housing Archives - Critical Financial

Home Posts Tagged "housing"

Fact Check Finance: Should Housing Costs be 30 Percent of Your Gross Income?

Posted by Flanice Lewis on Sep 9th, 2019 · 0 Comment

The unwritten rule is that your housing costs should not exceed 30 percent (sometimes 28 percent) of your gross income. Historically, expenses any higher than this indicated a cost burden and lack of affordability. Although widely used for decades, the rate may be unrealistic in this day and age. Gross vs. Net My first issue with the practice is the use of gross income. Gross income is your pay before...
more →

Here are some simple guidelines that will help you build wealth:

1) Do the math. Get a budget and calculate your net worth

2) Get an emergency fund. Save at least 6 months worth of expenses

3) Limit costs. Spend no more than 30% of your income on housing

4) Max your retirement. Maximize contributions to your tax-deferred retirement accounts

5) Pay yourself first. Set aside money for yourself before you take care of your other bills

6) Set goals. Goal let you get ahead faster

7) Avoid high interest debt. Avoid credit cards, title loans and other usurious loans

8) Diversify. Diversity your assets.

Fact Check Finance: Should Housing Costs be 30 Percent of Your Gross Income?

About the Author

Critical Financials’ Basic Personal Finance Rules

Support Our Advertisers