Money

Dave Ramsey - Mortgage 25% of Net Income.

Procore / EngLol2018
7d

Is your mortgage or rent no more than 25% of your net income?

I am trying to step up my financial literacy game and trying to save enough to have my mortgage be no more than 25% of net income. It’s hard in California or other high cost states. Maybe I should move?

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  • AT&T / Eng
    DDM2K

    AT&TEng

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    DDM2Kmore
    Sometimes it is all too obvious he comes from small-town Tennessee. “It shouldn’t be hard to find a $400 a month trailer if that’s all you can afford.”

    Yeah: where the median income is under $20k a year.

    Lmao! Just ask Dave about HIS house.
    7d0
  • Deloitte / Consultant
    weirdflex

    DeloitteConsultant

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    Deloitte
    weirdflexmore
    Dave Ramsey is a hack (whose advice doesn’t traffic with reality, with results ranging from slightly helpful to utterly counterproductive). A successful hack, granted, and one whose book/tape/program you probably uncritically bought, like most of his followers.
    7d1
    • Salesforce God Jr.
      Why you think he is a hack? Not a blind follower but Generally I like what he is recommending (no debt)
      3d
  • Facebook Whateverrs
    Seems like most of the people commenting didn't look at the results of the poll.

    Of course it's possible. Yes I do it. No you don't have to live in Tennessee.

    Mortgage *or* rent. Rent is a whole lot cheaper than mortgage and you can live in a crappy place or have a longer commute if you're serious about saving.
    7d2
    • Facebook / Eng
      mrballz

      FacebookEng

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      Microsoft
      mrballzmore
      When you say rent is cheaper, did you include tax deduction for interest on mortgage, appreciation of real estate you own?
      7d
    • Facebook Whateverrs
      Mrballz: no, because I wouldn't have included those in deciding if my mortgage was less than 25% of my net income.

      But also trump taxes reduce the tax efficiency of ownership and appreciation isn't guaranteed. Investing in a house means not investing in something else that may have appreciated as well.

      In budgeting, counting on something like home appreciation as an excuse to spend more on housing isn't really a good strategy.
      6d
  • Apple / EngEckel
    Ask Dave to stay in Palo Alto and then comment
    7d0
  • Amazon / ProductAmznnn
    Uhh you missed a very important detail. Ramsey says no more than 25% of your net income on a 15 year mortgage... fucking impossible if you ask me.
    3d3
    • AT&T / Eng
      DDM2K

      AT&TEng

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      DDM2Kmore
      Right unless you’re putting 50% down.

      He is a weird guy. Tells people to abstain from ANY credit products insomuch that ALL accounts drop off and you don’t even have a score anymore.

      Then, refers his listeners to Churchill Mortgage (whom Dave endorses) to perform “manual underwriting” because you don’t have anything on your credit report.

      This isn’t what’s best for the consumer, because following his instructions to the letter will cut down on CHOICE and the ability to shop mortgage companies and other lenders competitively.

      So much of lending is done with automated underwriting nowadays, you need a FICO score to get the instant approvals for things like credit cards (not subprime) and auto loans (again, not subprime).

      Credit unions are great for low interest auto and sometimes home loans, but most people I know want accounts with the large banks when it comes to credit cards, as it’s easier to get higher limits.
      2d
    • Procore / EngLaRaza
      It’s not impossible but you just have to make a TON of money. Makes sense though as you don’t want to be house poor and a quick way to become wealthy is to pay off your home as quick as possible.
      2d
    • AT&T / Eng
      DDM2K

      AT&TEng

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      DDM2Kmore
      If you make the average household income for your area, assuming you keep your plate clean of high CC balances, but everyone else’s behavior is to bid up prices where they max out their DTI and LTV allowed, you won’t win any bids because everyone else is bidding higher.

      Agree with LaRaza, unless you’re rolling in it, the only way you can get a competitive bid is to act as irresponsible as everyone else, or be one of those supercommuters who pulls in a big city salary and lives in the sticks.

      In the Bay Area, that commute is about 2 hours.

      For RTP and ATL, about 1 hour or just above.
      2d
  • Intel Roggik
    About 15% if you are talking after-tax and retirement savings, including insurance and prop tax in the mortgage pmt
    7d0
  • Facebook / Eng
    mrballz

    FacebookEng

    PRE
    Microsoft
    mrballzmore
    This 25% advice is dumb and indicates that he doesn't understand how real estate (and other things for which supply can not easily increase with demand) is priced.
    7d0
  • Salesforce God Jr.
    It was ~20%. But now it’s 0. Doubled down and paid it off.
    3d0
  • Apple vAAA81
    Yes only if I consider net take home for the year including bonus and stock awards. Otherwise no if I just look at my base income. That’s hard to do in Cali.
    6d0
  • Uber lLhR23
    Between the mrs and I, yes. Just me, not without including my monopoly Uber money.
    7d0
  • Facebook public2
    Mortgage payments are several hundred percent of tc lol
    7d0

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