I have to be honest, I have no idea how to forecast my expenses. I currently share an apartment with a friend, we each pay 675/mo and share utilities (gas, elec, cable). I’ve been living this way for a few years and typically “save” about $3000 each year, while not really worrying about money too much. I don’t spend carelessly, but if I see something I want, I buy it. I’m looking to move into an apartment of my own in Sept, and I’m trying to find out where my budget is for monthly rent. Ive looked at some 1br’s that cost 850/mo including gas, but was not too impressed. I find a substantial jump in quality of the place at 950/mo. Can I afford this? Bear in mind, all utilities will now fall directly on me. I’ll also make a few thousand more than last year (before taxes), and I currently will not be buying any new bikes (bought $2,000 bikes each of the previous 2 years).
Since I’m clueless, any info would help. BTW, I’m 27, no kids.
I think the ‘rule’ is that you shouldn’t pay more than 1/3 of your monthly take-home pay on rent. As someone who, due to a combination of circumstances, is paying more than that - I’d definitely agree.
If you spend a lot of time at home, either
A. get something nice right off the bat
B. get something cheap/not so nice but that you can fix up. Find out what you are allowed to do to the apartment like paint and flooring etc. You would be REALLY surprised how a crap place turns into a really nice place with some colour on the walls. I had a pretty dumpy place before I bought my house, however, I put new tiles in the bathroom, painted it and decked it out for movies. Like you said, if you go cheaper on the rent you have more disposable income for toys.
yeah, those 30%-40% include all utilities.
Just google how much rent, income etc. and you’ll get a flurry of articles.
That said, if you know you’ll be a lot happier with the 950$/rent place, go for it. Just last month I helped a friend move who hated his old place. The move was super quick since he never bothered to furnish the place since he knew after a few weeks that he hated the place. From the places I’ve lived in and seen, you get what you pay for. Like they say, if its too good to be true, it usually is. Lazy landlords, broken laundry machines, unpainted halls etc.
No matter what, a stinking formula is not going to be the solution - some cities have much more expensive rent than others. That’s just the way it is.
675 + 3000/12 = $ 925
Between the few thousands extra this year, the lack of bike purchase and the increase of utilities, it seems to me that you can afford the $ 950 / month rent, provided you are OK with not saving $ 3000 per year anymore.
(Note that I have not factored the possible wedding!)
The “rule” to go by his no more than 25% of your monthly pay for housing, whether buying or renting. Being “house poor” is no fun.
Furthermore, dipping into what you are saving is a recipe for disaster.
I assume the OP is young, which means it is a great time to get some savings/investments going that can reap the benefit of compounding. The difference between the $950 and $850 per month is $1200 per year, or a 40% increase in annual savings, assuming the OP maintains the $3k he was socking away previously.
Unless the room mate was a total lost cause, or moving, I’d suck it up, stay put (in what is probably a bigger place to begin with) and work into buying and owning a place of my own, be it a condo or whatever.
Paint is one thing, but there’s NO WAY that i’d put my own money into a rental. No way! That’s just dumb.
Agreed, but paint and the labor of painting are 100% worth it.
Unless the room mate was a total lost cause, or moving, I’d suck it up, stay put (in what is probably a bigger place to begin with) and work into buying and owning a place of my own, be it a condo or whatever.
Well, I’ll be moving from a 45 minute commute to a 10 minute commute, so mentally I “need” to move to have a nice easy commute. I’m also reaching an age where I don’t want to live with roommates anymore. I just want to come home to a place all my own. Unfortunately, working into buying and owning a place of my own in the Boston area is not even an option right now (2 bedroom condo in a 3-family house is 270,000 at a minimum). I feel like I just need to survive and put a little in the bank each year until my salary goes up in a few years. Not to mention that if I bought a place now around here, I’d be sure to lose money on it because the real estate market is about at it’s peak.
First thing I did when I moved into my apartment was paint the place and get all new window treatments. That made it home. I’ll take the curtains with me when I leave.