Case Study: Starting my mortgage, feeling at the bottom of a mountain

[jsalazar92]

Hello, im kind of new to MMM concepts and trying to get to a decent saving rates,
but the question is,
how do you account for mortgage, specially if my mortgage is on a high interest rate ( 9%) due to living outside of US ? am i on the right path here?

i currently spend about 43% of my after tax money on my mortgage and im planning to increase that to 61% in order to finish in the next 7 years...
that leaves me with 39% of my income to manage... so i have only been saving 8-7% ....the rest is family spending...( kids tuition, groceries, bills, etc)

Ill try to translate all of my expenses to us dollars to match up with your money saving scenarios and case studies, also different cost of living over here.
but it must be something like this.

We are a family of 4, i have a 5 year old and a new born.

After tax income    82K  per year
income                  6.8K per month

mortgage               3K   per month
mortage +           1.2K per month more to finish off in about 7 years
tuition                   500
house maintenance   100
utilities                    200
internet                    40
grocery                    400
entertainment           400
car 1 insurance   100
car 2 insurance   100
other taxes             80
cell phone             40
gifts                             40
savings                     600

am i on the right path here? 7 years to finish off the house seems like an eternity really.. and to think that ill start saving for my retirement only after that...

[YoungGranny]

What is the savings for? Is it an emergency fund? If so, after your goal amount is reached you could apply more of that towards the mortgage. Your mortgage amount seems quite high do you live in a high cost of living area?

Outside of that your budget seems fairly reasonable. I will say once you set a goal you'll be surprised how often you'll find yourself cutting back on other expenses to put more towards the mortgage. I'm sure you'll kill it faster than 7 years :)

[vivophoenix]

Hello, im kind of new to MMM concepts and trying to get to a decent saving rates,
but the question is,
how do you account for mortgage, specially if my mortgage is on a high interest rate ( 9%) due to living outside of US ? am i on the right path here?

i currently spend about 43% of my after tax money on my mortgage and im planning to increase that to 61% in order to finish in the next 7 years...
that leaves me with 39% of my income to manage... so i have only been saving 8-7% ....the rest is family spending...( kids tuition, groceries, bills, etc)

Ill try to translate all of my expenses to us dollars to match up with your money saving scenarios and case studies, also different cost of living over here.
but it must be something like this.

We are a family of 4, i have a 5 year old and a new born.

After tax income    82K  per year
income                  6.8K per month

mortgage               3K   per month
mortage +           1.2K per month more to finish off in about 7 years
tuition                   500
house maintenance   100
utilities                    200
internet                    40
grocery                    400
entertainment           400
car 1 insurance   100
car 2 insurance   100
other taxes             80
cell phone             40
gifts                             40
savings                     600

am i on the right path here? 7 years to finish off the house seems like an eternity really.. and to think that ill start saving for my retirement only after that...

do you have any savings what so ever?

you are prioritizing debt over savings and retirement why?

you should have some sort of emergency fund and some sort of retirement plan.  it looks slike you are going to use all of your earning potential to buy your house and then what?

what if you get ill, or lose your job?


i understand that the interest on your house is high, but after you have thrown all of your cash at your house and own it, you can not get that cash back unless you sell your home. maybe buying a house is  a poor move for you if the debt associated with it are equivalent to market return in the US.

[jsalazar92]

What is the savings for? Is it an emergency fund? If so, after your goal amount is reached you could apply more of that towards the mortgage. Your mortgage amount seems quite high do you live in a high cost of living area?

Outside of that your budget seems fairly reasonable. I will say once you set a goal you'll be surprised how often you'll find yourself cutting back on other expenses to put more towards the mortgage. I'm sure you'll kill it faster than 7 years :)

new savings are for furnishing my home, i have about 30k in savings, mortgage is 300K, thanks for the advice

[jsalazar92]

do you have any savings what so ever?

you are prioritizing debt over savings and retirement why?

you should have some sort of emergency fund and some sort of retirement plan.  it looks slike you are going to use all of your earning potential to buy your house and then what?

what if you get ill, or lose your job?

i understand that the interest on your house is high, but after you have thrown all of your cash at your house and own it, you can not get that cash back unless you sell your home. maybe buying a house is  a poor move for you if the debt associated with it are equivalent to market return in the US.

i have about 30k in savings as an emergency fund,
im prioritizing debt due to the high interest rate compared to investment returns.
i have health care and unemployement insurence provided by government, also i guess im on a high demand career niche.
i guess it all comes down to deciding if this house is worth the time or not =/

[vivophoenix]

do you have any savings what so ever?

you are prioritizing debt over savings and retirement why?

you should have some sort of emergency fund and some sort of retirement plan.  it looks slike you are going to use all of your earning potential to buy your house and then what?

what if you get ill, or lose your job?

i understand that the interest on your house is high, but after you have thrown all of your cash at your house and own it, you can not get that cash back unless you sell your home. maybe buying a house is  a poor move for you if the debt associated with it are equivalent to market return in the US.

i have about 30k in savings as an emergency fund,
im prioritizing debt due to the high interest rate compared to investment returns.
i have health care and unemployement insurence provided by government, also i guess im on a high demand career niche.
i guess it all comes down to deciding if this house is worth the time or not =/

hmm you sound like my roommate from france, does the government also provide retirement savings? also do you have any tax sheltered vehicles for saving money ? like a 401k

[Dicey]

Is any part of your interest tax deductible? I'm old enough to remember when US mortgage rates were that high and higher, so I'm not terribly freaked out about your rate, provided it's typical for your location. Stop throwing so much money at it and bolster your savings. Then focus on increasing your income.

How does the cost of owning compare to renting? Will you lose money if you sell?

Entertainment as high as food is facepunch worthy.