How Much House Can I Afford?

By Trent December 21, 2013

Another common email I receive from readers concerns whether or not the sender can afford a particular house – or how much house they can afford. The stories vary a lot in detail – some people have a down payment, while others do not, and some people have other debts, while others are debt free.
Regardless of the situation, though, I give these people the same advice. Your total debt payment for a given month should not exceed 30% of your take-home pay.
In other words, if you bring home $4,000 per month, your total debt payments for that month shouldn’t exceed $1,200.
Let’s walk through a few of the specifics here.

This is take home pay, not gross pay. The only pre-tax number you might consider including is your 401(k) contributions, but I wouldn’t include those. I would never include taxes or other costs when thinking about this. Why? In the end, this is all about budgeting, and having 30% of your monthly income go straight into debt payments is a pretty hefty chunk of your money. This leaves the rest to cover utilities, food, household supplies, and other living expenses.

The percentage should be pretty close to that even if you’re earning a lot of money. Again, why? This is all about downside. You don’t want to have to sell your home in a panic if you lose your job or some other major lifestyle change occurs. You want to keep yourself afloat no matter where your ship goes.
Sticking with this policy usually implies a few things.

First, you’re going to be able to afford a bigger home if you’re debt free. If you’re still paying hundreds per month in student loans, the burdens of home ownership are going to be intense. If you want a home in the next several years, focus hard on freeing yourself from debt.

Second, you’re usually better off if you buy a smaller home rather than a larger one. Once you get beyond a certain point of home size, the excess space mostly just serves as storage for your excess stuff – mostly stuff you don’t really need.

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Definition Of Wealth

Wealth 

(Enough Money and valuable resources, to sustain you without working )

Wealth calculation

Cost of Living -Housing Costs, Utility, Insurance, Transportation Costs, Insurance,Tuition, Health, Food.

Liquid Assets- Something that can be quickly converted into cash quickly

Assets- A resource that you hold or maintain that has some reciprocal value.

Debt- Outstanding principal financial obligations to a debtor that is still owed to a debtor.


(Current Cost Of living)*5 Years  + Current Liquid Assets + Assets-Debt

November unemployment data

Overall, the National unemployment rate decreased to 7.0%, and the Veteran unemployment rate decreased to 6.7%.  The Veteran unemployment rate is slightly higher than November of last year but lower than the November 2011 rate of 7.4%.

Leo the Homeless Coder Finished His App, and You Can Download It Right Now

By Caroline Moss 17 hours ago

Leo Grand considers himself lucky when the doorman at the luxury apartment building nearby lets him charge his Samsung Chromebook without issue.

View gallery

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Leo's app — Trees for Cars — just launched this morning, and the new coder needs to make sure his computer is ready to go for the day. The guys in the apartment building have been a great help; four months ago when Grand started this venture, it was warm outside. That, unfortunately, is no longer the case.

"Trees for Cars" is a mobile application that aims to save the environment by helping users carpool to their destinations, and Grand programmed the entire thing himself from the streets of Manhattan with just 16 weeks of coding lessons. It also provides information on how much CO2 the user is saving with each ride which further encourages environmental awareness, creating within the app a healthy competition amongst users to save the most CO2.

Grand was approached by a young programmer named Patrick McConlogue in mid-August with a choice: Take $100 or take an opportunity to learn how to code. Grand, who had been homeless since 2011 after he lost his job at MetLife and was priced out of his neighborhood when a high-rise went up on the next block, didn't hesitate.

He wanted to learn to code.

The two men met every weekday where Leo sleeps outside for an hour each morning. McConlogue taught Grand how to program using three used books from Amazon and a refurbished Chromebook McConlogue purchased for Grand online.

Business Insider spent a lot of time talking to the men back in the fall, and we even visited a coding class on what would be the coldest day of September. Grand talked a lot about his upcoming app (which, at the time, remained a secret), and how excited he was for its launch. There were naysayers who said this day would never come, but Grand, McConlogue, and thousands of people following their journey on Facebook had kept a positive outlook.

Now the app has arrived to the Apple Store and the Play Store for $.99.

"Trees for Cars is a great way to build relationships, strengthen communities, help each-other financially and energy wise, all under the umbrella of saving the environment," Grand said in an
 official statement about the app.

Here is his Google apps page

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14 Services For The Super Rich You Never Knew Existed

by Business Insider Jul 6th 2013 5:00AM

Alamy

By Megan Willett

The rich and famous really have it made.
Not only do they own expensive homes and cars, but they also pay for some amazing perks that make their day-to-day lives that much simpler.
We found a recent /r/AskReddit thread which asked about the craziest services and products for the 1% that most of us didn't even know existed - some of the responses were amazing.
Turns out there are a lot more services for the wealthy than chauffeurs and personal chefs. Here were some of our favorites:


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http://www.dailyfinance.com/2013/07/06/services-super-rich-reddit/?utm_source=zergnet.com&utm_medium=referral&utm_campaign=zergnet_105050#!fullscreen&slide=976227

My savings plan

My personal Savings plan

Step 1

Save cash and food as a survival fund.

Have a stash for emergency of at least $200 or more and stack up on food so you don't have to buy fast food as much.

Step 2

 Get money orders send to a Growth savings account that has no debit card or instant access to funds 10% of current earnings no less than $10.


The reason I use money orders  because obvious the chance of them bouncing is slim to none, and not having access to your account gives you time to think about if you really want or need to take out money.

 After you are discipline  enough automate your savings account to take money out your account every pay period.

That's why its called a growth fund you don't want to stunt your growth.

Your growth fund should be looked at as your wealth fund you want it to grow till you're wealthy basically $100,000- $1,000,000 +

Warren Buffett - The World's Greatest Money Maker .

Mapping The Wealth Of U.S. ZIP Codes

Mapping The Wealth Of U.S. ZIP Codes Shows The Haves Hiding From The Have-Nots

This interactive graphic, which lets you see the economic stats for every ZIP code in the country, shows the emergence of "Super ZIPs"--communities where nearly everyone is wealthy.

The Harvard philosopher Michael Sandel calls it the “skyboxification of American life"--the way in which the wealthy and not-so-wealthy are living further and further apart. In the past, American neighborhoods were more mixed, housing people of very different backgrounds and incomes. Nowadays, many places are becoming homogenized.
The Washington Post recently showed how high-earners are clustering into "Super ZIPs" where median household incomes are more than $120,000, and where seven in 10 adults have college degrees. Its analysis showed New York City has the most of such areas, but that the D.C metro area has the largest cluster of contiguous Super ZIPs--an area measuring more than 700 square miles in total.

From the piece by Carol Morello and Ted Mellnik:

...many Washington neighborhoods are becoming more economically homogenous as longtime homeowners move out and increasing housing prices prevent the less affluent from moving in. The eventual result, in many cases, is a Super ZIP. And because the contiguous Super ZIPs are surrounded by areas that are almost as well-off, it’s possible to live in a Super ZIP and rarely encounter others without college degrees or professional jobs.

Other cities have large continuous Super ZIP areas, starting with east Manhattan, San Jose, Boston, Oakland, Bridgeport, Newark, Chicago, north of Los Angeles, and on Long Island. These are places in danger of "compartmentalizing [themselves] into clusters of people with different backgrounds and world views" and that are "isolating well-to-do Americans from the problems of the poor and the working poor."
Morello and Mellnik point to a paper by academics Sean Reardon and Kendra Bischoff showing how middle class places are disappearing. Four decades ago, 65% of families lived in a middle-income neighborhood. In 2009, only 42% did. They write:

Although the wealthiest Americans have always lived in their own islands of privilege, sociologists and demographers say the degree to which today’s professional class resides in a world apart is a departure from earlier generations. People of widely different incomes and professions commonly lived close enough that they mingled at stores, sports arenas and school. In an era in which women had fewer educational and professional opportunities, lawyers married secretaries and doctors married nurses. Now, lawyers and doctors marry each other.

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5 Surprising Things You Didn't Know About the Dollar Store

5 Surprising Things You Didn't Know About the Dollar Store

By Meg Favreau | U.S.News & World Report LP – 9 hours ago

The dollar store is a great place to shop for deals...right? Well, sometimes. You might be surprised to learn that it's not always the cheapest place to shop. Read on to learn more about unexpected dollar store facts.

1. A dollar store shopping spree can satisfy your shopping craving.

Thanks to the way our brains work, a dollar store shopping spree can satisfy our shopping craving even better than shopping at a more expensive store. "Dollar stores are a great option for shopping sprees because of the way the mind translates purchases into pleasures," says Jeremy Shapiro, an adjunct professor at Case Western Reserve University's Department of Psychological Sciences. "We get a little kick from each purchase we make, and the size of the purchase makes less difference than the number of buys."

As he explains, we get more enjoyment from a bunch of small purchases than from one big buy. So the next time you want to splurge, try doing it by heading to the dollar store.

2. Not everything at the dollar store is cheaper.

Earlier this year, a Fox reporter in Idaho found that out of 10 items she bought at the Dollar Tree, eight of them were actually cheaper at the local grocery store. One way to avoid this is to keep a running list of stores in your area that have the best prices for products you use regularly. That way, if you see a product you use for sale, you can quickly and easily know whether or not what you see is actually a good deal.

Another trick is to pay attention to sizes and the price per ounce - not the price overall. Often, dollar stores will sell smaller sizes of products, so the cost appears to be less, but if you look at the price per ounce, you might discover that it's actually less expensive to buy a bigger size at another store.

3. You can get brand names at dollar stores.

If you haven't been in a dollar store recently, you might be surprised - the shelves aren't just stocked with off-brand Irish summer soap. Rather, many dollar stores have started carrying name-brand items. But be wary - these name-brand products are often the products that you can find cheaper at other stores.

4. Off-brand products could be just as good as the name brand.

Think that you're above advertising and product packaging? Well, you probably aren't. Shapiro says that even wine experts - people who make their living tasting differences between wines - are influenced by how products are presented. "Blind taste tests have found that both ordinary people and wine experts like what they drink much more when they see it poured from an impressive bottle than a cheap-looking container," he says, "and something similar probably happens with the items we buy from different types of stores."

If you're shopping for food, cleaning supplies or health and beauty items, a quick way to see if you're influenced by your perception of products is to compare the ingredients between a name-brand and generic product. If a name-brand and a generic glass cleaner have the same ingredients, for example, you should be good buying the cheaper generic.

5. A new dollar store opens every six hours.

Many people thought that after the Great Recession started to taper off, the popularity of dollar stores would taper as well. But they're still going strong. In fact, according to the brokerage firm Sterne, Agee & Leach Inc., so many new dollar stores opened as of July 2013, that it equaled a new store every six hours.

Best Penny Stock Advice by Warren Buffett

Nine Formulas For Wealth Building

Nine Formulas For Wealth Building

This story appears in the December 16, 2013 issue of Forbes. 

If you want to retire in style, you’d better know the numbers. We have some formulas that will provide them.

The objective here is to steer you to wiser investments and give you some insights about what will happen to your assets and liabilities over time. The formulas are not complicated. They all fit on the back of an envelope. Some are adapted from experts. Some we concocted.

With these rules of thumb, you can answer questions like these: Do I have enough in my 401(k)? Will a mortgage refi pay off? What will it cost to send my kids to college? When is a closed-end fund a bargain?

1. What Can My Portfolio Earn?

R = 5*S + 2*B – E

Utterly unpredictable as markets are from month to month, their returns over long periods (meaning: decades) are not a great mystery.

In this equation, R states, in percentage points, the expected real return– return, that is, above and beyond inflation. S is the fraction of your portfolio invested in stocks, B the fraction in bonds. E is the percentage you lose every year to expenses.

Example: You have the customary 60/40 mix of stocks and bonds, and the funds you are invested in eat up 0.5% a year in fees. Then 5*0.6 + 2*0.4-0.5 = 3.3.

Now, 3.3% a year is a decent return, but it may be a bit less than you were hoping for. It’s enough to turn the dollar you put into a 401(k) at age 25 into $4.04 at age 68. That is, scrimping today will enable you to buy four times as much stuff in retirement.

The formula doesn’t allow for taxes, which will come out of your retirement money at some point– at the back end if you have a conventional 401(k) or up front if you opt for a Roth account.

Is a 5% real return on stocks realistic? They’ve done better over the past century, but they are very expensive today. John Bogle, the Vanguard founder and wise man of investing, is telling people to expect a 7% nominal return less maybe 2% for inflation, which nets to 5% real.

Bonds doing 2%? That takes some optimism, and a willingness to invest in riskier corporate debt. Treasury bonds are safer, but the 20-year, inflation-protected variety yields only 1.3%.

Take four directives from the formula:

—If you are young and can stand the volatility, aim for a stock-heavy portfolio.

— Don’t have cash. It earns nothing beyond inflation.

— If you see a projection about your retirement or about what some financial product will do that assumes a return like 8%, be wary. The fellow doing the projecting probably didn’t allow for inflation or expenses.

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10 Reasons You'll Never Be Rich

By Cameron Huddleston | Kiplinger – Wed, Nov 27, 2013 12:31 PM EST

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  Getty Images - Thinkstock

You don't have to inherit money, win the lottery, or even be the next Bill Gates or Warren Buffett to become financially secure. With a little bit of knowledge and a lot of hard work and discipline, almost anyone can accumulate sufficient wealth -- and perhaps even great wealth -- to enjoy the creature comforts of life.

But how do you get ahead if you're living paycheck to paycheck? The fact is, no matter how much you earn you could be creating your own barriers to financial success without even knowing it. Here are ten things you might be doing that are preventing you from achieving prosperity. Change your ways and you could find yourself well on the way down the road to riches.
You Spend Too Much
Plenty of Americans live beyond their means but don't even realize it. A 2012 Country Financial survey found that more than one-half of respondents (52%) said their monthly spending exceeded their income at least a few months a year. Yet only 9% of respondents said their lifestyle was more than they could afford. Of the 52% who routinely overspend, 36% finance the shortfall by dipping into savings; 22% use credit cards.
Blowing your entire paycheck (and then some) each month isn't an ingredient in the recipe for financial success. Neither is draining your savings or running up card balances. To rein in spending, start by tracking where the money goes every month. Try to zero in on nonessential areas where you can cut back. Then create a realistic budget that ensures you have enough to pay the bills as well as enough for contributions to such things as a retirement account and a rainy-day fund. Our household budget worksheet or an online budgeting site can help.
See Also: 9 Ways to Get Rich Quicker
You Save Too Little
If you're like most folks, your savings habits could use some improvement. The personal savings rate in the U.S. is just 4.9% of disposable income, down from a high of 14.6% in 1975. Only about one-half of Americans (54%) say they have a savings plan in place to meet specific goals, according to a 2013 survey commissioned by America Saves, a group that advocates for better saving habits.
Saving needs to be a priority in order to build wealth. Begin with an emergency fund that can be tapped in the event of an illness, job loss or other unexpected calamity. A 2012 survey by the Financial Industry Regulatory Authority found that 56% of individuals say they have not set aside even three months' worth of income to handle financial emergencies. Once your emergency fund is well under way, you can divert small amounts toward other goals, such as buying a home or paying for college. These six strategies can help you save more, no matter your income.
More: 10 Best Ways to Earn More Interest on Your Savings
You Carry Too Much Debt

Americans have $846.9 billion in credit card debt alone. That's $7,050 per household, according to NerdWallet.com, a Web site that analyzes financial products and data. If you're only making minimum monthly payments on $7,050, it'll take 28 years and cost you $10,663 in interest before you're debt-free, assuming a 15% interest rate. And that only holds true if you don't make any additional charges.

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How An Exploding Freelance Economy Will Drive Change In 2014

How An Exploding Freelance Economy Will Drive Change In 2014

The following guest post is by Jeff Wald, cofounder, COO and CFO of WorkMarket, a software platform for businesses to find, manage and grow their freelance workforce. You can follow Jeff on Twitter at @jeffreywald.

Student laptop (Photo credit: Wikipedia)

In 2013, the freelance economy continued to dominate the discussion about the way we work. One in three Americans (roughly 42 million) are estimated to be freelancers. By 2020, freelancers are expected to make up 50% of the full time workforce. Independent work is becoming more common across all generations and the vast majority plan to remain independent in the coming year.

The freelance economy is exploding at exactly the same moment that companies are undergoing a major shift in how they hire. Talent is moving from a fixed cost (and one that’s historically been one of the largest across a business) to a variable cost, with companies staffing up and down as needed. Businesses have the ability to quickly on-board hundreds or thousands of freelance workers– provided they have the tools and systems in place to manage them. The booming online staffing industry is also accelerating the growth of the freelance economy. This $1 billion industry provides a valuable alternative to companies that are leveraging a contingent workforce. In fact, the Staffing Industry Association saw the online staffing market grow 60% last year, and we see no signs of that growth slowing down in 2014 and beyond.

How else can we expect the freelance economy to reshape the workforce in 2014? Here are a few of my predictions for the year to come:

The Enterprise Emerges. Small and medium sized businesses have been taking the lead on the freelancer boom — until now.  In 2014, we can expect to see enterprises entering and playing a more active role in the freelance economy, which will bring a new degree of formality to the landscape.  For example, small to mid-size businesses typically work with freelancers on a one-off basis, and thus, often customize the terms of the arrangement as they go. This is not the case for bigger companies who already have established processes and procedures. For freelancers, this will potentially mean longer payment terms and stringent requirements around insurance, certifications, background checks and legal agreements. It will also mean greater earnings as enterprises typically pay higher wages and send more work to freelancers. At Work Market, we see the average enterprise send a freelancer 30+ assignments per year, whereas a small business sends three.

Work Goes Mobile. When it comes to the freelance economy, mobile equals efficiency. As more and more workers carry mobile devices, we can expect to see everything from a decrease in the time needed to locate an available freelancer to an increase in communication between a business and a freelancers. For example, mobile devices will enable freelancers to start receiving push notifications of location based work, enabling freelancers to more quickly move from project to project. Other benefits include the ability for on-site workers to check in, obtain digital signatures, take photos of completed work, and close out work while on site using mobile devices. We will also see an increase in mobile analytics platforms for freelancers, which will give businesses a greater ability to track and analyze the work of their freelancer workforce.

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