What Percentage of My Wages Should Go Towards Housing?

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Most experts suggest spending one third of your monthly income on your housing payments. Find out what percentage of your wages should go to housing with help from a personal finance professional in this free video clip.

Part of the Video Series: Money Management
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Hi, my name is Andrew Schrage, co-owner of Themoneycrashers.com, personal finance website, and today we're going to discuss how much of your monthly income you can allocate towards your housing payment. Most experts suggest spending one third at max of your monthly income on your housing payments but sometimes this can even be too high. To account for this, it's better to back your way into this number to figure out exactly how much you can afford. To do this you first want to add up your non-housing payment expenses, things like transportation and childcare expenses to come up with a total number there. You'll also want to add up how much you plan to save for retirement, also aspects like saving for your child's college fund and this will be your total planned or current savings number. You'll then add your savings number to your non-housing payment expenses and come up with a total number which you can then subtract from your monthly income to figure out exactly how much you can spend on your monthly housing payment. By doing this you can ensure you are not going to be committing to a payment that you can't afford. Once again this is Andrew Schrage of Moneycrashers.com discussing how much of your monthly income to allocate towards your housing payment.

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