NOTE TO HOMEOWNERS: Please consider property taxes & insurance as part of your monthly payment. This is to keep the comparison to renters fair since renters don’t pay property taxes and if they even have renter’s insurance at all it’s usually dirt cheap (though if you rent and you do pay renter’s insurance you should include that too). Unless you have no mortgage payment due to paying cash for a home or having paid it off then congrats - but please don’t vote in the poll so as not to skew the data (but you’re welcome to post in the thread).
Also if for whatever reason either side of the equation is zero (like you live with your parents rent-free or you recently lost your source of income), then also please refrain from voting for the sake of maintaining the integrity of the data. Besides, wouldn’t want to risk breaking the universe dividing by zero. In the case of a lost job you can just consider whatever your income was before you became unemployed if you wish.
So the formula we’ll use to determine your rent or mortgage to income ratio for the purposes of this poll is:
((monthly rent or mortgage payment) + (property tax per month, if applicable) + (homeowner’s or renter’s insurance, if applicable) * 100) / (monthly take-home income after taxes)
Of course you don’t have to reveal the data in the formula for this - I’m just interested in the overall percentage.
ETA: also I know it’s never really fair to lump together renters and homeowners since there are a myriad of other expenses for the latter that the former don’t have to pay but we’re just shooting for “close enough” here.
You get 0.29, multiplying by 100 gives you 29. It’s a common way to express turning a decimal into a percentage, although for me certainly and most people I know it’s automatic to see 0.29 as 29% and adding an explicit step is more confusing.
Aye. Sorry if I was too liberal in interchanging the words “ratio” with “percentage”. Since the poll is expressed in whole number percentage values that’s what the *100 is for.
Lemme guess - computer programmer? Always making sure everything is spelled out explicitly. I guess I trusted folks to make that inference without stating it, but you’re right, of course.
it was under 20% when I was working, but now that I am unemployed, it is just over 35%.
It’s actually less than that as I do work part time and forgot to include that in my calculations. Since the job is temporary, it’s not that critical an error.
Renter. Less than 20%. I suddenly have a better understanding of why we survived for a year with only minor lifestyle changes when my husband was laid off!
putting single numbers in parenthesis really does nothing. So, your calculater is obeying orders of operation and just multiplying the 54 by 100 then adding 931. That’s why you’re getting wonky numbers. The second way is correct, but still has superfluous parenthesis.
For me, I’m at just over 40%, but I’m paying a mortgage on a house 400 miles away and paying rent where I live now. When my house sells, I’ll be at about 17%.
I’ve heard that you should keep your rent or mortgage payments at no more than 25% of your income if you want to be able to get ahead financially. I think we were just over that percentage before my wife and I got raises recently, which lowered our rent percentage.
After overtime rollbacks at work, for several months our mortgage-plus-insurance was just over 50% of my income. That was untenable for us … so with our son entering school this year, my wife has gone back to work.
I guess I trusted folks to make that inference without stating it, but you’re right, of course.