Alicia's monthly income is $1,500 she is currently running 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
Based on Alicia's monthly income of $1,500, her current apartment rent of $750 seems to be within her affordability range as it accounts for half of her income. However, if she decides to buy a house with a mortgage of $1,350 a month, it would consume around 90% of her income.
This financial decision is potentially irresponsible for Alicia because committing such a large portion of her income to the mortgage leaves very little room for other essential expenses, such as utilities, groceries, transportation, and savings. It is advisable to allocate no more than 30% of one's monthly income towards housing expenses.
By choosing to buy a house with such a high mortgage, Alicia may face difficulties in meeting her basic needs and potentially fall into financial distress if an unexpected expense or emergency arises. It would be more responsible for her to consider a less expensive housing option that fits more comfortably within her income.