You can pay for it, but is it too much?

Author

AJ Neeme
June 15, 2025

In partnership with

Quote of the week: If you can’t pay for it twice, you can’t afford it - Jay Z

We’re 6 days removed from Summer officially starting.

But, winter in Zurich is putting up a pretty hard fight (It literally hailed on us yesterday).

As summer comes along, expenses go up too. This is the season I do most of my travelling, activities and outings.

Which meant, early on in my career, the season where whatever I had saved up during the winter months would get obliterated.

It was a combination of bad planning & not really knowing the difference between being able to pay for something and being able to afford it.

On an intuitive level, we all know the difference: If you earn $2,000/month, you probably shouldn’t get a car loan for $1,500/month. Yes, you can pay for it, but come on.

The problem is, it’s usually not this obvious. How much can you afford to pay for a house ?

Let’s take a look at 3 affordability indicators I use for some of life’s biggest decisions.

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Affordability indicators:

  1. Overall Expenses: Day to day, month to month, here’s a quick breakdown of expenses I try to abide by:
    Fixed+Variable expenses: below 60% (necessary expenses like rent, insurance, grocery)
    investing/savings rate: 25-30%
    Guilt-Free Spending: 10-15% (this includes outings, and saving for future vacations)

  2.  House loan affordability: 20% Downpayment + Loan worth 3X gross household income. This is a hard one to abide by because even on 2 incomes, most housing in Zurich would be out of reach.
    But, buying a house isn’t a priority for us. Should we get into a loan that’s larger than this guideline or put down a downpayment of more than 20%, the opportunity cost isn’t one we’re willing to pay.

  3.  Start with saving rate and let everything flow from it: One can argue that as long as you’re savings 25-30% and not living above your means, everything else is permissible. imo you still need other guardails.

TL;DR – Affordability Isn’t “Can I Pay?”

It’s:

  • Can I pay and still make progress?

  • Can I pay without borrowing from my future?

  • Can I pay and still sleep well at night?

How I can help:

This stuff only works when you do something with it.

If you're ready to ditch guilt-budgeting and build a money system that feels good to use, here's how I can help:

  1. If you’re a Do-it-Yourselfer, grab the guide:The Busy Beginners' Money Guide to Build Wealth & Spend Guilt Free - A step-by-step way to set up your money for peace of mind + everything I wish I knew about ETF investing.

  2. Need some help ? Reply to this email: Ask me a question or share what you're working through. I read and respond to every message (No investment advice).

See you next week!

The information contained in this newsletter is for general informational purposes only. It should not be construed as financial or investment advice. Please consult a qualified financial advisor before making any investment decisions.