Your Rent – How Much Can You Afford?
Do you know how much rent you can afford to pay on a new apartment? There are so many different options and price points available in many places, making it hard to know where to start when apartment searching. First things first, how much can you afford to pay in rent? If you’re not sure where you stand with this answer, then you should turn to a rent affordability calculator to get an idea. Of course, every person’s rental budget is unique, so here’s what you can do in order to get an even more detailed answer on how much rent you can afford to pay.
How much rent can I afford? Here’s the simple answer …
Prfessionals recommend that renters put no more than 30% of their monthly income into rent. For example, let’s say you make $60,000 per year. This means that your rent, along with your renters insurance, should not exceed more than $1,500 per month, or $18000 per year.
5 Steps to Getting the Answer to “How Much Rent Can I Afford?”
1. Your Entire Budget
Take a step back and look at your entire budget. There are a variety of budgeting methods. There’s a 50/30/20 rule that many professionals agree on. In a nutsehll, this is what the 50/30/20 rule is:
· 50% of your income: Fixed costs such as transportation, rent, groceries, and utilities.
· 30% of your income: Wants such as entertainment, dining out, memberships, and shopping.
· 20% of your income: Goals such as saving for the future and paying down your debt.
You can now see how the 25%-30% rental rate guide can change if your other expenses are different. Let’s say you have low transportation costs and your utilities are includes, you would then be able to afford rent that was closer to 40% of your income.
2. Make Sure You’re Realistic about Your Expenses
You need to be honest about your lifestyle. If you have a Netflix membership or Xbox live membership, or even yoga classes that you need to cover, decide if this is really something that you can live without.
3. Add in Moving Expenses and Furnishings
You don’t want to live in a home without furniture, do you? Also, don’t forget about those additional moving expenses that may be involved. In addition, there will be other “one-time” expenses that you may need to cover:
· Security deposit
· Last month’s rent
· Moving expenses
· Any applicable pet deposits
· Any overlap in rent from your new and old leases
We reocmmend planning and saving for these expenses well ahead of time.
4. Factor in Your Housing Market
The rental market norm where you’re located is going to make a world of difference. For example, if you’re in a high-demand market, or somewhere near Google headquarters, you may find the rent goes above 30%. In this situation, you may want to adjust other areas of your budget to determine how much you can afford for rent.
5. Don’t Include Credit or Savings Acounts
You may want to take cash from your emergency and savings accounts, but don’t do this. When you start to drain those funds so that you can cover rent, you will no longer have a safety net to rely on.
Do not take out personal loans or use credit cards in order to cover those expenses – even if it’s the one-time moving expense. On a similar note, if you find that you’re charging groceries on a credit card so that you can pay your rent on time, this means that you have overstretched your budget, and you should go back and take another look at you rbudget breakdown.
Now that you know how much rent you can afford, you should use mrx.com.mm for even more help.