The standard recommendation is to spend no more than 30% of your gross income on housing. I’m curious if most FIRE adherents have a significantly lower cost on average. So my question this week, what percentage of your gross income do you spend on housing?
Using our combined gross income… 7.5%. We don’t make tech money or anything, we just got lucky with buying below our means in 2018 before the market got insane. We’re in the Midwest which helps.
If we were to buy the same house today with current rates and values based on our improvements, we would be closer to 17%.
Our income is variable, but we’re somewhere in the 3-6% range on average. That number is low partly due to income and partly due to a higher than average down payment.
I’m at 11% if you only count mortgage, property tax, and homeowners insurance. If you include all the maintenance costs of ownership, then it is wildly variable, but also difficult to split out living expenses from discretionary improvements.
For example, this year I spent money on replacing a broken HVAC unit, which I would consider a cost of ownership. I also had to have a large part of my lawn replaced after it was dug up for a major plumbing repair. But since I was having landscape work done anyway, I also had them make some improvements to another part of my yard. I don’t cleanly track required expenses separately from discretionary in that category.
All that said, if I add my home maintenance category I am 15.5% this year and if I add landscaping I’m at 23.7%.
This year and last year have been particularly expensive in maintenance costs. I replaced 2 large HVAC system and a mini-split heat pump, my yard was excavated to clear a sewage pipe block, I cleaned up some unsightly landscaping, my front porch was repainted and front door restained, 30 year old single pane windows were replaced with energy efficient windows, I had the crawl space encapsulated, among other things.
We did all this now for 2 main reasons. First, we had a lot of deferred maintenance that we couldn’t afford with our savings goals and paying down student loans. We paid off the loans in 2020 and I got some decent raises the last 3 years that finally put us in a good spot to both increase savings and catch up on home maintenance.
Second, we spent a lot of time reflecting on where we want to go in the future and decided we would likely be in our house for 10 more years, but maybe not much longer. We decided that we would rather invest in the house now and enjoy the full benefit rather than defer it and pass most of the benefit on to the next owner.
With all of that done, I’m hoping the next several years will be much cheaper, but home ownership is very unpredictable. I think we have had a significant unexpected exense almost every year. I know I’m going to have to do major work on my deck soon, so that’s definitely an upcoming expense. I miss renting an apartment sometimes.
I spend ~13% of my gross income on PITI (principal, interest, taxes, and insurance).
Another motivation to RE:
About two years ago, big corporate forced a mandatory 30 minute lunch into our work day, turning our 8 hour day into 8.5. We didn’t ask for it — we were all perfectly happy eating at our desk. It doesn’t sound like much, but that’s asking for 5 extra hours of our life every two weeks for no additional pay.
Most of us ignored it, and because we were salaried despite having to clock in/out, we still got paid our full FTE.
Well, big corporate is now back to enforce their terrible mandate. Accusing people of “not working their FTE.” Guess we all get to stare at the wall in the break room rather than continuing to be productive all day. Sweet.
This happened to me when I was working an overnight job. My hours were midnight-8am. They told me I had to take a 30 min break.
What am I going to do at 3am?! Nothing is open at that time. I was already sitting in a room alone most of the time, anyways.
I asked if I could just tack it at the end of my shift and still leave at 8. They said no. What a waste.
Most of my career I’ve had mandatory lunch breaks, either required when hourly or implied when salary (based on the norms of when people arrived and left each day). However, the worst was definitely an overnight hourly job I had stocking shelves. We had a mandatory unpaid lunch break in the middle of the night, but even if there was somewhere to go, we weren’t allowed to leave the building for security reasons. The doors were locked for most of our shift and would only be opened for an emergency. I think I quit after 3 months.
