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I am considering renting an apartment for the first time. I've heard the rule of thumb is 25-30 percent of your monthly net (after-tax) income, but I've also heard it's 25-30 percent of your monthly gross (before-tax) income. Wouldn't it make more sense to calculate it from your after-tax income? http://hotpads.com/sites/rentersGuide/before/budgeting/how-much-rent-can-you-affordGenerally, the maximum amount of rent you can afford is deduced from your yearly income. The rule of thumb is usually that you should pay no more than 25-30% of your before-tax income. I am able to make $1653.60 per month NET as a journalist. The apartment I'm looking at is $495/mo, with lights being $10-15/mo and electric and phone separate. I have a cell bill about $40-50 mo--very basic (no texting or anything) and electric should be $30/mo at most. So: 495+30+15 equals $540 a month out the door. I don't need cable as I'll be spending little time there. Internet, maybe, as I'm going to use my work's internet for my project the next year (my novel). I'm willing to eat cheap and I don't eat out half as much as I used to. I have no car payments other than bi-monthly insurance totaling $606/yr out the door. That's full coverage, not just liability. I don't drink or smoke and I have no loans. I have several thousand saved up for a rainy day. My car is 6 years old and has 140k miles and it's generally reliable but you never know. It's an '05 Corolla. Should I still save more the next few jobs while looking for a higher-paying job and then move out, or is this monthly income ($1,650/mo) good enough for $540/mo apartment with basic necessities? I'm not looking for the Waldorf-Astoria here.
Last edited by AsianDawg; 05/15/11 02:52 PM.
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can you post about your girlfriend problems again... it will help the new folks understand your inability to make basic life decisions
![[Linked Image]](http://www.dawgtalkers.net/uploads/captainphil/browns bills sig 5.jpg) When it gets cold and snows and the wind blows, you gotta be able to run the ball. - TR
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How old are you? What is your current housing situation?
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Quote:
as a journolist
Oh dear.
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I am 27. and no, I have no girl problems anymore, captnphil. so don't go there. it was a stupid post and that was in the past. yes, I misspelled journalist, julesdawg.  My only question is why do they list 25-30 percent of gross pre-tax income? wouldn't it make more sense to calculate living expenses using net-income figures?
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Just teasing you. 
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Depends on where you are. If you are in NYC you can throw those calculations out the window. It all depends, there are no rules. Do what you think you can do.
Joe Thomas #73
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Whether you use pre-tax or after-tax income as a guide doesn't change what should be immediately obvious: at ~20k/year you have no business living on your own if you have a reasonable alternative (e.g. living with parents or a roommate).
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Quote:
Whether you use pre-tax or after-tax income as a guide doesn't change what should be immediately obvious: at ~20k/year you have no business living on your own if you have a reasonable alternative (e.g. living with parents or a roommate).
Right there is some darn good advice IMO 
#gmstrong
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Quote:
My only question is why do they list 25-30 percent of gross pre-tax income? wouldn't it make more sense to calculate living expenses using net-income figures?
Both ways have worked for me. It's literally comparing gala apples to granny smith apples, they're different, but ultimately the same. You have to figure out how much you can afford on your budget, you can do it either way.
Also, I recommend the living with a roommate.
There are no sacred cows.
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thanks all...the reason I ask is that 29k is gross, 21k is net, and various calculations I've shown give varying answers. if I go with the gross figures, it's not so bad--a calculator I found showed I could go up to $665 mo/rent but it seems very optimistic. but yeah, my net income is 21,496 AFTER taxes. and that's with a college degree. meh. probably time to get a new job.
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Quote:
can you post about your girlfriend problems again... it will help the new folks understand your inability to make basic life decisions
 Laugh of the day......
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Your net is closer to 1800 a month if you include the 2 months where you get an extra check.
If you have no credit cards, or anything like that, you should be able to find a nice apartment. I paid almost 700, making 35k a year, a few years back. Plus I had a car payment, high speed internet, and a few credit cards.
If your job doesn't have any opportunity for increases in salary, I would find something else to do. Living on 30k is doable, but you have to be very disciplined when living on your own.
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Quote:
The apartment I'm looking at is $495/mo, with lights being $10-15/mo and electric and phone separate. I have a cell bill about $40-50 mo--very basic (no texting or anything) and electric should be $30/mo at most.
So: 495+30+15 equals $540 a month out the door.
Where do you live that electric is only $30 ???
We don't have to agree with each other, to respect each others opinion.
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It's not abnormal for a 1 bedroom apt to have a $30 electric bill. At least in the spring and fall
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Quote:
Quote:
The apartment I'm looking at is $495/mo, with lights being $10-15/mo and electric and phone separate. I have a cell bill about $40-50 mo--very basic (no texting or anything) and electric should be $30/mo at most.
So: 495+30+15 equals $540 a month out the door.
Where do you live that electric is only $30 ???
He does list "lights" separately from electric. Why, I don't know. My electric bill just says "pay this much" - it doesn't list lights separately.
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Not sure I care what the percentages should be.
Add up all the monthly expenses you have now.
Take away any that would go away if you move from where you are now.
If you don't already pay them, add in water, sewer, phone, gas and/or electric, parking (if needed) (get estimates from those you may rent from and may I suggest that you SEE the bills just to be sure)
Allow for the unexpected by some amount, savings by some amount, entertianment etc..
Subtract all that from your monthly NET income.
What you have left is what you can afford.
When you hear about spending a percentage of your income on this or that, it NEVER takes into account your personal situation... You should.
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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IF you dont have to move out from wherever you are I would stay. Assuming it must be at your parents ? Then I would start putting aside that 500 dollars a month every month as if you were paying rent. If you could manage that for the next 3 years you could move out with 20 grand in your pocket and hopefully a higher salary at the time.
Meet the new boss, same as the old boss...
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Figure up every single thing you spend money on. Add in for utilities. Add in for food. Figure gas, maintenance, ets for your car. When you figure it all up .... live at home for a few more years ..... save what you would have spend in rent .... and have a nice down payment on a home. 3 years at $600/month would give you a solid $21,000 to work with. Or ... if you still want to rent then, the economy should be better ..... and you'll still have $21,000 in the bank.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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You are worrying about the difference between two different guesses that, as has been mentioned, do not take into account your personal situation.
If you are paying no rent now, are you saving $450 a month, or whatever the amount is? If so, then you are good to go. If not, take a LONG, HARD look at just exactly why that is.
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You sound young and broke. My advice is to shack up with a girlfriend who has her own place. 
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Quote:
Depends on where you are. If you are in NYC you can throw those calculations out the window. It all depends, there are no rules. Do what you think you can do.
Exactly.
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Quote:
Not sure I care what the percentages should be.
Add up all the monthly expenses you have now.
Take away any that would go away if you move from where you are now.
If you don't already pay them, add in water, sewer, phone, gas and/or electric, parking (if needed) (get estimates from those you may rent from and may I suggest that you SEE the bills just to be sure)
Allow for the unexpected by some amount, savings by some amount, entertianment etc..
Subtract all that from your monthly NET income.
What you have left is what you can afford.
When you hear about spending a percentage of your income on this or that, it NEVER takes into account your personal situation... You should.
THIS.
Just run your numbers, figure out what you can afford and then act appropriately.
I say if you want to move, move. Living tight is part of starting your career if you ask me. Shacking up with mom and dad until you can buy a place is a little sad and selfish if you ask me. They should be a fallback- not a savings plan.
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Quote:
I don't eat out half as much as I used to.
If you move out of your moms house, you will be eating out a lot more. If things go right anyways.
KING
You may be in the drivers seat but God is holding the map. #GMSTRONG
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Quote:
Quote:
I don't eat out half as much as I used to.
If you move out of your moms house, you will be eating out a lot more. If things go right anyways.
KING
I'd hope not. Not something I'd recommend with one night stands 
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Quote:
Quote:
Quote:
I don't eat out half as much as I used to.
If you move out of your moms house, you will be eating out a lot more. If things go right anyways.
KING
I'd hope not. Not something I'd recommend with one night stands
Asian doent strike me as the one night stand kind of guy
KING
You may be in the drivers seat but God is holding the map. #GMSTRONG
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You're right. They'd hook up one night, then he'd write about her on a Browns message board for a few weeks after.
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I didn't move out of my moms house till I was 23, and I thought that was pushing it. It's time to fly away little birdie.
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I moved out at 18, and moved back in at 20. I stayed for a few years, helped with the bills ..... then took a job out of town.
The only bad part of living at home was not being able to bring a girl home. Other than that it was great.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I stayed until 18, then returned at 20 as well, stayed until 24.
But my mom was living alone in a house, so my moving in helped with lawn and pool care, house repairs, and I paid her $100/wk (late 80's early 90's) for room and board.
Asian, as others have said, figure out what you spend now, then determine what you have left. And don't over exaggerate that you "wont eat out", "wont go party", wont this, wont that. And any bill you think you know the cost of, double just to be sure.
Living on your own is more than rent, utilities and groceries. Initial moving items (plates, silverware, toiletries, cleaning products, vacuum, small appliances, laundry costs) cost a fortune, and will be recurring depending on how much you clean and stuff. Also don't forget first & last months rent and safety deposit usually on initial agreement.
We don't have to agree with each other, to respect each others opinion.
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Before I moved out the 2nd time, I had an entire corner filled up with stuff .... microwave, can opener ..... dishes, silverware, pots and pans ... and so on. I probably spent $1000 in the 6 or 7 months before I moved out. (The 2nd time .... the 1st time at 18 I loaded my car and rolled off to Columbus ... and slept on the floor with 1 blanket and a pillow. lol) My 1st place in Columbus didn't even have gas for the 1st 2 months because my roommate and I had to save up the deposit.
Really poor planning ...... but it was a lot of fun anyway. lol
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I do not trust percentages. Depends on where you live AND how you live. Might try roommate approach. You don't mention if you have saved an emergency cushion yet, so I feel you are going to be a little light. On your own is cool, but not if you live in a crisis mode (done it). The unexpected stuff needs to be saved for, so in your calculations I hope you are paying yourself some set amount first. Trying to save the last few dollars can be difficult, and often there aren't enough there. If in doubt, save a bit more first. Might be like that old saw, If you gotta sk, you can't afford it. Good luck. 
"Every responsibility implies opportunity, and every opportunity implies responsibility." Otis Allen Glazebrook, 1880
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thanks all! I have a few thousand as a cushion. thanks to those who posted mature responses, too.
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Dude can totally afford that, unless he is paying student loans or something uforseen in the neighborhood of 300+ per month! Just remember to budget for the car mechanic, all in all no sweat totally affordable.
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