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Rent

pontifex

pontifex

Lifer
How much of my earnings should go to rent? Looking at rent calculators online and they are saying 30% of your gross income.

So this means that at my current gross income of $40k, I can afford $1000 in rent.

After taxes, that is about half my monthly income! That can't be right, can it?
So 30% actually ends up being closer to 50%.

Or am I completely misunderstanding something?
 
Aim for the cheapest place you can stand to live. Hopefully your salary and savings will increase over time.
 
Mine is 18% of my gross and it feels like almost too much.

edit: I guess that's like 28% of net.
 
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How is rent in PA? Unless you're in a prime part of Philly, I'd think $1,000 is more than you need for a studio or 1 bedroom. You should try to get closer to 20% so you can save something. Try looking in the $600 - $700 range.
 
IronWing said:
Aim for the cheapest place you can stand to live. Hopefully your salary and savings will increase over time.
Click to expand...

Yep, if you're trying to save money go for the cheapest place you find comfortable enough to tolerate. Also, consider roommates. While there are plenty of roommate horror stories out there I've had plenty of roommates that were just fine. It makes a serious dent on your expenses.

Also, examine what's most important to you. If you really want to live in a specific part of town and/or have a nice place you may need to make sacrifices in other parts of your life. You can't have everything so chose what you really want and trim down your budget on everything else.

Personally, when I was renting I tried to keep my rent closer to 30% of my NET income. It meant I lived in less nice places, but it gave me enough money to do fun things and also enough to save up for a home downpayment.
 
I'm standing at 45 percent of my income when I am in school. That includes my internet which will be going up at the end of the year.
 
When I started at my job a couple years ago I was right at 40k gross. Was paying $990 for a 1bdrm apartment. Found it to be pretty easy to afford and still save decent money. I was living with my gf though, she paid for groceries and cell phones.

Came out to $580 net for a 40 hour week, so at least $2,320/month. Shouldn't be too hard to manage $1k rent if necessary, unless you have other debts/payments or jobless wife and kids.
 
Why should rent be a given percentage of income? With investment/savings it obviously makes sense to dedicate a certain amount, and for budgeting with entertainment, etc I understand it, but otherwise I don't see why anyone would do anything other than what IronWing stated.
 
Our rent is about 45% of the net income at the moment. I think what you end up paying in rent really ends up being what your total living costs will be.

For example, if your take home pay is $2200/month and you put $1000 of that toward rent, if you only spend ~ $600 month on everything else (utilities, gas, groceries, entertainment, other expenses), then you are putting away $600/month, which isn't great but is doable (depending on your current savings situation). But when I lived by myself, my utilities were probably $200 so $400 for everything else is pretty small (unless you like Ramen noodles or don't care what you eat). I like to cook so sometimes my grocery bill was high.
 
im gonna gross about 40k this year and $400/m for a spacious newly renovated 1br in a great neighborhood. doin pretty well on it I guess
 
I would not go over 30% of net income. You need to save money for emergency fund, retirement accounts and have a litle fun.
 
30% of take-home pay max is my usual rule of thumb.

there are also other factors to take into account, though (like, if I was living somewhere that allowed me to live 100% without a car, I wouldn't mind paying more since I'd also be saving a few thousand dollars/year on insurance + gas + maintenance)
 
I spend about 32% of my net pay on rent. Only saving grace - my girlfriend helps pay for other things.
 
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