Setting your heart set on the beautiful five-bedroom, three-and-a-half-bath estate on the hill could set you up for disappointment if you don't know what you can afford.
Instead of just leaving a cushion in your bank account so your next check won't bounce, you want to sit down and look seriously at your average monthly budget. Take a hard look at what you're spending your money on -- everything from your restaurant bills to your dry cleaning bill (but not your rent). Then, figure out what you have left after you pay all of those bills. That's what you'll have left to spend on your monthly mortgage and home expenses [source: Bray, Schroeder and Stewart]. Don't forget to factor in all new home-related expenses such as insurance, possibly increased utility bills, taxes and even the occasional plumber visit [source: Bray, Schroeder and Stewart].
If those numbers aren't adding up to what you want, then take this as a starting point to buckle down and change your spending ways. Skip your daily latte or pack your lunch for a couple months, and see if your budget numbers change for the better.