MFA IRL: How Much Rent Can Olivia Afford?

We are starting today a new series, MFA IRL or My First Apartment In Real Life, where we answer selected reader questions that were posted in the comments. You can also email your questions/comments to [email protected]

Olivia, 23, moving out of her parents’ house later this year, asks: “How much rent can I afford?”

Income: $23.19 an hour, with occasional/optional overtime
Monthly bills:
Credit cards – paid off before move
Student loans: $400
Phone: $50
Car: $275

You can find Olivia’s full comment here.

MFA Answers:

First, congratulations on your new $23 an hour job! Consider yourself double lucky – you got a well-paying job and you are able to live at home for now.

You should be totally ready to move out by the end of the year and you can afford up to $1,000 a month in rent. (See below.)¬† In fact, depending on your location, a landlord may approve you (and push!) for an even higher rent, up to $1,200, but don’t fall into that trap. You have pretty high student and car loans to pay, so don’t stretch on rent.

Between now and your moving out date, start practicing living on your own. In addition to knocking off your credit card debt, see if you can save each month an amount equal to your estimated housing budget (rent/utilities), less what you pay now. At the minimum, you need to save 3 times your expected rent to cover your initial expenses, such as first month’s rent, security deposit, moving costs and some furniture.

While you are still living at home, learn to cook if you don’t know yet. Take-out and eating out will quickly blow a hole in your budget, so plan to put your new kitchen into good use. Make a housewarming wish list of kitchen items you’ll need to get started.

We have estimated your monthly budget with the listed expenses plus other bills apartment renters typically need to cover. You should double check all the numbers and run your own budget by downloading¬†this worksheet. The budget does not include health insurance, assuming that you are covered by your parents’ plans. It also does not include a savings target. We recommend that you get into a habit of putting 10% of your take-home income into savings.¬† Start by earmarking any overtime pay for that purpose.

Good luck!

 

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