After looking at the best home warranty, and deciding what level of home warranty coverage you would purchase for your home a year, and three service call fees. Divide that by 12 and add that cost to your housing costs.
After you have added your mortgage payment, property tax, insurance, utilities and maintenance costs together, compare your monthly housing costs to the amount of money you could reasonably spend with your budget.
If you haven't completed that part of the workbook, you can find the article on how to do that here. If you can afford houses in that price range, begin looking!
If you cannot afford that, lower the price for a home and calculate it again. Do this until you can find a home price you can comfortably afford. For more information on Landmark Home Warranty or the home owners warranty that we provide, please go to www. There you can learn more about home warranty coverage, how an appliance warranty works and learn more about the best home warranty.
There are two other parts to this series. Find out how much you should pay for a home by looking at your budget here:. Or, see why there are so many conflicts on what economists say you should pay for your housing costs each month here:.
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Debt Rules of Thumb. Savings Rules of Thumb. Retirement Rules of Thumb. Investing Rules of Thumb. Credit Rules of Thumb. Credit Card Rules of Thumb. Housing Rules of Thumb.
Other Rules of Thumb. Table of Contents Expand. Table of Contents. Grain of Salt. Rent Rule of Thumb vs. By Rebecca Lake. Rebecca Lake has over a decade of experience researching and writing hundreds of articles on retirement, investing, budgeting, banking, loans, and more. Learn about our editorial policies. Reviewed by Lea D. Lea Uradu, J. I did some back-of-the-envelope math using my take-home pay instead of my gross income because I wanted to account for taxes.
I'd have enough to cover my other expenses, like food, transportation, and some entertainment, plus stash a little bit in savings. Apartment hunting sounds fun in theory. In practice it can be tedious and frustrating, especially if you're on a strict budget. But a good enough apartment always crops up eventually, even if it doesn't tick every box on your wish list. I jumped from one increasingly expensive city to another.
In both places I lived with at least two other roommates and always took the worst room, which translated to the cheapest rent. In New York City, that meant a windowless bedroom in a railroad-style apartment in one of the outer boroughs. In my first apartment in Los Angeles, I took the most inconvenient parking spot and the only bedroom without an en suite bathroom this is nothing to complain about, I know.
Rent isn't the only housing expense, though. These costs are hard to control when you're living with roommates, since you can't police their energy usage or shower time. In these cases, I tapped my emergency fund to pick up the slack, which I'm convinced I have been able to maintain precisely because I've been so strict about keeping my fixed housing costs low. Each time I've moved apartments — a total of three times since that first New York City apartment — I've been at a higher income level.
Housing is not a very liquid expenditure. You can't cut back on a dime because most leasing agreements last around 12 months. But you can quickly cut back how much you spend on shopping or lunch. I realized how important it is to be mindful of how much I spend on housing, since it's usually a long-term commitment. By controlling my housing costs, I'm able to be way more flexible with the rest of my budget. It's worth noting that I didn't have student loans to repay and have always avoided credit-card debt, so my expenses outside of housing were already pretty flexible.
As my income has gone up, I've put the money toward other categories of my budget, like upgrading my gym membership, traveling more comfortably and conveniently, and saving more money.
I'm particularly focused on funneling as much money as I can into my k so that it has decades to grow before I retire. I also want to make sure I'm prepared for unexpected costs that arise now.
Instead of moving into a nicer apartment in a nicer neighborhood each time I get a pay raise — therefore eating up my newfound cash with housing costs — I bump up my k deferral rate and add to my emergency fund. You might have less choice than I did about exactly which city or neighborhood you live in and how many roommates you have, or you might prefer to spend more budget on your house and less on food and travel.
Keeping my fixed, long-term costs low means I can be nimble with everything else. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth. Have a money question for Tanza? Fill out this anonymous form. For you. World globe An icon of the world globe, indicating different international options. Get the Insider App.
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