4 ms·

> housing costs were not 50-75% of their salary 75% is far above what any reasonable person would recommend to be the maximum portion of salary that should be

> housing costs were not 50-75% of their salary 75% is far above what any reasonable person would recommend to be the maximum portion of salary that should be spent on housing. Personally, my housing is around 25% of my posttax income, and I thought I was pushing it a bit. This isn't a generations problem, this is a supreme-ignorance problem.

maerF0x0 8y ago
> 75% is far above what I or any reasonable person would recommend to be the maximum portion of salary that should be spent on housing. Two rules of thumb i've heard are: 1) Do not mortgage more than 4x your annual salary (household if double income) . 2) Do not pay more than 20x annual rent for a place (eg, $50k annualized rent == $1M house) . Another way to rephrase an ignorance problem is a lack of education problem. On one hand we're all adults and ought to keep trying to learn whatever will benefit us best (ie "Financial education") , on the other hand those tasked with educating us have failed us (parents, school system) .
- mmirate 8y ago
  > (parents, school system) Being younger than the Web, I utilized neither of those things to learn how to set up a budget. > On one hand we're all adults and ought to keep trying to learn whatever will benefit us best (ie "Financial education") Damn straight.
- randomdata 8y ago
  > on the other hand those tasked with educating us have failed us (parents, school system) Is the problem lack of education, or is it that humans also have emotions to contend with? If, hypothetically, someone with a $100k income spends $75k on rent, they are left with $25k to spend elsewhere. If another location allows you to rent a place for $10k, that means that a $35k income would also leave you with $25k to spend elsewhere. Assuming all else is equal, try and convince someone with that $100k income that they should move and take a $40k job instead. It, in almost all cases, isn't going to happen. Sure, they would technically be better off, giving them an additional $5,000 in their pocket. But from a social perspective, saying that you make $100k sounds way more impressive than saying you make $40k. And moving isn't a desirable action for most. It seems that is difficult for a lot of people to overcome, even when they know the numbers are not in their favour.
  - mmirate 8y ago
    The central problem there is that we even care about gross income rather than net income minus housing expenses. > Is the problem lack of education, or is it that humans also have emotions to contend with? On second thought, it is indeed good that there is selection pressure against the weaker-minded.

maerF0x0 8y ago

> 75% is far above what I or any reasonable person would recommend to be the maximum portion of salary that should be spent on housing. Two rules of thumb i've heard are: 1) Do not mortgage more than 4x your annual salary (household if double income) . 2) Do not pay more than 20x annual rent for a place (eg, $50k annualized rent == $1M house) . Another way to rephrase an ignorance problem is a lack of education problem. On one hand we're all adults and ought to keep trying to learn whatever will benefit us best (ie "Financial education") , on the other hand those tasked with educating us have failed us (parents, school system) .

mmirate 8y ago
> (parents, school system) Being younger than the Web, I utilized neither of those things to learn how to set up a budget. > On one hand we're all adults and ought to keep trying to learn whatever will benefit us best (ie "Financial education") Damn straight.
randomdata 8y ago
> on the other hand those tasked with educating us have failed us (parents, school system) Is the problem lack of education, or is it that humans also have emotions to contend with? If, hypothetically, someone with a $100k income spends $75k on rent, they are left with $25k to spend elsewhere. If another location allows you to rent a place for $10k, that means that a $35k income would also leave you with $25k to spend elsewhere. Assuming all else is equal, try and convince someone with that $100k income that they should move and take a $40k job instead. It, in almost all cases, isn't going to happen. Sure, they would technically be better off, giving them an additional $5,000 in their pocket. But from a social perspective, saying that you make $100k sounds way more impressive than saying you make $40k. And moving isn't a desirable action for most. It seems that is difficult for a lot of people to overcome, even when they know the numbers are not in their favour.
- mmirate 8y ago
  The central problem there is that we even care about gross income rather than net income minus housing expenses. > Is the problem lack of education, or is it that humans also have emotions to contend with? On second thought, it is indeed good that there is selection pressure against the weaker-minded.