If you have been apartment- or house-hunting in the past 6 months, you have probably seen ads promoting luxury living for bargain prices. Sure enough, prices are dropping for units in enormous high-rises with swimming pools, roof decks, onsite gyms, and common areas that would be great for having all your friends over, but can you really afford the upgrade? Before you get caught up in a luxury fantasy, figure out how much you can really afford to spend. Remember, you'll need to factor in expenses like paying utilities, buying food, and furnishing your new place.
Most experts recommend planning to pay 25-30% of your take home pay as rent or mortgage, though in some higher cost areas that could run to 35 or 40%. You must take all of your monthly expenses (including credit cards, transportation costs, and student loan payments) into account.
Set a budget and stick to it when looking for your new home. Knowing how much you can realistically spend will help you weed out places you can't afford, no matter how glamorous they seem.
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