A simple calculator for how much home you can afford

It’s March. Spring is here in most places. And this is when the house hunting season starts to get rolling. I used to moonlight as a realtor. I started from nothing, ran my own little gig, and did very well. Then I got a book contract, and there was no way I could do three jobs. But I learned a lot.

One of the things I learned is that home buyers very frequently have a very hard time staying within their budget.

They set a number, start looking in their price range, then peek at the homes in a higher price range, and of course those homes look better. Why wouldn’t they? They’re more expensive! And, geez, they have such nice faucets and cool counters and a shower with five heads so you can wash your body from every imaginable angle, and suddenly many of my buyers would refuse to see cheaper homes. Because they just had to have the ultrawash shower.

Or a dent in a wall that’s officially called an alcove.

Or a super deluxe gas heater fireplace that runs on banana peelings and saves gerbils.

Or whatever.

It’s called house craze. It’s a temporary thing. It passes as soon as you get in the house and start making the payments.

And then you wake up and realize you have a hot tub and you hate hot tubs! What in the world were you thinking?!

Well, you had house craze.

The unfortunate side effect of buying too much house is that the mortgage eats up so much of the take-home pay that it makes everything else exceedingly tight. Or impossible.

You don’t have room to pay off debts. Don’t have room to invest much, or at all. Don’t have room to have fun vacations. Don’t have room for anything except the fricken-ricken, blankity-blank, #$%!* house!

This condition is called being house poor.

So house craze leads to being house poor.

Which leads to second jobs and stress and often more debt. You may also end up in a roadside ditch. The situation below occurs with more than just with cable companies.

The lender will tell you that you can lend up to 36% of your take-home pay!

Your eyes go wide, and you being to think that maybe you can afford two ultrawash showers. But just slow down and think for a second–the lender is the one SELLING you the loan.

Right…

Don’t listen to the lenders.

Listen to common sense.

My advice is the same as Dave Ramsey’s:

  1. Don’t buy a house until you’re out of debt and have saved enough to pay 10% of the purchase price of the house.
  2. When you’re at that point, get a 15-year, fixed-rate mortgage with a monthly payment that’s no more than 25% of your take-home pay.

So that’s my advice. You’re free to do with it what you wish. Just know that being house poor sucks.

And all that to introduce the calculator which will tell you exactly how much home you can afford. It takes 10 seconds to fill in.

Here it is: How much home can I afford?

Download it and be happy.

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    Where in all these studies was self-selection included? Nowhere. Motivation, early success, quitting: disregarding those is a huge oversight.

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    Duncan Watts did a fascinating study about cumulative advantage reported in the NY Times here: http://www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html?_r=0

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    “In all the social-influence worlds, the most popular songs were much more popular (and the least popular songs were less popular) than in the independent condition. At the same time, however, the particular songs that became hits were different in different worlds, just as cumulative-advantage theory would predict. Introducing social influence into human decision making, in other words, didn’t just make the hits bigger; it also made them more unpredictable. . .

    . . . When we added up downloads across all eight social-influence worlds, “good” songs had higher market share, on average, than “bad” ones. But the impact of a listener’s own reactions is easily overwhelmed by his or her reactions to others.”

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    And when you meet failure after failure after failure . . .

    You’ve got to practice well to get better, to offer more awesome gifts. But you’re not going to practice without the motivation. Motivation is the KEY to learning. And early success is a key part to motivation.

    Another piece of data that seems to belie the 10,000 hour claim is that when you do some simple math and look at surveys of writers breaking in, 10,000 hours starts to look very odd indeed.

    Let’s say you’re a poopy-slow writer and can only get 250 words in per hour. In 10,000 hours will you have written 2.5 million words or about twenty-five 100k novels.

    25 novels?

    Hey, you say, you can’t be typing the whole time.

    Okay, let’s be super conservative with these numbers. What if you spend about half that 10,000 hours writing and the other editing and doing pre-draft work? That’s still 12.5 finished novels.

    That sounds like Brandon Sanderson. Except it’s not. Remember, he sold number 5 or 6.

    Furthermore, the problem is that from all the surveys I’ve seen, writers who break into the old traditional publishing system aren’t averaging 12.5 novels. They aren’t averaging 5 or 6. They’re averaging 3-4, with a lot selling their first or second.

    Hello, Stephenie Meyer and JK Rowling. And a lot of indie authors.

    Jim Hines reports from a survey of authors he conducted:

    “I also asked how many books people had written before they sold one to a major publisher. The average was between three and four. Median was two. I was surprised, however, to see that the mode was zero. 58 authors sold the first novel they wrote.” More at: http://www.jimchines.com/2010/03/novel-survey-results-part-ii/

    10,000 hours? A million words?

    I don’t think so.

    Gladwell scoffs at this 10,000-hours-will-make-you-a-success reading of his original writings on the matter: http://www.newyorker.com/online/blogs/sportingscene/2013/08/psychology-ten-thousand-hour-rule-complexity.html.

    But this is precisely the message so many have taken from the studies. Just put in the time and you’ll become great because the practice is more important than any natural aptitude . . . or early success.

    I don’t think it is.

    John, what in the Sam Hill are you doing? Trying to depress everyone and tell them they can’t succeed?

    No.

    What I’m saying is that we must practice and improve our craft. That’s a given. But we cannot expect that alone to make us successful. Especially not as artists. We can’t expect that 10,000 alone will make our work super popular.

    Working hard WILL increase the probability of success (what’s that saying?–the harder I work, the luckier I get).  But as writers we’ve got to realize that there’s no guarantee of popularity. Or even expertise.

    So what are we left with?

    Nothing, and maybe everything. Because there is passion. There is sharing. And if you can tap into that and rejoice in the sharing that does occur, it might well be the best reward. Bricks of gold in the basement and your name on everyone’s lips must be awesome. But a memory of walking a number of afternoons with a daughter in the hills and telling (sharing) a fine tale to that audience of one might just be worth more than all the gold bricks in China.

    (Yes China, not Fort Knox. You didn’t hear?–we had to ship everything over before we could get another loan.)

    The bottom line is this: there’s no guarantee of success. Not even with 10,000 hours.

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