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What percentage of your salary should you spend or housing, car note, ...
- Thread starter PICK3
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Matthew_31
New member
Oooh, interesting topic.
You can live year to year, putting a bit away some months, living beyond your means another, and end up in a financial crisis by the time you are 50. However, no one needs live like this.
I used to work full-time (before i went back to university) and had after 6 years perhaps 8,000 in fixed assets to show for it? Now, while working full-time only during the summers and part-time during the schoolyear own a condo, a vehicle and 20k worth of liquid assets.
Half the battle is earning the money. The other half which people ignore is keeping it. This is where estate planning comes in handy.
I have my CSC, my CFA and im finishing my LLB with a specialization in tax law (if you prefer pedigree before such discussions).
Purchase the lowest price home you will be comfortable in. Houses generally only become good investments when you are not paying interest on a mortgage. For example, many people will curse out renters as being careless with their money.
Person 1: 25 year mortgage on a $400,000 house. If paid on time with no penalties, you will pay 400,000 to the principal and 1.2 million to interest.
Person 2: Rents for 25 years at $2000 a month. Your payout? $600,000.
Strict market averages across the board and your 1 million dollars saved will provide you with more equity than the home will. The house will appreciate to around 3-4 million dollars, while the investment income will leave you at around 5-6 million.
Additionally, housing upkeep + utilities + property taxes will eat away at your profit.
99% of cars depreciate...they are rarely investments.
You can live year to year, putting a bit away some months, living beyond your means another, and end up in a financial crisis by the time you are 50. However, no one needs live like this.
I used to work full-time (before i went back to university) and had after 6 years perhaps 8,000 in fixed assets to show for it? Now, while working full-time only during the summers and part-time during the schoolyear own a condo, a vehicle and 20k worth of liquid assets.
Half the battle is earning the money. The other half which people ignore is keeping it. This is where estate planning comes in handy.
I have my CSC, my CFA and im finishing my LLB with a specialization in tax law (if you prefer pedigree before such discussions).
Purchase the lowest price home you will be comfortable in. Houses generally only become good investments when you are not paying interest on a mortgage. For example, many people will curse out renters as being careless with their money.
Person 1: 25 year mortgage on a $400,000 house. If paid on time with no penalties, you will pay 400,000 to the principal and 1.2 million to interest.
Person 2: Rents for 25 years at $2000 a month. Your payout? $600,000.
Strict market averages across the board and your 1 million dollars saved will provide you with more equity than the home will. The house will appreciate to around 3-4 million dollars, while the investment income will leave you at around 5-6 million.
Additionally, housing upkeep + utilities + property taxes will eat away at your profit.
99% of cars depreciate...they are rarely investments.
DieselGunz
New member
PICK3 said:
my point exactly i work hard and like to enjoy the fruits of my labor
Matthew_31
New member
How much is a good portion is the question. If you are working off of a matching 401k exclusively, that might be quite low.
Also, the capital gains from a 401k get truncated because it is taxed as employment income. Why would I want (past the matching portion) want my investment income to be taxed at high marginal employment rates when I can have it taxed at capital gain rates outside the 401k?
It takes 3 years of prudent financial planning to get to a point that you are buying your car outright (instead of financing it). Leasing is horrible, it is just a fancy way of charging you interest upfront while having nothing to show for it. But at least if you can have 100k in liquid capital, you can lease a fancy vehicle for free every year.
Once someone has 100k in liquid capital earning them labour free money every year, they rarely turn back. It provides you with flexibility (half the battle) and this encourages knowledge of different investment options. It is a spiral towards financial independence.
Aim to save as much money as you can. Set a budget that is as tight as you can possibly make it, and if you miss it a couple times a year, big deal.
Also, the capital gains from a 401k get truncated because it is taxed as employment income. Why would I want (past the matching portion) want my investment income to be taxed at high marginal employment rates when I can have it taxed at capital gain rates outside the 401k?
It takes 3 years of prudent financial planning to get to a point that you are buying your car outright (instead of financing it). Leasing is horrible, it is just a fancy way of charging you interest upfront while having nothing to show for it. But at least if you can have 100k in liquid capital, you can lease a fancy vehicle for free every year.
Once someone has 100k in liquid capital earning them labour free money every year, they rarely turn back. It provides you with flexibility (half the battle) and this encourages knowledge of different investment options. It is a spiral towards financial independence.
Aim to save as much money as you can. Set a budget that is as tight as you can possibly make it, and if you miss it a couple times a year, big deal.
WilliamBailey
New member
House should be 3x your Salary
Car should be 1/2-2/3 your Salary
Car should be 1/2-2/3 your Salary
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