Beyond the 30 Percent Rule for Housing
Handy numerical benchmarks can help us get our bearings, but financial decisions are more individual than our favorite personal finance proverbs would have us believe. Yes, if you want to save for retirement, you should put five percent of your income into savings every month. Thanks, Uncle Moneybags, but I don’t make enough money to cover my bills; I worry about how far past maxed out my credit card has to get before it stops letting me make purchases until I make a payment. You might as well tell me how big a horse I should buy based on my body weight, with the levels of aspiration encoded in your financial advice. Save so much for retirement that you can withdraw four percent each year, or is it three percent? Eat five servings of fruits and vegetables per day, never mind that no one will tell you how big a serving is, as if you could afford fruits and vegetables. Only date people who are at least half your age plus seven, as if anyone would go on a date with your broke self. When you think about it in this context, the rule that you should not spend more than 30 percent of your income on rent, and that your bougie counterparts should not spend more than 30 percent of their income on mortgage payments, is just another platitude. If you are struggling to pay your rent and your other bills, contact a Boca Raton debt lawyer.
Who Decided That 30 Percent of Your Income Is a Reasonable Amount to Spend on Rent?
In the late 19th century, the first time governments thought about what counted as affordable for the growing urban working class, they settled on the belief that housing was affordable if a week’s wages paid a month’s rent. By this logic, people who spent more than a quarter of their income on housing were cost burdened and therefore eligible for social welfare benefits. By the 1930s, so many people were cost burdened that, to save face and to save money, governments set 30 percent as the new benchmark.
Can 70 Percent of Your Income Pay Your Non-Housing Expenses?
How burdensome your rent payments are is more individual than economic data would suggest. It depends how much everything else costs. As Hannah Grabenstein of PBS news points out, billionaires can spend 99 percent of their income on housing and still have plenty of money left for other necessities. Meanwhile, seniors who live in a house with a paid off mortgage, making their housing costs negligible, might still struggle if Social Security is their only income, since groceries, transportation, and Medicare premiums are so expensive. Trust your intuition about whether you are cost burdened; don’t let people tell you that you are extravagant if you spend more than 30 percent of your income on rent or that you are whining about nothing if you spend less than 30 percent and are still feeling financially stressed.
Work With a Debt Lawyer About Coping With Expensive Rent
A South Florida debt lawyer can help you if you are struggling with debt because rent in South Florida costs more than 30 percent of your income. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.
Source:
pbs.org/newshour/economy/is-the-30-rule-for-rent-still-relevant-heres-what-experts-think
