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This comes up in the Personal Finance section a lot.
Wherever you live... and however many you might share with...
your total housing costs (including utilities and any other fees)
should not exceed XX% of your net take home pay (after taxes, HI, and anything else).
People will argue about what the XX% should be and many want to make this
number higher than it used to be (like wanting to say tips should be 20% vs 15%);
arguing about hot job markets and their higher RE costs. Horsehockey!
I say that the target is 25% (or less) as it has always been.
This allows ONE weekly paycheck to cover your obligation...
and still leave you breathing room for Savings and Travel money.
But in no circumstances ever commit to more than 33% and only if you KNOW that
you'll have enough increased income soonish in order to bring that % down to par.
This doesn't mean intern BS... it means a real job contract.
example:
A $1200 rent (plus utilities) is really $1375 in "housing costs".
$1375 x12 =16,500 x4 = $66,000 NET earnings
+ 20% for payroll tax and $3000 for HI, etc = $82,000 Gross Income.
Your right I have read a lot of this on the forum, people have their formulas. Although, I don't agree with the 25% rule especially for this day and age and given location (MD/NoVA). Now with the apartments I'm looking at my first pay check would be enough to completely pay the rent + utilities + $700 student loan payments. The second paycheck of the month would go to me. I don't have a car payment.
I am young and just want to ideally manage my money and stack up huge amounts of money.
I guess I would be happier if I felt like those $1250 apartments were modern apartments. Just want to know what other people like myself who have their own apartments are paying these days and where they live since location is a big factor in rent price.
I live in SW Florida; 5 years ago you could find a nice 1 bedroom for $600 a month. These days you will pay a minimum of $950 for the same place. It's getting terrible.
I agree that sometimes "rules" have to go by the wayside for a person to exist. Housing costs in general have become onerous in some, if not most, cities. What I am somewhat surprised hasn't made a re-appearance is the old style boarding house, where there is a private bedroom, decent common area, some cooking allowed but one or two meals served per day.
Renter or home owner, there are costs that have to be covered. In the case of someone renting, one additional cost is a profit to the landlord. More and more, what used to be part of the market in low cost housing is snapped up by the "we buy houses" investors. More and more, cities and counties and states are requiring not only property tax, but school fees, taxes on utilities, use of city controlled garbage pickup, water, and other utilities. When government budgets go up, people have to pay. As city governments start acting more like bloated businesses, expect to see low income families pushed into multi-generational housing or out into the rural areas. It is simply the way the economy and laws are leading us. One family member on a month-to-month was just given an eviction notice so that the apartment can be renovated - and then rented for TWICE what was being paid.
Apartments rent at what the market will bear, not what you want to spend. And when you live in an expensive area, you end up putting a lot more of your income into rent - that's the case in all major cities. The alternatives are to live with roommates or to live further out for lower rent but a longer commute or to pay more than you want and get less for it - or some combination of the above.
I think one paycheck covering all of your housing plus your student loan and the second covering everything else is not unusual in cities like DC, NY, SF, etc. Actually, that's likely doing better than a lot of people.
...especially for this day and age and given location (MD/NoVA).
That thinking is the trap. Don't fall into it.
Find a couple of roomies.
And a cheaper place
Quote:
Originally Posted by WildColonialGirl
That very nice. However....
...if the choice is between paying 50% and being homeless?
1) Look up the word "target"; consider how it was used.
2) Find a shelter (even Mom's basement) until you can earn enough to live.
2a) Live somewhere that the costs suit what you can earn.
In my neighborhood, a new, updated studio starts around $2300.
You can sometimes find a studio for $1500 but it will be very dated.
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