(Closed) 1/4 Rule

posted 7 years ago in Home
Post # 3
14492 posts
Honey Beekeeper
  • Wedding: June 2011

We have about 5% into ours, but that doesn’t include utilities (which are low). We spend another 1 or 2% into our vacation home, some of which is going into repairs.

Post # 4
2491 posts
Buzzing bee
  • Wedding: July 2012

I follow that rule, but don’t forget to account for repairs, Property taxes, emergency fund (for the broken pipe, gas leak, etc), insurance premiums and basic home improvements. we pay 30 percent into housing with all that combined, but we live a very basic lifestyle after that, so we are saving over 20 percent on top of that. I feel like if you have no debts and your savings are in line, the rest will work itself out.

Post # 5
11324 posts
Sugar Beekeeper
  • Wedding: February 2011

Our mortgage/insurance/taxes = 21% of our take-home pay. But I think you probably need to look at your over all expenses and just see what makes sense for you. You might have more or less other expenses that would make different amounts make sense.

Post # 6
7310 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

21% of our take home pay (after taxes, charitable contribution deductions, and health/dental/vision insurance deductions) goes to our housing payment (p&i, home owner’s insurance, property taxes). We chose to purchase a home that we could afford to make payments on if we had to rely on the lower of our 2 salaries. So the person who earns more in our relationship could stop working, and we could still afford to stay current on all of our bills, fill the gas tanks, and eat. Having that financial stability is crucial to our peace of mind.

The general rule is that no more that 35% of your income should be allocated to paying debt (home loan, car loans, student loans, credit cards, etc.) Overall we pay 27% of our take-home pay to debt.

Post # 7
5427 posts
Bee Keeper

YES, and I think that’s a whole lotta bull because if you’re on minimum wage, you can’t rent a closet!

My rent ismore than half my income… plus hydro, gas etc… so I am left with about $0 for emergencies.

Post # 9
231 posts
Helper bee

We spend around 20% of take home pay (after 401K contributions and all other deductions like health insurance and charitable contributions) on mortgage + property taxes + insurance.  Adding in electric, gas, and cable/Internet is around 25% of take home pay.

Post # 10
11231 posts
Sugar Beekeeper
  • Wedding: August 2013

Yeah, you’re supposed to be around 25-30%. Unfortunately, we’re about 50% because we moved into this apartment with two incomes, and we’re now on one small income. Ah well.

There are calculators that you can use, but I’m not a fan of them. There’s this one from CNN Money.

Post # 11
3226 posts
Sugar bee
  • Wedding: October 2010

Question – how much percentage of your salary goes into your home INCLUDING utilities. I know it can vary, but I wonder how much the percentage jumps if you include this.

Post # 13
2491 posts
Buzzing bee
  • Wedding: July 2012

Our 30% includes utilities (forgot to mention!). We figured out what 30% of our take home pay was. After paying morgage, property taxes and utilities, we put the extra money into a savings account for repairs, improvement and emergencies. It works out, most months, that we end up putting about 5-10% of our pay into the emergency fund.

Considering in the next year we will need a new roof, and in the next 10 years we will need a new furnace and air conditioner, I’m hoping the emergency fund will stay strong!

Also, we moved outside the GTA (Greater Toronto Area) specificially because of housing costs. Where we live now the housing costs are incredibly lower. Our house was around $330K. It is a 4 bedroom, 3 bath, fully finished house and less than 10 years old. In the GTA that might buy us a rundown semi. In Toronto we might, if we were lucky, be able to buy a small condo. We were willing to commute and get more for our money.

Post # 16
4655 posts
Honey bee
  • Wedding: August 2013




This was me when I lived in New York. (Currently it’s 0% because I teach English abroad and they pay my housing but before the rent situation was pretty gross.)

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