Dave Ramsey says: Keep rent at 25% or less of take-home pay

Dear Dave,

I just received a formal job offer in law enforcement. I’m debt-free, single, and I’d like to move out of a roommate situation and into my own apartment.

I’ll be starting out at $34,000 a year, then moving up to $38,000 after my probationary period.

You have a rule that says to make sure rent or house payments are 25% or less of your take home pay.

If I can find a place where utilities are included, do they figure into that amount?

– Josh

Dear Josh,

It’s really more of a guideline than a rule.

The point of not letting your housing cost eat up more than 25% of your take home pay is to make sure you have money left over for other important things.

It’s hard to save and invest for the future when a huge chunk of your money is eaten up by rent or a mortgage payment each month.

But no, utilities are not part of the one-fourth of your take home pay guideline.

At this point, it doesn’t sound like you need anything fancy.

Try to find a safe, quiet place to call home, somewhere you can relax and decompress when you’re off duty.

And thanks for entering law enforcement. A lot of folks are leaving your line of work, and we need good men and women in that profession right now.

— Dave

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