Please Help!

Question

Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month.

Is this monthly rental fee within the recommended 25%-30% housing expense range?

Answer 1

Hello, Mikey

 

He makes 684.50 a week, assuming that he gets to work 37 hours

He makes 2,738 per month.... again, assuming that he gets to work 37 hours a week (highly unlikely he gets the same number of hours every month)

 

The apartment is 1,500 a month.  To find the percentage of his income, before taxes and savings, that he would spend on rent simply divide (rent)/gross income.  Of course, this percentage gets even higher of one takes the taxes and the savings into consideration. 

 

(1500/2738)(100)=54.8 %.  This is the percentage of his income he would be paying in rent alone, not to mention electricity, water and so on..  Well, Mickey unless Abe wants to drink Raman soup every day (they cost 5 for $1), he should not rent the apartment. 

 

D. Y. Taylor