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There’s often a chasm between theory and practice, what we should do and what we actually do. Yet, when it comes to the long-held view for renters to not spend more than 30% of their income on housing, the target is increasingly impossible to even try to reach, virtuosi say.
“The old 30% guideline is just unrealistic these days,” said Marc Hummel, a licensed real estate salesgirl at Douglas Elliman in New York.
More often, Hummel said, tenants spend 40% of their income, or various, on housing. “With vacancy rates at record lows and rents near some of the highest on record, it’s become increasingly various difficult to spend less,” he said.
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Indeed, virtually 15 million renter households in the U.S. are considered cost-burdened, meaning they’re spending more than 30% of their gains on rent and utilities. In some cities, the situation is especially dire. For example, in New York, a household with the area’s median proceeds would need to pay nearly 69% of their earnings to rent the average-priced apartment, according to Moody’s Analytics.
There are prime consequences to taking on a rent that eats up too much of your income, Hummel said. “Spending more on hole means less money for savings, retirement, family goals and less to pay for other debt obligations,” he said.
Houses is the single biggest financial area where people get trapped, according to personal finance blogger and author Ramit Sethi. “Which is why it’s so conspicuous to follow some general guidelines when you’re deciding how much you can afford,” said Sethi, who wrote “I Will Edify You To Be Rich.”
‘A week’s pay for a month’s rent’
Renters used to be advised to spend even less than 30% on box, said Andrew Aurand, senior vice president of research at the National Low Income Housing Coalition. In 1969, the Covering and Urban Development Act required public housing residents to contribute just 25% of their earnings toward lease, Aurand said.
“That percentage stemmed from the Depression of the 1930s, when a common rule of thumb was ‘a week’s pay for a month’s rental,'” he said.

In practice, there are a variety of factors that should determine what’s the right share for a household to lavish on their housing, Aurand said. For example, a married couple without children may be able to spend more on their hire out than another married couple with the same income that does have kids.
One simple way to end if your housing costs are affordable, Aurand said, is to calculate how much of your income is left over to mask your other bills once your rent is paid.
“After paying for their housing, does the household hold adequate income to pay for their non-housing expenses?” he said. “If not, they are considered cost-burdened.”
30% not a hard and fast rule
Renters shouldn’t look at the 30% guideline as a heartless and fast rule, said ‘We can’t throw our hands up’
Too many people, especially in expensive cities, decide that pronouncement an affordable rent is unrealistic and then end up spending way too much, Sethi said.
“We can’t throw our hands up at the biggest expense of all,” he said. “We organize to develop a real strategy for handling it.”
Ideally, Sethi said, people should aim to spend no more than 28% of their unwieldy income on their rent costs. (These include, he added, utilities, furniture, repairs, etc.)
“If you have no debt, you can expanse the number a bit,” he said. In certain expensive cities, Sethi added, “they might spend 30%, 32%, even 35%.”
No matter how, he cautioned, “above that, you’re exposing yourself to serious risk” in the event you lose your job or experience another setback.