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What It Means to Rent What You Can Afford

July 08, 2019

Tip of the Week

Rent what you can afford.

1 min read


Consideration: If you have a lot of debt, your monthly rent plus your other loan payments shouldn’t exceed 43% of your monthly income. You may have to seek cheaper alternatives if it does.

Let’s break it down:

If your gross pay is $3,000 a month, you should pay no more than $900 a month.

To put another way, if your rent is $900 a month, your annual income should be at least $36,000.

Jargon Hack

What is gross pay?

Gross Pay

Gross pay is the amount you get paid prior to taxes being taken out of your paycheck.

Find out

Jargon Hack

What is a security deposit?

Security Deposit

A security deposit is money you need to put down prior to moving in to a rental, usually in addition to your first month’s rent. It’s protection for your landlord against your not paying rent, and property damage. You typically get your security deposit back with a small amount of interest when you move out.

Find out

While the 30% rule should be your goal, remember there is a well-documented shortage of affordable housing in the U.S., and nearly 40% of renters in the U.S. spend more than 30% of their income on rent, according to research. But doing what you can to get your rent costs down will only help you in the long run.

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By Stash Team

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