Le Mans: Prototype Class
Join Date: Feb 2004
Location: Orlando(ish), FL
Re: How do some of you afford it???
I doubt 20% of your net pay is possible in today's market with your income. That is how people do it. Many of those people have extremely high payments and scrape by with nothing. I was appalled at how much I could get approved for, over 4x my gross income for the loan alone and would put me at over 50% of my take home pay.
Assuming basic deductions, 50k a year is about 3200 a month with no additional state tax or deductions, such as 401k or medical. That means you can spend about 650 a month. That would mean he could get a $110k house roughly with no escrow. The number I've always heard is kept your payments under 50% of your total net income. That includes your house(including escrow), car, credit cards, students loans and any other debts you have. That number does vary a lot based on income and is general. I do think you could easily make it by on 1600 a month, but you would save very little, and don't recommend it.
The way to do it is to cut back on expenses, expenses like the car. That was one choice I made. Buy a BMW 135 and go into debt further or pay of the 3 and run it into the ground while saving money for another car. It will be a long time off before I even spend 20k on another car.
I would also look at Dave Ramsey. I don't agree with everything he says, but overall he has a lot of good points you can learn from.
One other note, make sure you have a good chunk of change saved up before buying a house in addition to whatever you spend on the house. In today's market, you will have a hard time reselling a house quickly. You have to be able to get by if anything should ever happen. You also have to plan for major expenses, like your AC going out and costing thousands to fix.
Bottom line, save your money, get more down and don't do it just because everyone else is doing it and barely scraping by.
08 Accord V6 6sp Coupe
SP23 Sedan - Sold 10/31/08
Totalled- 2003 Lapis Blue Mazda 6, 4/28/05