1. Always pay off the credit card bill every month. Completely.
2. Mortgage payment < 40% of take home salary.
3. Buy the cheapest new car you can afford and run it as long as possible.
4. Never buy branded clothing unless on sale.
5. Maintenance costs less than replacement.
In summary be a cheapskate and ignore the neigbours with expensive doodads.
Every time you don't drive the car, you play the maintenance slot machine one less time, and the accumulated effect of lower maintenance costs and lower gas is non-trivial.
The other thing I would add is to be honest with yourself, add up the car costs, rego, gas, tires, the maintenance schedule (you have a schedule even if you don't follow it). Your $20,000 dollar car probably costing you thousands a year.
He bought his vehicle new and put 144k km on it over the course of 22 years.
Of course that was only possible because there was a public transport network in place.
I, after an initial period of driving long distances, sort of followed in his footsteps via remote work and getting groceries delivered - the latter feels like cheating though, since that's just someone else driving instead.
In any case I can't recommend this enough. Cars are amazingly useful, but when used daily costs pile up quickly.
Driving to work actually costs you something more like ~$30 in fuel and parking and ~$25 in owning the car ($55). Biking to work costs you $0 in fuel and parking and ~$25 in owning the car that it sitting in your garage ($25).
Fuel is a small percentage of the cost in owning a car, and even the most insane parking costs get anywhere near car ownership costs.
For instance, I just fixed a 2c plastic clip that pretty much made my microwave unusable by virtue of the door being un-openable. In order to do so, I had to have my fingers about 3 inches away from a bare wire transformer which near totally obstructs what should be a very simple fix.
Plenty scary and dangerous enough for me to have to call the manufacturer and find a certified local repairer...
Friend had an older washer with a giant "timer dial" that was cheap to fix - the new dial cost like $50 and was simple to replace. A similar washer that I had had a single plastic part that held the dial in place break, and the only way to fix it was either bolt some metal strapping around it (which I did) or buy a new faceplate at $350 (+ shipping) - that's half the cost of a SpeedQueen (which I eventually bought when the pump crapped out. The SpeedQueens don't change year to year and they're basically laundromat machines so they're very repairable.
If you do decide to replace an appliance, there are people that will take away the old one for free, because they will repair and resell if possible.
Over time this became "spend 30% on housing" which, if you think about it, is kinda insane. It's obviously a rule of thumb that doesn't fit directly to everyone (should Musk spend $720 million a year on housing? Should you buy a new house every time you get a raise/change jobs?).
It's like the "renting is throwing away money" - it's a marketing tagline that has become gospel truth somehow. There are times for renting and times for buying and each situation should be evaluated to the best of your ability with the knowledge you have.
These are not the same at all.
> 25% should be the goal
I think 70% should be the goal - why? Because I pulled it out of my ass. Do you have a sound financial explanation for this benchmark, because it sounds like arbitrary dick sizing.
60% of income on a mortgage in a relatively stable area without insane property taxes is likely a very prudent allocation of income, since you both have a good investment and a place to live. Spending 60% or even more of income on a mortgage may well be better than 25% on rent.
Another thing, 25% of income is very different at $30k then it is at $300k. This is something the budding personal finance advisor should understand.
> then you need roommates
Is that what you’re going to tell people in their 30s with kids?
To meet some arbitrary 25% income metric - no thanks.
Notice you said nothing about “afford your bills” previously - but you have some very unsubstantiated definition for afford.
The idea that one should automatically consider roommates if they can’t keep housing below 25% of income is asinine.
Meanwhile still waiting for the derivation of “25%” in the first place.
Again with that clueless equivocation.
> 40-50k, but if they are spending more than 25-30% on rent/mortgage they will have a real hard time making utilities, food, car, insurance, etc work.
And yet millions of families in the US alone are literally making this work. So that’s nonsense. I have literally lived this. There is no goddamn reason spending more than 50% of your income to own a nice home in a good location is necessarily a bad allocation - there are far worse. It’s not for everybody but it isn’t inherently irresponsible. So what value does an arbitrary rule like 25% have - especially considering differences in absolute income - none whatsoever.
Finding suitable roommates is also not something anywhere near as easy as you make it sound.
Have a nice day. I know I’m not going to stop you spewing your inane life advice.
Kids are just roommates that never help with the rent. ;)
6. Learn to cook. https://www.bbc.co.uk/food/collections/1_dinners
And make your own coffee.
They're easily 5 times more expensive than the regular cafes here. INR 231 for a "tall Americano."
I think one should pop into these joints once in a while to appreciate being a cheapskate quantitatively speaking.
Later in life the same relatives struggled really bad when their incomes decreased, and they weren’t able to afford the lifestyle they were used to.
My family in the other hand never really went through economic struggle (at least it was not apparent to me and my siblings) even when my father lost his job and took him 6 months to get a new one.
My parents now live in a really nice house but they still have the ugliest and oldest cars ever lol. But that always reminds me to not fall for expensive stuff just because I can afford it.
2. < 25% of net pay
3. NEVER buy new, only buy used, drive it into the ground and smoking
4. NEVER buy new, only buy via a thrift store (except undies and socks, buy those cheaply)