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October 21, 2005

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I am a big fan of MND and agree with most of the suggestions in the book, but when it comes to real estate there are certain parts of this country that the 2x annual salaries just doesn't work. I agree that strecthing too far is never a good idea, but areas like the Northeast provide very little opportunity to follow the 2x rule.

I agree w/ gc on this one. My starting salary will not get us into home that cheap (and we're going to Texas) - but it will still follow the 15-year fixed mortgage payment that is no more than 25% of my take-home rule. And even that rule is somewhat stingy when it comes to the coasts.

I agree...I am living in NY, about an hour north of the city and it cannot be done. 3 BR raised ranches are over $300,000 here (I just sold mine for that). I know that it is kind of ridiculous, but that is what it is here.

-Rick

All --

Stay posted over the next few days. I have some thoughts for those of you living in high-priced markets.

FMF

I make a pretty darned good living but would absolutely not live in a house that was only worth twice my salary. The only thing that I could get in my area would be a run down single wide in a mobile park.

I love the MND book but also don't quite agree with that principle. That being said, there is no question that people are leveraging themselves waaaaay to much to get in to houses these days. I pity all the folks who have interest only variable rate mortgages. The last couple years have been ideal for locking in a low rate. There doesn't seem to be anywhere to go but up from here.
Hazzard
http://www.everybodylovesyourmoney.com

Maybe it's the fact that they're millionaires, so their annual income is probably pretty high. Perhaps the authors are just trying to make the point that they could live in a much larger house if they were to live in the same house (ratio-wise) of their poorer counterparts.

Millionaire makes $200,000 per year, but only lives in a $350,000 home.

Non-Millionaire makes $40,000 per year, and lives in a $200,000 home.

So it's not saying that what the poor people are doing is not acceptable, it's simply saying that what the millionaires are doing is commendable.

Just my thoughts after thinking about it a bit more.

Digesting this advice...Interesting perspective. My perspective has been the rent versus buy perspective of cash out for housing but I like the low/no debt equation of the discussion and I have not used the twice income for purchase of a house. The simplicity of rule is fantastic and easy to follow and I can see some challanges when the median price home was high although falling in many areas with the bubble in real estate.

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