Thursday, November 18, 2010

Percentage of Income

I hear on Dave Ramsey’s podcast that your house should be no more than 35% of your income.  I am not sure if he is talking about utilities AND house, or just house (mortgage, insurance and tax.) 

I enjoy working with numbers, so I decided to do our calculations.  Here are our numbers:

This includes our cell phones, electric, propane, DSL, dish, NetFlix, trash, septic inspection (yearly) and our Terminex (required by us: we had a horrible infestation when we first moved in.)  All of these services equal 15% of our take-home income!!!

This includes our mortgage (15 year,) property tax on both properties we own, and home owners insurance.  These are 17% of our take-home income.

That doesn’t seem so bad.  And it may go down when we get re-evaluated on the property we own next door.  The Auditor is still counting it as a regular dwelling valued at over $60,000 even though we purchased the home for less than $8,000 and it no longer has water or septic (the house is dilapidated.)  I have been working on the re-evaluation for over a year!  When they finally do it, our taxes should be cut down to next to nothing on this property.  Right now, they are charging as much as we pay for OUR residence, which just isn’t right.  Once it is re-evaluated, our homestead should be approximately 14% of our take-home income.

The numbers don’t look too bad at all, but I think it is redicules that we are paying as much for “services” as we are for our dwelling.  The culprits are our cell phone (3 phones and unlimited texting,) and satellite.  We have a 3rd phone for Todd’s mom so they can talk without racking up minutes.  The thing is, if we were to go down to one income, these numbers will double.  That makes me very uneasy.

So, I guess we will continue to work on Dave’s plan and build up our Emergency Fund and pay off the house as soon as we can.  I would really like to be able to live off of one income in the near future.

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