Am I spending too much on rent?

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cnblure
Posts: 39
Joined: Tue Jan 05, 2016 9:45 pm

Am I spending too much on rent?

Post by cnblure »

I am currently renting an 850sqf 1bed/1bath apartment in a Maryland DC suburb. I pay about $1800 a month for rent/water/trash/and a parking spot ($25 a month). My take home pay after maxing out my work retirement account and HSA is $5200 a month. I've rented in other parts of the country, but I'm not used to rent being more than half of my monthly expenses. I moved here for a job opportunity a few months ago and was only able to find a place online before coming here. But it seems to be competitively priced with other similar apartments in the area. There are only a few cheaper places, but only by like $100 a month. The positives are that it feels safe and is in a good location. My commute to and from work is only 20 minutes. Safety is important to me cause I am often out between 3-4am for work. This rent price also makes me feel uneasy about having a year long lease. I don't like the idea of potentially being on the hook for so much money if something were to happen and I have to break it. The cost of renting month to month would cost an extra $500 a month and isn't a viable option for me. Renting with a shorter term lease also significantly increases the price for me. Is paying this amount reasonable and just something I have to get used to, or should I try to find a better option? I don't think I'm interested in buying cause I plan to move in 11-12 years, and anything I would be interested in buying would probably take me 3-4 years to save up a down-payment for anyway.
wfrobinette
Posts: 1423
Joined: Fri Feb 20, 2015 3:14 pm

Re: Am I spending too much on rent?

Post by wfrobinette »

cnblure wrote: Fri May 29, 2020 2:29 pm I am currently renting an 850sqf 1bed/1bath apartment in a Maryland DC suburb. I pay about $1800 a month for rent/water/trash/and a parking spot ($25 a month). My take home pay after maxing out my work retirement account and HSA is $5200 a month. I've rented in other parts of the country, but I'm not used to rent being more than half of my monthly expenses. I moved here for a job opportunity a few months ago and was only able to find a place online before coming here. But it seems to be competitively priced with other similar apartments in the area. There are only a few cheaper places, but only by like $100 a month. The positives are that it feels safe and is in a good location. My commute to and from work is only 20 minutes. Safety is important to me cause I am often out between 3-4am for work. This rent price also makes me feel uneasy about having a year long lease. I don't like the idea of potentially being on the hook for so much money if something were to happen and I have to break it. The cost of renting month to month would cost an extra $500 a month and isn't a viable option for me. Renting with a shorter term lease also significantly increases the price for me. Is paying this amount reasonable and just something I have to get used to, or should I try to find a better option? I don't think I'm interested in buying cause I plan to move in 11-12 years, and anything I would be interested in buying would probably take me 3-4 years to save up a down-payment for anyway.
No! If housing payment/rent is less than 30% of your gross pay your doing ok. But you are in a HCOL area so it aint bad.
runner540
Posts: 1326
Joined: Sun Feb 26, 2017 5:43 pm

Re: Am I spending too much on rent?

Post by runner540 »

It’s too much if you can’t meet your other financial goals. Can you? Maxing retirement is a great place to be.
I bet there will be some deals soon...
Can you find a roommate and split a 2Br?
adamthesmythe
Posts: 3850
Joined: Mon Sep 22, 2014 4:47 pm

Re: Am I spending too much on rent?

Post by adamthesmythe »

OK. Safe, good commute, less desirable other alternatives only cost $100 less. Looks like you have done the best you can.

That's what it's like in an HCOL. With luck you will increase your income or gain experience that will make you marketable in a cheaper area.
LeftCoastIV
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Joined: Wed May 01, 2019 7:19 pm

Re: Am I spending too much on rent?

Post by LeftCoastIV »

Doesn't sound unreasonable to me. I recall reading somewhere that the average homeowner owns their home for 7 years or so, so 11-12 years is a fairly long time horizon, and long enough IMO to consider home/condo ownership.
bloom2708
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Location: Fargo, ND

Re: Am I spending too much on rent?

Post by bloom2708 »

That rent doesn't seem too bad for a HCOL area.

Options which may or may not be better:

1. Roommates - Pros and cons
2. Get married - :D Definite pros and cons
3. Move farther away (long commute) - Mostly cons, but it would be cheaper.

I would not consider buying at all if you are thinking of leaving at some point. Meet your savings goals, pay rent, spend some too.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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Watty
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Re: Am I spending too much on rent?

Post by Watty »

wfrobinette wrote: Fri May 29, 2020 2:34 pm ....but I'm not used to rent being more than half of my monthly expenses.
Your math is likely off. Your retirement savings and HSA are also also monthly expenses that you are not forced to pay.
cnblure wrote: Fri May 29, 2020 2:29 pm My take home pay after maxing out my work retirement account and HSA is $5200 a month.
It sounds like you gross around $100k a year. With earning that much pay $1,800 is OK and it sounds like you can afford it and there is not anything better.
terran
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Joined: Sat Jan 10, 2015 10:50 pm

Re: Am I spending too much on rent?

Post by terran »

I mean, it's a lot of money, but it sounds like you've done your research. After adjusting for cost of living (which is mostly the cost of rent) do you currently earn more or less than you could earn in a lower cost of living area? If more then it sounds like this expensive rent still leaves you ahead, so it's a good choice. If less then you're making a spending decision and you should decide if the lifestyle you're purchasing is worth it or if you should get a job in a location that will let you come out ahead financially at the expense of that lifestyle. Of course, the best case scenario would be if you can both earn more after adjusting for cost of living and have a better lifestyle in another location, but that depends on your personal lifestyle preferences.
sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: Am I spending too much on rent?

Post by sailaway »

Your rent is fine as a portion of your income. If it bothers you, in most HCOL, the best way to save on rent is to get a roommate or rent a room in someone's house. In our area, there is generally about a 5% difference between studios and 1 bedrooms, and a 10% difference between 1 bedroom and 2 bedroom with 1 bath or up to 20% difference between 1 bedroom and 2 bedroom with 2 baths.

I have had some bad roommate experiences and was on my own as soon as feasible, but DH recently convinced me to give it a go so that we could make a huge lifestyle change without changing our budget very much and it is going well.
BeneIRA
Posts: 843
Joined: Sat Nov 29, 2014 8:43 pm

Re: Am I spending too much on rent?

Post by BeneIRA »

No, that is not too much. That would be considered cheap in my area. Your house payment should, ideally, be 25% or less of your gross pay. In this case it looks like you are well within that. Also sounds like you can expect an increase come renewal time, so if you like the place, I would try and negotiate a longer lease term to lock in the lower rate, which flies in the face of your month-to-month comment, but there it is. Definitely need a good emergency fund just in case you are let go from your job at any point.
JD2775
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Joined: Thu Jul 09, 2015 10:47 pm

Re: Am I spending too much on rent?

Post by JD2775 »

For comparison my rent is $1600 (not including trash, utilities etc) in HCOL area (Bay Area, CA). I split the rent with my GF. Take home pay after maxing 401k/HSA is $5400.

There is no way I would buy a house around here. Pretty happy only paying $1600/mo, I would even be happy paying 500-600 more a month I would think.
IMO
Posts: 998
Joined: Fri May 05, 2017 6:01 pm

Re: Am I spending too much on rent?

Post by IMO »

JD2775 wrote: Fri May 29, 2020 6:18 pm For comparison my rent is $1600 (not including trash, utilities etc) in HCOL area (Bay Area, CA). I split the rent with my GF. Take home pay after maxing 401k/HSA is $5400.

There is no way I would buy a house around here. Pretty happy only paying $1600/mo, I would even be happy paying 500-600 more a month I would think.
Is it actually possible to buy a house in the Bay Area on a take home pay of $5400?
Grt2bOutdoors
Posts: 23151
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Am I spending too much on rent?

Post by Grt2bOutdoors »

cnblure wrote: Fri May 29, 2020 2:29 pm I am currently renting an 850sqf 1bed/1bath apartment in a Maryland DC suburb. I pay about $1800 a month for rent/water/trash/and a parking spot ($25 a month). My take home pay after maxing out my work retirement account and HSA is $5200 a month. I've rented in other parts of the country, but I'm not used to rent being more than half of my monthly expenses. I moved here for a job opportunity a few months ago and was only able to find a place online before coming here. But it seems to be competitively priced with other similar apartments in the area. There are only a few cheaper places, but only by like $100 a month. The positives are that it feels safe and is in a good location. My commute to and from work is only 20 minutes. Safety is important to me cause I am often out between 3-4am for work. This rent price also makes me feel uneasy about having a year long lease. I don't like the idea of potentially being on the hook for so much money if something were to happen and I have to break it. The cost of renting month to month would cost an extra $500 a month and isn't a viable option for me. Renting with a shorter term lease also significantly increases the price for me. Is paying this amount reasonable and just something I have to get used to, or should I try to find a better option? I don't think I'm interested in buying cause I plan to move in 11-12 years, and anything I would be interested in buying would probably take me 3-4 years to save up a down-payment for anyway.
You are not paying too much for rent. See the sentence underlined? Insert this in there instead "I'm not used to rent being more than half my take home pay" Fixed it for you, this is how much of America lives month to month. You don't know how good you have it. Save up your money, when/if you are able and the price/circumstances are right, you may want to consider purchasing a home. Until then, just consider the rent, the price you pay for safety, comfort and the ability to walk away or flexibility, if you will.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
JD2775
Posts: 663
Joined: Thu Jul 09, 2015 10:47 pm

Re: Am I spending too much on rent?

Post by JD2775 »

IMO wrote: Fri May 29, 2020 6:55 pm
JD2775 wrote: Fri May 29, 2020 6:18 pm For comparison my rent is $1600 (not including trash, utilities etc) in HCOL area (Bay Area, CA). I split the rent with my GF. Take home pay after maxing 401k/HSA is $5400.

There is no way I would buy a house around here. Pretty happy only paying $1600/mo, I would even be happy paying 500-600 more a month I would think.
Is it actually possible to buy a house in the Bay Area on a take home pay of $5400?
Not any house I would want :)
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