Shortly after finding our new job in Hawaii I set to work creating a new budget. A Realtor, lender or landlord would tell you to multiply your monthly income by .35, subtract your monthly debt payments (credit card, student loan, car pmts, etc.) and that's how much you can afford. But for Hawaii I think that is too generous because of the higher cost of living. I like to know more exactly what I'm up against and so first I figured our take home pay. Then I researched the average cost of utilities, insurance, food and other budget line items. I subtracted all these from my take home pay as well as my usual monthly expenses like clothing, gifts, savings, tithing, etc. and what's left over is what I can use towards housing.
Here's an example. Let's pretend (for ease of calculation, this is not our real take home pay or monthly expenses) that our yearly salary is $100,000 which would mean that our monthly take home after taxes would be $6,500. A Realtor, lender or landlord would say I could afford $6500*.35=$2275/month minus any debts. Let's continue to pretend I have $500/mo in debt payments on cars, student loans, credit cards or whatever (I don't). This means I would qualify for a monthly housing payment of $1775/mo.
But if instead I take the researched average amounts of utilities and expenses and add them to my current expenses and subtract all this from my current take home pay I instead get (again these are researched average expenditures--not my real income or expenses)
take home $6,500/mo
employer withholdings for retirement, health and other benefits $700/mo
tithing and offerings $700/mo
utilities: water, elec, garbage, sewer $500/mo
phone, cable, internet, cell phones $400/mo
2 cars: payments, insurance, gas, maintenance $1000/mo
other insurance, clothing, gifts, kids lessons, dates, entertainment $600/mo (this is not much money to cover this many things!)
This leaves about $1200/month for housing. This is assuming the $500 in debt (from example #1) is car payments. YIKES! and that's on $100,000 per year!!!
Double yikes when you compare that to the prices of homes in Hawaii. $1200/mo will buy you a $250,000 home (if you have a down payment). $250,000 would buy a decent little place in Lakewood where I currently reside but on Oahu on the Northshore it will get you a 600 sq ft shack 2 blocks from the beach with no land. In Honolulu you might be able to find a 2 bedroom condo, or at Scofield Barracks (not a desirable area) you can find a 3 bedroom, 1400 square foot fixer upper.
This leads us to the next question: Where do you want to live? This will of course depend on where you work, what school you want your kids to go to, if shopping is important to you, what kind of scenery you'd like to be surrounded by.