The conservative rule is that your rent or mortgage should not be more than 25% of your income. Others claims your rent should be no more than 30%. Whether or not this figure makes you cringe, there are some additional costs you should take in to consideration before establishing a budget. Expenses are added on once the apartment complex gets you in the door, and all of them should be included in this 25-30% rent to income ratio.
Here are some added expenses to consider:
1. Cable & Internet
If cable is not included in your base rent, add on another $50-$60. If neither cable or wifi are included, add on $90-$150.
Yes, trash. With a dumpster behind the apartments, my friend never expected a trash service fee to come with his monthly bill. Sure enough, there was another $20 a month for someone to pick up trash placed outside doors every evening.
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3. Water (and the administrative cost)
"Water is dirt cheap," I was told once. True. My friend's water bill came in at a whopping $4.37 last month. However, don't forget to calculate in another $15 administrative cost for, well, I don't know.
Add $10-$15 a month for renter's insurance required by most apartment complexes.
Some apartments have parking spaces but require you buy a pass. Others allow you to rent out a single car garage for $100-$200 a month.
Mortgage lenders even require house payments to be less than 28% of your gross income. Do the same for your rent and be prepared with a budget before signing the lease!
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