Author Topic: How much should i spend on a house...  (Read 3955 times)

FuckRx

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How much should i spend on a house...
« on: September 25, 2013, 11:01:59 AM »

background...i'm getting myself out of debt...paying down my credit cards, have about 13k left so i'm very proud...i have a condo that i bought for 455k and it's very antimustachian so that's actually in escrow which is also very exciting... this was my second condo... a few years back i had another condo and i actually sold that one and walked away with about 25k...hopefully i'll get some money from this one as well...

moving forward i need a new way of thinking about my home purchase... it can't be an impulsive or emotional purchase but it needs to be close to work so i can continue to bike to work...it needs to be something i can live in for the next 5-10 years...i don't want a condo and would rather buy a house...

i make about 200k a year but i still have student loans left to the tune of 117k at 3% and i have only about 10k in emergency cash which i'm working on while paying down the credit card...
outside of this i really have an $825/mo apartment, small cell phone bills, internet at home and a car that i'm leasing for 162/mo but i'm figuring the car situation out still....

ok after writing all this maybe i shouldn't even be thinking about a house but it wouldn't be in the near future...how do you determine how much to spend on a house? of course i would have at least 20% down...cheapest house i can find in a neighborhood i feel safe in is probably low 400s up to about 800k..

Another Reader

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Re: How much should i spend on a house...
« Reply #1 on: September 25, 2013, 11:12:04 AM »
In your shoes, I'm paying off all the debt ASAP while living in the $825 apartment.  Who knows, maybe by the time that's done your frugal dating will have led you to the partner of your dreams.  With kids in the future, then it might make sense to buy a house.  That's the point at which it makes sense to look closely at buying.  If you are still single at that point, think how soon you will be FIRE with no massive house payment to hold you back.

MKinVA

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Re: How much should i spend on a house...
« Reply #2 on: October 01, 2013, 05:14:41 PM »
You live in an area where a nice safe house is 400,000, but you can rent an apartment for 825? You should rent for as long as you can!  Seriously, pay all the debt, save as much as you can, and then make sure you are living where you want to be for the foreseeable future before taking on the responsibilities of a house. Once you are clear of debt, you see a much clearer picture of all the possibilities out there.

grantmeaname

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Re: How much should i spend on a house...
« Reply #3 on: October 01, 2013, 05:41:44 PM »
The question isn't how much you should spend on a house, it's how little you can spend and get away with it. A more expensive house means more interest, more insurance, more property taxes, more maintenance, more cleaning, more gas and electricity to heat and cool it...

devan 11

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Re: How much should i spend on a house...
« Reply #4 on: October 01, 2013, 08:09:37 PM »
  I am looking to build an insulated concrete form house.  They are secure and termite, fire and tornado resistant, quiet and energy efficient.  It is more expensive but buy it once...

CatamaranSailor

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Re: How much should i spend on a house...
« Reply #5 on: October 02, 2013, 10:02:29 AM »
If I were in your situation, I would not buy a house until all of the debts were gone and I had enough money to put down at least 20% (thus avoiding PMI).

SwordGuy

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Re: How much should i spend on a house...
« Reply #6 on: October 02, 2013, 10:42:05 AM »
Rouch calculations:  $200K income -  $20k 401k - $50k taxes - 30k living expenses = $100k on debt payments.

Once that condo sells you should be able to pay off all your debts in 14 to 18 months.  Do it!

Then invest like crazy.

JT

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Re: How much should i spend on a house...
« Reply #7 on: October 03, 2013, 11:11:14 PM »
Rent of $825 pm?  OMG!  That's brilliant right there!

But seriously, what you get should factor into your financial plans.

If you ultimately want FI, then getting a house doesn't make any sense at this stage.

Look at your stash as though you can invest it at the best rate. 

If you sink $400k into a house, will it earn the same rate as the best rate you could realistically get for your invested stash?

If you do the maths on $400k reinvested for 40 years, would you be happy using that $400k for a house that doesn't earn a single cent?

I'd stay where you are while single ($825), concentrate on getting rid of the debt asap whilst contributing to retirement funds.  And really focus on ramping up investing.  In the years you'll have to invest, who knows, they might be able to pay for a house.  The magic of compounding is incredible.