Nobody believes me, but when we moved from New York City to Madison in 2013, our housing costs went up. A lot. The reasons for that had less to do with Madison—though the region does have a higher-than-average cost of living—and more to do with the choices we made in New York City. Here’s a good rule of thumb for how much you should spend on line items in your budget: the more critical the expense is to your overall well-being, the lower the risk should be to cover that cost.
For housing—super important given my preference for living, umm, indoors—that translates to something I can afford even in lean financial times. I don’t want my housing cost to be a “stretch”. I don’t want the ability to stay in my home to ever feel precarious. I don’t want my living situation dependent on every adult working all the time. Freedom, remember? Better that we can cover our housing cost with one adult working, say, half the time. We can draw straws as to which adult that is.
Of course, your housing cost is not a number in a vacuum. The “ease” of covering your rent or mortgage (and property taxes) is related to how stable and secure your income is, how much your rent or mortgage is likely to fluctuate, how quickly you could change your housing situation, and of course, your Net Worth, the savings you can draw upon as needed.
This is not to say that you should always live in the cheapest apartment in the sketchiest neighborhood … though I like to think that I could if I had to (husband: “you could not”). Part of being a grown-up is living in a grown-up home, a place that has, you know, “decor”. Another part of being a grown-up? Knowing you can’t eat decor.
Family lore has it that my husband bought our house without my seeing it.
True!
Now before you go all:
… it’s OK. I may not be able to live in the cheapest apartment in the sketchiest neighborhood, but I could definitely live in a sketchier one than he could. When we were house hunting, his (very long) list of must-haves included things such as mature trees and being able to see the entrance where the kids walk into school. Me? I just wanted a place we could comfortably afford even in the worst-case scenario … and maybe a covered garage. So when he saw this house and it had a completely separate unit in the basement—hello, potential rental income!—he knew his wife well enough to snap. It. Up.
Now we live in a lovely neighborhood with lots of mature trees, my kids’ school is across the street … and I can blog without a paywall. Hahahaha! A paywall … good one, Grace!
As you can imagine, I hate those online calculators that tell you “How Much House You Can Afford!” The underlying assumption with a lot of these tools is that 1) everyone should spend the same percentage of their income on housing and 2) you want as much house as you can get.
False!
Look, I have a few “as much as I can afford” items in my budget—haircuts, for instance. But if something happens and I can’t fly to NYC and see Spencer every three months, I can grit my teeth and—*sob*—cut back. You can “cut back” on housing—commonly called “moving”—but it’s a bit more disruptive.