insert teeth-gnashing here

[vsp]

Originally posted by glatt
Remember that financial advice from strangers on the internet is the best advice you can get.

Well, I'll look at it from a few perspectives...

According to the typical 28/36 rule:

~68K * .28 / 12 = $1536 per month front-end (% of gross).
~68K * .36 / 12 = $2040 - $225 (car payment) = $1815 per month back-end (debt-to-income).

We have no credit card debt or outstanding loans at all; at present, apart from typical utilities and insurance, our only month-to-month bill is my car payment, $225 a month. However, that's right now, and I have to anticipate other debts down the road that'll affect this. My wife's car is paid for, for instance, but if it wears out in a couple of years we'll have to add a second car payment in, and (again) there's the what-if-we-have-kids factor.

According to the "2.5x" income rule, I should be aiming at something around 170K. Rolling that through Freddie Mac's calculator comes out with ($959 principal/interest) + ($217 taxes/insurance) + ($89 PMI) = $1265 per month, which would be within my anticipated target range. The trick is finding a single-family home at 170K that isn't in a bullets-flying-overhead neighborhood.

Now, I don't know what your wife's portion of that is, and how long she will be out of the workforce raising kids. But you are in much better shape than most people.

Oh, I agree that things could be a lot worse... but I also have to account for the fact that they could get worse than they are now. My income is about double what my wife makes, maybe more like 2.2:1, so any change of employment for me would be more critical than for her... but kids mean that debt goes up dramatically and her working hours drop off at least temporarily. I'd just as soon not lose the house via reproduction. Likewise, if I change jobs (voluntarily or not), I expect to take a hit.

One place where I'll gladly admit that I'm an amateur is the repercussions on my 1040 form. It's one thing to speculate on how much interest (or other things) would be deductable, but it's another to sit down and actually work out what the increase in my refund might be.