Board 8 > How much of your paycheck (biweekly) should your rent cost?

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I would say if your rent is $300-$400 less than your paycheck, then youre in a good living situation, financially speaking.

Once you get less than that though, youre cutting it close to having to live frugally. I would say under no circumstance should your rent cost more than your paycheck, even though you get two per month on average.

Moonroof posted...

I would say if your rent is $300-$400 less than your paycheck, then youre in a good living situation, financially speaking.

What

Oh wait you said biweekly (I think you mean fortnightly)

Yeah I've heard one third your monthly take home pay and that seems pretty reasonable.

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none

Mine is currently about 700 less than my paycheck

so you're saying I could have a better apartment

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ninkendo posted...

Mine is currently about 700 less than my paycheck

so you're saying I could have a better apartment

this just means you can afford more games


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SantaRPidgey posted...

What

Oh wait you said biweekly (I think you mean fortnightly)

Yeah I've heard one third your monthly take home pay and that seems pretty reasonable.

Biweekly can be used to mean twice a week or once every two weeks. It's not a very good word. >_>
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Yeah thats why I say lets kill that second meaning for biweekly and ride that fortnight train into the fucking sunset

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now granted when I factor in my school loans then it is 300-400 less than my paycheck

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35% of your paycheck should be going to housing (that includes mortgage/bills/strata fees if you own)

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Team Rocket Elite posted...

Biweekly can be used to mean twice a week or once every two weeks. It's not a very good word. >_>

@Team_Rocket_Elite Semi-weekly is twice a week. Bi means two, semi means half.

I miss getting paid every two weeks. The majority of jobs out here pay monthly and it sucks.

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My rent is $1950 less than my paycheck. (biweekly)

Helps having roommates.

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Moonroof posted...

@Team_Rocket_Elite Semi-weekly is twice a week. Bi means two, semi means half.

biweekly
/bwkl/
adjective
done, produced, or occurring every two weeks or twice a week.

Noted. However...If there is a word that has every two weeks (biweekly) in its definition and another word that only has twice a week (semiweekly) in its definition, that is all you need to know which word to use.

Back in topic, having roommates certainly alleviates financial cramping. But something about being over 25 and having roommates doesnt sit well with me, personally. I am also turned off romantically by women who fall into that category.

This is a dumb topic. Who cares how you get your paychecks. The question is what % of your income should go to housing. Most banks say around 40% or less when you apply for mortgages.

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Corrik7 posted...

This is a dumb topic. Who cares how you get your paychecks. The question is what % of your income should go to housing. Most banks say around 40% or less when you apply for mortgages.

Yes, but housing cost is typically divided monthly. Rather than divide your income by 12, I find it easier to compare paychecks. Same destination, friend.

Moonroof posted...

Back in topic, having roommates certainly alleviates financial cramping. But something about being over 25 and having roommates doesnt sit well with me, personally. I am also turned off romantically by women who fall into that category.

One day I'd like to have a place to call my own, but right now I'm fortunate to have my friends as roommates that I've known since 05.

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Nice. Some of my happiest times were in college when I had three roommates and we all got along very well. It makes a huge difference when you dont get along, though.

Moonroof posted...
Moonroof posted...

Noted. However...If there is a word that has every two weeks (biweekly) in its definition and another word that only has twice a week (semiweekly) in its definition, that is all you need to know which word to use.

Fortnight (i.e. Fourteen nights)

On topic, my mortgage is 27% of my monthly paycheck but that doesn't account for my missus's wage or that I rent a room out to a friend. I'd say I'm very fortunate though and not the norm.

Ideally you want to be around 33% or under but that figure was derived quite a long time ago I believe. I think with increasing cost of living not scaling with increase in wages, probably 40% or under is fine. 45% at a stretch. I'd imagine quite a few people are above that threshold though

Look at percentages instead of hard dollar amounts. If you get paid twice a month, then your rent/mortgage/whatever being 2/3 of a single paycheck is good. Comes out to 1/3 of your monthly total, which is a good benchmark.

Saying "300 less" is meaningless without the context of whether your checks are $500 or $5000

True. I did the math and Im at 27% but living in a meh apartment.

12% of my monthly income. But again, thats with roommates.

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Reg posted...

Saying "300 less" is meaningless without the context of whether your checks are $500 or $5000

I'd strongly disagree percentages are better at giving you a good idea. It's basically the same thing. 60% is meaningless without context too.

Like using your example if you're paying 60% of your monthly income towards rent and your paycheck is $5000, you're still looking at $4000 per month you have to do whatever with. Cost of living be damned I'm sure you're completely fine. $400 per month to do everything but rent, not so much.

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Lopen posted...

I'd strongly disagree percentages are better at giving you a good idea. It's basically the same thing. 60% is meaningless without context too.

Like using your example if you're paying 60% of your monthly income towards rent and your paycheck is $5000, you're still looking at $4000 per month you have to do whatever with. Cost of living be damned I'm sure you're completely fine. $400 per month to do everything but rent, not so much.

there's a matter of security cushion though. by that logic if you make $20k/month then you'd be fine with rent of $15k/month. but if you lose your job in that case then you're utterly fucked
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SeabassDebeste posted...

there's a matter of security cushion though. by that logic if you make $20k/month then you'd be fine with rent of $15k/month. but if you lose your job in that case then you're utterly fucked

I would also argue that the amount you spend on housing is probably generally indicative of how much you're spending elsewhere. It's uncommon (though not unheard of) for somebody to spend excessively on housing and frugally on everything else. So if you're spending 60% of your income on rent and "still have $4000 left to do whatever with", that implies to me a lifestyle that does not carry that $4000 quite as far as it would go for an average person.

The point is it's still basically saying the same thing. You're still accounting for pay scaling because it's "One whole paycheck + 300 dollars"

The only difference is whether that 300 dollars is an appreciable percentage of your paycheck or not, but I'd say if that 300 is an incredibly minor percentage then it's not as harmful to be riding up near the 50% income line because you have a lot more resilience towards various expenses that may provide huge problems towards those with less income like car repairs, etc.

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Should your house cost 5,999,700 of 6,000,000 of your paycheck or 200 of 500 of your paycheck.

You are kinda arguing something silly here, Lopen. Not many people who are millionaires and shit live on poor people budgets the rest of the way.

You should be going by percentages in this conversation.

Could they? Sure. Are they? No.

Not many rich people on 58 acres of land are gonna go trim and cut their lawns all day and be the pool boy for themselves and so on. That's why percentages make sense and why banks go by them.

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It is a percentage though you just aren't thinking about it because it's not expressed as one.

When you say three hundred less than a single paycheck you're by default setting the absolute floor below 50% because you're leaving them one whole paycheck.

The more poor you are, the further from 50% you should be because you can't afford as many random unexpected expenses as the more rich can. Which is why a flat value is actually more useful than you'd think.


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Corrik7 posted...

This is a dumb topic.

It's a Moonroof topic, that's by design.

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Lopen posted...

It is a percentage though you just aren't thinking about it because it's not expressed as one.

When you say three hundred less than a single paycheck you're by default setting the absolute floor below 50% because you're leaving them one whole paycheck.

The more poor you are, the further from 50% you should be because you can't afford as many random unexpected expenses as the more rich can. Which is why a flat value is actually more useful than you'd think.

I think he meant $300 less than his paycheck both times. If he didn't then it was poorly worded.

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I think you didn't read the opening post

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Corrik7 posted...

I think he meant $300 less than his paycheck both times. If he didn't then it was poorly worded.

why would you pay rent twice a month >_>

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MZero11 posted...

why would you pay rent twice a month >_>

Set aside a certain amount from one paycheck and enough from another? Though, mortgages very commonly can be paid biweekly because it helps you make a couple of extra payments a year. It's a very common option for paying on mortgages...

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it doesn't really matter how often you pay your mortgage, they amortize a month at a time.

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Bartzyx posted...

it doesn't really matter how often you pay your mortgage, they amortize a month at a time.

Not sure about the United States, but in Canada interest is calculated daily so you are better off to make payments as often as possible (weekly in most cases).

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In the US, mortgage payments are made in arrears, so it doesn't matter if you pay 29 days early or 1 day early

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charmander6000 posted...

Not sure about the United States, but in Canada interest is calculated daily so you are better off to make payments as often as possible (weekly in most cases).

My school loans were this way but mortgages are not.

Biweekly mortgage payments are common though I don't do them.

https://www.magnifymoney.com/blog/mortgage/5-reasons-you-should-make-biweekly-mortgage-payments/


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How much should you spend on housing

Women will falsely accuse you of rape

alright

My budget is relatively

$300 gas/electric (usually around $200)
$300 internet/tv/ water/ garbage/ services (usually around $250)
$100 cell phones ($90)
$500 monthly food
$500 gas/any other uses
$450 car payment
$1500 home loan ($820, I overpay)

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My biggest expense is food. I eat out every meal! But thats my vice. I put a lot of my paycheck right into savings. So its okay...

On the topic of budget, I used this video to learn how to create an excel budget and it has helped me out tremendously over the years.

This vid is Part 1 of 4:
https://www.youtube.com/watch?v=AZbWLu5zzAo

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i used to do that sort of tracking, but counting my expenses and splitting them up by category became way too time consuming to be fun

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banananor posted...

i used to do that sort of tracking, but counting my expenses and splitting them up by category became way too time consuming to be fun

If you set it up right excel does almost all the counting for you. But I get what you mean. I try to enter my expenses once a week, but sometimes I dont feel like doing it til the end of the month and that turns out to be time consuming.

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Do you manage your expenses because otherwise youd risk falling behind? Or is it just habit at this point? I feel like I would keep track if I was on the verge of falling behind.

SwiftyDC posted...

If you set it up right excel does almost all the counting for you. But I get what you mean. I try to enter my expenses once a week, but sometimes I dont feel like doing it til the end of the month and that turns out to be time consuming.

yeah, it's the actual transfer of purchases from my credit card statement into excel that's a pain. i still keep track of macro total expenses

Moonroof posted...

Do you manage your expenses because otherwise youd risk falling behind? Or is it just habit at this point? I feel like I would keep track if I was on the verge of falling behind.

i also don't like to worry about money in the moment. i like looking backwards and seeing mistakes, then coming up with rules/heuristics that are easy to adhere to

regardless of whether you're ahead or behind, waste is waste. it can also be a wakeup call to some boiling frog scenarios. at one point, i was ordering seamless once a month, then it became once a week, then it became two, three+ times a week and actually seeing the food expense go up month-by-month was motivational to stop being so lazy.

seeing exactly how much i was spending on alcohol helped motivate me to drink less. seeing that i was actually spending less when living farther away and taking an expensive train four times a week made me feel better about a situation. knowledge is power, blah blah blah

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Moonroof posted...

Do you manage your expenses because otherwise youd risk falling behind? Or is it just habit at this point? I feel like I would keep track if I was on the verge of falling behind.

It's become a habit and it's to help me save better. I don't have that many allotments and currently single, no kids. I do buy shit that I don't need sometimes and eat out when I should be cooking the food I have at home. This just helps me keep track of where my money is going and tells me where I should cut back on some things. I've never let myself get close to falling behind. I'm a big believer in planning for a safety net of at least a year but preferably three, be it I can't work cause of an injury or whatever the case may be.

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SwiftyDC posted...

On the topic of budget, I used this video to learn how to create an excel budget and it has helped me out tremendously over the years.

This vid is Part 1 of 4:
https://www.youtube.com/watch?v=AZbWLu5zzAo

Good video. My suggestion would be to add a Column for "Category" to the Comprehensive Expense Tracker (Gas, Mortgage, Groceries, etc.), then you can just use a SUMIF formula to automatically add it to the Soft Total in the top part in stead of having to do it manually

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