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Originally Posted by dealsaver
His advice that your house payment should be 25% of your take home pay combined with his advice to take a 15 year fixed rate mortgage would have made it virtually impossible for a vast multitude of people to ever afford a house.
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I agree, I like Dave for his get out of debt advice, I like Dave because he gets people thinking about their retirement. That is pretty much where I stop with Dave's advice.
He is a little out of touch with the price of property in most urban areas, and if I followed his advice, I would probably never own a home. The fact of the matter is a quarter of my take home monthly pay would be $860 (That is after I've taken out 15% for retirement, and does not include the 10% for charity). I think it would be virtually impossible to buy any home in the Chicago area on a 15 year fixed mortgage for that payment. Using the latest census figures for the suburb I live in, If I bought a median priced home $181,700, put 20% down, a 15 year fixed mortgage would run $1199.31 before taxes.
The 12% returns on Mutual Funds is also a little off base, considering he rarely makes mention of the loads and expense ratios. I suppose he doesn't talk about it for fear of losing his ELP's.