A rule of thumb I’ve read for rent is that your total housing costs shouldn’t exceed over 30% of your gross income. Total housing costs for us renters is the rent payment plus utilities. Personally, I also include the cost of internet access in my housing calculation because not having internet is not an option for me.
Since college graduation, I will have lived in three places: a 2-bedroom apartment shared with my college friend, a studio apartment by myself, and soon I will be moving into a 1-bedroom apartment with CB. In each of these instances, my housing costs stayed around 15%-20% of my total gross income. Here are some tips that helped me to keep my rent cost down:
1.Have a roomate: the more the merrier cheaper
This is probably the best and easiest way to save on rent. 2 (or 3 or 4) people living in one place means that not only your rent is decreased, but that all the utilities is shared. In addition, much of the cost of furnishing the new place is also split among the roommates. To avoid a roommate nightmare, however, it’s best to talk through your expectations (how the rent is split, who chips in for cable, do you share groceries, etc.) so that everyone feels good about the situation. If you are moving in with a significant other, it’s even more important to have clear expectations because many times it can be more awkward to talk about money with romantic partners than with roommates (why is that?).
2. Don’t pay for amenties that you don’t use
Our current apartment is somewhat of an anomaly in our area – it doesn’t have a pool or a jaccuzi. But I don’t care – I know we won’t be using those amenities, so I am glad that we won’t be paying for them. Along a similar vein, even if you know you won’t be going to the attached gym, or playing with its pool tables in the recreation room, understand that part of your rent each month will be going towards those perks.
3. Skip the nicest complexes: who needs travertine tile anyway?
Those units with travertine tile in the bathroom and granite on the kitchen countertops? Formica will serve as a counter just as well (or that’s what I keep telling myself…) Or the glossy hardwood floors and the new stainless steel appliances? You will be paying a premium for premium features, so make sure those features are really worth the money because you fall to a luxury apartment’s charms.
4. Trade services for a reduced rent
In some cases, it might be possible to engaging in a little bartering. If you live in someone’s house, perhaps you can babysit the landlord’s kids 3x a week for lower rent. Or if you are a gardener, maybe you can keep up the landscaping. A barter system can work well if both parties are clear about what services are required in exchange for what amount of rent reduction. It’s best to have everything in writing.
5. Be realistic about the market and your budget
If you are looking for a 1-bedroom in Midtown Manhattan, there’s no way you can score a place for under $2,000. It’s important to be realistic about both (1) the going price of real estate in your location, and (2) what you can comfortably afford while having enough money left over for your other goals / desires. CB and I found a gorgeous complex with an Apartment For Lease sign on the outside – once we found out that the price was $1,900 a month, however, we didn’t even bother to go in. Theoretically, we could afford the place, but we both had more pressing financial goals: saving for graduate school, paying off college loans, saving for retirement, and working on our Galapagos fund. And, we knew we could find something for much cheaper. Which we did, although of course it wasn’t as nice. But for $800 less? We’ll take it!