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0 pointstomsaffell15y ago0 comments

Yup, but bear in mind that's between two people ($1300 per month), and after tax break (so looks like $2000 on paper, but is actually only $1300 out of pocket). It's on a 3.75% rate (7 year), and excludes principle repayment (which is not a cost). Includes property tax. So it's very comparable to rent.

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7 comments · 2 top-level

tomkarlo15y ago· 3 in thread

While principle repayment is not a cost, it's a cash flow, so you can't exclude it when you're trying to figure out if you can cover your monthly nut. Similarly, you can't include the present value of expected future income from the sale of the business into your current estimate of what expenses you can cover.

tomsaffellOP15y ago

Principle repayment is optional (when taking a loan). It only makes a small difference to interest rate [1]. So for the purposes of discussing cost minimization, it is legitimate to exclude it.

[1] http://www.schwab.com/public/schwab/banking_lending/mortgage...

jacques_chester15y ago

Pedantic nitpick:

Principal is the subject of a loan, or the leader of a school. Principle is an idea that people may hew to and argue about.

tomsaffellOP15y ago

Could those who are down voting please explain why.

MatthewB15y ago· 2 in thread

Im looking for apartments in SF right now and can't find anything (decent) under $1700 for a 1 bed 1 bath. Maybe I just have expensive taste:).

timr15y ago

No, he's only counting interest on the loan, and his wife is paying half. It's not even remotely a fair comparison to a single founder living in the city.

A more realistic "cheap" lifestyle in SF is probably $2500 a month if you're living on your own. And renting is substantially cheaper than owning here, unless you play stupid accounting games to pretend that you're not actually spending money.

tomsaffellOP15y ago

>unless you play stupid accounting games

What games would those be? What I did was: a) exclude principal repayments (they are not a cost, they are an investment. They are also entirely optional - any house buyer can take an interest only mortgage). b) factor in the tax advantage (which is actual money in my pocket, either by paying less withholding, or by getting a check from the IRS at the end of the year).

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