Life is expensive.
Yah, like noooooobody already knows that, right? ;-)
Everyone has to live somewhere and it's not free.
Whether you rent or own, there are expenses associated with housing.
Are you in a housing situation that you can afford?
The cost of where you hang your hat is more than just a rent check or a mortgage payment.
Do you know how much your home is really costing you?
Sharon over at Midlife Mom Musings and Morrison over at My Life In Focus asked that question a month or two ago in regard to home ownership--What is it costing you?
They figured out their expenses for the year that were directly affected or a result of their home.....things like the obvious mortgage, but also taxes, services like water, garbage disposal and sewage, as well as electricity(and propane or gas for cooking/heating) and insurance. Money spent on home maintenance and repairs should also be included in your total.
We own a 4 bedroom, 2.5 bath, 2 story home with a 2 car garage, on a 1/4 acre lot in a small town outside of a metropolitan city area. The development the home sits in dates from the 1980's. The house is just over 2,100 sq. ft.(not including the basement).
For 2012, my list of expenses included.....
Insurance-$596.00
Sewage---$407.40
Taxes----$3116.33
Garbage--$336.00
Electric-$2432.28
Water-----$743.31
Repairs---$265.00
What I didn't include was money spent on the lawn/landscaping/gas for the mower/plants/etc. as I don't have figures for those expenses handy. Most of that was paid for in cash and I didn't keep the receipts.
My Housing costs for 2012 were $7,896.32 for the whole year, or $658.03 per month, which comes to $21.63 a day.
And if I take that figure of $658.03 and compare it to renting a comparable house here, it is at least $350ish less than it would cost me to rent one. And that rent wouldn't include the utilities or renter's insurance.
So we are doing well staying put here for now.
The water is higher because we have a pool so we use more than someone without a pool.
The electric is higher because the home is all electric-heating and cooking. We do not have central A/C....yet! ;-)
The main reason my home costs us so little is because we paid it off in 2007 so there is NO mortgage.
Compared to our net take home pay, we are spending well under the recommended 30% of our after tax income on housing.
So what's your house costing you every year?
Are you afraid to figure it out because you might not like what you see?
The first step to budgeting and figuring out what it cost you to live the life you are leading is to get a handle on what you spend.
Run the numbers.....it might surprise you to see what it costs you daily to stay in your current home.
You might find that your house is unsustainable for your income and you might be better off not owning it.
Sluggy
Sluggy,
ReplyDeleteI ran the numbers. Prior to divorce a year ago, my mortgage was almost exactly what I am currently paying in rent. While my mortgage included taxes (at the tune of $750/mo), I do not pay taxes on the rental. Hard to toss in other factors such as lawn care, utilities as regardless of where one lives, these most likely will also be included in a budget (noting that some rentals have the LL doing lawn care). One of the reasons I grabbed this place when I did, was due to the relatively speaking, "affordability"-since it is what I was previously paying, I knew that it would work in my budget. Additional expenses such as now having to pay for lawn care, snow plow, msc handyman services as I am on my own had to be factored in. Once I am in my own home again and out of rentals, I will still incur those expenses. Renter's insurance is significantly cheaper than home owners. My trash charges are the same as I do them myself. I am currently reviewing my alternatives as my lease is up mid August. Heating bills have been killing me, this house was poorly added onto, insulation is a joke, it's a drafty home.
I have to weigh the cost to move (sucks), the extended cost of my investment to have my wood stove installed to help with oil bills (it did, that's the sad part) which would no longer be spread out over several years, instead just one; (sometimes, tho, you just got to cut your loses and move on. Quality of life also factors in). While I had to purchase a washer, dryer and by my choice, a clothesline-they all go with me, or I sell them off. I invested in home furnishings, reupholstery-again all portable. So far, there is nothing currently in this town that would be do-able for me, the next town over has a few options, the city to the North a few as well. The further I travel out of town, however, adds time to my work commute but also brings me closer to where we shop, doctors, etc. It's a trade off. I've been monitoring homes for sale as well in this town, and realize that we are priced out. When the time comes to buy (hopefully Spring 2014), I will have $$$,$$$ saved and a lower mortgage as a result in the town next door, most likely.
Good thought provocative post.
Thanks for the mention.
ReplyDeleteOur place costs us an arm and a leg, about 52% of our income. I know, not very healthy. But with this economy, we can't even break even if we tried to sell, so it's not an option at the moment :(
ReplyDeleteYeah, I did a double take on that $650 amount. You can rent for $350, or you mean $350 more? That's super cheap rent for such a house, even at $1000!
ReplyDeleteNo, renting an equivalent place here would be $1K a mo(so $350 more). I don't think you can rent a shack here for $350. lol
DeleteWe pay about $4,000/month (mortgage + utilities). Taxes are included in the mortgage amount.
ReplyDeleteRenting a house in our same school district/neighborhood would be - shockingly- about the same to slightly more than we pay monthly. We bought the crappiest house in the nicest neighborhood we could afford, so the rentals are all at nicer houses than we currently have. ;-) That said, we can certainly afford it. Now it's just a question of what else we could do with the money if we didn't have to pay that much in a mortgage.
We rent, and it makes sense for our situation. If you take the numbers (by the way, I think you left out a word - you meant to say it's about $350-ish less, right?) and add in a mortgage payment, you can see that renting is cheaper on a month-to-month basis. At least it is for us.
ReplyDeleteWe have an apartment but it's ground-floor, surrounded by grass and woods (on edge of nature preserve) and on the other side of us is a neighborhood where the houses sell for about $450,000 or more, depending on size. Less for smaller houses. I guess I should compare to smaller. Yet, we have three bedrooms and nearly 1,300 square feet (pretty nice as apartments go, with washer/dryer, two full baths, separate large kitchen, big LR/DR, high ceilings, concrete/steel construction, no visible neighbors - it's like a "villa," in that regard, I guess I should say) and it's $1,472 per month. But we do have to pay for utilities so that's several hundred more. Still cheaper than a small house within sight of us, and it's a nice neighborhood (looks similar to yours, but housing prices are higher here.)
I'm with Lena on this one... ours costs us more than 1/2 of our income. A BIG chunk, but we live in a safe & quiet area of town, and I refuse to "pay less" and get less security at home. It's not worth it...
ReplyDeleteWe pay about $1300 a month for everything which is well under the 30%. In some situations, I think it makes more sense to stretch your budget a bit when you're young so you don't end up buying a house that you will outgrow quickly.
ReplyDeleteI bought one of the larger houses in one of the nicest neighborhoods--Historic District and the first neighborhood in the town over 100 years ago. My mortgage was $192/month. Insurance and taxes had to be paid with the mortgage, but I never paid more than $256/month for mortgage/property taxes/insurance.
ReplyDeletePeople always (for 30 years)said I should get out of this big, old house and get a nice, little apartment. That would cost at least $450! I like old! I like my yard and would rather be cold in the winter from no insulation than be in a tiny place that was not mine. Those people had values that did not jive with mine, so they usually disappeared. These were not friends yet, just acquaintances.
I am very safe. I can go in the yard or go outside for anything and am never afraid. Even at 3 am, I can drive to the store. Oh, the dark scares me at times...lol, but if anyone walks leisurely through our neighborhood, the police are called and the person is questioned. You really should be walking briskly for exercise if you do not live in our neighborhood. I have 4000 sq ft. At this point, only about 1000 sq ft is useable due to rain damage.
Through the years, the house payment was less than 25% of my income some years. In other years, it was nearer 33%. Thankfully, it is paid off and I no longer have to pay taxes since I am over 60. Maybe it because I am over 65. Regardless of age, my disability allows me not to pay taxes. Oh, I have 1/3 of an acre.