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.
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).