Paychecks

[MinesJeep]

I'm trying to do some long range financial planning and trying to figure out what I should be expecting to actually see on my paycheck. So after Fed I-tax, SS, medicrap,state taxes, 401k, and any other benefits. What % of your check do you actually see in your bank account?

Specifically, I'm looking at salary range from $65-80k and married. The reason I'm doing this is I'm trying to determine how much house I can afford while paying student loans, car loans, fixing up the jeep etc...

TIA:beer: :beer:

[scottycards]

I take home 75% of my bi-monthly pay. 26 pay periods per year.

Married, no insurance out of my check (we're on wife's insurance through her company), and I get a refund (not huge, but decent) every year. We do own a house, so there's an interest deduction.

[Camp]

I would say that you can expect to be in the 62% +/-5% range. It all depends on your deductions you set up, 401K contribuition %, and so on but, that is probably a pretty good guestimate.


Edit: I didn't factor in married since I'm single but, that is the range I am in for take home percentage and I pretty well fit the profile you listed other than married.

[Steve]

I'd have to ask Kathy. Really. Other than investment strategy, I have almost nothing to do with our finances. Kathy is an accountant and does the payroll at Mesa State College, and thinks balancing a checkbook is fun. I'm not even sure when my payday is (every other Friday, but I don't know which one) and I'm just fine with that. :D

[bsaunder]

figure ~20-25% for taxes etc, what ever percentage you want for 401K, ~$150/check for medical (really depends on your company, some are way less, some are way higher), insurance if you have it (some companies auto deduct for short term and or long term disability/ad&d). then figure in the amount of savings you want, car insurance, car repairs, car registration, oil/gas/tires/etc, clothes you may need for work, wedding costs, utilities, cell phone, etc. (I'm sure you have most of that)

Honestly - to be smart, I wouldn't plan on bringing home more than 40% of your check. The last thing you want to do is plan out every dollar of the paycheck and then get laid off and have no buffer.

The smartest thing that a couple of my friends did right out of college was to live like poor college students and only used 20% of their paycheck - everything else that they took home was split between savings and debt until they were debt free.
I really wish I had done that - strapping yourself with a car, house, college debt and getting used to the income that you have rather than paying off debt as fast as possible really sucks a few years down the road when you have kids and your trying to figure out how in the heck your going to pay for their college and still retire at a decent age where you may still be able to enjoy it.

[MinesJeep]

Thanks guys, the numbers you said were right in the range I was thinking. Yeah, I'm pretty much budgeting on being broke as heck in order to get my student loans paid down quickly, I've got about 130k in loans, and to get started on a house.

[ScaldedDog]

I've got about 130k in loans...

Wow! What's your degree in?

I remember owing $1600 when I got out (in '82)... :D

Mark

[Matt]

I've got about 130k in loans.

To be honest, I wouldn't plan on buying a house with that much debt.

[bsaunder]

Thanks guys, the numbers you said were right in the range I was thinking. Yeah, I'm pretty much budgeting on being broke as heck in order to get my student loans paid down quickly, I've got about 130k in loans, and to get started on a house.

Ouch - I graduated ~$85k in debt from Mines and I'm still living quasi poor over a decade later (once I allocate $$ to paying debts, bills, taxes, self forced savings, etc - I have maybe 20% left to pay for food, clothing, gas and fun). If any of that is credit card, which I'm guessing a good bit is; get that paid off now. I'd honestly find the cheapest living arrangements you can stand for the next 3-5 years and drive the absolute least expensive vehicle you can until that debt is paid down. Unless you have a good bit of cash in the bank and are going to be making mad $$ at your job, it will be hard to get reasonable financing on a house with that debt to income ratio for a while.

If you took engineering econ there; use the knowledge taught in that class to really look at the financial impact of the debt; it will suck and it will scare you, but for good reason.

I really don't mean to preach; but I have way too many bad stories to tell about debt and they all stem from not paying it off sooner. Please look at the whole picture of debt and not just the monthly payments when calculating what you can afford, the real answer that it took me a long time to acknowledge is that I truly couldn't afford anything as anything was putting me further into debt.

[Slacker]

I'd have to ask Kathy. Really. Other than investment strategy, I have almost nothing to do with our finances. Kathy is an accountant and does the payroll at Mesa State College, and thinks balancing a checkbook is fun. I'm not even sure when my payday is (every other Friday, but I don't know which one) and I'm just fine with that. :D

Wow! Not only do we have the same investment strategies, we also have the same paycheck and bill paying strategies!!!!!!!! :D

[longboy]

I just looked, and I'm getting 50.5% of my gross. But, I take out a huge chunk to 401k, I claim 0 for withholding (various reasons, don't ask), and another huge chunk is withheld for my Flex plan (child care and health care).

That being said, since I was about 21 I have tried to do my best to boost my 401k contribution and get used to living off of the rest. I have been contributing the max to the 401k now for a couple of years, and I'm very happy that I do that. If only the market would rebound from that 10k loss I've had in 2008.

[CGuava]

Dude, your debt to income ratio is going to be pretty bad. Even on an aggressive mortgage, they figure you can afford to commit 38% of your gross to paying debt. Depending on how you are making your student loan payments, at 65-80k, you're committing a lot of that 38% to the loan.

If you've got a big DP for a house, you may be able to pull if off. But at the same time, I'd consider putting that big DP toward that loan depending on the rate you have on it.

I have to ask, I'll be honest, I really don't know anything about student loans, but 130k seems like a hell of a lot for school. I thought Mines was cheaper than CU/CSU, am I correct about that?

[MinesJeep]

I'm an out of state student, why my loans are so high and I've been in school for 5 years but I'm finishing my Master's this year. The loan balance I've stated is also higher because I'm figuring in the interest thats accrued on those loans and will be capitalized into my student loans when I begin paying. I'm planning on going to school part time for year to work on my Ph.D so that I can work full time and pay off big chunks of the interest thats accrued to prevent it from capitalizing. Those loans have also gone to paying off a jeep as well and living comfortably.

Bsaunder, I'm graduating with a M.S. in Mineral Economics so I know Stermole's class pretty well :)

I have zero credit card debt and a 750 credit score. My mortgage broker said he'd have no problem getting me 200k loan as soon as i started making 30k a year so I shouldn't have to many problems finding a loan at 75k/year especially if I sit on a crappy cheap apartment for a year to make a big downpayment.

[CGuava]

Out of state, never thought of that angle. I could definitely see that. But good luck to you.

[bsaunder]

I'm an out of state student, why my loans are so high and I've been in school for 5 years but I'm finishing my Master's this year. The loan balance I've stated is also higher because I'm figuring in the interest thats accrued on those loans and will be capitalized into my student loans when I begin paying. I'm planning on going to school part time for year to work on my Ph.D so that I can work full time and pay off big chunks of the interest thats accrued to prevent it from capitalizing. Those loans have also gone to paying off a jeep as well and living comfortably.

Bsaunder, I'm graduating with a M.S. in Mineral Economics so I know Stermole's class pretty well :)

I have zero credit card debt and a 750 credit score. My mortgage broker said he'd have no problem getting me 200k loan as soon as i started making 30k a year so I shouldn't have to many problems finding a loan at 75k/year especially if I sit on a crappy cheap apartment for a year to make a big downpayment.

It sounds like you're trying to do all the right things, and you definitely have the right knowledge to make the decisions (The Stermoles' know their stuff) -- just trying to help someone out so they don't have to go through some of the same "oh crap" lessons.

While you are figuring in expenses, be sure to cover property taxes and home owner's insurance as well, and PMI if you are not planning on at least 80% down (suggest against that). Many mortgage brokers will leave that part out - I'd be leary of a 200k loan making 30k a year and the debt level you have, I'd steer clear of any balloon, or hybrid ARM loans.


I can see the debt level, though you were probably living a little better than I was - I was ~$85k in debt when I graduated in '98 after 4.5 years at Mines, all out of state. Would have been at least 30% lower if I had been in state. And that included two new engines in my Bronco and a sweet home theater system, ski passes every year, etc - most of which I really should not have purchased.

[CGuava]

While you are figuring in expenses, be sure to cover property taxes and home owner's insurance as well, and PMI if you are not planning on at least 80% down (suggest against that). Many mortgage brokers will leave that part out - I'd be leary of a 200k loan making 30k a year and the debt level you have, I'd steer clear of any balloon, or hybrid ARM loans.


You mean 20% down right? Because if we're talking 80%, I have some serious money to make.

[bsaunder]

You mean 20% down right? Because if we're talking 80%, I have some serious money to make.

LOL - yea, sorry:eek:

[MinesJeep]

Yeah, I'd be leary of trying to pay back my student loans at 30k/year! Luckily, I'm looking at about 2.5x that.

Yeah, I've been looking at buying a house since the whole lending crisis and foreclosure stuff started. I had a good line on a house in 230k neighborhood that had been foreclosed on and the bank only wanted 160k. Needed a little work but nothing extreme, but because of the tightening in the market I couldn't get the loan any longer. If i had started looking like two weeks earlier, I would have had a nice fixed loan at 5.6%.

Now, I'm in the process of convincing my fiance we do not want to buy her mother's house. She owe's about 196k on the house in about a 200k neighborhood, but the house needs about 20k in work if I had to flip the house for any reason we'd be screwed.

The cost of mines has gone up quite a bit from 98 as well. Out of state tuition is about 20k/year

[MinesJeep]

Yeah, I've got an insurance agent already so I call her each time I'm interested in the house to get an idea of what home owner's would cost.

[CGuava]

Do you already have a job offer at the 75k range? I wanted to buy a house out of school, conservatively assuming how much money I'd make once I finished, and I was told I had to wait until I was done and had a job, etc. Like you, I've got good credit and zero debt. Glad I waited though, b/c I can afford a much better house than I originally thought while I was in school.

[MinesJeep]

Quasi-offer, I'm actually waiting on the full written offer for the exact amount. I have a friend that works at the company who just started their in December and thats what he got and I expect to be in the same range.

[Trango]

I don't care if your FICO is astronomical - you ain't getting 200k loan on 30k/year. Even if you did, every cent of your

I realize, this was just a datapoint, but it's a bad one. At today's interest rates, you're going to be paying around $1600 for a homeloan in the range you're looking at (with insurance), and then an additional $300+ in bills, to pay for a house. Let's say, though, the interest is tax deductible, so it's like getting bills for free.

You're still looking at the type of cost ($1600) that it would cost you and your SO EACH to rent a modest apartment ($800), which you could alternately do for a couple of years, and then save up cash (or pay down debt). I'd personally say the former, since your student loans are presumably "safe" debt - low interest rate, cheap cost of capital etc.
Drawing this out, if you guys take your $800 "surplus" over two years, you're looking at $20g that you can use to pay off the first 10% of a home loan.

Another thing I'd think about is tightening economic conditions. In the current economic climate, I'd be hard pressed to sign up for an expensive, illiquid asset if I didn't think it were absolutely necessary.

Finally, you're a young guy. You're going to get married soon, and I have to think that cash is going to be quite nice to have once you're finally making some (it was to me, making that sort of cash in my first few years). So while home ownership is great, offers plenty of benefits etc... it's also incredibly expensive, especially in the first year when you're really only paying debt service on your enormous, quarter-million-dollar loan, and not earning any equity. Look at the amortization tables for a mortgage (fixed price loan) and you start to get a feeling for the joys you feel of paying 10k your first year to accrue 1k in equity - joy. Sometimes, that's an activity best served when you feel the hit of the payment a little less (meaning, when you have some savings etc.).

Anyway, do what you want, it just seems a bit premature to me to be chomping at the bit to snap off a huge ass home loan with the immediate situation and short-term projections you have.

I really hope this post helps with some perspective and information that hasn't been discussed yet.

[Steve]

I'm an out of state student, why my loans are so high and I've been in school for 5 years...

Out of sheer curiousity why didn't you establish residency here after the first year? Our daughter went to CSU when we lived in NM and that's what she did. Non-resident tuition for the first year and resident for the rest.

[scottycards]

I'll politely disagree with Trango's post. Right out of college, I bought my first place- a small condo up in Shanahan Ridge in Boulder. 84K at the time. I sold it just a couple of years later for twice the money, and got my first house. I sold that a few years later for twice the money, and you get the idea.

Housing will turn around. Just buy within your means- like 30% of your spendable income each month- that's PITI (principal, interest, taxes, insurance). If you're at around 30-35%, you should have enough for bills. The tax benefit is excellent, and rent is nothing but money down the drain, IMO.

I was years ahead of my friends in the homeownership thing, and it's always been to my advantage. They were all renting when I was building equity and appreciation, building my credit, and the discipline to stick to a financial committment early in life.

But there is always more than one way to skin a cat, and Trango brings a really good perspective, which is absolutely valid, and gives you something to think about, Tony.

[Camp]

Out of sheer curiousity why didn't you establish residency here after the first year? Our daughter went to CSU when we lived in NM and that's what she did. Non-resident tuition for the first year and resident for the rest.

I was wondering the same thing?


All I can say by reading this is THANK GAWD I went to the University of Tennessee :D One of the 5 oldest engineering colleges in the country and it only cost me $3K/yr in tuition :thumbsup:

[scottycards]

All I can say be reading this is THANK GAWD I went to the University of Tennessee :D One of the 5 oldest engineering colleges in the country and it only cost me $3K/yr in tuition :thumbsup:

YOU'RE A VOLUNTEER? :eek: :eek:

Damn! My Mom, Dad, and both of my Uncles are Vols. Dad, and 2 uncles were all in engineering there.

ROCKYTOP! :thumbsup: :thumbsup: :thumbsup: :thumbsup:

Way cool.

[MinesJeep]

The tightening conditions are a big motivation for me to purchase a house. I expect inflation to possibly peak at around 4% if the Fed keeps playing retard with monetary policy, with interest rates in the 6% range, that would be effective interest rate of about 2%. Now if real wage growth doesn't keep pace with inflation there are problems, but I don't foresee wage growth in the energy industry slowing much over the next 10 years in fact I would expect it to continue on its quite nice growth path.

Yeah, purchasing an illiquid asset right out of college can have its downsides, but it also means having it paid off earlier in my life.

Appreaciate all the input so far, always good to see multiple viewpoints.

[Camp]

YOU'RE A VOLUNTEER? :eek: :eek:

Damn! My Mom, Dad, and both of my Uncles are Vols. Dad, and 2 uncles were all in engineering there.

ROCKYTOP! :thumbsup: :thumbsup: :thumbsup: :thumbsup:

Way cool.

Yes.....yes I am.
http://web.utk.edu/~icehocky/hall_of_fame.htm
Inducted 2003 :D


So, why did you chose to stay an out of state student? Did you not work while in college, keeping you from declaring residency?

[Steve]

Yeah, purchasing an illiquid asset right out of college can have its downsides, but it also means having it paid off earlier in my life.

If you're working and making good $$$ about the last thing you want to do is pay off your house, at least under the current income tax rules. It will give you more options, which is always good.

[MinesJeep]

Out of sheer curiousity why didn't you establish residency here after the first year? Our daughter went to CSU when we lived in NM and that's what she did. Non-resident tuition for the first year and resident for the rest.

I applied for instate 3 years in a row and got denied. I know alot of people that were out of state for only a year and got instate. There was a list of things you needed to verify you were in state, but even if you met all the listed requirements it was still a judgement call by the financial aid office if you were truly a resident of the state of CO. I'm actually instate now as a grad student, but I still took the maximum student loans in order to not need to work even though I do. I value not eating top ramon everyday so using student loan money to buy groceries was never an issue + some of that has gone to helping my mom out.

[MinesJeep]

I started working in CO as soon as I got here. The rules say you can't recieve support from your parents and since I was recieving child support from my father at the time, I was not eligible for instate even though that money was being given straight to my mom to help her out.

Financial aid wouldn't consider that an extenuating circumstance that violated the rules.

[CSP]

If you're working and making good $$$ about the last thing you want to do is pay off your house, at least under the current income tax rules. It will give you more options, which is always good.

X2, plus with interest rates as low as they are, financing a home is cheap money. You're much better off paying other debt and investing what's left.

[Steve]

I applied for instate 3 years in a row and got denied. I know alot of people that were out of state for only a year and got instate. There was a list of things you needed to verify you were in state, but even if you met all the listed requirements it was still a judgement call by the financial aid office if you were truly a resident of the state of CO.

Actually, no, it's not a judgement call by anyone at the school. Unfortunately it's too late for you. I got a similar answer with our daughter. I did some research and found out that establishing residency here for college tuition is prescribed by state law so that it's the same for all schools, and it's pretty B/W. You either meet the stuff or you don't, and it's not hard to meet if you live here. Nobody at the school can use "judgement" and deny it to anyone.

Edit: just saw your post about child support, not sure how that fits in CO law. We paid our daughter's tuition and books and she worked for fun money, so we definitely "supported" her. She still go resident tuition after the first year. :shrug:

[Camp]

I started working in CO as soon as I got here. The rules say you can't recieve support from your parents and since I was recieving child support from my father at the time, I was not eligible for instate even though that money was being given straight to my mom to help her out.

Financial aid wouldn't consider that an extenuating circumstance that violated the rules.

Odd, they do come up with some stupid rules. The two schools I went to, as long as you worked in state and showed W2's for it, as well as a year long residence, you were a resident since you paid taxes to that state. I had plenty of other run arounds with the financial aid office and the Bursers office while in school so, I can appreciate the frustrations.

[MinesJeep]

Hmm, I knew I was always getting screwed when I knew other people who didn't jump through any hoops and got residency.

[Steve]

Hmm, I knew I was always getting screwed when I knew other people who didn't jump through any hoops and got residency.

Sure sounds like it. Here's the requirement, and it says nothing about support from your parents or anywhere else.


Tuition Classification Requirements

Criteria for establishing in-state tuition classification

Domicile

In-state classification requires a domicile in Colorado for 12 months on or prior to the first day of classes of each semester. "Domicile" is the term used to describe the place where a person has chosen to make a permanent and fixed home. Domicile is made up of two components: physical presence and evidence of intent. Both physical presence and evidence of intent must be established to begin the domicile year.

A domicile year is 12 months on or prior to the first day of classes for each semester. To begin the domicile year, a qualified person must reside in Colorado, with the intent to permanently live in the state.

Physical presence is the actual place where a person has established a permanent legal residence. Proof of physical presence can be lease agreements, rent receipts, home ownership or a notarized statement from a landlord.

12-month Domicile Period

In-state classification requires domicile, or legal residence, in Colorado at least one year before the first day of class for the semester for which you are petitioning. Depending on if you meet the definition of a "qualified student", this 12-month period may apply either to you or to your parent(s). The only exception provided by statute to this 12-month domicile period is for active duty military personnel on permanent duty stationed in Colorado.

Either you meet that or you don't. :shrug:

[MinesJeep]

Hmm, time to go find the school one cause from what I remember it doesn't read anything like that not that it really matters anymore. Just proof they were screwing me.

[Steve]

CSM's policy is here. (http://www.mines.edu/academic/affairs/PDF%20files/Procedures%20Manual/Section%208.3.pdf) Pretty wordy, but not much different from what I posted already. It doesn't say anything about support from parents either. You're either a legal resident here or you're not. :shrug:

[Trango]

I'll politely disagree with Trango's post. Right out of college, I bought my first place- a small condo up in Shanahan Ridge in Boulder. 84K at the time. I sold it just a couple of years later for twice the money, and got my first house. I sold that a few years later for twice the money, and you get the idea.


I have my own polite disagreement. :) I'd say this scenario is very unlikely to repeat itself. I mean, this will never, ever happen again on the front range, until building materials become scarce to nonexistant.


Housing will turn around. Just buy within your means- like 30% of your spendable income each month- that's PITI (principal, interest, taxes, insurance). If you're at around 30-35%, you should have enough for bills. The tax benefit is excellent, and rent is nothing but money down the drain, IMO.


Again, my polite disagreement stands. :)

Honestly, from a costing standpoint, rent is indistinguishable from the tax-deducted interest paid as debt service on a loan (which will be approx $900 in this scenario). Neither are of any redeemable value, and oh yes, rent is almost always lower. Yes, a mortgage payment is partially equity, but if that equity is being thought of as forced savings, then you're better off just.... forcing yourself to save your money and not tying it to a house.

Oh, and yes, I bought my house at 24. I also had zero debt, had been working for 3 years, and had cash in the bank. I was nonetheless house poor for the following 3 years. So, I am all about the benefits of buying WHEN it makes sense. However, buying out of instinct, without looking at the costs, possibilities of appreciation, buying on a priori instinct of what *should* be possible on a particular income range in the first time working for an industry and in a specific locality, this is a bad idea and this is what gets people in trouble.

Worst case scenario: if you work someplace for a few years, decide it sucks, and want to sell your house and move, then you've just paid $8k in closing costs to sell, burning more than your $5k of equity (an estimate which itself is generous), AND you've paid a tax-deducted $1500 per month to live, plus whatever home improvements you and your young wife (no offense intended here) short-sidedly poured all of your available income into, but will only see approximately 40% (average) return on.

What I'm getting at speaks to the mobility of young people, the changing of taste and goals with the onset of experience, the cost of capital, the weighted aspects of amortization, the accrual of equity, possible stagflation, the usefulness of cash, the helpfulness of a nest egg when making major life decisions, etc etc. I think it's very premature to just say, "oh yeah, totally buy a house" just because it's financially *possible.* It just may not make financial *sense.*

This is me totally being devil's advocate here. I am pretty neutral on whether the OP should or should not buy - it would just be complete folly to have this argument on what should be possible on a particular income range or whatever perfect black and white "engineering-esque" discussion (see avatar) went on WITHOUT the coloring of real life issues and concerns to say, hey, let's slow this down and not jump into anything just because we're making big salaries and should do big things.

BTW I read a very interesting argument the other day about how high rates of home ownership can actually exacerbate macroeconomic woes, by tying people to locations when jobs move elsewhere.

Ok off to welding store before closing.

[MinesJeep]

Oh yeah, I remember now. Got emanicipation confused with my resident issues. Those were my heavy drinking days it all blurs together.

[Trango]

Oh yeah, I remember now. Got emanicipation confused with my resident issues. Those were my heavy drinking days it all blurs together.

If anyone needs me, I'll be tending to the aneurysm I'm pretty sure I just had.

[bsaunder]

Out of sheer curiousity why didn't you establish residency here after the first year? Our daughter went to CSU when we lived in NM and that's what she did. Non-resident tuition for the first year and resident for the rest.

I looked in to it when I was there and the only way was to take a year off from school and obtain a full time job, or legally emancipate myself from my parents and receive zero financial help from them. - that was directly from 3 different lawyers I consulted after being denied the second time.
I don't think that much has changed since I went to Mines in that regard - they make a real PITA to get in-state. And since they are semi-private, they don't have to play by all of the same rules as CU/CSU.

[MinesJeep]

Yep, they can def. give you the runaround nothings changed.