OT-How much money does the average family have left over each month?

[minnie1928]

But... over the last 3 1/2 years interest rates fell considerably...we refinanced twice. We went to a $2,900 month mtge payment to a $2,300 pymt, back up to a 15 yr $2,900.

I was in a similar situation, but that was during the refi- boom. Rates have since bottomed out, so looking to refi in a year or two from now may not work out as well as it had in the past several years. I wouldn't make this assumption if I were in your shoes. You may want to look into paying points on your loan. The points would be tax deductible this year (assuming you settle this year). If your not sure if the points would pay off, go to a site like Bankrate.com. They have all kinds of calculators there.

Also keep in mind that by buying a more expensive house, your tax deductible interest will also increase. When we bought our house, our interest deduction tripled! Needless to say, I've been getting refunds ever since. Which allowed me to change the withholding rates on our paychecks. Which in turn gave us more money each month.

Good luck with whatever you decide to do!

 

[hockey mom]

We are fortunate in that the majority of my income is extra but it doesn't take long to fly out the window on the unexpected. We have 3 kids- one in hockey, one in dance and one trying skateboarding school , school and it's extras are another killer, rising gas prices, rising hydro, furnace breaks, and you get the picture. So for me that amount of extra each month would be cutting it to close for comfort.

 

[wide awake]

That amount sounds fine to me. You already realize you're going to have to watch it, your children are young so they're cheaper...and I don't know anyone that doesn't stretch it to get into a house. As long as you're not getting one of those weird interest only or 40 year loans you should be fine.

 

[juliegirl]

Don't forget - lawnmower, snowblower, garbage cans, rake, shovel, etc....Lots of extras that can easily wipe you out.

That being said, we only have about $400-$500 'extra' each month ourselves, but that is after all expenses, 401K, etc.

No college fund for the 10 yr old. DH says "We did it on our own, she can too"

I remember it being tight tight tight starting out though.

 

[vanyel]

I saw one of your bills is college loans which should be short-term. Also watch the cc bills!

 

[grlpwrd]

DH & I have decided to buy a house, actually having one built. We've found a wonderful home design, been approved, decided on options, picked a lot, done everything except sign the papers. I am very excited but even more nervous because we will be paying substantially a lot more out each month. I am just curious, how much does the average family have left over each month after figuring in house payment, car payment, utilities, cc payments, student loans, groceries, gas, and very thing else an average family pays out each month. We've sat down and figured out a budget several times so far and each time coming out showing we'll have approx $450.00-$500.00 left each month after figuring in everything we could think of and also budgeting $100.00 per month for misc. I know things always look better & simpler on paper. Does this seem reasonable? Does the average family normally have a lot more left over each month? BTW it is me, dh, & ds 3 & 4. Also the $450.00-$500.00 left over will be with us on a tight budget. Any opinions would be greatly appreciated.

TIA

Well, there are other variables, too.

Are you all in general good health? If any of you have a ongoing medical condition or may have a medical emergency then that can be a snag.

Or how about job security? Jobs can be very unstable, especially with merging and downsizing. You will need to consider whether that extra $450 - $500 will be enough to live on if something major happens.

How about investments, retirement, and an emergency fund? I don't know if you figured these in and how important they are to you, but they are also part of a good financial plan.

How about property taxes and other expenses? Have you figured those in, too?

How about the school system there? If you decide the public school system is inadequate or if you decide to send your kids to a private school then that shoul dbe considered, too. Of course, homeschooling is not a very big expense in general.

Have you considered an older or "starter home" rather than new construction? Most folks start out buying something they can really afford rather than something they will overextend themselves (to). That may be an option.

Yes, and the economic climate is changing as interest rates are not as good as they were and refinancing deals are not great as before either. This may also affect job security, such as if your job(s) are tied into the economy, such as tourism.

I don't mean to be pessimistic, honest, but I am also a realist, too. I just want to add variables that need consideration, too, as I think $450-$500 is cutting it pretty close.

HTH and GL!

 

[Aidensmom]

It depends on the standard of living you are accustomed to. $500 left over for some people is a lot, for others it is nothing.

That being said, we have about $600 a month left over after all of our budgeted expenses: mortgage (incl taxes and insurance0, utilities, day care, student loans, credit card bills (which only have a balance because of a rash of home emergencies which all occurred in a short period of time), savings, groceries, $100/month miscellaneous, $30/month for "date night", vacation savings, prescription co-payments, satellite, internet, cell phone, car payments, auto insurance, and funds for Christmas and Home Improvements. Make sure you have budgeted in ALL expenses.

We had the exact same questions last year when we bought our home, but with the dramatic increases in home prices in Florida, and the fact that owning is an investment whereas renting is not, we felt it was best to purchase a house, though it costs us about $300 more a month than renting.
And yes, taxes and insurance are likely to increase over the years, but so is your income. We have never been used to having a lot of extra money, and to us the amount we have left over is plenty. We don't go to the movies or eat out or things like that much, but we find plenty of things to do within our budget.

 

[grlpwrd]

Just wanted to add some helpful links which I bookmarked....

www.betterbudgeting.com there's also calculators for mortgages, etc.

www.stretcher.com

www.bankrate.com



GL!

 

[diznee25]

Financial matters differ from family to family so I'll get you some general tips that I've read about:

I'm reading a finanaical book called, 'All Your Worth' by Elizabeth Warren. Here are a few tidbits from the book:

According to the USDA, a family of 4 should spend about $650 on groceries This is basic food needs. And of course non-food items such as toliet paper, body wash, etc. Restaurant and fast food are not included in this budget. Those two are considered luxury/entertainment items.

Want to know if your budget is where it should be?
Here is how to break down your monthly take home pay:

50% goes to Must-Haves (morgage, utilites, bills, cars, etc.)

30% goes to entertainment (fast food, restaurant food, vacations, magazine subscriptions, candy, toys, gum, birthday/Christmas gifts, etc)

20% goes to savings (this includes retirement, so if you can already account for that, you could probably drop this to 5% or 10% and add the left over to Must-Haves or Entertainment.)

Just make sure you always show 100% of your take home pay, otherwise that means your not accounting for all the money you spend.

Please note that the author does mention that the formula can be revised to fit everyone's different needs. For example if you're trying to get out of debt, you may want to decrease your entertainment budget and increase your Must-Haves. Just make sure your always at 100%.

Diznee25

 

[Phyllisi]

You may not be able to get all the tax cuts for a house that you would think. The alternate minimum tax ceiling has to been rising to inflation since the 1960’s! More and more middle class family are going to be considered “rich”, it can impact a middle class family who has a modest household income of only $100,000.00 and lives in a high state like I do.

 

[DiznEeyore]

More and more middle class family are going to be considered “rich”, it can impact a middle class family who has a modest household income of only $100,000.00 and lives in a high state like I do.

Wow, I don't consider "only" six figures "modest" -- it's almost double what we make every year! We must really be poor!

 

[zurgswife]

Pretty much $0 or less left over every month....but I found out this year we can live on alot less. DH lost his professional income job and hasn't found a proper replacement.....Never thought we could live on what we have been but it has worked out just fine...

 

[Aidensmom]

Wow, I don't consider "only" six figures "modest" -- it's almost double what we make every year! We must really be poor!

Same here, I would consider myself rich if I had a six figure income.

 

[EsmeraldaX]

Wow, I don't consider "only" six figures "modest" -- it's almost double what we make every year! We must really be poor!

It depends on where you live.

We have a combined household income that is under 6 figures but above the "national" average.

For 2 adults with no children in a suburb of Boston, we are considered maybe the upper end of lower class/lower end of middle class. We are not saddled in debt either. This is just how much it costs to live in this area. If we had children, we'd probably be eligible for social services.

There is no way we could buy a house in this area. You have to be making at the very least 100K in this area to buy a nice home and still have money left over to enjoy life and not live paycheck to paycheck. I refuse to live paycheck to paycheck. We looked at buying last year and decided, we just would not be happy living like that. Right now, honestly, I'd rather rent and still be able to take vacations and have money left over after my bills are paid.

If we were to buy a home the size of the house we rent (a spacious 3 BR, in a good neighborhood with a large yard and a garage), we'd be looking at 500K minimum, for a fixer upper.

Most of my friends rent. The few that do own homes either own smallish condos or very small houses. I have one friend with a large house. He lives out in the middle of nowhere in order to afford it. He makes well over 6 figures (his wife works part time outside the home) but even at that, they go without things like air conditioning, cable ect. and are struggling to put their kids in college. If one of their cars needs repair, I've seen how stressed out
it makes them because it is a huge hit on their checkbooks.

So while 6 figures might seem like a lot in some places, in this area, your not considered well off at all with that kind of income.

 

[DiznEeyore]

It depends on where you live.

Of course.

We live in Michigan, where the house values have skyrocketed -- we bought 12 years ago when they were still reasonable and now couldn't afford to move 3 miles west of where we are, even in the same size house (and we couldn't even get a decent apartment for what we pay for our mortgage). Nevertheless, "only" six figures is still almost double what we make, and isn't "modest" to most people.

 

[EsmeraldaX]

Nevertheless, "only" six figures is still almost double what we make, and isn't "modest" to most people.

It is to pretty much anyone in MA. If I heard someone in this area say they only made 6 figures I'd probably not even think twice about it. 100K in MA for a 2 income family is modest, if not below average.

Like I said, I understand that to most people, that's a huge salary, around here it's really not.

 

[DiznEeyore]

It is to pretty much anyone in MA. If I heard someone in this area say they only made 6 figures I'd probably not even think twice about it. 100K in MA for a 2 income family is modest, if not below average.

Like I said, I understand that to most people, that's a huge salary, around here it's really not.

Are we debating? And if so, why? I think we're both agreeing that Massachusetts isn't "most" of the country ... even if you add in NYC, DC and California.

 

[EsmeraldaX]

I'm not debating, I'm just pointing out that the person who said that might live or used to have lived in a very high cost of living area and have a much different perception of what is and is not modest.

I think 100K is very modest. If I lived in say, rural MO, I'd think 100K was a huge amount of money.

 

[skiwee1]

I'm not debating, I'm just pointing out that the person who said that might live or used to have lived in a very high cost of living area and have a much different perception of what is and is not modest.

I think 100K is very modest. If I lived in say, rural MO, I'd think 100K was a huge amount of money.

I agree. Here in Maryland in my area you would have a hard time living on $100,000. I know I couldn't do it! Housing around here is $350,000 for a rancher that needs work. While $100,000 isn't poverty level by any means it is still pretty low in the local area.

 

[FINFAN]

We are in a similar situation as Zurgwife. I guess what I have learned from past home purchases(3) is that I would like to have a solid 40-50K in savings (liquid) after purchasing a house and then have the $500 "cushion" per month. That only adds up to $6,000 per year, which is not much, sadly. We have experienced all different ranges of financial juggling, and years ago, when we bought this home we based it on average salary increases, yadda yadda.... those did happen, but then so did salary cuts to hang onto the job, job loss, had a few medical issues / car issues/ selfish moments of WDW trip taking / I would buy a home based on salary 10 years ago if planning to have kids, 'cause that college savings plan will eat up any increase you may receive, and it will still not be enough.Our taxes have gone up way more than a national average, who could've guessed 9/11? You get the idea....It is so hard to afford a home now, and I would purchase one over not...even if there was not much left over at all (paycheck to paycheck) but not everyone feels that way, and renting does have it's merits...changing jobs/relo may be easier, again, taxes, you just can't spend on stuff that may end up in your basement anyway....
As the others have mentioned, seriously write down EVERYTHING you spend on, pets, stamps, dry cleaning, updating the computer, then add 20% to that, and THEN see if you're comfortable with any left over $$$$ It can cause a lot of stress to fall behing....one thing we had happen was our car being totalled 1 year after we moved into the house, DS was 3 months old, and we had not budgetted for car payments as the old car only had 62,000 miles on it...9gotta love the bluebook for a Ford TAURUS NEVER again)it took a long time to catch up from that only t have the salary cuts start to happen. You learn as you go along, and that is probably what will be best for you. Is the home in a good selling area if you decided you were in over your heads? That is always something to consider. I think it will work out for you, you will be able to adjust to what ever may happen. On a happier note, it is very exciting and cool to own your own place...good luck!

Pam