Are You Cost-Burdened?
If you spend 30 percent or more on housing costs, you are considered cost-burdened, meaning that you could have problems paying other bills due to high housing expenses.
Think of it this way: If 30 to 50 percent of your gross paycheck (income before taxes) is taken up by rent and mortgage costs, that leaves only two-thirds to half of your income left to cover other things.
To figure out what 30 percent of your monthly income is, multiply your gross income by 0.30.
$4,000 (monthly gross income) x 0.30 (30 percent with the decimal moved two places to the left) = $1,200.