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Rent as a percentage of income

February 25, 2008

I received a notice on my door today saying that I had a $30 credit on my account with my apartment, and instead of $1425, I get to pay only $1395 this month! I assume this is from the application fee being credited towards my rent.

After receiving some comments on my budget that my rent was high for my income, I got curious about how “out of line” I was with my rent. Still, there isn’t a lot I can do about it, but I really didn’t think it was such a stretch to think a young professional could afford to live in a tiny apartment in a safe neighborhood.

First, don’t get me wrong here–I’m not trying to pretend my rent isn’t absurd. I still have sticker shock each month I write the check. I sit on my balcony in the weekend mornings enjoying coffee with T, and think to myself “Wow. I pay almost $50 each day for this!” Today a cute little humming bird flew up next to us like a tiny little helicopter, and it almost felt worth it. (We don’t have hummingbirds in my home state.) Almost.

My original idea when I was looking to move here was to pay $1000/mo, but the only places I could find in that range were in neighborhoods I would not feel comfortable in, as a scrawny 25 year old girl who still occasionally gets carded at R rated movies. I’m just not very tough, even with my pepper spray.   Where I live, my commute is super short, and in a city known for congestion, I’m thankful of that every day. Roommates would have been the only viable option, but I decided to pay for the luxury of living alone over finding a random on the internet, at least at first. I toured a couple places, and I could have saved maybe $100 or even $200 by living further from work in an even tinier apartment. It just didn’t seem worth it.

Anyway, so I made up a little poll over in the forums at Get Rich Slowly to hear what people who are at least a little interested in personal finance paid. I asked specifically for what percentage of gross income went to rent/mortgage. Here are the current results, though 50 respondents is hardly a statistically significant sample. (Note the flawed poll options… the second to last one should have said 40-50!)

  • 0%: 5 people, 10%
  • 1-10%: 8 people, 16%
  • 10-15%: 7 people, 14%
  • 15-20%: 11 people, 22%
  • 20-25%: 12 people, 24%
  • 25-30%: 3 people
  • 30-40%: 1 person
  • 30-50%: 3 people
  • over 50%: No one (whew!)

Mine is right around 24% without including any bonuses, slightly less if I do. Which is high and it stinks, but it doesn’t seem to be so abnormal.  I recently moved from Iowa, where I was paying just 12% of my rent to a nicer and larger apartment (I have my old kitchen table in pieces under my bed). It is an adjustment, that is for sure! Still, I don’t mind cutting back on things like clothes and expensive meals in order to live here. As my salary increases, I don’t think I’ll feel the need to move into bigger and nicer places. Even if T were to live with me, we both don’t mind a small cozy place. I actually really like it–less to keep clean and less stuff I need to buy to fill it up.

I’m not sure if this is the city we will live in forever. There are a lot of great cities that just aren’t so darn expensive, and we kind of want to go abroad for awhile. For now though, it is a great place for me to be. Late this afternoon I drove 1 mile to the beach and went for a run next to the ocean (yes i know I could just run the mile, but I feel safer and happier running on the path by the water). The waves came crashing in, the sun was starting to dip, and I felt really lucky to live where I do. I may hate paying so much in rent, but I can’t say that I regret it.

4 Comments leave one →
  1. February 25, 2008 9:45 am

    I hate paying rent.. but I love living alone. It’s a real tradeoff.

    I have only lived with roommates twice and the experience both times was harrowing

    I love my privacy, space and being able to wander around and wear and do whatever I want without having to think about others in the house.

    • Neil permalink
      December 22, 2011 6:37 am

      Rent money is dead money. It is better to buy an appartment and build some equity than have zero to show for. If one lives paycheck to paycheck and is renting, then it is totally baloney because you are accumulating absolutely no assets. Paycheck to paycheck living is only justified if one is mortgaging a home and building equity as the home paid off becomes one’s nest egg. If one is a renter, one cannot really be living paycheck to paycheck since this would mean that no nest egg is being built, unless you work for a company that will provide you a decent pension.

      • December 29, 2011 9:19 am

        But why would one ever want to live paycheck to paycheck? I rent but I save a large percentage of my income (because I don’t have a hefty mortgage!)

  2. February 25, 2008 10:23 am

    I also live in a one bedroom apartment in a nice area…I pay quite a bit for the luxury of living alone ($670/month). It’s about 19% of my gross income…UGH!

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