What percentage of my salary should go toward bills?

Question

I am working on my budget and I wanted to know what the general public thought was right.

I have always heard that your house payment should only be a certain percentage of your income, but I can't remember what it is...

Anyway...What percentage should all of your payments, meaning debt, bills, house, etc... take up. What is a good situation, an okay situation, and a bad situation?

Answer 1

The only general rule is less then you make. A mortgage should really be no more then 25% of your gross income. I would recommend saving a minimum of 10% of your income for retirement.

As long as you are putting at least 10% away for retirement, preferably more, what you do with the rest is your business. The more you save, the more wealth you will build, the more you spend, the less.

Answer 2

Of course, the best situation is to be debt free except, maybe, the house. A house payment should be no more than 1/4 of your take home pay. Otherwise, you have too much house or too little income. According to daveramsey.com, your budget should be arranged to pay for food, utilities, and rent, in that order, with the understanding that you don't buy unnecessary things if you can't afford it (like eating out). If you are covered in debt, divide what's left over your creditors and pay them off as quickly as possible. This frees up a lot of money for savings and a better standard of living. I'm no expert but Dave is.