Author Topic: housing expenses  (Read 1423 times)

jsalazar92

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housing expenses
« on: June 05, 2017, 04:08:26 PM »
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, im planning to increase that to 61% in order to finish in the next 7 years...
that leaves me with 39% of my income ... so i have only been saving 8-7% ....the rest is family spending...( kids tuition, groceries, bills, etc)

it is hard translating 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
income                  6.8K per month

mortgage               3K   per month
mortage +           1.2K per month more to finish off in 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...


KungfuRabbit

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Re: housing expenses
« Reply #1 on: June 05, 2017, 09:11:49 PM »
At 9% interest I'd pay it off. Can you re finance?  This is going to sound ignorant with but such a connected world I figured interest rates were more global. Can I buy into your bank and get a 6% return from your loan...?  Heck, how about me and you hook up I'll loan you the money for 8% :)

Do you need such an expensive house?  How much is a similar rental?

Do you need private school?  Will that go up to $1000 when your newborn is in school? 

Aside from that only other cut is entertainment.....

jsalazar92

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Re: housing expenses
« Reply #2 on: June 07, 2017, 08:51:22 AM »
imagine my reaction when i see your 3% mortgage loans, its amazing,
private school is a must since public shools are not available here
i guess i could go for a smaller house, it must come to that at the end =/

nereo

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Re: housing expenses
« Reply #3 on: June 07, 2017, 09:16:31 AM »
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...

Yes you are on the right path here, and I don't think there's anyone credible on this forum that will fault you for accelerating the payoff of a mortgage at 9%.  Assuming there were no other options for loans with better rates I'd do the same in your situation.

Second, you *are* saving for retirement by paying off debt and reducing your future expenses (no mortgage).  It might not feel like it now, but once that 9% loan is gone you're situation will improve overnight.

As for "how to calculate" what you are doing, Id break it down as follows:
amount going towards home equity
amount going towards debt reduction
amount going towards other savings

how much do you have in 'other savings' (including e-fund) to protect against "really bad things"?

slugsworth

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Re: housing expenses
« Reply #4 on: June 09, 2017, 12:43:16 PM »
I'm curious what inflation is in your country?  Interest rates are typically tied to inflation in a county. What interest rate to investments get in your country?

I know there are plenty of other people living in non-western countries who would be better at giving you input, but I think you'll need to really look at inflation as you figure out your FI date and math more broadly. If you aren't savy in Excel I'm sure someone here would help.

I was in SE Asia recently and saw interest rates in VND at ~7% for a 36mo CD vs. 0% for USD. . . which is due to inflation of the VND.