Find Out How Much Annuity You Can Afford With the 40X Rule
To live a comfortable life with money left for other things, it is important to make sure that we can truly afford housing costs, one of the biggest items on our budget. One guideline for determining how much rent you can afford is the “40 times rent” rule.
In some cities, such as New York, homeowners require tenants to have an annual income of at least 40 times their monthly rent. For example, if the rent is $ 2,000 a month, you would need to make $ 80,000 a year to get approved.
Unless you are in an area where homeowners have this requirement, this is still a simple guideline to consider. In the example above, the $ 2,000 rent is 30% of the monthly income of that $ 80K salary, which is close to our recommendation of 28% for the housing budget .
As rental prices soar across the country, it can be difficult to meet any of these requirements, but don’t be afraid to bargain with your landlord to come close to this 40x rule of thumb. In addition, as WiseBread points out, in the end, what you are comfortable paying for is also important.
The Easy Way To Decide How Much Annuity You Can Really Afford Wise bread