My Rent Is More Than 30% of My Income. What Should I Do?

Two young woman moving boxes into a new apartment together.

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To keep your finances balanced, your housing expenses should not exceed 30% of your take-home pay. This means that if you bring home $3,000 a month, your rent should be capped at $900. But what if you're spending more than 30% of your paycheck on rent?

Given the cost of rentals in some cities, that's a pretty common scenario. According to online rental company RentPath, the average 2019 monthly cost of a one-bedroom apartment on a national level was $1,586.84. For some cities, it was much higher. In Miami, for example, rent for a one-bedroom apartment averaged $2,597.57. Meanwhile, in Boston, a one-bedroom averaged $3,712.96. You can easily land in a living situation where your rent represents more than 30% of the money you bring home. And that's not ideal--for several reasons.

First, if you overspend on rent, you risk falling behind on other bills. Secondly, if you pay too much in rent, you may fall short on your financial goals. If your rent exceeds 30% of your income, you might struggle to keep anything in your savings account or chip away at debt you've already accumulated.

Finally, spending too much on rent could prevent you from enjoying your life. You may find that you don't have funds left over for entertainment, like streaming services or drinks with friends, if rent uses up too much of your paycheck. For some, it might be hard to make ends meet or pay for necessities if rent is too high.

So what should you do if you're spending more than 30% of your earnings on rent? Well, you have some choices.

1. Move to a more affordable area

Yes, there are costs associated with moving. But if you're spending too much on rent, a good solution may be to pack your belongings and move. Just don't forget to evaluate the pros and cons of different locations. Right now, your more expensive apartment might mean easy access to public transportation. Moving someplace cheaper might save you money on rent--but what will your new commute look like? Will you need to drive or rideshare to work? You'll need to weigh both sides of this decision before telling your landlord you're moving out.

2. Negotiate your rent with your landlord

If you love where you live and are simply struggling with its cost, you may be able to negotiate a lower rent payment.

Vacancies are a landlord's worst nightmare. If you've been living in one place for quite a while, you've probably proven yourself to be a considerate, responsible tenant. Your landlord may agree to a rent reduction if that keeps you from leaving.

Another option is to barter with your landlord. You might, for example, offer to do light maintenance in exchange for reduced rent. If you're good with numbers, you can offer to do some accounting for a discounted home in return.

3. Apply for government assistance

You may be entitled to benefits that make renting a home more affordable. There are three main types of assistance you may qualify for, based on your income:

1. Housing vouchers

Housing vouchers allow you to find your own housing. The money is sent to your landlord to cover part of your rent, and then you pay the rest. For example, if your rent is $800 a month, and you receive a $500 voucher, you'll only need to pay $300 in rent. Your voucher amount is based on your income, family size, and local housing costs.

Before you assume your income is too high to qualify, check the requirements with your local Department of Housing and Urban Development (HUD) office. In Denver, for example, you can apply for a housing voucher if you're a household of three and your yearly income is under $41,800 (based on 2019 requirements).

2. Public housing

With public housing, you rent a home from a local public housing agency. Public housing is a more affordable type of housing. While your rent won't be subsidized the way it would be with a housing voucher, it should be relatively low.

3. Subsidized private housing

Some property owners are given government funds to provide low-cost homes to renters. You may need to meet specific requirements imposed by the property owner you'd be renting from.

For assistance finding affordable housing where you live, you can use this tool to search for housing based on your location. You can also call the U.S. Department of Housing and Urban Development at 1-800-955-2232 for more information.

If you need general assistance, you can also look into the programs available through your state social service agencies. These may be helpful if you’re not able to qualify for housing assistance.

4. Boost your income

Finally, if you're already interested in starting a side hustle, now could be a great time to go for it.

Say you bring home $3,000 a month. You should pay no more than $900 in rent. If the cheapest apartment in your city costs $1,100, that's $300 more than the maximum you should be paying. You need a side hustle that can boost your income just by $300 a month for a healthy budget.

Spending too much on rent is a dangerous move. Over time, the extra weight on your budget can have unfortunate financial consequences. With a little creativity and some help from others, though, you may not need to worry about the cost of rent taking over your finances.

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