How Much Home Can A Debt Free Person Buy in Atlanta?

How Much Home Can A Debt Free Person Buy in Atlanta?

Not sure if you’re like some people but some people have Moms that tell them about buying Atlanta homes and they say to take your annual income and multiply it by a number to get what you would qualify for.  Well, Mom is assuming that  you don’t have any debt when she does this.  The number 3 times your annual salary works really well, only if you have absolutely no debt.  No credit cards, no car payments, no student loans, no cell phone bills, etc.

In this example a person making $40K a year could afford a $135,000 home.

So what does the real world look like.  Assuming you have a $250 a month credit card bill, a $350 car payment and $250 of miscellaneous expenses per month (this number should be MUCH, MUCH higher – think groceries and food).  You’d be able to afford, $28,000 home.  Yes, a fraction of what you make. 

So the lesson for today is to be debt free.