How Much Do You Really Spend on Your House?

Photo by MCCAIG/istockphoto.comI read this morning in Real Simple (You have a problem with that? Say it to my face.) that well-known financial advisers recommend the following ratios for spending and saving take-home pay: either 70% to "needs" (like rent or mortgage), 20% to "wants" (fun money), and 10% to savings; or 50% to "needs", 30% to wants, and 20% to savings. Sounds reasonable, right?

OK, but within the "needs" category, which includes things like food, medical care, and the costs of housing, what percentage are you, and should you, be funneling into your house? The Wall Street Journal says, "Typically, most lenders suggest that you spend no more than 28% of your monthly income on a mortgage."

Well, then, what percentage of one's income goes to maintenance of her house? US News and World Report says, "On average, homeowners will spend between 1 to 4 percent of a home's value annually on maintenance and repairs, which tend to increase as the house ages, according to several real estate websites and mortgage firm Freddie Mac." According to several real estate websites. OK, then!, a reasonably good source of realistic and helpful financial information for the average Joe or Jane, quoted a University of Illinois Extension study that says that the average homeowner needs to set aside one to two percent of the price of their home per year for maintenance. Therefore: If your house cost you $300,000, then expect to spend $3000 to $6000 per year on maintenance.

But wait, there's taxes. Property taxes vary (sharply) by county and state, but Forbes did some nice research and produced a list of average property taxes by region. According to their research, the average property tax nationwide is somewhere between $4,000 and $9,000 per year.

So let's make a sum: For a house that costs $300,000, you'll be paying around $6,000 a year to maintain it. Plus add on property taxes as, say, $6500 per year. That's already $12,500 per year, before we even get to the mortgage. Say you're spending about $2000 per month on a mortgage. That's $24,000 per year. We reach a grand total of $36,500 per year spent on the house, or $3,041.67 per month. In order for $3,041.67 to be 28% of someone's monthly income, his take home pay would have to be $10, 863.12 per month, or $130,357.286 per year.

Can we talk about this? How much do you actually spend per month on your house? Do you think it is cheaper to rent or to buy? How do you make it work within your budget? And is your house a money pit?

Chaya Kurtz writes about everything from remodeling projects to tile contractors in Miami for

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