Alysha’s monthly income is $1,500. She is currently renting an apartment for $750 a month. She wants to buy a house. The mortgage would be $1,350 a month. Analyze her decision and state why such a financial decision is responsible or irresponsible.(
Alysha's decision to buy a house with a mortgage of $1,350 per month while earning a monthly income of $1,500 can be considered financially irresponsible.
This decision seems imprudent because her total monthly housing expenses would exceed her monthly income by $150. This suggests that Alysha would struggle to meet her other financial obligations such as utilities, groceries, transportation, savings, and potentially unforeseen expenses or emergencies.
It is generally advised to spend a maximum of 30% to 40% of one's income on housing costs. In this scenario, Alysha's mortgage payment alone would account for 90% of her monthly income, leaving little room for other necessary expenses and financial stability.
It would be more responsible for Alysha to consider alternative housing options, such as finding a less expensive house or renting a cheaper apartment until her income increases. Making a decision that aligns with her financial means and allows for a reasonable amount of disposable income is crucial for maintaining financial stability and avoiding potential financial difficulties in the future.