In the last post, I showed 2 examples of how vastly different income was depending upon who a cashier married. Corrected net incomes:
*Cashier + Sales person: $42,241
*Cashier + Truck Driver: $74,017
I’ll throw in another couple who tend to marry each other and are top earners of the top 25 jobs: Software Developers. Net income:
*Software developers: $150,541
While you can’t help who you fall in love with, would this difference make the 3 lifestyles so different? And what about a house? How does debt make a difference?
In determining affordability of a house, I used the Dave Ramsey approach: monthly payment of no more than 25% of take-home net pay. I also used the area around Tomball, TX as a go-by for houses and as a typical suburb using the realtor.com app.
So let’s dive in with our cashier and sales couple. Net income $42,241. Monthly payment towards housing $880.03. I also researched typical credit card debt and added monthly car payments. Car payments were calculated using the Suze Orman’s rule of thumb of 15% take-home pay for 36 months.
Using the redfin.com slider tool:
and realtor.com app, I found decent homes for every income in fairly nice to nice areas (I used the live in Houston). Here’s what our first couple’s home might be like with $0 down, debt, $10,000 in closing costs, and car payments:
What if they had no debt or car payments? They could afford a $175,000 vs $140,000 house. See what debt does?
How about our cashier + truck driver? Net income $74,017. Monthly housing budget $1,542.03. At this level, they can afford a house of $269,735 or $319,340 minus $10,000 each for closing. Let’s look:
What about our software developers? It turns out that the amount of credit card debt and car payments rise with a rising income. With debt, our duo can afford $630,000 or $725,000 without debt and payments. Around $100,000 difference! Let’s look:
So what does this all mean? Really it’s just an interesting excercise in playing with numbers and combining disperate bits of data. With millenials, home ownership is less a thing than it was with boomers and genx’ers ( https://www.investopedia.com/news/real-reasons-millennials-arent-buying-homes/ )
In the next installment, we’ll talk cars and how our couples will drive various vehicles. Debt will be in there too make no mistake.
Dave Ramsey solutions
Spreadsheet by yours truly