X Marks the Spot

More specifically, a very literal spot – your apartment! Seeing as my boyfriend and I are moving into a new apartment tomorrow, this seemed like a fitting topic of conversation (besides, you try coming up with an alliterative title that includes the letter X). Navigating the apartment hunting process can be undeniably frustrating – between online reviews, location, price, and lease length (to name a few), you have quite a number of factors to consider before deciding on the perfect place. While I can’t help you decide whether or not hideous carpet or street parking would be deal breakers, I can certainly offer pointers on how to select a new apartment that fits comfortably within your budget.

Let’s first discuss pricing. In general, most financial blogs and consultants will advise you to spend no more than 33% of your total income on rent. For example, if you earn $30,000.00 a year (after taxes), the most you should allocate towards rent per month is $825.00. Keep in mind that in addition to base rent prices, you will also have to pay for internet, utilities, and renter’s insurance, so be sure to factor those additional costs into your total rent cap.

Next, make a detailed list of all of your other monthly expenses. How much do you pay for your car insurance? Student loans? Are you on a monthly payment plan with KLS? If the rest of your expenses tend to be on the higher side, you’ll want to give yourself a bit of a buffer as far as rent is concerned. Even if you’re in a great spot financially, it’s inadvisable to only look at apartments that would run you exactly 33% of your salary. If you find yourself facing a steep medical bill or you unexpectedly lose your job, you don’t want to have to dip into your savings just to cover your rent.

If you can’t afford to live alone or simply don’t prefer to, living with a roommate or a partner can drastically reduce the amount of money you would otherwise spend  – especially if the other party earns more money than you and agrees to chip in for a higher percentage of overall rent costs. If you both settle on a $1,500.00 a month apartment and split the costs 60/40, your prospective rent payment just went down from $825.00 to $600.00.

Finally, always plan ahead before your move. In addition to everything that makes up your monthly rent, most apartment complexes require separate fees at the time of move in. Almost every complex will require a security deposit, which typically costs one to two times your monthly rent and will be returned to you at the end of your lease, provided no damage has been done to the apartment. You may be able to negotiate a much smaller deposit, but if your complex determines that the apartment has sustained damages exceeding that amount, you are liable to pay – and may end up forking over just as much for damages as you would have for the initial deposit. If you have pets, be prepared to pay a pet deposit as well as a possible monthly fee, and in some cases, an administrative fee to cover the cost of processing your application.

Is your head swimming with all of these potential future costs? Don’t worry! If you’ve already made the decision to move, start saving to the best of your abilities, take your time picking a place, and don’t hesitate to make a pros and cons list for every complex in your consideration. Now if you’ll excuse me, I have some last minute packing I need to attend to!

2019-12-16T20:06:21+00:00December 16th, 2019|ABC's of Financial Freedom, Tips and Tricks|