Budgeting Questions

[saravt80]

I have been using Mint to help track and manage my finances and Mint has been a lifesaver. I have a budget set in Mint, but I think I can tighten my belt a little more and I would like to pay down my debt faster to begin to save for a house. I have been reading up on mortgages and all the extra expenses that can come with home ownership because I don't want to get in over my head and one thing I realized is a lot of websites mentioned taking on a mortgage no greater than 30% (give or take depending on the website) of your take home pay. That got me thinking, is there advise for other categories that have an average percentage? I have heard to save 10% of your income (pay yourself first) but those are the only 2 areas I have heard regarding personal finance and setting a budget. I use percentages at work to set the budget and every category has an average but I have never seen advise for personal budgeting.

[feh]

I have been using Mint to help track and manage my finances and Mint has been a lifesaver. I have a budget set in Mint, but I think I can tighten my belt a little more and I would like to pay down my debt faster to begin to save for a house. I have been reading up on mortgages and all the extra expenses that can come with home ownership because I don't want to get in over my head and one thing I realized is a lot of websites mentioned taking on a mortgage no greater than 30% (give or take depending on the website) of your take home pay. That got me thinking, is there advise for other categories that have an average percentage? I have heard to save 10% of your income (pay yourself first) but those are the only 2 areas I have heard regarding personal finance and setting a budget. I use percentages at work to set the budget and every category has an average but I have never seen advise for personal budgeting.

The link in my signature will help w/ personal finance, although it won't answer this specific question.

By the way - you should save at least 15% of your gross for retirement as a rule of thumb.

[snafu]

There are ''rule of thumb' for nearly every category. For example car payments should not exceed 20% of net income and no more than 3 years loan. Buy transportation to cover your needs rather than emotional response and do some research for best buy.

Buying a home needs 20% downpayment to avoid super expensive mortgage insurance. Most important factor is 'location' since most other issues can be adjusted to your needs. Understand how an amortization schedule works. Due to cost of buying and selling, don't buy if you plan to move in 5 yrs. If practical, buy the least expensive home in your selected neighbourhood as the others will pull up your home's value. Never consider decor, paint is the cheapest fix and a DIY skill you will need to acquire.

If you have dependents you need term life insurance whose value is based on
a list. The internet has lists for nearly every category, like the best organic foods to choose.

[disneysteve]

A very broad budget formula is 50-30-20. That's 50% for needs, 30% for wants, and 20% for savings.

Some more specific rules of thumb:
Housing including principal, interest, taxes, and insurance shouldn't exceed 28% of income. That basically matches another housing rule of thumb which is to spend no more than 2.5-3 times your annual income.
Car payments shouldn't exceed 10% of income and loan should be no more than 36 months.
Retirement savings should be 15% of gross annual income not including company matching funds. 15% of your money.