Affording a New Home: How Much of Your Monthly Income Should Go Towards Your Mortgage? 28%? 25%? Less Than 20%?

If your family is currently considering buying a new home, one of the biggest questions should be this:

“What percentage of our household monthly take-home income should go towards our mortgage payment?”

If you depend on the unanimous results of a Google search, the answer is 28%.

If you put your faith in the results of a lender or a mortgage calculator found on the website of a new home development, you may be pleasantly surprised to see how big and nice of a home you can “afford” based on your household monthly income.

However, Dave Ramsey teaches no more than 25% of your household take-home income; in an effort to prevent becoming “house poor”; where you could afford to pay your monthly mortgage but could not live a comfortable lifestyle.

After meeting a 2nd time with our Associate Financial Consultant, Christina Tumbleson at Charles Schwab, where my wife and I recently starting investing our money, we learned that we are spending around 13% of our monthly take-home income on our monthly mortgage.

However, that number was based on the total of both of our full-time salary positions. That does not account for the monthly income I make from my 5 side hustles; for example, I made $531 last month from my two YouTube channels alone.

When we consider all my side hustle income, we can easily yet conservatively count on another 1%.

Therefore, at around 12%, we are fortunately spending a little less than half of the conservative 25% of take-home income Dave Ramsey suggests.

While it is undeniable that at age 37, my wife and I are at solid places in our careers and are being paid accordingly, we also have no other debts other than our home. I have been driving the same 2004 Honda Element for over 13 years now. Not to mention, I spend literally all my free time on my 5 side hustles; which provides passive streams income for our family.

But perhaps most important is the fact our 1900 square feet, 4 bedroom, 2 car garage home is still much more humble than it needs to be, according to popular American dream standards.

The main take-away is this: We choose to live way below our means.

If we wanted to sell our current home, we could pocket an easy $50,000 and then “upgrade” to a half a million dollar home. I could even trade in my old Honda Element for a new Toyota Tacoma.

We could “afford” to do that.

But if I am going to impress anyone by my finances, it’s not going to by how much I spend, but instead, how amazingly little.

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My 5 SEO Side Hustles, Which All Made Me a Minimum of $1,000 Each in 2018; Creating Passive Income

What is SEO? It’s search engine optimization. SEO is knowing how to cater to the free market of the Internet by publishing articles, links, videos, and social media messages, based on what people are already searching for. It’s behind-the-scenes marketing knowledge and skills that allow people like me to make money on the side by helping other people grow their brand name online; as well as my own.

I remember back in high school (my 20th high school reunion is coming up this summer!) when I was planning my proposed future career: I wasn’t that inspired by the thought of making money, but instead, just to be “happy”. But several years later, having entered the work force with thousands of dollars of debt from college loans, then getting married a few years later during the Financial Crisis of 2008, I think it sort of scarred me. Or at least it rewired my brain in regards to how I perceive finances:

Use your time, energy, and talents to control money before it controls you, by default.

That serves as my SEO Side Hustler backstory. It explains why one of my superpowers is the ability and the drive to be constantly making money on the side; no matter how great my actual full time job. I’m sure there’s some psychology in there, that having felt helpless and hopeless with finances in my late 20s and early 30s, I now feel the need to reverse my role with money and instead be in complete control of my finances. I have basically adopted my Italian grandfather’s mindset, as he lived through the Great Depression as a 1st generation Italian-American in an orphanage; and was one of the most financial conservative men I knew. 

What are my hobbies, besides hanging out with my wife and kids? The answer: My 5 side jobs. 

My brain interprets these SEO side hustles as (mandatory) fun. Last year, in addition to my well-paying full-time job in HR at a Fortune 500 company in Franklin, Tennessee (though my wife actually makes more than me at her full-time job), I made thousands of dollars on the side by basically goofing off on the Internet after my wife and kids fell asleep each night. Granted, I don’t get a lot of sleep myself, except on Saturday mornings when my wife gets up at 6:00 AM with kids and lets me sleep in around 8:00 AM! 

Here’s how I made thousands of dollars, on the side through passive income, in 2018 by utilizing my knowledge and skill set of SEO; and plan to make even more in 2019…

#1 My 1st YouTube Channel:

Named after myself, Nick Shell is a YouTube channel with over 6,200 subscribers. I serve as a mentor who helps young men find their own masculine identity and confidence, despite their perception that early male pattern baldness takes away their value as men.

Thanks to the ads that play before each video, I made nearly $3,000 in 2018 from this channel; see below. It also helps that for 3 months straight in 2018, I kept shaving my head, which made me a lot of money as I have since then been able to casually yet effectively sell the electric clippers I used to do it, through the use of Amazon links. (More on that in a minute.)

#2 My 2nd YouTube Channel:

Named after this blog itself, Family Friendly Daddy Blog currently has over 1,500 subscribers. I named it after my blog, as a way of extending my brand name online. On this 2nd YouTube channel, I mainly talk about DNA test results and cultural perceptions of society. Some of my most popular videos are where I feature vehicles that car companies send me because of my blog. (More on that in a minute.) I have learned that producing nearly 3 videos per day, on each channel, grows my audience more than producing fewer, yet higher quality videos.

Quantity over quality is my formula. Even though I have the skill set to make polished, edited videos with music and words that pop up on the screen, I’ve learned that I earn more revenue from the dozen videos I can make in the same amount of time it would take to make one high-quality video.

#3 My website, Family Friendly Daddy Blog:

Yep, you’re on it right now. I created this website over 9 years ago and have regularly maintained it with new posts. (If nothing else, I publish 2 new posts every Thursday: A letter to each of my children, which I have been doing since my wife announced her pregnancy for them both, accordingly.) That’s one of the reasons it has such strong SEO; making it very easy to find when people Google nearly anything. My blog is a dragnet for search terms.

The name of this blog itself, while it may sound a bit corny, was something I strategically created for the purpose of SEO. Therefore, on a daily basis, I have requests from 3rd parties requesting to be featured as a guest blogger on my site, to boost their own website’s SEO. For the right price, I say yes. From these fees alone, I cleared well over $1,000 in 2018.

That’s not including the free vehicles my family was loaned, complete with a free tank of gas, for our family vacations: Mitsubishi sponsored our trip to Sacramento, Mazda sponsored us for Lake Tahoe, and Chevy took care of us for Destin. Plus, I got sent on an all expense paid trip to Florida for the Grapefruit League Baseball Series, thanks to Toyota. Additionally, my kids also get some free toys this year and our family is regularly offered free tickets to events in Nashville, like Frozen on Ice. And all of this is simply because of this blog’s very healthy SEO.

#4 Handling SEO for a major university in the Nashville area:

I’ll keep the name and dollar amount confidential on this one, but I serve as the behind-the-scenes SEO independent contractor for a particular department. I handle their Twitter account, I’ve produced promotional videos for their YouTube channel, and I manage an ongoing blog series which features its employees in a more casual light, so that people in the department can learn more about one another; while increasing the university’s presence online. 

#5 Amazon Associates:

Anytime I place a link to Amazon for a product like this really cool Mama Bear t-shirt for moms, whether it’s in a description for one of my videos on either YouTube channel, or in one of my blog posts, I get a cut of the sale that is made. Even if the person doesn’t buy the actual product, as long as they buy something while they are browsing through other suggested items, I still get a cut of that sale. It’s Amazon’s way of thanking me for directing a new sale to them. In 2018, I made right over $1,000 from these links; even though I didn’t even start the program until February. See below.

I am a huge fan of the book Rich Dad, Poor Dad by Robert Kiyosaki. The book focuses on the importance of creating venues of passive income; making money while you sleep, which is especially what my YouTube videos and Amazon links do for me. The author explains that it’s not enough to become and remain debt-free or pay off mortgage your early, but also to start making side incomes (ideally passive ones) and then investing that money. He presents that formula as the way to graduate from the middle class. So far, it’s working for me. 

At this point, our family could move into one of those McMansion homes in the next neighborhood over; increasing our square footage by 50%. We could afford it, but we instead choose to keep our current lower overhead and send the extra income towards paying off our mortgage early, building our kids’ college fund, growing our retirement, and focusing on our financial investments through Charles Schwab. I could also pay cash for a brand-new vehicle, trading in my old 2004 Honda Element with 180,000 miles and a salvaged title; and still have thousands more in the bank and investments. But instead, there’s a sense of pride in knowing I’m living below my means; not simply within them. 

So while I don’t get much sleep at this stage in my life, I can at least known that I am constantly making money even when I do sleep.

I am Nick Shell- and I am the SEO Side Hustler. 

At Age 37, My Wife and I Have Begun Investing Our Money, Thanks to Charles Schwab

At age 37, I am fully aware that I am now at the halfway point of the average American lifespan. I suppose this is literally the most appropriate time to have my midlife crisis.

Finally, I can trade in my old paid-off Honda Element for a brand-new Jeep Wrangler, take a spur of the moment trip to Spain, and start training for American Ninja Warrior…

But instead, I am focusing all that energy into planning for the 2nd half of my life- and my wife’s, as well as our children’s future.

My wife and I got married 10 and a half years ago, right in the middle of the 2008 Financial Crisis.

The first half of our marriage was spent building our careers from entry level positions and trying to manage the tens of thousands of dollars of debt we were in; largely due to college loans and our wedding.

The most recent half of our marriage began with us finally becoming debt-free in 2013, buying the last steal-of-a-deal new home in the Nashville area, and both finding ourselves far enough into our careers and side hustles that we started making a comfortable living.

But as Maslow’s Hierarchy of Needs pyramid explains, your goals and motivations evolve as you overcome your previous more basic needs and desires.

Now the focus is… how to invest our steady stream of income into our future.

I thought it was as simple as just paying off our house, then worrying about retirement afterwards.

However, my wife has been listening to the Moneywise program on Moody Radio on the way home from work each day. She explained to me that based on our interest rate on our home, it would actually be a better investment of our money to start building our retirement now, alongside paying off our mortgage early.

My wife then set us up an appointment with Charles Schwab financial investment company, which she had been hearing endorsed on Moneywise.

Today was the big day.

Our financial advisor helped us rollover my 401K from my previous employer to traditional IRA and select a portfolio for it. She also gave us direction on determining our financial goals so we could better plan our retirement and our kids’ college funds.

This was a major milestone for us. Here’s to the second half of life!