Answer:
Explanation:
The 25% taken out of your net pay is known as "FICA" taxes. "FICA" stands for Federal Insurance Constribution Act. This is the money taken out your net pay which is the money left over after the deductions in a paycheck are taken out. It is used to the taxes Social Security and Medicare. Your housing affordability is based on your gross annual income. One way to determine how much house you can afford is to multiple the gross annual income by 4. This is a rough estimate of the house you can afford. If you were actually buying a house other factors would be considered.
- Gross annual income x 4 = amount you can afford for a house (maximum amount of money able to be spent on a house).
Definitions
⇒ Gross income
⇒ Net income
⇒ Wage Earner
An example:
Let's say a married couple both have jobs.
The Husband, who will be named Elijah, makes $46,000 a year as an Online Banking Specialist.
The wife, who will be named Charlotte, makes $56,000 a year as an flight attendant.
A way to figure out the gross anual income is to add both yearly incomes together.
$56,000 + $46,000 = $102,000
REMEMBER: Gross annual income x 4 = amount you can afford for a house
$102,000 * 4 = $408,000
The amount of money this couple can afford for a house is
$408,000
This is maximum amount of money they can spend on housing.
