If total income is $80,000, then is $1,500 mortgage doable?

**Scanner** · 05-12-2008, 02:07 PM

Depends on property taxes

**disneysteve** · 05-12-2008, 02:38 PM

Haven't we had this conversation already?

Anyway, rule of thumb is no more than 28% of income to housing, including principal, interest, taxes and insurance, and no more than 36% of income to debt payments overall.

I think you are going about this wrong. You need to look at the big picture - mortgage (and related expenses) AND his CC debt and student loans all together, and joint total income. I understand that you want him to focus on repaying debt (especially the CCs) but you are going to be married. You need to handle finances as a team and look at everything together to decide what you can and can't afford and how best to divide up the household income. It might make more sense in the long run, for example, to go a little slower on the student loan repayment in order to get a better house in a better neighborhood and better school district (if you plan to have children) rather than buying something cheaper that you will want to upgrade in a few years. Moving costs money. Furnishing a new home costs money. Each time you move, you incur costs. If you can buy the "keeper" home right away and skip the "starter" home, you'll probably be better off. Even if that means he takes a little longer to repay his student loans.

**ScrimpAndSave** · 05-12-2008, 06:50 PM

Disneysteve, I understand and agree. I think that if we can afford a $1,500 monthly mortgage, we WILL be able to have the keeper house....or at least a house that we will stay in for at least 10 years. (Might not be the dream house, but close).

Affording a $1,700-$1,800 would really put us in in a good place.

Thanks - I know we talked about it before. I'm obsessed - Ha!

(Better than being a Bridezilla, right?)

**creditcardfree** · 05-12-2008, 06:57 PM

I think it's too much...especially if it does not include property taxes. That is a chunk of debt to pay back. We make slightly more and have a mortgage payment of $1200. But there are other priorities besides the house...such as college and retirement savings.

If you didn't have the debt, I'd think it would be fine. Don't get in over your head and don't finance in such a way just to get the payment right.

**ScrimpAndSave** · 05-12-2008, 07:01 PM

We are definitely saving for retirement - but we are not having children

I will be making $65k that year, $73k the next and $85k the year after that.

**aida2003** · 05-13-2008, 04:17 AM

Originally posted by ScrimpAndSave View Post

We are definitely saving for retirement - but we are not having children.

How sure are you about kids? Has one of you had some sort of sterilization?
My ex-colleague surprised me a few months ago announcing that his wife is expecting. I asked him what happened because they didn't plan to have any children for 5-7 years. He said they had always protected themselves, but...that protection assures you 99% only. Oopsie....they got into that unfortunate 1%. After some psychological adjustments (esp.for him), they're excited to have a boy in August

.
If to look from financial perspective, kids are not cheap

, though very precious

**ScrimpAndSave** · 05-13-2008, 04:33 AM

Nope. No kiddies for me!

**Caoineag** · 05-13-2008, 06:10 AM

It would probably be easier to judge this if you laid out the whole proposed budget. That way you can get a feel of whether it would seem tight to you. While like you we aren't going to have kids, we are planning on being financially independent at a fairly young age so we are keeping our monthly expenditures to an absolute minimum so that we have plenty to save and plenty left to enjoy travelling.

**ScrimpAndSave** · 05-13-2008, 07:48 AM

Yeah...this would all be so much easier if I knew what my fiance will make when he gets out of law school. He will be working as an associate in a medium sized private law firm in central Jersey. I have no idea what that starting salary will be.

**disneysteve** · 05-13-2008, 07:56 AM

Originally posted by ScrimpAndSave View Post

Yeah...this would all be so much easier if I knew what my fiance will make when he gets out of law school. He will be working as an associate in a medium sized private law firm in central Jersey. I have no idea what that starting salary will be.

I imagine there must be some way to estimate that. Can he speak to friends who graduated before him or maybe speak to his instructors who work in the area?

Why the rush to buy the house now? I don't remember. What about waiting until he is out of school and settled in a job before you buy? What if he works a few months and isn't happy in the position and you need to move to a different area?

**jIM_Ohio** · 05-13-2008, 08:25 AM

General questions get general answers. Specific questions get specific answers.

The issue is you are looking for a specific answer with general information. You don't know salary in 2 years, yet are trying to decide how much house you can afford. There are many macroeconomic issues you have no control over which will change the decision:

1) interest rates
2) housing markets
3) employment of spouse 1
4) employment of spouse 2
5) debt ratios
6) budget

You are trying to decide what mortgage payment you can afford now, when my advice would be to save-save-save now. Or at least pay down the debt now. Deal with the now. Your plan has too many variables you have no control over to try and create a short term plan for a very specific problem, even though the knowns are very general at this point.

For example retirement savings is a general problem-general solution type thing-

save 10% or 15% or 20% of income. Trying to plan now how much I need in 15-20-25 years is not a good idea- my spending habits over that same 15-20-25 years is not known, my health is not known, and my rates of return are not known. So trying to even pick the year or amount to retire with is wasted effort. Save now, solve that problem now.

Another example is budgeting. A very specific solution to a very specific problem. This plan gives me a spending amount which needs to be tracked each year. The budget will give me a specific outline for how I should spend my money (and how I do spend my money). This specific outline, measured year over year, will be able to help make a retirement plan more specific (because more data is needed for a specific financial plan to solve the problem).

In your case I would look to make a specific budget, and possibly make another specific plan to pay down the debt, and make another specific plan to pay for the wedding. Solve the specific problems and see what the solutions are. This will tell you your spending levels and that would influence the decision as to the type of house to purchase.

**vsjhoc** · 05-13-2008, 12:52 PM

Originally posted by ScrimpAndSave View Post

Yeah...this would all be so much easier if I knew what my fiance will make when he gets out of law school. He will be working as an associate in a medium sized private law firm in central Jersey. I have no idea what that starting salary will be.

As I posted elsewhere, sites like vault have specific information about associate salaries. Check also at Salary.com.

**Saving in So Cal** · 05-14-2008, 11:42 AM

As other posters have said, you cannot really make this type of decision with ballpark estimates. You need accurate information. A few points you may want to think about:

If your fiance knows where he'll be working, then he should know what he will be making. Employers do not offer employees jobs without telling them what they will be paid.

If your fiance does not know where he'll be working, then do not count on him having a job until after he passes the bar exam. Even then, it could be tough going as the job market for new associates is definitely cyclical.

If your finance ends up working at a medium-size law firm, he should make a decent salary but he may have to pay more than average for his benefits and its unlikely his employer will contribute much toward reirement. In addition, associates at law firms are generally required to work extraordinary hours and many find they can't or do not want to keep doing so indefinitely. After a few years, many will leave to find more meaningful work and more humane working conditions, usually for significantly less pay. For instance, where I live, public sector attorneys make about half of what a comparable attorney would make in the private sector. Non-profit sector attorneys make even less.

The student loan amount you've listed is a little frightening to me and I suspect it does not factor in the possibility of your fiance needing a bar loan to pay for his bar review course and living expenses while he is studying for the bar. I know of a few other lawyers with similar debt loads and I can tell you that it weighs heavily on them. Debt loads like that usually include private loans with higher interest rates. Your fiance should have copies of loan disclosure statements estimating what his payments will be when the loans become due. You should add those all up so you have a better idea of what his loan payments are going to be when he graduates. You may be surprised at how much it is.

**ScrimpAndSave** · 05-14-2008, 03:39 PM

Yes, the $140,000 does factor in the loan for the bar exam, review course and housing.

We are estimating about $2000-$2500 a month for student loan payments.

If total income is $80,000, then is $1,500 mortgage doable?