Apartment too expensive

[texashorn]

What percent of your income after taxes do you spend on your apartments?

Currently I spend 23%. But I found a really cool place that would be about 30%, but I'm worried that that would be way too much to spend on an apartment.

Are both of these way too high?

Thanks

[and1grad]

Those sound about right to me. Mine is about 20% of my gross income, which is about the lowest its ever been for me.

[Krishna]

Does that 30% include utilities?

[SmilesSoSweet]

My rent is 22% of my income after taxes. This is definitely the cheapest I've had my rent.

It was at 36% when I lived in So. Cali, but I was also sharing my apartment with a roommate.

[dacrunkest]

23% of my income for a pretty amazing apartment. Rent is cheap in KC.

[wordsmith]

I will not go any higher than one week's pay. Where I am now is slightly under that.

[shorty]

I heard a rule of thumb saying you shouldn't spend more than 30-33% of your income on rent (I don't know if that includes utilities though). Actually, when I applied for my current apartment, they required that the rent not exceed 33% of your income. So 30% on rent doesn't sound unreasonable if you really like the place. It might help if you write out an estimated monthly budget (including monthly utilities, food, and other bills) and see if you can afford it though.

I just calculated it and I only spend about 22% of my monthly take-home pay on rent (not including utilities).

[GoogleGirl]

How do you figure out percentage? I know I will be paying $400/month for rent and utilities starting in June. I think that's pretty good actually. And I'm making about $1750/month after taxes.

[CTGirl]

I am dangerously close to 50% of my monthly income for rent+utilities

[Ciderhillnh]

While % is a good basis, I think its much easier to look at your budget and expenses and figure out what YOU are comfortable with.

Someone with low credit card payments if any, and no student loans might be much more comfortable paying 40% or more of their income on housing, than someone with high credit card payments and student loans.

I know with my budget I looked to pay less than 20% because of my lifestyle...wanted extra cash to go out since that is more important to me than a really nice home.....Im usually not there anyway.

So do up a budget, see where your money is going, how much you have left and how much you want to save.
You might find you have more than you think.

[SpaceMonkey]

How do you figure out percentage? I know I will be paying $400/month for rent and utilities starting in June. I think that's pretty good actually. And I'm making about $1750/month after taxes.

Divide 400 by 1750, and multiply by 100 = 22.9%

[SpaceMonkey]

I agree with this. Individual situations are different. I think as long as you have that money in your budget (or can create a new budget around it--and stick to that budget), and you're ok with spending x amount, then it's fine.

Exactly. Adding rent and utilities, my total housing costs are at least 45% of my monthly take-home pay (it can be more in the winter), but I'm still able to save what I feel like is a lot of money because I don't need to own a car, and I can even walk to work a lot of the time which brings my transportation costs down even further.

[beeblebrox]

I'm at about 38% for rent. My utilities will only include electricity which is going to be divided between my boyfriend and I. It's a little higher than my previous ones, but we get a lot included with our rent, so I don't have to pay $104/month on cable and internet. We're moving into a Chicago highrise on Saturday.

[shadeofgreen]

Interesting. I'd never calculated it before, but I'm only paying 27% of my income for rent. Heat and hot water are included, so the only utilities are gas and electricity. I have a roommate so those costs are split and stay pretty low.

This makes me wonder where I'm spending all my money...

[Ciderhillnh]

My place is 58% of my income. Thats with a roommate splitting the costs.

[Deavan]

Go to www.grandcentralapartments.com they have a really good rent calculator that gives you an estimate both low and high that you should or could be paying with your income...:surprised

[arrow]

I like that calculator. It tells me I can pay a lot more than what I'm paying now. It actually tells me that I can pay for my entire apartment myself, even if I wasn't splitting with the bf!

For those of you calculating per month take-home, are you just adding 2 bi-weekly paychecks? Or calculating differently? Does "after taxes" also include "after all deductions including 401K and any flex spending accounts"?

I think I'm at around 21% for overall monthly take-home after all the crap is taken out, 23% for if you only count 2 paychecks, and 13.5% of gross monthly income. It looks MUCH nicer if you calculate gross.

[arrow]

What amazes me is the difference between gross and take-home. I mean, I know some of that money goes back to me in the form of transportation (metro card), health care costs, and 401K contributions, but damn. It still feels like a lot.

[SmilesSoSweet]

Go to www.grandcentralapartments.com they have a really good rent calculator that gives you an estimate both low and high that you should or could be paying with your income...:surprised

The only downside to that is that the calculator doesn't factor in your debts and other bills. But at least it does give you a range to go by when first looking for a place.

[ebruening]

My apartment rent, with utilities, is 20% of my takehome pay. I also have 2 roommates, and I live in Nebraska. My apartment is quite new, but is also outside of the city proper. I moved to an apartment, and left the rental house where I was living last year, as well as added a second roommate, to cut housing costs.

[MollyM]

19% of my gross income goes to rent. Only 11% before taxes.

[and1grad]

19% of my gross income goes to rent. Only 11% before taxes.
Arent those the same thing?

[MollyM]

Ha. I'm just keeping you on your toes.

[BLK95TA]

when i was in phoenix and making $15/hr, my rent accounted for about 45% of my after tax income... that didnt even include electric or dsl/cable tv

[Phoenix212]

Actually, the standard is 30% or 33% BEFORE taxes. So even if you're paying 40% or 45% after taxes, you're still probably under the standard. In that light, all of you are doing a good job :)

Regardless of what the guideline says, the question is, is it worth it? For example, say you make $40k before taxes and so the guideline says you can afford $1,000 per month. But is the difference between the $1,000 per month apartment and, say, a $600 per month apartment worth $400 per month? Or would you rather spend the $400 per month on other things or even save it?

Conversely, maybe the standard says you can only afford $500 per month. But anything less than $600 per month in your city is in a dangerous neighborhood. Would you rather live in a dangerous neighborhood? Or would it be better to cut another $100 per month out of your budget but live in a safe neighborhood?

Personally? Last year, between living in a predominantly Dominican area of upper Manhattan and working long hours, I spent only 13% of gross income / 21% of after-tax income on rent. I then moved to a penthouse on the Upper East Side (admittedly, with 3 roommates.) It was fun and convenient, but not worth the additional $600 per month in rent. So I moved back to the same neighborhood as before. Besides, I've learned to like Dominican food :)

[and1grad]

I'm not gonna live in a subpar neighborhood just to save a buck but I'm also not gonna waste money trying to keep up with the Jones's. Its all about balancing it out.

[Phoenix212]

It depends on the person and what is important to them.

Unfortunately, some of us don't have the option of financial failure. For us, saving several hundred dollars every month by living in a "subpar" neighborhood is rather appealing.

Besides, I don't consider my neighborhood undesirable. It's not the Village, to be sure. But it has its good points, many of which people outside the neighborhood aren't even aware of. Many unhip or undiscovered neighborhoods are like this.

Keep in mind that I live in New York City. The neighborhoods New Yorkers call "bad" would be average at worst in most cities. I've dealt with Bushwick, Harlem, Newark and even the South Bronx. Trust me, these places are tame compared to the worst parts of most major American cities.

[and1grad]

I wasnt referring to where YOU live. I dont even know what a subpar neighborhood for you would be. I was speaking specifically for myself.

[PVD99]

I would be upset if I had to pay 50% of my monthly income to rent. Currently, I pay just about 35% (not including utilities) and I hate doing that.