Finding your dream apartment can hit you with a wave of emotions, ranging from excitement to anxiousness. One thing you can do to easily calm your nerves is making sure you’re financially ready before embarking on this next chapter in your life. But before signing the lease, it’s important to ask yourself the age-old question of how much rent can I really afford? When it comes to finding the perfect apartment, being honest with yourself will make all the difference.

Be realistic and set a budget

One of the tougher steps to take before taking the plunge on a new apartment is creating a budget. This part can get tricky because everyone’s budget is going to be different based on income and monthly expenses. Being honest with yourself is the most important mindset to take when sitting down and creating your budget.

You’ll be surprised what you’re able to go without after you analyze what you’re spending your money on. Don’t get caught up in the mindset of stretching your budget so you can afford all the bells and whistles of a luxury apartment. This will only cause you to dip into your emergency savings which can be hard to replenish once it depletes.

Lucky number 30

The general rule of thumb is that your monthly rent should not exceed 30% of your gross income. While this rule may be a tad outdated, it’s still a good starting point when figuring out how much rent you can afford. Take a look at your more than your monthly income compared to your current debt. When analyzing your debt to income ratio, make sure you have a solid safety net large enough to cover 6 months’ worth of your expenses. Whether to spend 30%, 40% or 50% of your gross income on rent should be up to the individual.

Don’t forget furniture

What’s a beautiful apartment without the proper furnishings? Too often, renters don’t factor in the cost of furniture and other living necessities when signing the lease for a new apartment. Nothing is more disappointing than only being able to furnish your new digs with an air mattress and some milk crates.

It’s tempting to break out the plastic and charge all of your new furnishings but it’s important to resist that temptation. Interest rates on credit cards can be extremely high and this will make it hard to pay off the balance while still having the cash to cover rent and utilities for the month. Consider researching options for a low APR personal loan to furnish your new pad. You’re only applying for the amount you need which eliminates the ability to overspend. Depending on the your circumstances, a fixed interest rate APR are often lower than a credit card.

At the end of the day, your rent depends on your income and the city you live in. Living in popular cities like New York City or San Francisco and trying to make ends meet could get tough if you opt to apply the 30% rule. Figuring out where you can cut costs and compromise on other aspects of your life can save you a good chunk of change in the long run.

Find a rental that fits your budget!

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