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Spend no more than 30% on housing? Not necessarily, Northeastern household finance experts say

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You’ve probably heard the advice — spend no more than 30% of your net income on housing. But while scrolling through Zillow in the midst of a nationwide housing shortage — and a housing “crisis” in major metropolitan areas like Boston and the Bay Area — you might be hard-pressed to find your next home within that parameter.

So, is the 30% allocation on housing relevant anymore?

It is … to a point, says Northeastern University household finance expert Andrés Shahidinejad. “You may want to take into consideration that there’s maybe a certain ‘wisdom of the crowds’ in this focus on 30%,” says Shahidinejad, an assistant professor of finance and economics at Northeastern. “But don’t take it as dogma, either.”

Instead, Shahidinejad advises that we think of the 30%-on-housing advice as less of a rule than as a “rule of thumb.”

Continue reading at Northeastern Global News.

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