It's a drag to try to date as a young adult living with mom or dad. It isn't much better if you have a roommate. Life is so much better if you have a space that is truly yours. But how do you make that happen?
1) Run The Numbers
Start by finding an online mortgage calculator and playing with it a bit. See what kind of impact different percentages of down payments have on the mortgage payment. Look at homes of the type you aspire to own and get a feel for roughly how much they cost.
This exercise will get you some idea of how much you will need to have on hand for making a down payment. Perhaps you need to save up, or perhaps you can sell some assets or get down payment assistance from family. Not everyone has the same circumstances. You know …show more content…
One is typically referred to as the GDS Ratio (Gross Debt Service Ratio) and the other is typically called the TDS Ratio (Total Debt Service Ratio).
For the GDS Ratio, they add up all the expenses of home ownership and compare it to your income. The guideline here is that it should not exceed 32 percent. For the TDS Ratio, they add up all debt payments and compare it to your income. The guideline for this is that it should not exceed 40 percent of your income.
In laymen's terms, the carrying costs of home ownership should not exceed 32 percent of your budget. Additionally, no more than 40 percent of your overall budget should go towards debt. In other words, before you purchase a home, your monthly debt payments should be no more than 8 percent of your income. If it is more than that, you need to work on this.
The good news is those are only guidelines. They are not firm limits. The final decision can be influenced by other factors, such an excellent credit score or a larger down payment.
3) Budget and Save …show more content…
However, budgeting is not just a math problem. It is very much a human problem. It almost never works to just arbitrarily cut expenses across the board.
4) The Right Way to Cut Costs
It will help if you think about the underlying need that a particular expense is meeting. For example, eating at a restaurant is may not be just about getting food into your belly. It can be about many other things as well.
It can be about a pleasurable dining experience, socializing with friends, convenience or simply that you hate to cook. Although home cooked meals will be cheaper, if you do not think about the myriad different purposes served by going to this particular restaurant on this type of occasion, you may find that simply deciding to cook from scratch will flop.
So, don't make promises to yourself that you cannot keep. Instead, think more deeply about what is going on. Perhaps going to this restaurant on this occasion matters, but perhaps you can spend less while there. Ordering water instead of a cola or an alcoholic beverage can help cut costs. Skipping desert is another way to help cut
1) Run The Numbers
Start by finding an online mortgage calculator and playing with it a bit. See what kind of impact different percentages of down payments have on the mortgage payment. Look at homes of the type you aspire to own and get a feel for roughly how much they cost.
This exercise will get you some idea of how much you will need to have on hand for making a down payment. Perhaps you need to save up, or perhaps you can sell some assets or get down payment assistance from family. Not everyone has the same circumstances. You know …show more content…
One is typically referred to as the GDS Ratio (Gross Debt Service Ratio) and the other is typically called the TDS Ratio (Total Debt Service Ratio).
For the GDS Ratio, they add up all the expenses of home ownership and compare it to your income. The guideline here is that it should not exceed 32 percent. For the TDS Ratio, they add up all debt payments and compare it to your income. The guideline for this is that it should not exceed 40 percent of your income.
In laymen's terms, the carrying costs of home ownership should not exceed 32 percent of your budget. Additionally, no more than 40 percent of your overall budget should go towards debt. In other words, before you purchase a home, your monthly debt payments should be no more than 8 percent of your income. If it is more than that, you need to work on this.
The good news is those are only guidelines. They are not firm limits. The final decision can be influenced by other factors, such an excellent credit score or a larger down payment.
3) Budget and Save …show more content…
However, budgeting is not just a math problem. It is very much a human problem. It almost never works to just arbitrarily cut expenses across the board.
4) The Right Way to Cut Costs
It will help if you think about the underlying need that a particular expense is meeting. For example, eating at a restaurant is may not be just about getting food into your belly. It can be about many other things as well.
It can be about a pleasurable dining experience, socializing with friends, convenience or simply that you hate to cook. Although home cooked meals will be cheaper, if you do not think about the myriad different purposes served by going to this particular restaurant on this type of occasion, you may find that simply deciding to cook from scratch will flop.
So, don't make promises to yourself that you cannot keep. Instead, think more deeply about what is going on. Perhaps going to this restaurant on this occasion matters, but perhaps you can spend less while there. Ordering water instead of a cola or an alcoholic beverage can help cut costs. Skipping desert is another way to help cut