Max "safe" rent?

[Chiropteran]

The old saying was your rent should be less than 1/4 of your paycheck. More recently, I have heard it should be less than 1/3.

I can't seem to manage even that.

In this area (NoVA/DC), the cheapest apartments are slightly above the 1/3 figure, but they are so far from work that I would end up paying a ton of extra money on gas. While the apartments close to work will save me gas money, they cost basically 50% of my take home pay. That is what I would prefer to do, though.

Is it really that bad or dangerous? It seems like I would still have plenty of money for food, car payments, and misc, and I'd still have some extra $500/month unaccounted for for emergencies. Do I just need to find a roommate or what? Is the "1/3" rule out of date or inapplicable for urban areas?

 

[MetalMat]

I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

 

[spidey07]

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

 

[Riverhound777]

My rent is currently 21% of my gross monthly income. Or should it be net income?

 

[Chiropteran]

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

So, NoVa/DC area rental costs are $1500, so everyone living here should be making over $100k a year? It's a great concept, I'd love to live a place where my rent is that small, but seems unrealistic. The only way to get rent that low is to live 50 miles away, which defeats the purpose because I pay the difference in gas.

How does a car fit into the equation? Is it supposed to be fine to spend 25% on rent and have a car that costs you 25%, but it's not okay to sell your car and rent a place for 50% of your income?

 

[tigersty1e]

Live at home, save your money...

Your firends and co-worlers will laugh at you.

But when you move out to buy your own place, invite them to your opening home party and just play it cool.

 

[ravana]

The rent for my place is about 40% of my net monthly. I have a roommate that splits it with me, so that helps.

I also live in NoVa, 2 miles from Tysons Corner.

 

[sjwaste]

Where do you work, and where in nova are you looking? There are some lower rent places, but from what it sounds, you want to live right by the metro. Those are the prices you're quoting, anyway.

 

[BlahBlahYouToo]

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

no way you can find a place that costs 25% or your take home pay in any major metropolitan area unless you're making 6 figures, rent or own.

 

[halik]

rent is an expense ... so it should be the lowest amount possible.

 

[spidey07]

Originally posted by: BlahBlahYouToo

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

no way you can find a place that costs 25% or your take home pay in any major metropolitan area unless you're making 6 figures, rent or own.

And that's why salaries are much higher in major metropolitan areas.

 

[Chiropteran]

Originally posted by: sjwaste
Where do you work, and where in nova are you looking? There are some lower rent places, but from what it sounds, you want to live right by the metro. Those are the prices you're quoting, anyway.

Yeah, I want to live on the orange line metro. I work in Rosslyn, looking at apartments nearby. Basically I see apartments in Rosslyn for $1600-$1800. With these apartments I wouldn't even need a car, I have even been thinking about selling it to save a little more on insurance, plus it would give me a big head start on savings.

Apartments further away, but still in Arlington, maybe as cheap as $1400- but then I absolutely have to keep my car, which is an extra $100/month for insurance and gas.

While apartments yet even further out in the suburbs, like Reston or Fairfax or Anandale or Woodbridge, I see places as cheap as $1200/month, but the extra commute time would cost me some $200~ in gas- so it seems like ultimately the more expensive places that are close would cost pretty close to the same after I add in car costs.



I don't really see whats so bad about spending half my take-home pay on rent. My other expenses are very minimal, my car will be paid off in two months so I won't even have a car payment, basically I'll just have rent and food, and the rest of my money can go to entertainment or savings.

 

[jaqie]

The rule is an overgeneralization.

I live on disability which is $657 a month. The cheapest stable place I could find so far has been $400/mo utilities included. If you do the math, that leaves me with $257 for food, medicine disability doesnt cover, other needs. When everything is said and done I can barely keep everything paid, but it is possible provided there are no big surprises. It depends more on the financial lifestyle you need and your other expenses then anything else... by force of situation I have a very, very frugal lifestyle... using the bus to get everywhere I need, buying very inexpensive food and off-brand meds from out of country, et cetra.

 

[miri]

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

Not really, depends on the cost of living area.

Take a high rent place like California, average rent can easily be $1500-$2000 for a 1 bedroom apartment.

$1750 rent or 35% of $5000 take home = $3250 left over

Take a low rent place in the US

$500 rent or 25% of $2000 take home pay = $1500 left over

Since most of the bills outside of rent cost the same in high cost of living areas like electricity, car payments, phone, cable, etc., $3250 left over after paying rent is not in my opinion, living over their means.

 

[SearchMaster]

Originally posted by: jaqie
The rule is an overgeneralization.

I live on disability which is $657 a month. The cheapest stable place I could find so far has been $400/mo utilities included. If you do the math, that leaves me with $257 for food, medicine disability doesnt cover, other needs. When everything is said and done I can barely keep everything paid, but it is possible provided there are no big surprises. It depends more on the financial lifestyle you need and your other expenses then anything else... by force of situation I have a very, very frugal lifestyle... using the bus to get everywhere I need, buying very inexpensive food and off-brand meds from out of country, et cetra.

It's not really an overgeneralization. The theory is that you're not prepared for a disaster. What if you lose your job for 6 months? What if the govt stopped sending your disability checks? Yes, you *can* survive month-to-month as long as your income exceeds your expenses, but the higher the expenses, the less prepared you are to overcome unexpected events.

 

[vi edit]

To me it just really depends on what you have left over.

If you make $7000 a month, that leaves you with over $4500 left over.

If you make $1500 a month, that's only $1000.

One of those leaves you exposed to a lot more risk than the other.

 

[Chiropteran]

Originally posted by: SearchMaster

It's not really an overgeneralization. The theory is that you're not prepared for a disaster. What if you lose your job for 6 months? What if the govt stopped sending your disability checks? Yes, you *can* survive month-to-month as long as your income exceeds your expenses, but the higher the expenses, the less prepared you are to overcome unexpected events.

It seems flawed though.

I could be paying 20% of my take-home on rent, and another 60% on other bills and expenses, and if I lost my job I'd be homeless in a month.

Or, I could be paying 50% of my take-home on rent, 10% more on other expenses, and I would be a lot better prepared for disasters.

Going by a strict 25% rule means someone is going to get a place 40 miles away to save $50 on rent and end up adding another $200/month to their gasoline bill.

 

[Gibson486]

Originally posted by: spidey07

Originally posted by: BlahBlahYouToo

Originally posted by: spidey07

Originally posted by: MetalMat
I think Dave Ramsey suggest that you should only pay around 25% of your take home pay to a mortgage payment or rent.

Yep. Anything more than 1/4 take home = living beyond your means.

no way you can find a place that costs 25% or your take home pay in any major metropolitan area unless you're making 6 figures, rent or own.

And that's why salaries are much higher in major metropolitan areas.

it's not even "much" higher anymore....

 

[jaqie]

Originally posted by: SearchMaster
It's not really an overgeneralization. The theory is that you're not prepared for a disaster. What if you lose your job for 6 months? What if the govt stopped sending your disability checks? Yes, you *can* survive month-to-month as long as your income exceeds your expenses, but the higher the expenses, the less prepared you are to overcome unexpected events.

You don't know much about disability... they review your case every few years and if they deem you fit to work you get just about a half a years' notice, and disability is not a job silly, it is for people that cannot work! "lose your job for 6 months" has nothing to do with it. My whole point seems to have gone right over your head, that is it has more to do with what your other expenses are and how much you spend a month then your rent.

After living like this for so long, I am much more capable on living on such a frugal budget then others are, and much more used to it, my point is the 1/3 or 1/4 rule is just a complete overgeneralization. Say for example I got better (which I am, but that's another subject) and got a job that paid $1400 a month. I would be quite happy in a place that cost me $600-700 a month including utilities, which is half of my income, but I would have $700-800 a month for my other expenses as opposed to $257 I do now. I am so used to being so frugal that a large portion of the money would go into savings each month.

 

[Chiropteran]

To put things in perspective, I have had major credit card debt for the last 8 years that I just finally paid off. I have been paying an extra $800/month towards this every month, while living some 40 miles from work with family at minimal rent. That debt is finally paid off, so I feel like I could easily pay an extra $800 above my current rent to improve my living conditions. It's above the silly 25% rule, but since it's how I lived my life the last 5 years I don't really see why I can't keep doing it. The only difference is the money will be going to pay rent instead of paying off debt.

 

[LittleNemoNES]

rent for me is 66% of my means dont' have much money left for much else (sans my shiny computer)

 

[jaqie]

Chirop: just a wee bit of friendly advice there: stay there another 6 months, toss that money into savings for a rainy day, THEN move into a new place

 

[mchammer187]

You definitely can get below 1/3rd but you definitely will NOT living alone


look into renting a room in a house

they are generally cheaper than an apartment or a 4BR apartment

 

[imthebadguy]

3/8ths is good

 

[HopJokey]

I believe there is no set "safe" limit as this depends on your other expenditures (bills, food, etc.).