Housing costs

papakron · #1 (**permalink**) 07-04-2007, 03:45 PM

Just out of curiosity...

What do you guys think is an acceptable amount of your take-home income to spend on rent? Obviously, you'd be willing to spend more on your own mortgage because your building equity... whereas with rent, you're just paying for a roof over your head.

I've read that about 1/3 or 30% of your take-home is a pretty reasonable amount (this is including utilities, cable, internet) but is it common to go higher (say, 40/50%?)

Thanks....

disneysteve · #2 (**permalink**) 07-04-2007, 04:12 PM

Housing should be no more than 28% of gross.

The housing figure includes rent/mortgage, taxes and insurance. It does not include utilities and luxury items like cable and internet.

jmjj215 · #3 (**permalink**) 07-04-2007, 04:50 PM

The lower the better, is my rule

scfr · #4 (**permalink**) 07-04-2007, 05:11 PM

Agreed - The less the better when you are renting (especially if you are saving to buy a house).

humandraydel · #5 (**permalink**) 07-04-2007, 05:47 PM

I spend 20% of my take home on rent. Note that this is:

a) Take home after retirement and health insurance contributions
b) Rent only, not including utilities.

I also have a lot of student loan debt and am saving for a downpayment. Personally, I wouldn't really feel comfortable spending more than 20% of take home on rent.

project15 · #6 (**permalink**) 07-05-2007, 05:08 PM

I spend 22% of my take home pay (401k, health ins, etc...) on rent and utilities. I don't think I'd want to pay anymore than that on just rent.

papakron · #7 (**permalink**) 07-05-2007, 07:40 PM

The places I'm looking at to rent will take up around 25-30% of my take-home pay. However, this is including my utilities (cable, heat, hot water). Is this reasonable?

disneysteve · #8 (**permalink**) 07-05-2007, 08:29 PM

Quote:

Originally Posted by papakron

The places I'm looking at to rent will take up around 25-30% of my take-home pay. However, this is including my utilities (cable, heat, hot water). Is this reasonable?

I think so.

I will make the point again, however, that cable is not a utility. It is a luxury service, so it really shouldn't get lumped in with your housing costs.

humandraydel · #9 (**permalink**) 07-06-2007, 04:56 AM

Quote:

Originally Posted by papakron

The places I'm looking at to rent will take up around 25-30% of my take-home pay. However, this is including my utilities (cable, heat, hot water). Is this reasonable?

Really only you know if it's reasonable based on your other expenses. Do you have a budget using that figure for rent/utilities? Are you comfortable with the amount of disposable income you will have every month? As long as you don't have much debt, that sounds fine.

LivingAlmostLarge · #10 (**permalink**) 07-06-2007, 07:29 AM

It depends on where you live and what you need. You can live in a room in a house, with roomates, or in a studio. Depends.

FrugalFish · #11 (**permalink**) 07-06-2007, 07:50 AM

The 25-30% you are looking at sounds great for most parts of the country. As someone else stated, it's always best to just spend as little as is possible. I've lived places where I had no choice but to spend 50% of income on housing costs- it was as cheap as it came for that particular area. Know the rule of thumb, but ultimately you do what you've got to.

Fishy

Ima saver · #12 (**permalink**) 07-06-2007, 07:52 AM

I spend 0% I paid off my house 30 years ago and always build a new one for cash. I do spend about $3000 a year for taxes and insurance, but I save that on a weekly basis.

DebbieL · #13 (**permalink**) 07-06-2007, 12:09 PM

I am also in BC Papakron. I think (if you are in Vancouver or Victoria like me) that the odds of being able to stick to the low numbers that have been recommended would be VERY difficult here. It is (as you know) a very high cost of living area, and the wages don't match unfortunately. I pay about 38% of my net wages on rent (about 30% of my gross). This doesn't include electricity. Including electricity I pay just under 40% of my net (or just under 32% of gross). I really see no point in calculating the figures as a percentage of anything but net anyways, since that's the only money that I have to spend. Living here is very expensive, and I actually pay less than what today's rent on a similar condo would probably be (since I've been there 6 years, and they can only increase the rent 4%/year maximum).

The way I look at is this - renting costs less than half of what buying at today's ridiculously inflated prices here are. I will not buy until things come down to earth (a LOT). I wouldn't be here at all anymore if it weren't for my family all being here and the fact that I don't want to pull my daughter away from all her relatives.

Good luck to you. If you can rent a place for around what I pay (which as I said is just under 38% of my net wages) you should be okay. I still pay for my daughter's horseback riding, guitar lessons, etc. I've taken her to Disneyland a couple of times. I do put some away in my RRSP (although not as much as I'd like to). It can be done. I don't live extravagantly though. I rarely eat out or buy much clothing for myself, etc.

papakron · #14 (**permalink**) 07-07-2007, 10:52 AM

Quote:

Originally Posted by DebbieL

The way I look at is this - renting costs less than half of what buying at today's ridiculously inflated prices here are. I will not buy until things come down to earth (a LOT). I wouldn't be here at all anymore if it weren't for my family all being here and the fact that I don't want to pull my daughter away from all her relatives.

Good luck to you. If you can rent a place for around what I pay (which as I said is just under 38% of my net wages) you should be okay. I still pay for my daughter's horseback riding, guitar lessons, etc. I've taken her to Disneyland a couple of times. I do put some away in my RRSP (although not as much as I'd like to). It can be done. I don't live extravagantly though. I rarely eat out or buy much clothing for myself, etc.

Ah, a fellow British Columbian! Housing costs in the market right now are ridiculous, what with the 2010 Olympics, and just the insane rate they keep going up. I've already come to terms I won't be getting into the market until atleast after the Winter Games, or if somehow interest rates go up and everyone has to sell these huge mortgages because they are in over their heads (bank foreclosures?).

I've been looking at simple 1 bedroom or studio apartments, but am more leaning towards starting off with a basement suite. For starters, all my utilities are included in one rent payment (you have to spend 600-750 for anything half decent, with laundry if you're lucky!) which usually includes your cable and sometimes internet. I have no friends I could see myself living with, my girlfriend has another year in university, and 19 year old brother pisses all the money he makes at $9/hr on smokes and booze.

Anyways, it's nice to hear from someone else in this situation. When I heard 20%, I nearly fell off my chair. Thanks for the post.

MonkeyMama · #15 (**permalink**) 07-08-2007, 07:53 AM

Actually, one idea that worked for me is when I was in college in the SF Bay area the average studio apartment in the bad part of town was $1k/month. That was bout 100% of my salary, if I even made that much.

But I did end up renting a big room in a nice home for $350/month. This is a really great option in expensive areas. There are often great long-term tenants in homes who pay low rents (because they prove they take care of the house, etc.). They then in turn sublease other rooms in the house. In my case I didn't know my roommates from Adam, but going with someone who is loved by the landlord, at least you know it is someone responsible. I had very good luck - had 2 roommates. We hardly said boo to each other the house was so large. It wasn't the same thing as living close quarters/sharing rooms, etc. IT was a REALLY nice cheap living arrangement at the time.

I also house sat 6 months - free room.

In expensive areas you have to get creative to survive. If nothing else you should be able to find roommates somewhere. It's probably almost better sometimes if you don't know them.

PrincessPerky · #16 (**permalink**) 07-09-2007, 08:26 AM

ditto that creative....I think you have to pay what you have to pay, but you don't HAVE to have it all, kitchen, ect, you can rent a room, get some roommates.....accept a smaller house, look for a job in charge of an apartment building for a discount (part time so you make real money as well))

Those low numbers are lovely for folks in cheaper housing areas, or for those making a ton, but for the rest of us...eh, not to many American families living in a studio apt with 3 kids, which is prolly more than I could get around here for 20% of my income...(no idea about BC families, sorry)