Don’t Be House Poor!

Reader Question: I read where you recommend having your house payment or rent at an amount that’s 25 percent or less of your monthly take-home pay. Does this figure include taxes and insurance too?

Yes, it does. I’m trying to keep you from being “house poor.” Did you know you can qualify for a house payment, with taxes and insurance, that’s close to half of your take-home pay? That’s ridiculous! When you don’t have room in your budget to do anything else that matters because your house payment is so large, that’s what we call house poor.

When your income minus your basic living expenses equals almost nothing, it means your basic living expenses are way too high. Being in this kind of situation keeps you from saving for really important stuff like investing, retirement, and college for your kids. I’m trying to position you where you can get the house and everything paid off so you can become wealthy.

When we talk about driving a crappy car, not going out to eat, or not going on vacation — those are temporary things. It’s all about living like no one else, so that later you can live and give like no one else!

Dave Ramsey

Dave is the author of The New York Times best-selling book Financial Peace. He is also the host of the nationally syndicated The Dave Ramsey Show, and is a regular guest on television. All of his financial counseling is based on biblical truths. You can hear Dave from 9 a.m. to 11 a.m., weekdays, on WLWI 1440 AM or online at www.daveramsey.com. Send your questions to askdave@daveramsey.com. He resides with his wife Sharon and their three children, Denise, Rachel, and Daniel, in Nashville, Tennessee.

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