Did you base it on salary, or how much free cash you had every month?
when i bought my house, i went off of how much i was payng in rent along with how much extra cash i had at the end of the month.
basing it off salary alone is dangerous. someone making 70k with a ton of debt being payed out every month vs. someone making 70k and no debt payed out each month is obviously 2 different situations
Sat down with the wife, put down every single monthly bill we had in Excel, added some money for savings, and a dollar amount for “other”, and figured out what we could afford living the lifestyle we live based on our net income.
You know, the responsible thing that the people who will end up getting bailouts didn’t do. 
lol, you’re going to have to explain that further.
15% of (gross sal - 401k & health ins, excluding commision)
I’m using 80% of what my checking account has grown month to month over the last 3 mos as my “ideal” payment number
quick example
Jan 1 - $0 in checking (obviously not accurate numbers )
Feb 1 - $10 in checking
Mar 1 - $30 in checking
April 1 - $35 in checking
total growth: $35/ 3 = $11.6 * .8 = I can easily afford a $9 payment (mort, tax, etc…)
I figured this was safe for me b/c I’m a horrible spender. I force savings transfers every week else I’d never save.
haha so true. based it off of 70% savings, 90% the value of my other property, and projected modest 5yr salary minus non luxury living expenses.
I did all kinds of analysis… but at the end of the day I drew an arbitrary line in the sand that I didn’t want a payment of over $x a month before bills. I based this on current income / debt ratio and normal monthly expenses. I intentionally didn’t factor in money from the girlfriend paying rent – I wanted to be sure I could carry the whole thing if needed.
i picked a number and will let the federal government decide if im right…
i just usued what i have been paying in rent and added a little bit to find my ideal payment…
Nicole makes significantly more then i do being an RN and has a lot less debt (just student loans and a car lease) but we are each paying half, but she has the ability to pay it all if need be and still be able to get by (bitch)
in 2-6 months my salary will double and all will be good
^ double salary, are you getting a new job?
This what everyone should do. It’s what I did too. Figure out how much you make and what you can spend. Simple math.
That would have been a little high for us to be comfortable.
There is no “rule”. Different people spend money differently. Some people tend to take expensive vacations, or spend too much on cars, or in our case have an expensive toy like a boat. If you blindly go in thinking some standard formula is going to fit YOUR budget there’s a good chance you’ll be one of these people having trouble paying your mortgage. On the flip side are people like my painfully single co-worker who lives to work and has no hobbies at all who could easily spend 4 times his salary and still be fine because he doesn’t spend hardly any money.
Sit down, add up all the things you know you’re likely to spend money on each month, add in a decent chunk for savings, another chunk for a safety net, and what’s left over you can spend on a house. It’s really not that difficult but some people look at the number and when they can’t buy that big house in the nice suburb they try ignoring their budget or following some “rule” that doesn’t fit their lifestyle.
What he said.^
Glad you’re posting this, saves me the time to type it.
Took the max the bank would give us and cut it in half with the stipulation that we put $30k+ down in cash and only bought a property with income potential.
so basically, my wife goes on mat leave, i buy her a brand new car and then buy the house, pay the mortgage, her car payment etc. and i can still afford to throw $20k cash into my businesses in the last 3 months…
live below your means… it’s way more fun.
That’s why I’m using my average monthly “left over” cash. My spending is so erratic that making a budget for me is useless. I wish I could stick to a budget though, I have to admit I was a little more than disappointed in myself when I got my year end Amex statement to see I spent about $30K on that card in '07 (and I only use that since May and only for big ticket items, my debit card and amazon visa get used also)…thank god that’s a “you must pay the balance at the end of every month” card I can see how people get in serious CC debt really quickly.
Yeah, but when you’re buying a house you really should crack down on the stupid shit you buy, at least a little.
why move into a house if you have to lower your standard of living… that’s what I consider crazy.
:lol: Well when I first bought my house I was really smart. Effectively what I did was take what I could afford and multiply it by 1.3. Yeah that sucked for a couple of years. All is well now though, thankfully.