First off, one of the largest expenses you'll have is your rent bill. Housing — along with food, transportation and medical care — are considered essential costs. They are expenses that you must be able to cover each month. Therefore, the more you spend on housing, the less you'll have to spend on your other essential costs. Does this simple rule of thumb work even when median rent is increasing at a rate that outpaces the growth rate of median renter household income? The answer is: It depends.
General personal finance guidelines can be helpful because they can give people an idea of how much they should be spending. But money advice can be oversimplified and doesn't account for every individual's unique financial status such as where someone is living, how much money they're making, how many dependents they have or how much debt they carry.
If you're living in a major metropolitan area like Los Angeles, Boston, Portland or New York City, you'll be shelling out more money for housing because the average cost of rent in these cities or suburbs is much higher than the national average. For example, the average rent in San Francisco is more than 3 times the national average. What percentage of your income you're able to spend on rent also depends on your annual income and the size of your household. How much you can spend on rent also depends on what your income level.
This means that low-income individuals and families typically have to spend a higher percentage of their income to cover the cost of rent, especially if they're living in urban areas. When I moved to New York earlier this summer, I was surprised to learn how many lesser-known costs were associated with renting and moving.
There was a broker's fee and a security deposit, plus I had to purchase new furniture. These things can add up, so it's important to know what they are and how much everything will cost. Depending on what city you live in, you might have to pay a broker's fee. Unfortunately, you won't get the broker's fee back. There aren't broker's fees for renting in most areas, but you'll typically find them in New York City , and occasionally in other cities like Boston.
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Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. One drawback to this formula is that the calculation uses gross income —your income before taxes and other deductions.
Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take.
This rule allows for taxes, retirement, and other deductions before arriving at a rent figure. The "40 times rent" rule says your salary should be 40 times your monthly rent, but this fails to account for taxes, and for the specifics of your financial situation.
The best way to determine how much rent you can afford is to add up your actual monthly expenses and subtract them from your monthly take-home pay. Start with utilities, such as water, sewer, trash, electricity, oil, and gas. Water, sewer, and trash are often included in rent but not always. Other utility costs include cable, internet, telephone, and even security and maintenance in some apartment complexes. The cost of electricity and oil and gas can vary depending on the age and condition of the apartment.
A well-insulated apartment, for example, will cost less to heat. The best way to determine the likely cost of utilities in a new apartment is to ask the landlord or several current residents. This category includes groceries, cleaning supplies, paper towels, and other items that you use and replace on a regular basis.
After all, New York is the second most expensive real estate market in the nation! Bustle spoke with real estate broker Shii Ann Huang , who is with the Corcoran Group, concerning what advice she would give to people looking for an apartment in the city. Huang warned that the NYC rental market may be a bit shocking at first. The numbers may sound daunting, but there are still deals to be had! Ridgewood, Bay Ridge, Hamilton Heights is where people are going for deals. Huang's key advice for beating the competition is all about being prepared when you enter the hunt.
Next, get all your financials together, pay check stubs, W-2s, tax returns, bank statements, and parent guarantor. This way, when you see the right apartment you will be able to present a full application before anyone else," Huang recommends.
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