# Figuring Out My Finances

Updated: Sep 16, 2019

# I wanted to buy a house, but can I actually afford it!

Like many #millennials, I have now been in the work force for a couple years and have been extremely work focused. But, here is the thing... as I have turned a corner in my life and want more consistency... I want to buy a house.

“What can I afford.”

I was super nervous about looking for a house and making that commitment. Buying a house is the biggest financial investment any of us will likely make, except maybe children. So being single and already saddled with #student #loan debts I really needed to figure all this out before making any moves.

## The Calculation

Ok, so there are a couple of things I needed to figure out before I could start were:

1.) How much I make?

2.) How much I spend?

The general rule of thumb is that you don't get a house that is more than about 25% of your income. So, for example if I make $48000 annually("I don't this is just an easy number to use") the #calculation will look like this:

1st yearly amount: 48000*0.25= 12000, 12000 is the yearly amount that you spend on house payments.

2nd monthly amount: 12000/12 = 1000. The total monthly amount you will want to spent.

In this scenario, this person should only be spending 1000 a month on a #mortgage payment. Here is the thing though.... this does not take into the monthly amount that is spent on other large bills (cough cough, student loans). What I decided to do was to subtract the student loan amount that I pay yearly from my calculation. This would hypothetically change the calculation as follows:

1st the yearly amount that is spent on student loans (400 *12 = 4800). This is just the monthly payments multiplied by 12

2nd the yearly amount minus student loans: (48000-4800)0.25= 10800, 10800 is the yearly amount that you spend on house payments.

3rd the monthly amount: 10800/12 = 900. The total monthly amount you will want to spent.

As you can see this lowered the amount slightly! In the end of the day it is really up to you and what you feel comfortably with. Growing up in the #recession, and seeing so many people go through #foreclosure I really wanted to make sure that I was making the best decision for me. I took the time to #play around with the #numbers and found the price range that worked for me. I also really didn't look at the total home price range until I figured out the monthly amount. #Remember, the monthly mortgage payment will include things like interest, escrow, PMI etc. all these things are variable and will depend on the interest rates So once you figure out the monthly amount you can figure out the rest by looking at mortgage options and talking to your mortgage broker.

Let me know if you found this useful!

Thanks:)