desk and an office chair. It’s pretty small, you might be able to fit a double bed in if three sides touched the walls!
I share with technically 3 other people, but in reality it’s 4, making us a household of 5 with 1 bathroom. The household is made up of my landlord, his girlfriend, his brother, a guy who works night shifts, and myself. They have a band, so it can get quite noisy at times. It’s a lovely, lively household.
In terms of money though, hmmm. My student loan doesn’t even cover my yearly rent- it’s short by £1000. I will work over the summer to earn that, hopefully. In the mean time, I am incredibly lucky, because my parents give me £250 a month to make sure I’m housed, not starving, and can afford the bus to university. My income is not fixed because I work ad hoc, and I’ve only just started so I can’t really project figures.
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I live in Durham, NC and pay $499/mo for rent, with about $100/mo (averaged out) for utilities (gas, power, water, internet and recently cable, which I’m trying to convince my roommates we can do without). I’m below 20% of my gross pay with my rent, and just over 21% when you add in the average utility cost. I live in a house with 2 roommates, one of whom owns it. My other roommate and I pay our rent and all 3 of us split the utilities. I don’t know anyone in their mid or early twenties (my age) who doesn’t have at least one roommate, if not 2 or 3, except for one woman whose parents owned an extra property. It’s the only way we can afford to live in safe neighborhoods.
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I *might* be moving to Durham for graduate school, and information like this makes me so happy. I suppose real estate is all in the eyes of the beholder, but it will be a real relief coming from the much pricier West Coast. I shared an apartment with a roommate in a safe but kind of run-down part of LA, and the price for each of us was $750 plus another $50-$100 in utilities.
I am planning on budgeting $650-$750/month for my rent & utilities in Durham, it sounds like that would be sufficient… Of course I will also have a roommate.
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We lived in Durham while my husband was in grad school then moved to Winston-Salem after school. Housing prices are extremely reasonable in NC and a TON cheaper than the other top-notch schools he was looking at attending. I highly recommend it!
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Right now, I’m in training to be a diplomat for the US Government. Because that involves moving every couple of years (plus temporary stints in DC from time to time), the USG is paying for my current location and will pay for my housing when I work abroad. Therefore, right now, I am extremely lucky and pay $0 for a furnished apartment until August, and then I will have a house provided in my city of assignment (in Sub-Saharan Africa). (I will have to pay for housing if I ever do a longer assignment in DC.)
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I think most people reading this can count themselves lucky that they don’t live in London…
I do and renting the cheapest 1 bed flat I could find costs me £760 per month (~$1200). Add in to that council tax and utilities and it breaks the £1000 ($1585) barrier.
Comparing this to my salary gives 34% on rent plus another 10% on bills, which is just about do-able considering I cycle almost everywhere, keeping my transport costs very low.
It’s certainly a lot better than this time last year, when I was earning significantly less and in total it was closer to 70%!
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My rent is similar to yours, $1100/month (with all utilities included except electric) only I live in Fairbanks, AK, and this is insanely cheap rent for a place that allows pets and has running water. (We could go cheaper if we were willing to live in a cabin w/o running water again–when we did that it was $375/month + heating oil + electric. Or about $200 cheaper/month if we wanted to ditch our pets.)
Electricity runs us about $200-$250 in the winter, $100 in the summer. Until my husband found another job, rent alone was taking up over half of my income.
I love it here, but the rent is out of control. My landlord confessed that he’s still losing money on our place because of the expense of heating fuel.
The only way we could afford to live here without help from our parents was because we spend waaaay less on food than most people: my husband hunts, our family fishes, and I garden and forage wild berries.
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I live in the DC area, which is more expensive but I am able to live without a car. I also save on rent because I’m willing to take the bus rather than live right at a train stop. So overall I get more exercise (all errands are on foot), have a low-stress commute, and low transport expenses. Great tradeoff for me personally. Living in this area with a car commute sounds horrible, I don’t know how people do it.
P.S. Interesting article on rent vs. buy:
http://www.reuters.com/article/2012/02/15/us-housing-americandream-idUSTRE81E1LG20120215
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We too live in the DC area (NoVA), and we rent because as soon as we can leave this area we will. It’s way too crowded and expensive. We pay $3,000 per month for a 2,200sf house that’s 45 years old. That represents 24% of gross income, but 40% of net after savings and other fixed expenses. There’s nothing in walking distance, but it’s only a 5-minute drive to groceries, gas, etc. and I only have an 18 minute commute. We love taking Metro to the museums and national mall, but since that’s 40 minutes from home it isn’t an everyday treat – and isn’t enough to make us want to live the rest of our lives in the concrete jungle.
We’re actively working to find employment in Charleston SC or Indianapolis IN (for different reasons), and will be gone as soon as we can make it happen.
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Also live in the DC area, we just purchased a house within walking distance of Metro (10/12 minutes) in Alexandria part of Fairfax County. With a 15 year mortgage, our monthly payment is 27% of our income. We did get a good deal on our house (roughly half the price of a similar house in Del Ray) because it needs some work and the neighborhood is not the best kept … but several local improvements are in the works for the next couple of years. Plus, the metro ain’t going any place!
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We also live in DC, in the northwest. Our mortgage alone is $2150, which comes in somewhere between 15-18% of our gross monthly take home.
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I pay $850 for a two bedroom in Baltimore MD, which is 24% of my take home pay and I do not feel pinched. I have a list of things I want in my next place, but I am concentrating on 1) paying down consumer debt 2) saving one year of expenses in my freedom account so I am not willing to move yet even though my kitchen IS SO SMALL!
I used to live in New York, where my rent with my ex-husband for a one bedroom in a 6 floor walk up was almost $1700 by the time we left it in late 2008. That was about 25% of our combined take home pay, but the pinch was much bigger that it is for me now. We were making more money combined, but also spending too much and communicating poorly.
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My boyfriend and I also live in Baltimore. We pay $1,000/mo (23% of our combined take-home pay) for a nice sized one-bedroom apartment with private parking. I think it’s a good price for the neighborhood.
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We pay $1600 per month for mortgage, taxes, and homeowners’ insurance. It’s a little less than 10% of our take home, about 5% of our gross. It’s the smartest financial move we’ve ever made. We have a 4 bedroom, 3 full bath 3200 sq ft home which suits our needs just fine. It’s big enough should we ever add another child or two. Not too big if we don’t. Once our mortgage is done we’ll still have $500 per month escrow.
Our payment is considered extremely low for where we live (Philly area) and is due largely to our low property taxes – we can thank doing an addition rather than moving into new construction for that one. Had we moved into a similar new construction home in our same township, we’d be paying 12k per year as opposed to 4k per year in property taxes alone.
The tradeoffs? We have a smaller lot and less upscale neighbors. Don’t mind the smaller lot as it makes maintenace cheaper and easier (and it’s still big enough for a swingset and a game of soccer). And we consider the less upscale neighbors a bonus – no pressure to replace my minivan with a Lexus.
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wow, I just wish I knew how to make $380,000+ in Philly!
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$850/month for the top flat in a 2 family house. It’s a 3 BR,1 BA. I live in Schnectady, NY. Combined, my husband and I take home about $4700/month after taxes and health insurance. He also has freelance income, but I don’t budget with that. We rent, but owning a two family would be cheaper, even without getting a tenant for the other flat, which we would.
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Hi Meg, I too live in Schenectady. My housing cost with taxes (own) is about $900 per month. I don’t know how you feel, but if ever there was a place you could get a reasonably priced home, it’s in Schenectady. The property taxes, unfortunately, are very high, but you’ll be paying 150K less than a similar property anywhere else in the capital district.
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I live just outside of Charleston, SC in a new community that will eventually be approximately 400 – 500 homes. I forget the exact number. We recently refinanced our home from 6% to 4% and pay $1300.00 per month. I’m not sure what percentage that works out too. As soon as we have consumer debt paid off (this year) and emergency fund in place (next year) we’ll attack the house payments.
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From south Florida ans we are renting. 20% of my salary (we are single income) goes in to rent. We save 50% of our salary. We also save, yearly bonus and tax return in entirety.
We are saving for our first home. So 80% of savings goes in to home buying fund, rest in retirement.
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I’m in a small town, Wooster, Ohio. $440 a month rent for a small 2br duplex. That’s about 19% of my expenses.
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We live in a 2 bedroom apartment that is nice and is taken care of by landlord when needed repairs. Our rent is $450 a month and includes water /sewer and trash pickup. We split this with our grown son who pays half of rent and utilities too. We live in Ohio. It is rare to find rent this low here though. If we move we will have to pay at least $600 a month to find comparable place in quality. That’s why these apartments don’t have a high turn over. There are only 8 apts. and one renter been here 17 years, 12 years and rest of us anywhere from 2- 7 years. It took us 5 years on waiting list to get it. Because we split rent and utilities its about 10% of income, but we have high insurance costs through husbands work around $600 a month and worry that Obamacare will make rates go extremely higher.
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Currently live rent free (yay, parents) while I pay down student loans, but when I was in grad. school I paid $540/month plus about $150-$200 in utilities in College Station, Texas (and that was mostly due to 100+ degree summers and awful insulation, something I didn’t know until AFTER I signed the lease). It was well over the 25% of my salary, but health insurance, etc. were covered and my loans were deferred (and my tuition was being paid by the school).
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I live in Manhattan. I pay $1050 for my part of a small 2-bedroom apartment, which works out to about 44% of my take-home pay. I do feel pinched — but there’s not a whole lot of flexibility in this area, and my industry is mainly located here. Nonetheless, I’ve done some soul-searching about whether I want to remain in both the industry and the area.
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I live in Manhattan as well. Move to Hamilton Heights, in Harlem. Safe, working class neighborhood where I pay $750 for my part of our huge 2 bedroom.
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I pay about $950/month for renting a small one-bedroom apt. in Brooklyn, which works out to about 40% of my monthly income in the nonprofit industry. I feel pinched too. Both my rent and salary were slightly increased recently, and I feel that it’s hard to get ahead in both savings and income in general unless I go back to school or switch sectors.
Feeling a little jaded about working for nonprofits right now…
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I, too, live in Manhattan. My spouse and I own a co-op and our monthly costs are about $1800/month for a smallish studio. That’s about 21% of his take-home, I’m a full-time grad student and not bringing in any income. We’re both in tech and not considering leaving, ever. We do, however, enjoy looking at how much more home we could get elsewhere.
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Central Pennsylvania – rural/suburbs 3 bedroom, 2.5 bath single family raised ranch (no garage).
Purchased house just under 5 years ago
Refinanced twice, now at 3.375% 15 year with about 14.6 years remaining
Paying 29% total mortgage/escrow portion of take home pay. But that’s before I collect rent from my two roommates. If you add that to my pay, it drops it 24%.
(For fun, if you just deduct the rent I collect from my mortgage/escrow costs, I’m only paying 6.4% of my take home!)
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I live in Vienna, Austria and my rent is about 25% of my salary. Not bad at all considering that the Danube canal is just across the road, the area is very good and I can walk to downtown if the weather is warm enough. I just moved here, so I intend to rent for at least the next year and a half before I think of buying my own place.
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AWESOME! I want to visit Austria so bad! What I’ve seen looks amazing.
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What district are you living in? I lived in the 6th district for a while, and it was pretty pricy! (But so worth it! What a beautiful beautiful city).
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I live in Bangalore, India. I am staying in a 2 Bedroom condo and paying a mortgage of INR19000 (~ $400) per month and a monthly outgo on association charges of about INR2162(~ $45) so my total outgo towards housing is INR21162(~ $441) which is 22% of my take home monthly salary INR95000 (~ $1980) after taxes.
I paid 50% down for the apartment I live.
~ Himanshu
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I live in SE England in a 4-bed 2.5 bathroom detached house. Mortgage + council tax is a fraction under £1700 ($2694), which is about 28% of our take-home pay. This isn’t counting overpayments, which we have been doing aggressively so far.
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I’m going to pay €275 (I’m moving tomorrow) for my room in North Madrid. It’s a shared flat with two other guys. The total cost is €850 a month, if you’ve made the math you’ll see that one of the guys with the nicer room pays a bit more (I’ll pay more.
The new rent is going to be around 20% of my after taxes monthly income, which is not bad, considering I don’t include bonuses/extras/extra income on my current calculations.
I’d like to move to somewhere on my own, but that will increase a lot my rent and at the moment I can live with housemates.
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I’m always shocked at how cheap it is to buy in some areas of the US. I saw a listing for a house the other day that cost $85k. I was gobsmacked – it was about twice the size of mine & looked much nicer (newer). For comparison, I live in SW England and have a £1000 (about $1600) monthly mortgage payment on a very modest 2 bedroom 1 bathroom detached house. The house cost £235,000 ($370,000-ish) a few years ago, and this is about average for the area I live in.
The mortgage payment & other house-related costs are a pretty large chunk of our monthly income. There is also council tax of about £200/month, and another £100+ for utilities, plus insurance & maintenance costs. The mortgage is also variable rate, so is lower than it used to be because of the current low interest rates. Needless to say, paying it off early is a big priority.
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I live in Texas and own 3 of those $85,000 houses. I used to own two in Beaumont, TX just outside Houston. One cost me $10,000 and the other $12,000. Yes, they needed some fix up, but starting out with one house was easy. So I rented out one and bought/moved into another, then another. I was shocked at the housing prices in the UK and northern areas of the U.S.
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A few years ago, DH and I looked at a condo that was up for sale right across the street from our apartment building. It had nearly identical layout and square footage to ours and no better amenities. It was priced at $863,000. Prices have not gone down in our area.
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Sounds great! I think I’m living in the wrong country here.
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$2100 in mortgage/tax/insurance escrow on a 4 bedroom 2000sf house on a 6 acre farm with barns and outbuildings. We bought near the height of the bubble and are too underwater to sell. Oops. It’s under 25% of takehome though so we can manage.
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We live just outside of Washington DC in a pretty expensive area. We managed to find a 3 bedroom house in a fantastic neighborhood with good schools but we only pay $1550 per month in rent. The house is old (it was built in 1938) and needs repairs, but in an area where housing rent prices are normally $2000 and up we could not pass up the oppurtunity. My husband works in DC so it’s a shorter commute (we used to live near Baltimore) and we get to take advantage of our county’s fantastic school system. It represents about a 1/4 of our monthly budget since I stay home with our children.
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DC is brutal! We pay $3000/month for a 2 bedroom apartment. Looking at homes and most homes in the $400-500k range need significant work. THIS PLACE IS STILL IN A HOUSING BUBBLE.
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Yes, DC is the worst when it comes to housing. I’m in a DC suburb, and we recently moved to a 2-bedroom apartment (after living in a 500 sq. ft. shoebox for years). The cost is $1400 per month, plus utils (about $100 a month). It represents about 25% of our net take-home pay (or about 18% of our gross pay). Our current place is about $15.27 per sq. ft (annual), as opposed to our previous apartment which was about $22 per square foot.
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They wanted to raise the rent on our 2br/2ba 1025sqft apartment in Arlington, VA to $2500/mo so we bought a 4br/2.5ba house in Loudoun, VA for the value & schools. Right now the PITI of $2850/mo is about 40% of our income. When my wife stops working it’ll be around 50%.
A lot of the DC suburbs are expensive, but I was the one who made these dumb decisions. We could’ve bought a smaller house a few blocks from where I’m sitting and would’ve been looking at a much saner (25-30%) ratio. We chose to stretch in the hopes that we’d grow into the mortgage since the market didn’t look good for selling if we needed more space.
At least the pinch has started getting me serious about debt elimination and wiser spending habits.
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Yes DC housing is still ridiculous. We bought a 3 BR / 3 BA townhouse in a close-in Virginia suburb a few years ago. We pay right around $2500 for mortgage, taxes, ins, utilities or ~25% of our salaries (we both work). We deliberately bought in an area with fantastic public schools and don’t understand why some of our friends keep encouraging us to look at private schools…but that is another topic.
Also, although we could get more space for the money farther out, we’ve found living in this extremely walkable neighborhood has enabled us to stick with one car for now, which saves us a good deal. And ultimately if we had more space we would just put more Stuff in it…well and a dedicated room for a home office, which would be nice, but we can be creative.
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Also live just outside of DC. Sharing a 3 bedroom rental house with a friend – total rent is ~$2200 (so my share about $1100). It’s a cute house (though not fancy) and in a very walkable location: I walk to work, to the grocery store, library, pretty much everywhere. We’re about 0.5 miles to a metro station, which makes a huge difference on the price – if we were a couple of miles further out, our rent would certainly be a bit less, but then I’d have to pay to park at work (~$90 per month) plus sit in DC traffic.
Previously I lived in a 3BR/2BA apartment that went for ~ $1900 per month – all utilities, parking, and gym access was included and it was only about 0.33 miles to the metro station, but it was somewhat grungy (very old stained carpet, tiny kitchen, fire alarms going off frequently, bugs, leaking water pipes, occasional carjackings in the parking lot) and I was sick of recruiting housemates from Craigslist (though I ended up being quite lucky with my Craigslist housemates – had 7 housemates over 4 years, and all them were perfectly nice people. some of them had different standards of cleanliness than I did, but we were able to work it out for the most part…and I have some good stories from the more difficult negotiations
My total share of the rent (including cable and internet) was only ~ $670 – I paid a bit more than 1/3 because I had my own bathroom. This was a spectacular bargain for the location! I stayed long enough to pay off my credit cards and stash a bit in savings.
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I live in Westchester County, NY. We spend $1425 for a one bedroom apartment, which is roughly 26% of our take home pay.
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We pay $630.00 per month P&I for a 3 bdr, 1.5 bath in Western Massachusetts. Property taxes and homeowner’s insurance add $300.00 per month. This comes out to about 25% of our combined income. Feeling pinched right now, but that is because my husband is only working part-time at the moment and we are paying down debt.
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I pay a total of $1480/month for a two-bedroom condo in Cambridge, MA, inclusive of mortgage, taxes, and condo fees. Mortgage and taxes are relatively low for the area but the condo fees are a whopping $440/month (this includes insurance, heat, hot water, landscaping, maintenance and snow removal. Fortunately we almost never have special assessments for additional costs; the last one was 5 years ago). This represents just under 20% of my take home. Occasionally I think about trading up to a bigger place because I do have the room in my budget, but I’ve gotten pretty comfortable with that low spend and it gives me lots of freedom for savings and wants.
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i live in a modest house in a modest neighborhood in pittsburgh, and my mortgage is $450 a month. at this point we could probably get a no-interest credit card to pay it off!
i moved here from brooklyn, where i was paying $2100 a month for a gorgeous flat, the ground floor of an old brownstone with amazing woodwork, floors, built-ins, and a yard in one of the nicest neighborhoods in the world.
before that i was paying $1500 for a horrible place with bedbugs. so the $2100 place was worth it at the time!
i have to say it’s reeeeally nice to have such low monthly costs right now, though. i’m building a business and it gives me a lot of flexibility.
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We also own a modest house in a middle class neighborhood in the eastern section of Pittsburgh. We paid $115k for it, and our monthly payment including taxes and insurance is just $750 on a 30-year fixed mortgage. We’ve made extremely accelerated payments, though, so we’ll be done paying it off in October, after only 2 years of payments.
That $750 represents about 10% of our take-home pay.
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Between me and my roommate, we pay about $700 for our 2bd-1.5ba townhouse including rent, utilities, and internet. But that $350 part that’s my share is still 25% of my take-home…which is why we live in section 8 housing!
It’s not uncommon to be able to purchase a duplex in the area for less than $100k, though, so what I can save is going toward my down payment fund!
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We live in rural Illinois and have to spend $1400 per month on our 2200 sf 4 acre house/land. This represents 17% of our net income. We’ve been accelerating payments on our 15 yr mortgage, so if you count that, we’re spending about 50% of our net income on housing costs. Even that doesn’t make our budget feel pinched, because we’re focused on a goal (paying down the mortgage) and still able to save and contribute to our retirement. However, there are lots of extra things I want to do (new siding on the house, new windows, update the kitchen), but we can’t do both. This is our dream house, but I wish we would have rented a couple of years before buying it. I think we will live here until retiring.
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Earlier this year, we were paying $1000 in mortgage and taxes in St. Louis. This gets you an historic 2 bedroom/ 1 bath/ 1200 sq ft home in a centrally located inner suburb. This was about 30% of our take home pay. We refinanced and lowered our payments. Now we pay $800. Plus my husband got a raise, so it is now 18% of our take home pay.
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Living in the Netherlands in a small city, 4th floor in a flat, in a not too desirable area of 915 sq feet.
Mortgage: 650 euros ($885) (after tax reductions)
Owners organisation: 234 ($307)
Total: 884 euros ($1164)
Which is about 20% of our combined take home pay. We’ve bought it to be able to live of one income if necessary.
As Sam #14 mentioned I’m always surprised as well about US housing prices being very low.
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I live in New Orleans. Since there are so many ways of defining housing, I’ll do it two ways. The amount for principal/interest going to the mortgage company (not including extra payments) or the amount for principal/interest + taxes and insurance. Our home insurance rates are ridiculous (thanks, Hurricane Katrina) so that takes a big chunk out. Anyway, the owner’s part is 2BR/1BA on the main floor, with 2 unfinished rooms in the basement. The renter’s part is a 2BR/1BA apartment in a ground-level basement (it’s not underground, but it has low ceilings and is what passes for a basement in New Orleans).
Principal/Interest only:
19.2% without rental income from basement apartment
4% with rental income from base apartment
Principal/Interest/Insurance/Taxes:
29% without rental income from basement apartment
14% with rental income from basement apartment
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Oh wow, that reminds me – there are really more ways to calculate. You could calculate Interest + Insurance/Taxes, but omit Principal. Obviously that money is coming out of your pay and going to the bank, but it’s also stacking neatly into your equity. While my mortgage payment is the same now as it was when I bought the house, instead of paying $785 / month in Interest, now I’m only paying $360.
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Forgot to mention that P&I is about $1100/month, while it’s closer to $1750 for PITI.
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I pay $650 for my share of a 2 bedroom in the Shaw neighborhood in Washington, DC – it’s a steal. It’s still 28% of my current take-home pay, though. (My employer has a generous 401k match that I’m taking advantage of.) The best part is I have a walking commute to my job downtown, so my transportation expenses are virtually nonexistent. Utilities average around $100. I don’t feel pinched, but I would love to be saving a little more and buying a little less.
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Raleigh, NC, we just refi’d to a 15yr this month so our % went up to 28% of take home (not gross) income, we don’t feel pinched at all, the house is our only debt, but we still look for ways to cut other costs and save more for retirement. The house fits our needs great right now and should for at least the next 10 years, after that our plan is to downsize and pay cash with the equity from our current home.
If we had to do it all over again I probably would have purchased a less expensive house but stayed in the same area.
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We plan to do the same thing. Keep our current home until we retire and then downsize. I would like a small house with some land (1-2 acres). If I had it to do over again I still would have bought the house we have now but wouldn’t have gone crazy on upgrades such as $15K for hardwood floors. What fools we were! But those upgrades should help us get top dollar when it is time to sell.
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I was paying about 21% of my gross salary for mortgage, taxes, and insurance around ten years ago. With refinancing and increases in income I now pay 12% of my gross salary. While understanding I’m getting a good deal in general on housing, I still feel pinched in my life based on my other obligations.
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Fairfield county, CT outside NYC area. Real estate is very expensive here, yet we are currently paying $1836/mo for a 3 br/1 bath, small ranch home on 2 acres with a huge barn on the property (can house 3 + cars, 2 stories high). This used to equal 25% of our take home. Toss in unemployment and now underemployment, and it’s more like 35% now.
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I pay $1600 for mortgage/insurance/property tax on my dream home — a four floor (3500 sq. ft) Victorian townhouse in Springfield, Massachusetts. I have quite expensive insurance (which gives me great peace of mind), I also get a big mortgage interest reduction on my taxes each year.
I’ve lived here for ten years. I just changed jobs and am now paying about 50% of my income towards housing. My other expenses are extremely low, and I expect my pay will rise, so the current pinch is (I hope and expect) short term.
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I’m in Raleigh, NC and pay $535 in mortgage for a 3 BR/2 BA house. Property taxes and homeowner’s insurance add another $215. I’m a full-time freelancer so I can’t accurately say what percentage that is of my income since my income varies. I can say it feels quite reasonable and I never feel stretched to pay my mortgage. Keeping my expenses low was what allowed me to make the leap to freelance. Even during my worst months, I can still make all my bills. Owning is far cheaper for me than renting in this area. I think I purchased my home at the right time (2000) and it has paid off for me.
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We bought a 4br, 2.5ba, 2 car garage house that has 2000 sq ft and a city lot in Columbus OH. We made our purchase in 2004 and paid $149k.
Now our home’s value is only $122k. We installed new windows, a fence, and had two roof repairs and a major $6k basement repair.
We paid off our mortgage in 6 1/2 years.
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In central IL we paid $1025 for a rental home. We now pay $818 for our mortgage.
Our mortgage is 8% of our income.
We purposely kept the house payment low so that if there was a time I wanted to stop working we could afford it on my husbands salary (we’d be looking at 20% of income then).
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I pay $1295/month to rent a 2 bed/2 bath house on 1.1 acres of land. I consider myself a temporary resident of Maryland (where I am renting) so I won’t buy a house, but when I was looking for shelter after I moved here, I realized couldn’t live in an apt. My “home” state is TX and I own a house there. It was my deliberate choice to get a smaller(ish) house with land so I could do what I want, whenever I want, without worrying about neighbors above or below me.
Meanwhile the TX house is rented out, but the times it’s empty my housing cost per month skyrockets.
All that to say – the monthly rent I pay is steep, but well within my affordability range for my take home pay. It is a little tight for the money I have left after savings, food and gas/utilities – my actual budget for living is considerably smaller than my take home pay. BUt I make it work and enjoy the fact I can live in a house (which to me is quite a luxury when I think about it) and still live on a smaller portion of the money I actually make.
Home is more important than travel to me at this time in my life, so I’m willing to spend more on nesting/gardening/community involvement than trendy travel outings. (Sorry, I’m just NOT a fan of all this travel-the-world-for-the-sake-of-traveling-the-world crap people are pushing these days.)
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We live in Indiana in a 4 bed, 2.5 bath house (2000 sq ft). Our 15-year mortgage payment, with taxes and insurance is about $1300 a month.
This is less than 10% of our pre-tax income, which leaves us lots of room for savings. I’m spoiled now, and I don’t think I’ll be able to ever move to a more expensive area.
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We spend around 20% of our pay on housing.
$969 to the mortgage, taxes, insurance premium, etc.
We haven’t had any repairs (just maintenance) to do yet and have lived here for 2.5 years.
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North Central Florida.. 3/2/2 1500sqft on 1.5 acres. We paid $152,000 two years ago.Put down $56,000 and payments are $1165.00 for 10 yrs at 4.2% (PITI). Since we moved in a down market we did not sell our old house and it is currently rented for $1150. month with no mortgage however, we do spend $320 month on taxes, insurance and management fees.
Note: Our new house was a “fixer upper” we have put about $45,000 into it and it now appraises for $235,000.
The $1165.00 is approximately 15% of our gross. We have no other debt. We are very close to finished with the renovations and plan to put approx. $1000.00 extra into the mortgage payment.
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$180/month in property taxes and homeowners insurance for my 3BR home that I own outright with no mortgage.
This is about 2% of my household’s take home income.
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My husband and I live on the South side of Indianapolis. For a 1 bedroom, 1 bath 736 sq ft apartment we pay $530/month, about 14% of our income. It’s not the most fabulous place but it’s clean, quiet and the neighbors are all friendly! The area is safe but lacking in exciting entertainment and restaurant options. We are the netflix, home cooked meal types so that wasn’t important to us. We wanted to keep the rent payment low so we can continue to build our savings and plan for a move at the end of October. We anticipate higher rent payments when we move to Texas or California.
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We’re in the rural Northeast with a small cape on 2 acres. Mortgage (1208/month, includes PMI) + taxes (144/month) + insurance (69/month) = $1421 on housing. This is about 26% of our gross, 37% of our net (after health insurance deductions and the like). 3 bedrooms, 2 full bathrooms, walkout basement, acceptable commuting distance. And, it has great soils and exposure for gardening, which was very important to us. Our family is 2 adults, 2 children, and frequent multi-day visits (at least 2x/month) from one grandparent. The house and location are a good fit for us.
We still own a house in the Mid-Atlantic from before our move here. Since we have capital tied up in that, we have a higher interest rate and PMI on the house here. We’re renting the other house, but still taking a loss each month on it. Luckily we’re not underwater, but homes are slow to move there, and being rent-free for a long time to sell that house would be a challenge for us. We do have a good emergency fund in the bank. We’ll probably make the move to sell the other house in a year or two to stop that constant loss.
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We live in Sioux Falls, SD, and my wife and I net about $5,100 every 4 weeks. Our minimum required mortgage payment is $885 (including escrow). In the last couple of years we’ve been snow balling some other payments (and raises)into this payment and currently are making $2,625 monthly payments. So our required monthly payment is about 17% of our income but we’re currently making about 51% payments. With this progress we’re already years ahead when comparing our current balance to the ammoritization table for minimum payments, and this August we should break below a 100,000 principal balance.
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Awesome job, Cory! BTW, we live in Aberdeen and are moving to Sioux Falls in April. Looking for a place that doesn’t break the bank as we speak!
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I’ve paid about £600pcm for about the last 4-5 years (moving home every year – not fun) in Oxford, UK. Now I have a more permanent place at same price, in nicer area. Bit further out of town, no students, nice neighbours, and a safe cycle into work.
Works out to about 25% of take-home pay, but I feel very happy with this as I have lots of savings, and low outgoings.
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We live just outside Dayton, Ohio.
Combined take-home (we have pre-tax contributions into our 401k of 18-20% each) is about $5,250/month. Of that, 17% goes directly into savings.
Our mortgage, including taxes, is about $1,200 a month – so that puts us right at 23% or so. We pay an additional $100/month towards the principal so our net monthly housing cost is 25% of take-home.
However, my wife is losing her job in a few months so we might have to re-evaluate some things soon.
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South Florida, historic home in a walkable, funky community, 1/2 mile from ocean.
At present we are paying 20% of our take home funds towards housing, this includes mortgage, taxes and insurance (both of which are high in Florida, but no state income tax so it works out). We are paying extra towards our mortgage but I’m not counting that in the equation.
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My folks moved to Florida to retire on the coast, partly based on that “no state income tax” enticement. They forgot that retirement means no income.
So they’re paying huge property tax bills … they could have moved to the Georgia coast and saved thousands per year.
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We own a 3bed/3bath On 17 acres in Midwest US outside a major military post. We are morgage free put pay about $600 a month in tax and insurance. 3200 sq ft with a barn the same size. It is about 20% of the normal income in this area.
in the nine moves while in the military we commonly paid 30% of income for housing because we always choose the best school systems to live in. In Hawaii we paid almost 40%. In hindsight we should have lived in a cheaper place and send them to private school.
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We always lived in lower end housing and sent our kids to private school. I have alway regreted that we did not purchase a nicer home in a good school district.
I guess it is hard to tell which is better??
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