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I’m 34, make $5K a month and spend 64% of my income on rent. I also have $0 savings. Am I making a big mistake?

I’m 34, make $5K a month and spend 64% of my income on rent — $3,200 for a 1-bedroom in Philadelphia. I have $0 savings. Am I making a big mistake or is this just the reality of US housing?

Rent prices have been rising across the United States, and it’s causing big problems.

Rental data from StreetEasy and Zillow shows that since 2019, rents have risen faster than wages in 44 of the country’s 50 largest metro areas. Rents have gone up an average of 1.5 times faster than wages since 2019 and have increased three times as fast as wages in some areas.

This has very real financial consequences for people who are trying to live and work in these locations. Say, for example, you live in Philadelphia, make $5,000 a month and you’re paying $3,200 a month for a one-bedroom apartment. That’s 64% of your income, leaving you less than 40% to cover all of your other expenses.

With such little income remaining, you haven’t had an opportunity to build your savings, and now you’re wondering if you are making a big mistake or just stuck in a bad situation due to the state of the U.S. housing market.

Yes, you’re definitely stuck in a bad situation and many Americans are in the same boat. But you can make it better if you’re willing to make a few sacrifices.

When it comes to the cost of living, experts typically recommend that you spend no more than 30% of your income on housing. Those who spend more than 30% on their home are considered “cost burdened.”

Unfortunately, U.S. Census data shows that far too many Americans fall into this category. According to a 2024 report, over 21 million renter households in America spend more than the recommended percentage of their income on housing. That’s around half of all the households that rent properties throughout the country.

Those living in Philadelphia are very likely to feel the pinch, as the City of Brotherly Love came in at number nine on Redfin’s list of the 10 least affordable metros for renters. As of December, 2024, the median rent in the area was $1,865, which means you’d need an annual income of $74,600 to afford the median rent in Philly.

Since you’re earning $5,000 per month, you’re earning less than what you’d need to comfortably afford the median rent in Philadelphia. And since you’re paying $3,200 per month on rent, you’re actually paying nearly twice the amount that a typical renter pays in Philly.

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