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Reduce Your Largest Monthly Expense

The general rule of thumb is to spend around 30% of your gross monthly income on rent or mortgage payment. If you make $3,000 a month or $36,000 a year, then your rent or mortgage payment shouldn’t be over $900. When applying for a mortgage there are many ratios that lenders review in order to determine if the applicant is a credit risk. One of which is the 30% ratio of mortgage to income, or the 30% rule. The monthly mortgage payment consists of the principle, interest, PMI (insurance), and taxes. This figure doesn’t include other housing related expenses like electric, gas, water & sewer, cable, or the internet. Factoring in other related housing costs and your housing expense could be up around 35-40% of your gross income! According to Harvard University's Joint Center for Housing Studies 11.8 million households are paying more than 50% of their income on housing in 2015. This is a huge monthly expense and is generally the largest, but is also one of the easiest expenses to reduce.[….]

How I Got Here

My financial story is much like the average American’s. The story of earning an income by doing the 8-5. It’s not the 9-5 anymore, it’s the 8-5! Going to work and watching time go by until we get the two precious days off each week. The story of having too much debt and living paycheck to paycheck[….]

Net Worth Update

In the time period of a little over a year my net worth almost doubled from $50,105.74 to $106,052.54. A lot of the gain was from the increase in the value of my 401k. A strong stock market and contributions to my 401k helped increase my 401k by $28,879. In 2016 I contributed 9% of my salary to my 401k and also received a company match of 3%. I received a raise at the end of 2016 and increased my contribution rate to 11% for 2017[….]