After years of putting up with noisy neighbors and a landlord who will not fix the dripping faucet it is time to look for a new place to live. Since it has been a while since you have moved, you are prepared to deal with higher rents and the other changes that have occurred in the rental market. Before you go out and put in your application for a new place, you need to figure out how much you can realistically afford for rent to avoid facing eviction from your new place.
Figure Out Your Regular Monthly Bills
The process for determining how much rent you can afford is the same as setting up a monthly budget. If you have already set up a monthly budget, then you can look that over and decide how much you can spend. If you do not have a budget, then it is time to make one. The first step is to add up all of the monthly bills you get in the mail or pay online. Leave out the rent you pay now since you will be replacing that. This includes any bill you pay on a monthly basis regardless as to whether you get a monthly statement or not.
Monitor Your Expenses
For one month, carry around a notebook and write down how much you spend on regular expenses such as groceries, gas for the car, entertainment and clothing. Monitoring your expenses will also give you a chance to see just how much you really spend each month and take the steps necessary to reduce your spending.
Consider Your Income
Write down every reliable source of monthly income you have and how much it brings in. If you have a hobby you do on the weekends that brings in a few dollars, then you should write that down too.
Now Add 20 Percent To Your Bills And Expenses
The step that most people miss when it comes to creating a budget is giving themselves a 20 percent pad on their bills and expenses to allow for unexpected events. You can put this 20 percent into a savings account and have it collect interest each month, but you need to add it in to get an accurate number.
Compare Your Bills With Your Income
Add up all of your bills and expenses together and compare that number with all of your monthly sources of income. If you get a positive number when you subtract bills and expenses from income, then that is a good sign. If you get a negative number, then you will need to find ways to reduce your bills before you can move.
That final number you get when you subtract bills and expenses from income is how much you can afford in rent each month. When you go out and look for a new place to live, you should not apply for any place that exceeds that number you calculated. If you stay within your budget, you will always have peace of mind.