If you’re already renting and facing a price increase, double-check the laws in your area to make sure your landlord isn’t stepping out of line. Most states require landlords to give advanced notice of raises-usually 30 days-and some local governments even put limits on how much landlords can hike up your costs.įind expert agents to help you buy your home. Let’s talk about it.įirst, you should know the state you live in probably has laws your landlord has to follow if they decide to raise your rent. You may be wondering how rent increases play into all of this. Simple, right? Here are some other estimates of how much of your income you should spend on rent, based on how much money you take home each month.Īnd by the way, you should keep renting until you’ve paid off all your debt, built a full emergency fund worth 3–6 months of your typical expenses, and saved up a strong down payment for a house (more on that later). So, with a $56,000 salary, the most you should spend on rent in a month is $933.50.If you multiplied that take-home pay by 0.25, you’d wind up with $933.50.Your monthly take-home pay would be around $3,734.Ta-da! That’s how much rent you can afford. Then, multiply your take-home pay by 0.25. You can figure this out by looking at your paystub or (if you have direct deposit) simply looking at your bank account to see your monthly deposits from your employer. To calculate how much you should spend on rent, you need to know your monthly take-home pay-your gross pay minus any tax or health insurance withholdings. Just kidding, this isn’t complicated at all! Get out that fancy graphing calculator you haven’t used since 10th-grade algebra class. How to Calculate How Much Rent You Can Afford Don’t volunteer to be broke by paying too much for rent. Worse, it’ll be really tough to find enough money to get yourself out of debt or, if you’re already debt-free, save up for a down payment on a house. Sure, you’ll still be able to pay for food and put gas in your car, but you won’t have a whole lot left to spend on life’s other necessities (and, no, goat yoga is not a necessity). But if you spend more than 25% of your take-home pay on rent, your budget will wind up being really tight. After all, there are plenty of people who spend a lot more than that on their housing costs. We know, 25% might seem like a low number to you. And remember, that’s 25% of your take-home pay-meaning what you bring in after taxes. That means if you’re bringing home $4,000 a month, your monthly rent should cost you $1,000 or less. Your rent payment, including renters insurance (more on that later), should be no more than 25% of your take-home pay. 1īut you probably have an important question on your mind: How much rent can I afford? Let’s dig into how much you should spend on rent, plus why you shouldn’t feel bad about renting. Whatever your reason for renting, you’re in good company-more than 100 million people in America are renters. You might just be starting out after leaving your parents’ house, or you might be working hard to get out of debt. That’s no biggie-it’s okay to rent! Sometimes renting really is the best option. Okay, so you’ve crunched the numbers and decided that, for now, buying a house isn’t going to happen.
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