Looking ahead to your first apartment is a majorly exciting time. It's so close you can almost see it in your head: You, thriving on your own, cooking a delicious dinner in your impeccable kitchen before settling down in your well-styled living room for a Hulu Plus binge on your brand new TV. But before you get carried away with the fantasies of your first place, let me get real with you: Who's paying for all of it?
Answer: You are. With a great apartment comes great responsibility, and you're the one in charge of figuring out how to pay the bills now. Before you set out on your search for the perfect place, make sure you're crossing all the t's and dotting the i's when it comes to figuring out how much you can afford.
Trap #1: Planning to Spend Too Big a Chunk on Rent
You don't want to be apartment poor. Stretching your housing budget even a little bit (to be able to get into your top-choice neighborhood or have a freshly remodeled kitchen, for instance) will have compounding effects. It's not like splurging on a pair of shoes; you'll have to reach and pay that extra $100 over and over, month after month until your lease is up.
So what is a good rent budget? As a general rule. finance experts suggest that your housing costs take up no more than 30% of your income (calculated before taxes).
Trap #2: Underestimating What You'll Pay Each Month
I'm using the term "housing costs" instead of "rent" because there's way more to consider than just what you write on the check to the landlord. On top of rent, your monthly housing costs may include gas and electricity bills and garbage, water and sewer fees. And if you're moving from a dorm or campus housing where your cable and internet were included, you'll need to account for yet another addition to your "rent."
You can ask the landlord or property management company to provide you with an estimate of utility costs for the building and the area, and get quotes for the internet from a local provider before you make a decision.
Trap #3: Forgetting all the Added Move-In Costs
So you've done everything right and determined exactly what you can afford to spend on housing each month. Fantastic! But you also need to budget for a small sum of up-front cash to actually get you inside the door of your first place. Depending on your landlord or property management company, you'll be expected to pay an application fee, a credit check fee, a pet fee and a security deposit. Plus there are deposits to get your electricity and gas turned on in your name. (And that's all to say nothing of the expenses of actually moving your stuff from point A to point B.)
These fees will vary wildly, so it's best to just ask up-front when you're apartment hunting and use them to help make your decision.
Renters who have been there and done that: What surprised you the most about budgeting for your first apartment?