Are You Spending Too Much on Rent?

The 43% rule states that monthly housing costs and debt payments should be no higher than 43% of your monthly income. For example, if your household monthly income is $10,000, your total rent and monthly debt payments should not exceed $4,300.

Sticking to the 30% or 43% rule may be challenging, depending on your financial situation. If you’re a renter hoping to own a home, saving for a down payment and final cash to close may prove difficult if you’re burdened by debt or high rent expenses. If this is the case, consider cutting costs.

There are ways that cost-burdened renters can save money and reduce monthly debt payments. For example, refinancing student loans for a longer term and lowering your interest rate will lower your monthly debt payments. You can also consider a roommate to help with rent.

With all that said, it’s most important to take a critical look at your expenses. to help you create a budget and cut down on spending. Some standard fees that keep renters from saving money are eating out or Doordash, online shopping like Amazon, crazy utility usage, and subscription services like Netflix.

Wherever possible, reducing your spending can more easily save for a down payment and final cash to close on a house rather than spending all your money on those high rental prices. By buckling down, you can create a better financial situation for yourself in the long run.