Quote:
Originally Posted by jIM_Ohio
FYI 10% of x+ 10% of y is still 10% of (x+y); you are not saving 20% in 401ks. Just 10%. Look to increase 401k savings.
I don't think I understand the question- you have the money for the house, but need to figure out the budget? Or you need to save more to get into house? Or something else?
Here is what you need to plan for
a) make sure you have 3X monthly expenses in savings account.
b) when you close, make sure you have around 5k in "extras accounted for- paint, vacuum, cleaning, lawn care (mower), fertilizer, pest control, leaky roof whatever
c) get around 3-12 months expenses in a moderate account. This is for larger purchases (new roof, new driveway, new hot water heater) which occur randomly once every 10 years. If you are thinking of kids and want money to subsidize part time work, then increase this with more contributions (but only increase after d is taken care of).
d) get retirement savings up to 15% of gross pay combined. If you get 5%, plus 5% matching, you need to find another 5%- which is around 6k for you- and set this aside in 401k or Roth IRAs. If you do not have a Roth, I would start one now (5k max per spouse per year).
Get in general habit of spending less than you earn. You are doing this already if you have amassed that kind of savings, I think you could do better.
You can look at ratios forward backwards and sideways. Having cash on hand trumps the ratios. If your back end ratio is 45%, but you have 12 months expenses in the bank, that might be better than 35% with only 2-3 months expenses in the bank.
Plus look at tax return with new house payment- you will get around 3-5k more back based on your income and mortgage size (what are property taxes?).
|
I apologize if this post was confusing. We want to know if we could afford a mortgage of 2500.00 and still live comfortable with our current status and in the future if one should drop partime. We both have combine 30k in our 401k(only 28). We havent open a roth IRA, but plan to. We also have life insurance,but should we lower that and focus more on 401k?
When speaking of ratio and talking percentage, do you mean with our gross pay? For example, if our back end is 33% ratio, that means we could not exceed (140000/ X .33,/12=$3850) with mortgage and debt? And as long we are under this, we should be ok?