When you look at your budget, what is your largest monthly expense? For most people, that would be your cost for housing.
Whether you own a house or rent an apartment, that monthly payment going to your mortgage lender or landlord can take a big chunk out of your paycheck.
Americans spend on average $18,886 a year on housing, or $1,574 a month, according to the Bureau of Labor Statistics.
Most personal finance experts recommend that you only spend about 25 percent to 30 percent of your monthly income on housing. Bankrate chief financial analyst Greg McBride cites 28 percent-30 percent as an appropriate ceiling on housing and says "anything above that is a red flag that you may be stretching."
If you are spending a significantly higher percentage on housing, that can seriously inhibit your ability to achieve many of your financial goals like saving for retirement, paying for your children's education or taking a well-deserved vacation.
And once you sign those mortgage papers or year-long lease, your costs are fixed for a designated time period.