The final project I have chose is one that is a little similar to the first project we did towards the beginning of the half-semester, and that project was specifically solely for home mortgages. My final project is similar in that I have chosen to try to determine how long it would take me in my current situation to buy my dream house. My dream house isn't very grand or eloquent. The house I want to live in very much resembles my parent's house in South Jordan. Not too large but not too small either. Their house comes to an estimate of roughly $375,000. After doing a little bit of research, I've found that the most ideal house that I would want to live in would cost roughly around $430,000, more than $50,000 more than my parent's house. For this project, I want to determine how old I will be before I have enough money to buy my dream house.
Let's talk about factors that are put into play. For my job, I work at Bangerter Homes as what we call a "grunt." I do whatever my employers tell me to do, and that could be cleaning, framing, roofing; you name it. Currently, I make about $12 an hour, not bad for a college student. How long I work each day varies considering the work I do, but roughly I work 15 full work days (8 hours). $8 x 12 = $96 a day. $96 a day x 15 days = $1,440 a month. I live with my parents currently and I pay a rent of about $250 a month. I just finished paying off my car, so I don't have to worry about a car loan, but I still have to pay car insurance, which I spend $120.33 a month on as well. Since I finish school with an associates in arts this semester, we can assume that I will conclude pursuing for more school. Every month, I generally spend money eating out ($9 a day for 10 days = $90), filling up on gas ($22 twice a month = $44), a 10% tithing amount from my income for my church (1440 x 0.1 = $144), and personal spending on miscellaneous items (roughly about $40 a month). So if we add up how much money I spend a month, we end up with:
250 + 120.33 + 90 + 44 + 40 + 144 = 688.33
I spend about $688.33 a month. If we subtract that from how much I make a month we have: 1,440 - 688.33 = 751.67
By the end of the month, I have $751.67 to put in my bank account.
That's not very much money if I'm wanting to buy my dream house. But for the time being, let's assume that whatever money I have left by the end of the month, I want to save to buy my house. Let's also assume that in whatever time period is used, I never get married, spend additional money, buy another car, etc. For this example, we won't use a mortgage to help the paying process either. I also currently have $2,836.45 in my savings account. So with all that in mind, how long it would take for me to buy my house?
$375,000 - $2,836.45 = $372,163.55 / $751.67 = 495.12
It would take me 496 months to buy my house. Which is about (496 / 12 = 41.33) a little more than 41 years. Obviously this is unrealistic. I would be 63 years old when I buy it. Plus, my parents would be long gone and I would have to move out and pay different rent. Thanks goodness we have mortgages. The most affordable mortgage I could possibly afford is a 30 year mortgage with a 3.79% fixed rate. Let's say I make a 30% down payment. I would have to pay about a $129,000 down payment. How long would it take me before I could pay that much?
129,000 - 2,836.45 = 126,163.55 / 751.67 = 167.84
It would take roughly 168 months, or 14 years before I could make that kind of down payment. I would be 37 years old by the time that happened. Which is fairly doable but there's only one problem. The 3.79% fixed rate would be $1,401. a month. That's literally impossible with my current predicament, considering I have $751.67 by the end of each month. Even if I spend less on personal spending each month, it still wouldn't be anywhere close near what I need to spend on interest. The only thing I can do is get a better paying job. But now the question is, how much would I need to at least get paid before I could afford such a house?
$1,401 - $688.33 = $712.67
I need to make about $712.67 more than what I make now. Which means:
$712.67 + $1,440 = $2,152.67
I need to make about $2,152.67 a month in order to want to afford that kind of mortgage for this dream house. There's a way I could accomplish this with my current job. Since I only work 15 full work days, I could up the ante. Since I make roughly $96 a full day:
$2,152.67 / $96 = 22.42 days
I could work 23 full days a month. Which generally could work out pretty well. That would mean working every single week day full time and maybe even some full day Saturdays a month (I don't work Sundays).
But that time frame isn't ideal for me. My ideal time frame is to be able to live in my dream home by the time I'm 30 in about 7 years. It may just be wishful thinking, but how realistic is that goal? How much would I need to make to afford that mortgage in 7 years?
126,163.55 / 84 = 1,501.947 + $2,152.67 = $3,654.62
I would need to make about $3,654.62 if I were to afford this house in 7 years. That would mean I need to make (3,652.62 - 2,142.67 = 1,509.95) about $1,509.95 more than I could potentially make working 23 full days. It doesn't take a wiz to know that amount is literally impossible with my job unless I work major overtime, which is still practically impossible. If I wanted to afford this house by the time I'm 30, I would need to find a higher paying job.
In conclusion, in my current predicament, I cannot afford my house in a reasonable timeframe. I would almost be a senior citizen by the time that happened. I would have to make some changes to my work life in order to afford my dream house before I'm 40. Ideally though, if I wanted my dream house by the time I'm 30, I would most certainly have to get a different, higher paying job. However, I am totally fine with achieving my goal by the time I'm 37. But I would have to make changes.
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