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It's explained in the book I mentioned. You would also need to educate yourself on personal finance by reading some other books to get a more holistic picture (
by such_a_casual 11y ago
It's explained in the book I mentioned. You would also need to educate yourself on personal finance by reading some other books to get a more holistic picture (The Millionaire Next Door is a good place to start).
There's three things you need to understand about personal finance:
1. The first is that shit happens and most people don't plan for it (because they haven't been educated on personal finance). Most resources suggest that you keep an emergency fund of 6-12 months of living expenses saved up for when shit happens. We know that most people do not have this. I'm not even going to bother providing a source because there are so many sources on how Americans don't save.
2. The number one expense for any given household is going to be housing (whether owned or rented).
3. While you can cutback on many things, you cannot cutback on a mortgage. So if there are permanent setbacks to your finances: someone loses their job and gets another one that pays less, someone gets hurt and can't work for a while or ends up on disability, someone has to stay home to take care of an unhealthy relative, etc, then you can be pretty much shit out of luck unless you're house has equity on it and you can sell and downsize (although most people will just take a loan out against their equity lol).
So these are the characters of our stage. If you get a mortgage based on 1 person's income and something happens, there is another person there to step up. This provides a powerful safety net for the family. If you get a mortgage based on both people's incomes, you are putting yourself at greater risk because if something were to happen to either person you would not be able to afford to keep your 15-30 year agreement. And the cost of getting out of that agreement is enormous (as we saw with the recent housing crash).
I encourage you to read more on personal finance. It's incredibly fascinating.
- serge2k 11y agoYou realize the reason people move to 2 incomes is because they can't afford to live off one? You realize that a lot of people don't have savings because they live paycheck to paycheck trying to survive?
- such_a_casual 11y agoBoth of your questions would be answered by reading the aforementioned books and by learning more about personal finance. Also: https://www.reddit.com/r/personalfinance https://www.reddit.com/r/personalfinance
- serge2k 11y agoSo no, and you will just continue with the condescending assumption that anyone questioning you doesn't know anything?
- such_a_casual 11y agoI'm not sure how you would like me to answer false assertions? Especially since my post is clearly about people with a mortgage (as is the book I recommended). The best I can do is point you in the right direction to properly educate yourself.
- nommm-nommm 11y agoPersonal finance books are often a lot of garbage with a little bit of wisdom thrown in that requires effort to extract. http://badmoneyadvice.com/2009/03/whats-wrong-with-the-millionaire-next-door.html http://badmoneyadvice.com/2009/03/whats-wrong-with-the-milli...
- rosege 11y agoFor point 3 you might also be able to change your loan to interest only and thereby reduce the amount required.
- deciplex 11y agoA two income home is like putting valuable data in a RAID-0 HDD array.
- cesarbs 11y agoI guess we're covered then :) We' re still working on building an emergency fund the size we want, but it's already there to cover us for at least half a year. Right now we pay more than what we'd like on rent, but next year we'll move to a cheaper place. We're saving for a large down payment for when it comes time to buy a home. Also, we'll get a mortgage as if only one of us were working, we have already agreed on that. And we're planning on moving to a state with a low cost of living when that time comes. So in our case, two incomes is pretty solid.