Can You Afford Your New Apartment? Read This Before You Rent!

October 26th, 2011 by Crystal Beran| Posted in Apartment Guide, Apartment Life 2.0, Apartment Living, College Housing, Craigslist, Finding Your Apartment, Moving, Off Campus Apartments, Saving Money, Tips & Tricks | 2 Comments »

Many people don’t like to keep a budget. It’s time consuming, difficult to keep on top of and can be a source of stress when you can’t seem to make your income and expenses match up. And when you see that perfect apartment that has everything you want..your budget might not be at the forefront of your mind. But running out of money unexpectedly is a lot more stressful than knowing exactly how careful you need to be with money. If things are tight, it’s difficult to get on top of money troubles if you don’t understand where all your money is going. For these reasons, it’s critical to make a budget to help you figure out exactly how much apartment you can afford – before you sign on the dotted line.

Before you decide on a new place, make a list of all the expenses that go along with it. Rent is only one portion of the cost of an apartment. You’ll also need to pay for electricity, gas, water, garbage, cable, phone and internet. Figure out how much each of these additional expenses will be and add them up as expenses you’ll need to pay for each month.

There are also monthly expenses not related to the cost of living in an apartment and you’ll want to record each of these as well. You might be paying for car and health insurance, a cell phone, a data plan on a tablet or paying off a car. You may also have debt that you’ve got to pay off, so be sure to record the minimum payments you need to pay on each of your credit cards or student loan accounts as well. If there’s room in your budget, doubling the minimum due can help you save a great deal of money on credit cards in the long run.

You’ll also want to make sure you pay attention to variable expenses you may have every month. Food, household supplies, entertainment, gas, clothes and gifts also consume some of your income. The best way to find out how much you spend on these things is to track your expenses in each of these categories for a few months and then average it out. Mint.com provides a great online platform for automatically syncing and sorting your expenses, and would be a great place to start. While you may be able to save some money by cutting back on entertainment, dining out or buying the latest clothes, you’ll have to expect to spend some money on these types of things. If you’re realistic about how much you do spend, you’ll be in a better position to determine how much money you’ll have available for rent.

So how can you figure out how much you can afford on an apartment? Add up all your monthly expenses, plus a couple hundred extra for emergencies or unforeseen expenses and then subtract it from your monthly income. What you have left is the amount you can pay in rent. If you choose a place that’s more expensive than this you’ll find yourself falling further into debt each month rather than getting ahead and remaining in control of your financial life.

Have a fool-proof way of keeping track of expenses? Want help calculating yours? We’d love to hear from you – here or on our Facebook page!