Friday, May 24, 2024

How to Make Housing & Personal Finance Decisions

How Much Rent or House Payment Can You Afford?

by Lorri DeFoor, Sustain Financial

This is a question I get frequently from clients, and there’s unfortunately no “one-size fits all” answer to this question. However, whether you’re considering rent or a mortgage payment, there are some key financial metrics and guidelines that can help you make this decision.

Most conventional recommendations advise limiting your total monthly cost of housing to 28% of your gross (before-tax) monthly income. So, for example, if your gross pay is $7000 per month, you’d be wise to shoot for a maximum housing allowance of about $1,960 per month for a rent or mortgage payment. And while this is a good rule of thumb to consider, there are other factors that may be at play in your personal financial situation that you want to take under advisement as well.

When considering the 28% recommendation for housing – look at how it factors into your other key financial ratios:

  • 50/30/20 Ratio (For Renters and Home Buyers)
  • Overall Debt to Income Ratio (For Home Buyers)
  • Don’t Neglect the Cost of Your Escrow Payment, Increased Utilities and HOA Fees
  • Can You Cut Back Other Expenses to Commit to a Bigger House or Rent Payment?
  • What If You Live in a Place with a Very High Cost of Living

[Read the Full Article]

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I’m Using 4 Rules To Decide What I Can Afford When I Buy My Next House

by Eric Roberge, Beyond Your Hammock

My wife and I are currently selling the first home that we bought together. We’re also gearing up to buy our next place. This transition has led us to running through spreadsheets, net worth data, and other aspects of our financial reality to determine how much house we can afford in the future.

As a financial planner, here’s what I’ve considered in my own situation — and what I encourage others to consider if you also need to decide on a homebuying budget.

  1. Think about how your down payment fits into your strategy
  2. Aim for no more than 20% of your income going to housing
  3. Don’t rely on an adjustable rate mortgage
  4. Be open to renting while interest rates are high

[Read the Full Article]


Financial Decisions Don’t Have to Be Permanent

by Michelle Smalenberger, Financial Design Studio

With all the changes happening in the world, interest rates to inflation, many people can feel trapped by their financial decisions. But in this episode, we explore how your plan, from your mortgage to your retirement, should be resilient enough to withstand any change. No matter what life stage, you should be confident that your decisions will help you reach whatever your goals are.

[Listen to the Podcast]


Financial Advice from a Boston Financial Planner: Your Questions, Answered

by Eric Roberge, Beyond Your Hammock

Thank you to our listeners who reached out to share their specific financial questions! Today, we’ll work to provide clarity on some money situations that lots of folks tend to find themselves in.

We share our insights on:

  • What to do with your money once you pay off debt, max out your retirement accounts, and aren’t sure what to prioritize next
  • How to think through a decision like investing in rental real estate properties
  • What counts (and what DOESN’T) when talking about savings rates
  • Where to put your cash if you want it to grow
  • Which financial planning benchmarks you can use to determine if you’re on track, ahead of the curve, or falling behind with your personal finances

Tune in and get the answers here:

[Listen to the Podcast]


Financial Decisions Don’t Have to Be Permanent

by Michelle Smalenberger, Financial Design Studio

This episode will breakdown the biggest threat to your financial plan that you need to watch out for. If your financial plan isn’t protected from these dangers, you are vulnerable. But when you understand what the risks are, as well as opportunities, you can make the most of your finances.

[Listen to the Podcast]

Following along with the blogs of financial advisors is a great way to access valuable, educational information about finance — and it doesn’t cost you a thing! Our financial planners love to share their knowledge and help everyone regardless of age or assets.

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