this post was submitted on 06 Oct 2024
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A Boring Dystopia
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It's a crude rule of thumb that was questionably useful when it was first promulgated, and now is entirely adrift from reality.
It's extremely difficult to pull off today, but that doesn't mean that it isn't an appropriate figure. The "wants" and "investment" categories have effectively been wiped out for a large number of people, which isn't a healthy and sustainable way to live long term.
This is what the entire "living wage" argument is based on. Regular people aren't making enough money to have a healthy budget. Well, some are just over inflating wants, but that's not the people I'm talking about.
The notion that housing should take up a particular portion of your income is fundamentally flawed. It relies on a fixed relationship between prices of different classes of goods, when that relationship varies over place and time.
Which situation is better: making 50k take-home and paying 15k in housing costs (30%), or making 100k and paying 50k (50%)?
There are real problems in the housing market and overall affordability, but this statistic is like trying to measure national health by the percentage of people drinking 8 glasses a day of water.
50k and paying 15k, because that person is living within their means. They probably share a shitty apartment with roommates and have a crappy car, but they can sustain their lifestyle. Eventually they will retire with investments covering the exact same income that they have now.
100k paying 50k is a hot shot, a flash in the pan. They have a higher quality of life right now, but they will likely crash and burn. They cannot live and invest enough money to sustain their lifestyle, and they won't know what to do when they suddenly have to live on half of what they used to make.
Making more money does not mean you have better finances, it usually just means you own more expensive stuff right now.
Edit: the one exception is the 100k paying 50k and then living like the 50k paying 15k for literally everything else. They are not the norm, but those people will probably be ok. They'll have to move when they retire though, or have like no paid fun ever.