This is the Ramsey Call of the Day, part of the Ramsey Network.

Today's question comes from Drew in Austin. He writes, I hear you guys on the show talk about being, quote, house poor and not spending more than 25% of your take-home pay on your mortgage payment.

Can you explain more of what house poor means and what's bad about it?

In today's real estate market, that is tough to do with high home prices, higher interest rates, etc.

What is the harm of paying 30 to 35% if that's what it takes to get into a house these days,

especially since it is only going to appreciate in value. Well, this is interesting.

It's a good question, number one. The idea of the house appreciating value doesn't change the numbers

of you have this much income and this much of your world is being taken up by that house payment.

And so that's what being house poor comes down to. You don't have

enough money left over to do all the other things like fund college, fund retirement, go on vacation,

upgrade the car, cover the emergencies. And so being house poor just means that you have too much

of your world wrapped up in that mortgage payment, and that's too many

Americans today.

There's a reason that people have a car payment if they have a 35% of their income going to house

payment.

They don't have room in their budget to save up and pay for a car, so they go into debt.

So house poor means I borrowed so much on my house that I end up borrowing on other things.

Oh, and my kids in the future, they'll have student loans because I didn't save for their school.

Oh, and anything I get ready to do that I don't have room, as George said,

economists call the room in your budget, the margin in your budget, your disposable income,

the income you have for saving and for investing and for

enjoying. And if after your debt payments, you don't have any disposable income, any margin left,

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