Its definitely your gross, not net.

Here is one of any number of websites siting that golden rule (picked the first one on the google list).

http://interest.com/mortgage/how_muc...ou_afford.html

That being said - $70k is plenty to get a wonderful place, spend wisely (but not necessarily fret and worry yourself to death), and save well over the recommended 5% of your gross income/month.

Good Luck and ditch the car!

I am in a very simliar position as the OP. Making a tad more than him but also married. Wife will work and hopefully combined salary at around $100k. No kids and no plans for kids. I am debating how much I should spend on rent. We would be fine with a 1 bdrm place in center city. Want to live near a Patco station. Plan to keep 1 car. Assuming $0 debt and a nice savings (emergency fund handled, etc...) what rent range or house price range should I be looking at? My main goal is to find a place that has some type of private outdoor courtyard/patio for our 2 dogs. Sorry to hijack this thread but it is very similair in topic.

Someone beat me to it, but no, the figure is gross, and it only includes the costs of the housing itself, not utilities.

Here's an interesting database that shows how easy (or difficult) it is for people in a number of middle-income and service occupations (school teacher, nurse, food service worker...) to afford to live in 241 metro areas nationwide, maintained by the Center for Housing Policy:

Paycheck to Paycheck

If you look at their figures, you will note that the minimum annual salaries work out to roughly one-third of the median house prices, and the minimum hourly wages produce monthly income for which the median contract rent would account for a one-third share.

It looks as if moderate-income folks could easily afford to rent here but have a harder time buying.

__________________
Sandy Smith, Exile on Market Street, Philadelphia
“Basically I figure guns are like gays: They seem a lot more sinister and threatening until you get to know a few; and once you have one in the house, you can get downright defensive about them.” --Theresa Neilson Hayden

OP: I have a car in the city because there's no other way for me to commute. I pay about $200/month to garage it and $100/month for liability only insurance to give you ballpark figures. Some locations street parking is a viable option, others it'll drive you nuts.

$70K probably takes home more like 42-45K assuming an 6-8% 401K contribution, and a little more if they don't contribute.

Sort of staggering that they expect people to be able to pay 1/3 of gross income for housing... if a lot of that were deductible tax on a mortgage, maybe, but otherwise that's a huge chunk of change.

I'm in a similar situation as the OP, because my girlfriend and I split up (lived together for 3 years) and now we have to move into our own places.

She found a small place in UCity, near her job, but I am at a loss on where to live now. I love my current area (Grad Hospital), but I don't think I want to pay to live around here by myself. So it's either get a roommate, or pay a lot of money.

I make more than the OP by a fair amount, and I'm single/no dependents, but something about paying 1/3 of my gross in rent just seems like pissing away money.

HospitalityGirl: what questionnaire?

The questionnaire:

__________________


http://www.youtube.com/watch?v=7xCiKCxfYqE

"If we can't learn from our mistakes, what's the point of making them!" ...my friend Richard.

"You are protected by the enormity of your stupidity." Mother to son Victor, in "Notorious"

I know this website was just picked from a long list and you're not endorsing it, but just to make a quick point: The site suggests not spending more than 28% of your gross income on housing costs, but it is also assuming you are *purchasing* a place rather than renting. Because of the deductibility of mortgage interest on your taxes, that assumption makes a difference of several hundred dollars a month here.

For example, a $1200/month 30-year mortgage, of which well over 90% of your monthly payment is interest in the early years, would lead to tax savings of close to $300/month.

Throwing 1/3 at rent won't leave you very much to actually enjoy this city with!

Ahh, the FAQ. My apologies. I made a new thread over there, danke!

Actually, that site lists the 28/36 rule: 28% of gross for housing costs and 36% for housing costs plus debt.

If you think about it, 1/3 of gross is really too much to pay for housing, even if there's no debt.

I'm figuring based on my salary (about $73K). I pay a smidge over 30% in taxes as a city resident, about 12% for insurance and retirement, leaving a net of $41.7K per year. And I think most people's insurance is much higher than mine since I'm in the city's insurance plan.

But anyway, if I lived by myself, a third of my gross would be way too much for just rent. You could do it if you had no other debt and relatively small out-of-pocket expenses each month, but there's no real way to save any money, go on vacation, etc.

__________________

Wow! I never thought that question will draw so much responses! Thank you very much , all of you!

About some questions asked here:
1. Naturally , $70,000 is the gross (maybe someday .... )
2. I'm single - You're right , I should have mentioned it
3. I'm new to Philadelphia - Actually , I'm new to the US , so I although some of you have wisely pointed out that the rent is somewhat a waste of money , I think I would hold on with buying a house
4. About the car - I thought I need one , but after all I've read , maybe I can get by with bicycles and public transportation , and an occasional rental or one of the programs mentioned here.
5. I've been living with roommates for a long time , and though I think it can be fun , it can also be a real mess - So I think I'll stick with living alone for a while