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How Much House Can I Afford?



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Karin is with us in Indianapolis hi

Karin welcome to the Dave Ramsey show hi

thank you for what you do you're truly

an inspiration Dave well I'm honored how

can I help

I'm trying to prepare for life after

divorce and I'm wondering if I can

afford to stay in the house or if I need

to consider renting an apartment and how

much I can afford for rent

how much is your house payment that you

might stay with 1250 what is your take

home pay my growth is fifty take home as

probably 38 so what I'm not sure okay so

that's about one-third of your take-home

pay would be the house payment right

about 33 percent that's not the end of

the world especially I'm guessing you're

re-entering the job market now I'm

working you're working but I mean yeah

I'm gonna reentered because of this

divorce no I've been working oh okay

what do you do accounting this is the

accounting segment okay so the your

trajectory on your income going up are

you pretty well stable stable okay

here's the thing if your payment is much

more than 1/4 of your take-home pay it

doesn't leave much wiggle room in your

budget to do other things like pay cash

for cars in the future pay cash for

Christmas vacations and invest for your

retirement right and people tend to end

up borrowing for some of those things

and going the wrong direction if they

end up house poor so this is a little

over what I want it to be do you have

children no no is there any reason you

want this house not really no okay good

then I'd probably drop it and get

something a little cheaper and rent a

little while until you emotionally

finish going through this mess

yeah so what would you consider a

thousand would be like the max yeah yeah

okay

for a little while and then let's stop

and look and go okay because the point

is you can afford more than that and you

can qualify for a mortgage for a lot

more than that okay but the point is you

end up giving all your money to the

house and you know what I mean when I

say house poor yeah and I don't want

that yeah you do accounting and so

there's just no disposable income

there's no wiggle room no margin in your

budget and by being in the ends up that

the math ends up putting you against the

wall with a gun and hand holding you

hostage and you and you get you know car

breaks down then you got a problem and

you can't do anything everything's tight

because of the stupid house so I'm

letting that house go with the divorce

let's sell it and take your equity out

of your portion out of it and yeah

that's what I would do