First Apartment Budgeting Boot Camp: Couples

As promised last week, this is the couples week at the first apartment budgeting boot camp. We’ll try to figure out answers to Rachel’s, Celeste’s and Jimmy’s questions.

Rachael

Rachael asks: “Do you think $810 would be too much rent for my boyfriend and I together?”
See Rachael’s question as a comment to http://www.myfirstapartment.com/2012/08/how-much-should-you-plan-for-utilities/this post.

Hi Rachael,

You do not give us any information about your incomes or other expenses, but we love a challenge so we try back into an income number you’d need. We’ll do it by 1.) assuming first that each works a 40 hour week and 2.) estimating the hourly pay rate each would need to earn in order to comfortably pay $810 a month in rent plus all the other typical apartment living expenses and target savings. Because commuting expenses between using cars or public transportation make such a huge difference, we’ll show the numbers both ways. As you see below, if you have to get two cars with average expenses, you each have to earn $3 more per hour to pay for them, versus using public transportation. Good luck! Hope this helps.

Rachael’s Budget: NO CARS 2 CARS
Hours-R 40 40
Pay/hr $10.00 $13.00
Total/yr (50 wks paid) $20,000 $26,000
Est. taxes/deductions 15% ($3,000) ($3,900)
After tax take-home – Rachael $17,000 $22,100
Hours-BF 40 40
Pay/hr $10.00 $13.00
Total/yr (50 wks paid) $20,000 $26,000
Est. taxes/deductions 15% ($3,000) ($3,900)
After tax take-home – BF $17,000 $22,100
Cash take-home -combined $2,833 $3,683
Rent -$810 -$810
Utilities, incl. cable/internet (20% of rent) -$162 -$162
Car payments $0 $300/each -$600
Car insurance payments $0 $150/each -$300
Gas est. ($50 each) $0 -$100
or Commuting -$250 $0
Groceries/food est. for 2 -$450 -$450
Laundry/dry cleaning est. for 2 -$60 -$60
Cell phone est. -$160 -$160
Credit Cards $0 $0
Student Loan $0 $0
Other fixed monthly bills $0 $0
Discretionary expenses ($100/wk/person) * -$800 -$800
Cash Outflow/Month -$2,692 -$3,442
Savings (target 10% of take-home) $141 $241
*Clothing, entertainment, vacations, etc.

Celeste

Celeste asks: “Hi! My boyfriend & I are wanting to move in together. I make around $550-600 biweekly & he makes around $400 a week. We have found a 3 bdrm/2bath for $650/mo & $500 deposit. We don’t currently have a car so I’m looking into getting one on payments. We do currently have about $3,000 saved up. Do you think us moving out soon is plausible? Also my best friend wants to move with us but she makes $8/hr & only works 3 days a week.” You can find Celeste’s question as a comment to this post: http://www.myfirstapartment.com/2013/09/getting-your-first-apartment-how-much-money-do-you-need-to-save-to-move-out/

Hi Celeste,

First, congratulations on having saved a nice little nest egg that will cover your initial expenses when you get your own place.

It looks like it will be tight if you have to get a car and still want to continue saving. We’d like to see at least $100/person/week for discretionary expenses, or $800 a month for a couple. You can get close to that number if you stop saving, but that would be a bummer when you are already used to the routine of  putting some money aside.  If your best friend moves in with you two, and manages to pay one third of the rent, you could use that money for savings, and then have about $700 a month for discretionary expenses.  That should be enough, with the savings as backup. See the rough budget below. Good luck! Let us know what happens.

Note: We are assuming that the incomes you mentioned were after taxes and deduction, not pretax.

Celeste’s Budget:
After tax take-home/month – Celeste ($500*2) $1,100
After tax take-home/month – BF ($400*4) $1,600
Cash take-home -combined $2,700
Rent -$650
Utilities, incl. cable/internet (20% of rent) -$130
Car payments -$300
Car insurance payments -$150
Gas est. ($50 each) -$50
or Commuting $0
Groceries/food est. for 2 -$450
Laundry/dry cleaning est. for 2 -$60
Cell phone est. -$160
Credit Cards $0
Student Loan $0
Other fixed monthly bills $0
Target savings 10% of take-home -$270
Amount left for discretionary expenses $480
*Clothing, entertainment, vacations, etc.

Jimmy

Jimmy asks: “Hello, I’m getting married next month the budget has been a very important topic my fiance and me have been talking about since we realize money is the #1 cause of arguments in a marriage. I’ve never lived on my own so I’m trying to take in as much advice as possible. My situation is the following: I will be moving into an apartment with the rent being $750/mo, this includes sewer, water and trash. I live in Arizona so I realize electricity will definitely be higher than normal. We don’t have any car payments or any debt. We don’t watch TV so it would only internet from us. Cell phones together is about $100/mo. Car insurance together is at $110. Our take home pay after taxes is $3,200 a month. What would your suggested budget be for this scenario?” See Jimmy’s question as a comment to this post: http://www.myfirstapartment.com/2012/08/how-much-should-you-plan-for-utilities

Hi Jimmy,

You are so smart that you and your fiance are getting on the same page regarding money issues. If you are both happy to live within your means, you’ll avoid the money arguments altogether. There will be other arguments (about taking out the garbage and how to split holidays with in-laws and countless other things) but they are easier to resolve. On the money front, with your low fixed expenses, this is the time to maximize your savings so you lay a good foundation for future when the big bills start to come with children and houses and other big budget items. First, if your employers offer 401K plans, participate and save at least as much as you need to get the maximum match. In addition, set up automatic transfers from your salary to savings. You should be able to save 20% of your take-home, for emergencies and future, and still have plenty of money for living expenses. See below. Good Luck!

Jimmy’s Budget:
Cash take-home $3,200
Rent -$750
Utilities, incl. cable/internet (20% of rent) -$150
Car payments $0
Car insurance payments -$110
Gas est. ($50 each) -$100
or Commuting $0
Groceries/food est. for 2 -$450
Laundry/dry cleaning est. for 2 -$60
Cell phone est. -$100
Credit Cards $0
Student Loan $0
Other fixed monthly bills $0
Target savings 20% of take-home -$640
Amount left for discretionary expenses $840
*Clothing, entertainment, vacations, etc.

Lesson 4. Moving in together can save you money

Household expenses (groceries, etc.) for two are less than for two people living separately, because there is less waste and you can buy in larger quantities.  Rent and utilities for a 1BR are less than for two studio apartments and about same as two roommate shares.

 

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