48% of pretax income spent on housing? I think not

[Syarzhuk]

Our local free paper put an article (http://www.providencephoenix.com/archive/features/03/01/16/HOMELESS.html) on homeless people. They tell about the case of a poor woman who lost her job and had to go to the shelter with her 10-yo daughter. The thing I didn't understand - they tell how she lost "lost her $30,000-a-year job, and there was no way -- even with the help of parents and others -- to keep paying the $1200 monthly rent". I personally think that as a single parent spending 48% of her PRETAX income on housing she is spending her daughter's future.

Where I live in RI the rents are about $500-$600 for a 1 bd apartment - should be just enough for a woman with a daughter. And it's not a bad area either. She could easily move to here and pay half the rent she was paying. Is ability to hear crickets and ducks, proximity to a "swimming pool, a playground, and sliding glass doors" worth extra $600/month? Even if you put the supposedly excellent public school her daughter was going to in the mix, I still don't think the high rent was justified. Her daughter could be getting a good education in Science but her lifestyle education would be far from good - she will learn that it is Ok to spend everything that you make and live from paycheck to paycheck; when you lose a job it's not your fault that you can't live where you used to and it's Ok to go to the shelter. I understand this woman is going through tough times but being unemployed myself I just can't see her as a victim.

 

[dory36]

Re: 48% of pretax income spent on housing? I think

I had stats for such things, and published them on TMF a few years ago when doing so was free. My source has disappeared, and I can't read my own posts on TMF. Maybe someone with access can read it and replicate it here -- it was at:

http://boards.fool.com/Message.asp?mid=13050615

or maybe

http://boards.fool.com/Message.asp?mid=12305128

or possibly

http://boards.fool.com/Message.asp?mid=13891450

As I recall, national averages were somewhere around 28%.

Of course, people can always dream up reasons why their spending is absolutely necessary...

Dory36

 

[Syarzhuk]

Re: 48% of pretax income spent on housing? I think

As I recall, national averages were somewhere around 28%.

Of course, people can always dream up reasons why their spending is absolutely necessary...

One more argument I thought of after I posted.
If she spent the average 28% on housing and 20% on alcohol - most likely authorities would come and take her daughter away from her.
If she spent 28% on housing and 20% on, say, clothes and jewelry for herself - people would call her an irresponsible mother.
But somehow spending 48% on housing makes her an innocent victim.

 

[omni]

Re: 48% of pretax income spent on housing? I think

here you are Dory36 --- from your 8/2/00 post on REHP,

After the discussions on getting by with various amounts, I thought this would be interesting.

I went to http://www.keepingupwithjones.com/utils/form.cfm and looked up family spending habits for couples who owned their homes (without mortgage) and made about $22,000 a year, and also those at that income level who were renting their homes. I also got $100,000 income families who either owned or had mortgages on their house.

I was a bit surprised to see how close the spending was in some areas, and how different in others. $100k homeowners spend less on clothing than their $22k neighbors, and less on church contributions and prescription drugs. Pretty similar on reading material and personal care expenses, but wow! the $100k homeowners spend over $20,000 a year on transportation costs!

(These are averaged over lots of families, so presumably the figures aren't biased by some families buying cars this year and lots of clothes last year.)

I expect most of the families surveyed were working, not retired. It's interesting to look at these categories and see which ones would likely go way up or way down in retirement.

Total family income 21,951 21,980 99,688 100,156
Other receipts 218 27 0 52
Housing Status Own Rent Own Mortgage
Personal taxes & savings 310 -1,019 27,295 16,498
Total Annual Expenditures 21,642 22,999 72,393 83,657

Food 3,860 3,622 6,357 6,493
Food at home 2,984 2,779 4,569 4,062
Food away from home 876 843 1,789 2,431
Alcohol 227 206 425 565
Housing 6,404 7,331 15,212 38,084
Shelter 2,640 4,952 7,524 28,203
Owned dwellings 2,241 16 5,680 27,398
Mortgage interest 83 0 0 14,499
Property taxes 1,238 0 3,038 11,581
Maintenance, insurance, othe 921 16 2,642 1,319
Rented dwellings 48 4,913 0 6
Other lodging 351 23 1,845 799
Utilities 2,324 1,457 3,095 3,389
Household operations 580 253 2,102 1,205
Furnishings and equipment 860 668 2,490 5,287
Apparel 903 1,072 738 3,199
Transportation 3,628 5,573 23,006 15,052
Health Care 2,962 1,299 4,753 1,853
Health insurance 1,818 807 3,524 1,152
Medical services 497 308 696 441
Prescription drugs 515 144 249 184
Medical supplies 133 39 285 76
Entertainment 1,151 895 2,714 3,844
Fees and admissions 316 243 2,068 1,325
TV, radio, sound equipment 350 409 345 1,771
Other entertainment supplies, pet 485 243 301 748
Personal Care 301 243 357 607
Reading 193 127 236 366
Education 33 111 282 1,076
Tobacco 223 406 130 291
Miscellaneous 367 302 3,461 1,121
Cash Contributions 464 608 6,314 1,047
Child support 16 56 0 0
Contributions to students at coll 8 0 0 256
Gifts to persons not in the famil 110 448 1,667 35
Contributions to charity 50 48 4,448 337
Contributions to religious groups 236 55 200 218
Contributions to educational inst 8 0 0 127
Political contributions 2 0 0 22
Other contributions 3 0 0 52
Personal Insurance 1,138 1,522 8,418 10,704
Life and personal insurance 224 140 352 1,105
Retirement, pensions, Social Secu 913 1,382 8,065 9,599

Dory36

( I tried to "cut and paste" but I seem to have lost your table format....FWIW there are 4 columns of numbers.)

 

[popyee]

Re: 48% of pretax income spent on housing? I think

I tried to follow the link but have been unsuccessful. This data sounds interesting! Can you check out the link so I can read the figures? :

 

[BigMoneyJim]

Re: 48% of pretax income spent on housing? I think

I copied the table from above, did a couple of nifty commands to add the table structure and fine tuned it until it looked right. (i.e. had four columns) Here it is:

Total family income21,95121,98099,688100,156 Other receipts21827052 Housing StatusOwnRentOwnMortgage Personal taxes & savings310-1,01927,29516,498 Total Annual Expenditures21,64222,99972,39383,657 Food3,860 3,622 6,357 6,493 Food at home2,984 2,779 4,569 4,062 Food away from home876843 1,789 2,431 Alcohol227206425565 Housing6,404 7,33115,21238,084 Shelter2,640 4,952 7,52428,203 Owned dwellings2,24116 5,68027,398 Mortgage interest830014,499 Property taxes1,2380 3,03811,581 Maintenance, insurance, othe92116 2,642 1,319 Rented dwellings48 4,91306 Other lodging35123 1,845799 Utilities2,324 1,457 3,095 3,389 Household operations580253 2,102 1,205 Furnishings and equipment860668 2,490 5,287 Apparel903 1,072738 3,199 Transportation3,628 5,57323,00615,052 Health Care2,962 1,299 4,753 1,853 Health insurance1,818807 3,524 1,152 Medical services497308696441 Prescription drugs515144249184 Medical supplies1333928576 Entertainment1,151895 2,714 3,844 Fees and admissions316243 2,068 1,325 TV, radio, sound equipment350409345 1,771 Other entertainment supplies, pet485243301748 Personal Care301243357607 Reading193127236366 Education33111282 1,076 Tobacco223406130291 Miscellaneous367302 3,461 1,121 Cash Contributions464608 6,314 1,047 Child support165600 Contributions to students at coll800256 Gifts to persons not in the famil110448 1,66735 Contributions to charity5048 4,448337 Contributions to religious groups23655200218 Contributions to educational inst800127 Political contributions20022 Other contributions30052 Personal Insurance1,138 1,522 8,41810,704 Life and personal insurance224140352 1,105 Retirement, pensions, Social Secu913 1,382 8,065 9,599

 

[dory36]

Re: 48% of pretax income spent on housing? I think

I tried to follow the link but have been unsuccessful.  This data sounds interesting!

The link seems to have died a while back. Unlike the print world, when something goes out of print on the Internet, it's gone gone gone!

However, the data is still available -- just more complicated to dig out. (The old link did the data extraction and presentation for you.)

Go to http://www.census.gov/statab/www/ and look at online or paper versions of the "Statistical Abstract of the United States" -- that was the source of the data, and they slice and dice the numbers in every imaginable way.

Dory36

 

[Mr._johngalt]

Re: 48% of pretax income spent on housing? I think

We have a 1000 sf house with 100 feet right on the
water. Beautiful spot. Rent for this place would be no more than $600 mo. tops. Before I moved here I
lived in an apartment about 10 miles downstream.
Brand new duplex and basically the same view and
amenities. The one bedroom went for 450/mo. and
the two bedroom 550/mo. Prior to that I rented a 2 bedroom apartment in a small community about 10 miles away for $350/mo. It wasn't fancy but nice for the price and the price was what I was focised on at the time.