So, is your current home affordable? If it's not, it might be time to consider a cheaper place to rent or think about refinancing if you can. Here are 3 ways to budget with irregular income. If you have income that fluctuates throughout the year, budgeting can be very difficult. Create a household or personal budget that really works. If you're married or have a partner, keep in mind that this calculation includes the entire household, so you'll need to include their salary and debts in the equation as well. Clear graphs, dollar values and percentages so that you can adjust things as you go. The 28/36 rule stipulates that in order for a home to be considered within your budget, your housing expenses (such as mortgage payments, taxes and insurance payments) shouldn't exceed 28% of your gross monthly income. Your total debt (including credit cards, student loans and car loan payments) shouldn't exceed 36% of your gross monthly income. If you're looking to buy a home, some financial experts also recommend using the 28/36 rule to determine what you can afford.

The 30% rule is based on how much a family can reasonably spend on housing and still have enough money left over to afford everyday expenses like food and transportation.

That means if you earn $75,000 a year before taxes, you should spend no more than $1,875 a month on your housing.

If you own your home, you should include interest, homeowners insurance, property taxes and utilities, in addition to your mortgage. The most common rule of thumb to determine how much you can afford to spend on housing is that it should be no more than 30% of your gross monthly income, which is your total income before taxes or other deductions are taken out.įor renters, that 30% includes rent and utility costs like heat, water and electricity.

Household budget by percentage