As explained by Andy Josuweit, CEO of Student Loan Hero, spending a great deal of your money on mortgage or rent is one of the main reasons that people face financial hardships. The term is “house poor” and refers to the situation of a person who spends so much of their monthly income on housing costs, that it becomes impossible for them to achieve other financial or personal goals.
As a general rule, Josuweit suggests limiting the housing expenses to a maximum of 20 percent of your income, preferably less, “as opposed to the 28 percent to 30 percent limit that most banks allow.”
Speaking of housing, check out these 10 Unexpected Things That Decrease Your Property Value!
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