Any advice on my rent situation would be greatly appreciated!
TL;DR: In this market is it worth spending more of my take-home on renting a nicer place?
Context: I'm 22, make 54K a year post-taxes, have a paid off car, 15K in retirement, 6K emergency fund (still building-up), 3K in investments and no debt. My apartment's rent will be increasing from $1,300 to $1,425 a month if I renew my lease.
I'm thinking about moving because for the same price ($1,436 without utilities) I could be getting a much nicer apartment in a better far better area with an in-unit washer/ drier, granite countertops, bigger kitchen, nicer exterior etc. Not to mention my current apartment is on the first floor, at the entrance to the complex where there is a decent amount of noise and traffic.
The only problem I'm faced with is that the new apartment's rent will be roughly 31% of my take-home pay which is more than I want (ideally 25%) but I don't have any student loans or any other debts (not even credit card). Unfortunately there aren't many similarly priced alternatives in my area, and the only place that would fit in my 25% net rent budget (1125) is a studio apartment that goes for $950 with utilities that looks like it used to be an old motel, but is nice enough inside. There is literally nothing else in my area that fits that price-point that is safe and within my budget. I need to make a decision soon because my 60-day notice to vacate is coming up in a week.
What would you guys recommend doing?
Update: Thanks for all the comments everyone, I've made up my mind on moving to the nicer place!
Posted Jan 16, 2023, 11:40 PM UTC · edited
Do out a budget. Don't be afraid of having rent be over or under a certain arbitrary percentage of your income.
Everything you spend is all a part of the same pool. For example, say you spend $100 on gas a week with a long commute. You could afford to pay $400 more in rent on a place right next door to work where you had no commute. There's no magic behind what is rent vs what is other expenses.
You have a cell phone bill, gas, maybe some student loans, maintenance on your car, personal expenses, etc. Add those up and see where you are.
Thanks! I do have a budget, I guess I was too fixated on rent being under a certain percentage of my net income. Any amount that I'd save on rent would go right into my IRA : )