Photo (cc) by Furryscaly
No roommate no cry, right? It might be a relief to quit sharing space, whether that means you are just out of the college dormitory or exiting some other co-living situation. But living alone (getting the bathroom all to yourself!) does come at a huge premium, according to US News & World Report.
Looked at the other way, a two-bedroom place doesn’t usually cost twice as much as a one-bedroom or studio. Citing median rents in 10 U.S. cities, the article noted savings of almost 44 percent for sharers vs. solos.
Skip a roommate, and you’ll also be responsible for rent/utility deposits, all utilities, and all furnishings and household supplies. Yet plenty of people are sick of roommates or know right out of the gate that they’re simply not suited to sharing.
Done right, the solo life can work. Start by …
1. Learning the rental market
Read the ads for a sense of what places cost in your area. If they generally run between $800 and $1,100, then you’ll know to balk at a one-bedroom for $1,300 and to run toward a $700 studio.
This knowledge also helps your planning: I’ll need X dollars for the security deposit and X dollars more for the last month’s rent in advance. At the rate I’m saving to move out, it will take me X more weeks to pull together what I need.
If you have enough cash socked away, start apartment hunting in earnest. If not, keep squirreling away those dollars (more on that below) and looking for other stuff you’ll need. One way to save money is to …
2. Live at home, briefly
If your folks are OK with you coming back from college/returning home after your latest roommate disaster, this will give you a chance to save for deposits, emergency fund, etc. Share your move-out timeline with them: “In three months I’ll have all that I need plus a financial cushion, so I really appreciate your welcoming me back.” Pitch in cheerfully with household chores, too.
Continue the apartment hunting while you live at home. In the late fall or winter, be sure to …
3. Watch for “move-in specials”
If the market is slow or the weather is lousy, a landlord may offer incentives. I got one month free when I signed six-month leases on my first and second Seattle apartments.
You should also be willing to …
4. Think small
“Don’t be afraid of the studio,” advises Michelle Diamond, who blogs at FitNPoor. She moved from a one-bedroom into a studio that felt comfortable and cozy – and cheaper. If you don’t have a ton of stuff, this might work for you, too.
Can you really afford it?
Conventional wisdom is that rent should take up no more than 25 to 30 percent of your net income. Multiply your net pay by 52 (or 26 if you’re paid biweekly) and determine how much you bring home in a year. Depressing, huh?
Being pretty sure you can afford it isn’t good enough. You’ll need security and/or utility deposits, maybe the last month’s rent in advance, and a bunch of other stuff to make the place your own. That’s why you need to …
5. Track your spending
You might be shocked to find out how much you spend on iTunes and e-books. That’s money that could have gone toward rent. While some folks write down all expenditures and create spreadsheets, it’s easier to use online budgeting sites/apps such as Mint.com or PowerWallet.
Now that you know where your money is going, time to …
6. Create a budget
The 50-30-20 plan is a good template: no more than half of net income for “musts” (like rent!), 30 percent for “wants,” and the rest for savings and debt service.
Organizations like the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies can help you get started; often you can get this help for free. (Note: It’s best to check whichever credit counseling group you wind up with through the Better Business Bureau and your state attorney general’s office.)
Living within your means is smart, not onerous. A great way to get started is to …
7. Ask why you buy
Do you really need it? How many hours will you have to work to pay for it? If you absolutely need it, how can you get the best price?
Now, suppose you determine you can manage solo rent on your current earnings if you’re faithful to that new budget. Your next step should be to …
Think beyond next payday
Being able to afford the rent is one thing. Sooner or later, though, you’re going to need something you can’t pay for out of pocket: car repair, a medical deductible, a baby shower gift. That’s why your new budget must include ways to …
8. Build an emergency fund
Your basic budget covers, well, the basics. But sometimes stuff happens. See “18 Ways to Save $100 This Week” for some tips on establishing what I call the “being able to sleep at night” fund.
You should have this even if you’re not living alone. Should there be a fire or even a simpler issue such as a leaky roof that ruins some of your stuff, would you be able to pay for alternate lodging or replace your belongings?