Transportation ranked second in 2021 behind housing for the highest household cost, according to the Bureau of Transportation Statistics. Total debt includes your housing debt along with all other forms of debt, such as student loans and auto loans. The 28/36 rule is a common sense guideline that states you should not spend more than 28% of your monthly gross income on housing-either your mortgage payment or rent-and 36% of your monthly gross income on your total debt. This is where the 28/36 rule comes in, which clarifies how much how you can afford. Housing will likely take the largest bite out of your budget, so you must keep your monthly housing costs within certain limits. Some 33% of that-or approximately $1,885-went toward housing costs. The average American household spent roughly $5,577 per month in 2021. Here are some common categories and general estimated costs to factor in when figuring out where you can afford to live. Total annual household expenditures averaged $66,928 in 2021, according to the Bureau of Labor Statistics (BLS). For instance, it’ll cost you considerably less to live in Fort Smith, Arkansas compared to Fort Lauderdale, Florida.Īs you shop for a home in different cities and towns, crunch the numbers using our cost of living calculator to see how your total cost of living expenses vary. Not surprisingly, cost of living varies widely from place to place.

Whether you’re looking for a fresh start on an opposite coast, heading to a new region for work or moving closer to family, cost of living will play a big role in how much house you can afford while maintaining your desired standard of living.īesides your monthly mortgage payments and other housing costs, being able to afford a home also requires enough money to cover a host of other ongoing expenses, such as food, transportation, taxes, utilities, healthcare, childcare and entertainment.

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