For retirees Fred and Shelby Bivins, selling their home in Green Valley, Ariz., will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wis., a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.  

Fred, 65, says the decision to downsize was precipitated by a two-month stay in Portugal last year, one of several countries they hope to visit while they’re still healthy enough to travel. “We’ve had Australia and New Zealand on our list for many years, even when we were working,” says Shelby, 68. The Bivinses are also considering a return visit to Portugal. Eliminating the cost of maintaining their Arizona home will free up funds for those trips. 

With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona. “Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”

Challenges for downsizers 

For all of its appeal, downsizing in today’s market is more complicated than it was in the past. With 30-year fixed interest rates on mortgages recently approaching 8%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. More than 80% of consumers surveyed in September by housing finance giant Fannie Mae said they believe this is a bad time to buy a home and cited mortgage rates as the top reason for their pessimism. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon,” Fannie Mae said in a statement. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for Realtor.com. 

Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers. 

Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says. “We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.” 

Meanwhile, selling your home may be somewhat more challenging than it was during the height of the pandemic, when potential buyers made offers on homes that weren’t even on the market. The Mortgage Bankers Association reported in October that mortgage purchase applications slowed to the lowest level since 1995, as the rapid rise in mortgage rates has pushed many potential buyers out of the market. Sales of previously owned single-family homes fell a seasonably adjusted 2% in September from August and were down 15.4% from a year earlier, according to the National Association of Realtors. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said in a statement. 

However, because of tight inventories, there’s still demand for homes of all sizes, Jones says, so if your home is well maintained and move-in ready, you shouldn’t have difficulty selling it. “The market isn’t as red-hot as it was during the pandemic, but there’s still a lot to be gained by selling now,” she says.

Other costs and considerations 

If you live in an area where real estate values have soared, moving to a less expensive part of the country may seem like a logical way to lower your costs in retirement. While the median home price in the U.S. was $394,300 in September, there’s wide variation in individual markets, from $1.5 million in Santa Clara, Calif., to $237,000 in Davenport, Iowa. But before you up and move to a lower-cost locale, make sure you take inventory of your short- and long-term expenses, which could be higher than you expect. 

Selling your current home, even at a significant profit, means you will incur costs, including those to update, repair and stage it, as well as a real estate agent’s commission (typically 5% to 6% of the sale price). In addition, ongoing costs for your new home will include homeowners insurance, property taxes, state and local taxes, and homeowners association or condo fees.

Nicholas Bunio, a certified financial planner in Berwyn, Pa., says one of his retired clients moved to Florida and purchased a home that was $100,000 less expensive than her home in New Jersey. Florida is also one of nine states without income tax, which makes it attractive to retirees looking to relocate. Once Bunio’s client got there, however, she discovered that she needed to spend $50,000 to install hurricane-proof windows. Worse, the only home-owners insurance she could find was through Citizens Property Insurance, the state-sponsored insurer of last resort, and she’ll pay about $8,000 a year for coverage. Her property taxes were higher than she expected, too. When it comes to lowering your cost of living after you downsize, “it’s not as simple as buying a cheaper house,” Bunio says 

Before moving across the country, or even across the state, you should also research the availability of medical care. “Oftentimes, those considerations are secondary to things like proximity to family or leisure activities,” says John McGlothlin, a CFP in Austin, Texas. McGlothlin says one of his clients moved to a less expensive rural area that’s nowhere near a sizable medical facility. Although that’s not a problem now, he says, it could become a problem when they’re older. 

If you use original Medicare, you won’t lose coverage if you move to another state. But if you’re enrolled in Medicare Advantage, which is offered by private insurers as an alternative to original Medicare, you may have to switch plans to avoid losing coverage. To research the availability of doctors, hospitals and nursing homes in a particular zip code, go to www.medicare.gov/care-compare.

At a time when many seniors suffer from loneliness and isolation, a sense of community matters, too. Bunio recounts the experience of a client who considered moving from Philadelphia to Phoenix after her daughter accepted a job there. The cost of living in Phoenix is lower, but the client changed her mind after visiting her daughter for a few months. “She has no friends in Phoenix,” he says. “She’s going on 61 and doesn’t want to restart life and make brand-new connections all over again.”

Time is on your side 

Unlike younger home buyers, who may be under pressure to buy a place before starting a new job or enrolling their kids in school, downsizers usually have plenty of time to consider their options and research potential downsizing destinations. Once you’ve settled on a community, consider renting for a few months to get a feel for the area and a better idea of how much it will cost to live there. Bunio says some of his clients who are behind on saving for retirement or have high health care costs have sold their homes, invested the proceeds and become permanent renters. This strategy frees them from property taxes, homeowners insurance, homeowners association fees and other expenses associated with homeownership 

The boom in housing values has boosted rental costs, as the shortage of affordable housing increased demand for rental properties. But thanks to the construction of new rental properties in several markets, the market has softened in recent months, according to Zumper, an online marketplace for renters and landlords. A Zumper survey conducted in October found that the median rent for a one-bedroom apartment fell 0.4% from September, the most significant monthly decline this year. 

In 75 of the 100 cities Zumper surveyed, the median rent for a one-bedroom apartment was flat or down from the previous month. (For more on the advantages of renting in retirement, see “8 Great Places to Retire—for Renters,” Aug.)

Aging in place

Even if you opt to age in place, you can tap your home equity by taking out a home equity line of credit, a home equity loan or a reverse mortgage. At a time when interest rates on home equity lines of credit and loans average around 9%, a reverse mortgage may be a more appealing option for retirees. With a reverse mortgage, you can convert your home equity into a lump sum, monthly payments or a line of credit. You don’t have to make principal or interest payments on the loan for as long as you remain in the home. 

To be eligible for a government-insured home equity conversion mortgage (HECM), you must be at least 62 years old and have at least 50% equity in your home, and the home must be your primary residence. The maximum payout for which you’ll qualify depends on your age (the older you are, the more you’ll be eligible to borrow), interest rates and the appraised value of your home. In 2024, the maximum you could borrow was $1,149,825.

There’s no restriction on how homeowners must spend funds from a reverse mortgage, so you can use the money for a variety of purposes, including making your home more accessible, generating additional retirement income or paying for long-term care. You can estimate the value of a reverse mortgage on your home at www.reversemortgage.org/about/reverse-mortgage-calculator.

Up-front costs for a reverse mortgage are high, including up to $6,000 in fees to the lender, 2% of the mortgage amount for mortgage insurance, and other fees. You can roll these costs into the loan, but that will reduce your proceeds. For that reason, if you’re considering a move within the next five years, it’s usually not a good idea to take out a reverse mortgage.

Another drawback: When interest rates rise, the amount of money available from a reverse mortgage declines. Unless you need the money now, it may make sense to postpone taking out a reverse mortgage until the Federal Reserve cuts short-term interest rates, which is unlikely to happen until late 2024 (unless the economy falls into recession before that). Even if interest rates decline, they aren’t expected to return to the rock-bottom levels seen over the past 15 years, according to a forecast by The Kiplinger Letter. And with inflation still a concern, big rate cuts such as those seen in response to recessions and financial crises over the past two decades are unlikely. 

Note: This item first appeared in Kiplinger’s Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

Source: kiplinger.com

Apache is functioning normally

Inside: Ever wondered how much rent you can afford on a particular hourly wage? Use the rent calculator to see what you can afford on $17 an hour. Find out from the experts in this guide.

Honestly, this is something most people don’t think about until after they get themselves in a troubling situation.

Determining rent affordability is paramount in your financial planning. It’s important to strike a balance between comfortable accommodation and fiscal responsibility to avoid financial strains down the road.

There exists a direct correlation between your income and the rent you can afford to pay. Higher income opens doors to pricier accommodations while lower wages might enforce budget constraints. Understanding this relationship is crucial.

It guides your housing decisions and helps maintain a stable financial footing.

By calculating your rent affordability, you can set a clear budget, establish your housing needs, and navigate the real estate market with ease.

How much rent can I afford making $17 an hour?

If you make $17 an hour, based on a standard 40-hour work week, your gross income would come up to approximately $2,946 per month.

If you follow the 30% rule, this means you should allocate a maximum of $883 each month for rent.

$2946 x 30% = $883.80

However, remember this is a rough estimate and your specific expenses and financial obligations should also be taken into consideration before deciding on a rent budget.

What Percentage of My Income Should Go to Rent?

This is a good question to consider.

Even better when you are trying to figure out how much to save before moving out.

The 30% Rule Explained

The 30% rule is a simple guideline suggesting that one should allocate no more than 30% of their gross (before taxes) monthly income toward rent.1

This rule of thumb has been widely adopted as a measure of rent affordability. The beauty of the 30% rule lies in its simplicity and ease of use, allowing for quick budgeting while maintaining room for other essential expenses.

Be Conservative and Stick with 20%

According to Money Bliss budgeting percentages, adopting a more conservative approach to budgeting by allocating only 20% of your income towards housing costs can be more beneficial.

If you follow the 20% rule, this means you should allocate a maximum of $499 each month for rent.

$2946 x 20% = $499.20

This strategy helps to account for additional expenses such as utilities, unexpected repairs, and other costs that often accompany home ownership or renting.

This reduced allocation promotes being smart with your money to avoid unnecessary financial stress.

When to Consider Stretching the 30% Rule

At times, it might be necessary to stretch the 30% rule particularly in high-cost areas or during short-term situations. It’s crucial, however, to understand the potential ramifications and adjust other spending habits to compensate.

A temporary overshoot could be justifiable if it leads to significant future benefits, like proximity to a well-paying job. Always remember, that this should be an exception rather than the norm.

How Does the Rent Calculator Work?

A rent calculator is a practical tool that aids in estimating the rent you can afford. You don’t want to be forced to live on a shoestring budget.

This simple calculator is based on your hourly income and spending either 20-30% of your gross income on rent.

Fine-tuning your budget is possible by adjusting the percentage you wish to spend on housing. Remember, the final number serves as a guide and may require adjustments based on your financial situation.

Breaking Down Your Monthly Budget

For savvy budgeters, adhering to the 50/30/20 rule can provide a clear framework for managing your expenses and growing your savings. While at Money Bliss, we went a step further to define it as the 20-50-10-20-0 budget rule. (save-basic expenses-give-fun spending-debt).

This approach gives a precise breakdown of your monthly budget, ensuring that you are living within your means while also setting funds aside for future financial security.

Housing Costs

The basic 50/30/20 rule suggests dividing your monthly net income into 50% for necessities such as rent and groceries, 30% for personal wants like clothing or travel, and designating the remaining 20% for savings goals or debt repayment.

By adding these to your housing budget, you get a realistic picture of your monthly accommodation costs.

When budgeting for rent, one must account for other housing costs. These may include utilities like gas, electricity, and water, as well as internet, cable TV, and trash collection. You might also need to factor in the renter’s insurance and potential parking fees.

Essential Living Expenses

In addition to housing, remember to consider essential living expenses in your budget. These include food, transportation, health insurance, and childcare.

In addition, we advise our readers to put aside about 15-25% of their net income for savings. Accounting for these factors ensures you don’t stretch your budget to the limit solely on rent.

Discretionary spending

While you need to cover essential living expenses, it’s also important to allocate funds for discretionary spending – we call it FUN spending.

This category involves non-essential purchases like eating out, entertainment, vacations, and shopping. Using the 50/30/20 rule as a guideline, 30% of your net income can be put towards these wants, allowing you to enjoy your income while staying financially sound.

Factors Influencing Rent Affordability

There are many factors that impact how much you can spend on rent. As such, this will vary from person to person as situations vary. While these numbers are gross income, you need to realize the amount of money coming out for taxes. Many people don’t understand gross income vs net income.

Furthermore, the cost of living and rental prices in your chosen location can greatly impact how much you can afford. So, use the rent affordability calculator!

Location and Rent Prices

The location of a home greatly influences its rent prices. HCOL vs LCOL is a real thing!

Proximity to the city center, schools, parks, and shopping centers typically equate to higher costs. For example, renting trends in 2023 indicated an increase in prices the closer you get to these amenities.2

By choosing to live a bit further out, you may be able to find more affordable rent payments.

Areas with higher crime rates will have lower rents but these tend to come with more issues.

Size and Type of Housing

The size and type of your dwelling can also significantly affect your rent. Large houses with multiple rooms naturally cost more, whereas smaller apartments or studios are less expensive.

The type of housing also plays a role; for instance, a modern, furnished apartment might cost more than an unfurnished one. Tailoring your choice to your needs and budget allows for comfortable living without overspending.

If you have a pet, don’t forget it may cost more plus you have a pet deposit.

Lease Length Considerations

Lease length can directly impact your rent. Longer leases often equate to lower monthly rents, offering landlords a sense of security. On the contrary, short-term or month-to-month leases typically come with a higher price tag due to their inherent flexibility.

Assess your personal situation and potential need for flexibility before deciding on the lease term.

Also, the amount you need to put down as a security deposit can be negotiated.

Tips to Maximize Your Rent Budget

Plan your budget carefully taking into account factors like income, potential expenses, and the cost of living in your chosen location. So, if you are thinking $5000 is enough to move out, you may be surprised.

Use the 30% rule as a guide but be aware that in high cost of living areas, you may need to adjust this percentage. When searching for a rental, compare the cost and amenities of different apartments in your preferred areas and see if there are nearby neighborhoods with cheaper rental costs.

Also, you may need to embrace cost-saving measures such as cooking at home and shopping frugally to free up more income for rent.

You can learn more about those areas on our site.

Tip #1 – Reducing Costs and Saving

There are several ways to reduce housing costs and save more in this tough rental market.

  • Consider downgrading to a smaller place or moving to a less expensive area.
  • Negotiate a longer lease term for a reduced monthly rent.
  • Maybe even consider becoming a permanent housesitter to free up your budget.

Small changes can lead to substantial savings over time.

Learn how to budget on a low income.

Tip #2 -Planning for Future Rent Increases

Each year when your lease is about to renew, always factor in the possibility of future rent increases, which could be influenced by trends in the real estate market and inflation.

Ensuring your income can keep up with these increases is necessary for maintaining affordability. Continually reassess your rent affordability, especially during annual lease renewals or job changes.

Tip #3 – Get Roommates

Sharing your space with a roommate is a practical way to cut down on your living expenses substantially. By having one or more people to share the rental costs, utilities, and even groceries in some instances, you are likely to free up a considerable portion of your budget.

However, it’s important to clearly set boundaries and expectations to maintain a smooth living arrangement.

FAQ on Rent Affordability

Spending more than 30% of your income on rent is generally not advisable. It risks leaving you cash-poor, having insufficient resources for other important expenses like groceries, utility bills, health expenses, retirement savings, or emergency funds.

However, in certain scenarios like living in high-cost areas or prioritizing proximity to work (thus lowering your need for a car), bending the rule temporarily might be justifiable. Always reassess your budget to account for flexibility.

Yes, an increase in your hourly wage can slightly affect the amount of rent you can afford. The raise translates to an increased monthly income, which may enable you to comfortably afford higher rent.

However, it’s important to ensure this does not erode financial stability because lifestyle creep is real. Aim to maintain the key balance between comfortable living and responsible saving.

It’s recommended to reassess your rent affordability annually or when there’s a significant change in your financial situation.

Such changes could be a raise or decrease in income, new financial obligations, or plans to save for major future expenses. Regular evaluations ensure your housing budget aligns with your current financial realities.

Is $17 an hour a livable wage?

Given the average rent in the United States is $1702, $17 an hour is not a livable wage, especially in San Francisco or New York. As such, the maximum you should be spending on rent is $883.

If workers are unable to afford to live in the communities they work in, it puts the whole system under stress. While there have been movements to create low-income housing, it is slow to happen and for many, difficult to apply.

Ultimately, whether this wage allows for a comfortable lifestyle depends largely on your financial habits, commitments, and where you live.

With good financial planning, including a solidly crafted budget that factors in rent, savings, and living expenses, a $17 hourly wage can indeed cater to a decent lifestyle.

Remember to reassess your budget regularly and adjust as necessary to meet changing financial landscapes.

Making wise financial decisions now can lead to a financially secure future. Now, do you have the habits needed to be financially stable?

Source

  1. FiftyThirtyTwenty. “About.” http://fiftythirtytwenty.com/about.html. Accessed December 23, 2023.
  2. Rent. “Rent Growth in Half of Suburbs Outpacing Metro’s Core City.” https://www.rent.com/research/suburban-growth-outpacing-core-city/. Accessed December 23, 2023.
  3. Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed December 23, 2023.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

Apache is functioning normally

Inside: Ever wondered how much rent you can afford on a particular hourly wage? Use the rent calculator to see what you can afford on $18 an hour. Find out from the experts in this guide.

Honestly, this is something most people don’t think about until after they get themselves in a troubling situation.

Determining rent affordability is paramount in your financial planning. It’s important to strike a balance between comfortable accommodation and fiscal responsibility to avoid financial strains down the road.

There exists a direct correlation between your income and the rent you can afford to pay. Higher income opens doors to pricier accommodations while lower wages might enforce budget constraints. Understanding this relationship is crucial.

It guides your housing decisions and helps maintain a stable financial footing.

By calculating your rent affordability, you can set a clear budget, establish your housing needs, and navigate the real estate market with ease.

How much rent can I afford making $18 an hour?

If you make $18 an hour, based on a standard 40-hour work week, your gross income would come up to approximately $3,120 per month.

If you follow the 30% rule, this means you should allocate a maximum of $936 each month for rent.

$3120 x 30% = $936

However, remember this is a rough estimate and your specific expenses and financial obligations should also be taken into consideration before deciding on a rent budget.

What Percentage of My Income Should Go to Rent?

This is a good question to consider.

Even better when you are trying to figure out how much to save before moving out.

The 30% Rule Explained

The 30% rule is a simple guideline suggesting that one should allocate no more than 30% of their gross (before taxes) monthly income toward rent.1

This rule of thumb has been widely adopted as a measure of rent affordability. The beauty of the 30% rule lies in its simplicity and ease of use, allowing for quick budgeting while maintaining room for other essential expenses.

Be Conservative and Stick with 20%

According to Money Bliss budgeting percentages, adopting a more conservative approach to budgeting by allocating only 20% of your income towards housing costs can be more beneficial.

If you follow the 20% rule, this means you should allocate a maximum of $624 each month for rent.

$3120 x 20% = $624

This strategy helps to account for additional expenses such as utilities, unexpected repairs, and other costs that often accompany home ownership or renting.

This reduced allocation promotes being smart with your money to avoid unnecessary financial stress.

When to Consider Stretching the 30% Rule

At times, it might be necessary to stretch the 30% rule particularly in high-cost areas or during short-term situations. It’s crucial, however, to understand the potential ramifications and adjust other spending habits to compensate.

A temporary overshoot could be justifiable if it leads to significant future benefits, like proximity to a well-paying job. Always remember, that this should be an exception rather than the norm.

How Does the Rent Calculator Work?

A rent calculator is a practical tool that aids in estimating the rent you can afford. You don’t want to be forced to live on a shoestring budget.

This simple calculator is based on your hourly income and spending either 20-30% of your gross income on rent.

Fine-tuning your budget is possible by adjusting the percentage you wish to spend on housing. Remember, the final number serves as a guide and may require adjustments based on your financial situation.

Breaking Down Your Monthly Budget

For savvy budgeters, adhering to the 50/30/20 rule can provide a clear framework for managing your expenses and growing your savings. While at Money Bliss, we went a step further to define it as the 20-50-10-20-0 budget rule. (save-basic expenses-give-fun spending-debt).

This approach gives a precise breakdown of your monthly budget, ensuring that you are living within your means while also setting funds aside for future financial security.

Housing Costs

The basic 50/30/20 rule suggests dividing your monthly net income into 50% for necessities such as rent and groceries, 30% for personal wants like clothing or travel, and designating the remaining 20% for savings goals or debt repayment.

By adding these to your housing budget, you get a realistic picture of your monthly accommodation costs.

When budgeting for rent, one must account for other housing costs. These may include utilities like gas, electricity, and water, as well as internet, cable TV, and trash collection. You might also need to factor in the renter’s insurance and potential parking fees.

Essential Living Expenses

In addition to housing, remember to consider essential living expenses in your budget. These include food, transportation, health insurance, and childcare.

In addition, we advise our readers to put aside about 15-25% of their net income for savings. Accounting for these factors ensures you don’t stretch your budget to the limit solely on rent.

Discretionary spending

While you need to cover essential living expenses, it’s also important to allocate funds for discretionary spending – we call it FUN spending.

This category involves non-essential purchases like eating out, entertainment, vacations, and shopping. Using the 50/30/20 rule as a guideline, 30% of your net income can be put towards these wants, allowing you to enjoy your income while staying financially sound.

Factors Influencing Rent Affordability

Many factors impact how much you can spend on rent. As such, this will vary from person to person as situations vary. While these numbers are gross income, you need to realize the amount of money coming out for taxes. Many people don’t understand gross income vs net income.

Furthermore, the cost of living and rental prices in your chosen location can greatly impact how much you can afford. So, use the rent affordability calculator!

Location and Rent Prices

The location of a home greatly influences its rent prices. HCOL vs LCOL is a real thing!

Proximity to the city center, schools, parks, and shopping centers typically equate to higher costs. For example, renting trends in 2023 indicated an increase in prices the closer you get to these amenities.2

By choosing to live a bit further out, you may be able to find more affordable rent payments.

Areas with higher crime rates will have lower rents but these tend to come with more issues.

Size and Type of Housing

The size and type of your dwelling can also significantly affect your rent. Large houses with multiple rooms naturally cost more, whereas smaller apartments or studios are less expensive.

The type of housing also plays a role; for instance, a modern, furnished apartment might cost more than an unfurnished one. Tailoring your choice to your needs and budget allows for comfortable living without overspending.

If you have a pet, don’t forget it may cost more plus you have a pet deposit.

Lease Length Considerations

Lease length can directly impact your rent. Longer leases often equate to lower monthly rents, offering landlords a sense of security. On the contrary, short-term or month-to-month leases typically come with a higher price tag due to their inherent flexibility.

Assess your personal situation and potential need for flexibility before deciding on the lease term.

Also, the amount you need to put down as a security deposit can be negotiated.

Tips to Maximize Your Rent Budget

Plan your budget carefully taking into account factors like income, potential expenses, and the cost of living in your chosen location. So, if you are thinking $5000 is enough to move out, you may be surprised.

Use the 30% rule as a guide but be aware that in high cost of living areas, you may need to adjust this percentage. When searching for a rental, compare the cost and amenities of different apartments in your preferred areas and see if there are nearby neighborhoods with cheaper rental costs.

Also, you may need to embrace cost-saving measures such as cooking at home and shopping frugally to free up more income for rent.

You can learn more about those areas on our site.

Tip #1 – Reducing Costs and Saving

There are several ways to reduce housing costs and save more in this tough rental market.

  • Consider downgrading to a smaller place or moving to a less expensive area.
  • Negotiate a longer lease term for a reduced monthly rent.
  • Maybe even consider becoming a permanent housesitter to free up your budget.

Small changes can lead to substantial savings over time.

Learn how to budget on a low income.

Tip #2 -Planning for Future Rent Increases

Each year when your lease is about to renew, always factor in the possibility of future rent increases, which could be influenced by trends in the real estate market and inflation.

Ensuring your income can keep up with these increases is necessary for maintaining affordability. Continually reassess your rent affordability, especially during annual lease renewals or job changes.

Tip #3 – Get Roommates

Sharing your space with a roommate is a practical way to cut down on your living expenses substantially. By having one or more people to share the rental costs, utilities, and even groceries in some instances, you are likely to free up a considerable portion of your budget.

However, it’s important to clearly set boundaries and expectations to maintain a smooth living arrangement.

FAQ on Rent Affordability

Spending more than 30% of your income on rent is generally not advisable. It risks leaving you cash-poor, having insufficient resources for other important expenses like groceries, utility bills, health expenses, retirement savings, or emergency funds.

However, in certain scenarios like living in high-cost areas or prioritizing proximity to work (thus lowering your need for a car), bending the rule temporarily might be justifiable. Always reassess your budget to account for flexibility.

Yes, an increase in your hourly wage can slightly affect the amount of rent you can afford. The raise translates to an increased monthly income, which may enable you to comfortably afford higher rent.

However, it’s important to ensure this does not erode financial stability because lifestyle creep is real. Aim to maintain the key balance between comfortable living and responsible saving.

It’s recommended to reassess your rent affordability annually or when there’s a significant change in your financial situation.

Such changes could be a raise or decrease in income, new financial obligations, or plans to save for major future expenses. Regular evaluations ensure your housing budget aligns with your current financial realities.

Is $18 an hour a livable wage?

Given the average rent in the United States is $1702, $18 an hour is not a livable wage, especially in San Francisco or New York. As such, the maximum you should be spending on rent is $936.

If workers are unable to afford to live in the communities they work in, it puts the whole system under stress. While there have been movements to create low-income housing, it is slow to happen and for many, difficult to apply.

Ultimately, whether this wage allows for a comfortable lifestyle depends largely on your financial habits, commitments, and where you live.

With good financial planning, including a solidly crafted budget that factors in rent, savings, and living expenses, a $18 hourly wage can indeed cater to a decent lifestyle.

Remember to reassess your budget regularly and adjust as necessary to meet changing financial landscapes.

Making wise financial decisions now can lead to a financially secure future. Now, do you have the habits needed to be financially stable?

Source

  1. FiftyThirtyTwenty. “About.” http://fiftythirtytwenty.com/about.html. Accessed December 23, 2023.
  2. Rent. “Rent Growth in Half of Suburbs Outpacing Metro’s Core City.” https://www.rent.com/research/suburban-growth-outpacing-core-city/. Accessed December 23, 2023.
  3. Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed December 23, 2023.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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RVing, or traveling in a recreational vehicle, is an experience unlike any other. There’s nothing quite like taking your own bed, bathroom, fridge and other comforts of home with you, whether you’re camping in the woods or taking a road trip.

However, buying an RV can be a daunting experience, especially if you haven’t done it before. Trust me, I went through the process of buying an RV for the first time in 2020. If you’re thinking about buying an RV, here are some considerations and tips.

What to do before buying an RV

Choose the right RV type for you

The first decision in buying an RV is figuring out the right type of camper for your travel style. And the first major decision point is whether you want to be able to drive your RV or if you’d rather tow your camper. Here’s a high-level overview of the different types of RVs:

Drivable motorhome RV types:

  • Class A — large bus-like campers.

  • Class B — smaller van-like campers.

  • Class C — “classic” RV style, typically with an overcab bed.

(Photo by JT Genter)

Towed RV types:

  • Pop-up trailer — a small hitch-towed trailer that has sections that can be expanded out.

  • Travel trailer — medium-sized hitch-towed campers.

  • Fifth-wheel trailer — large to massive towed campers that are towed via the bed of a pickup truck.

  • Toy hauler trailer — a travel trailer that includes a garage for bringing motorcycles, bikes or other small vehicles.

  • Truck camper — a smaller camper that rides on top of a truck bed.

Each of these RV types has its advantages and disadvantages. It may seem simpler to get a drivable motorhome, but that means breaking camp each time you want to drive somewhere (e.g. to the grocery store or to explore a nearby attraction). Towable RVs can be left behind at camp when you want to drive somewhere, but they require much more effort to set up camp. If you plan to move sites often, you’ll spend a lot of time setting up and breaking down.

If you choose a towed RV type, make sure to check the towing capacity of your vehicle to see how much you can tow. You don’t want to go through the process of buying an RV just to figure out later that you now need to buy a more powerful truck to tow it.

Consider your options for buying an RV

Once you figure out which type of RV is best for you, you’ll need to figure out the best way to buy it. Should you buy new or save on a used RV? Should you buy from a dealership or a private seller? Is it worth buying an RV from a rental company for the savings?

The answers depend on personal preference — and budget. Used RVs can be much cheaper than new RVs but could have hidden issues.

My wife and I bought a former rental RV from El Monte RV for a fraction of the cost of a new RV. Our RV inspector checked it thoroughly and didn’t find any issues. Sure, the RV was a few years old and had 64,000 miles on it, but it had been well-maintained. We’ve only had minor issues the past few years — as with any RV.

(Photo by JT Genter)

Try renting before buying an RV

The best way of figuring out if an RV is going to be right for you is by trying it out yourself. Since each individual RV can be quirky, it’s best if you can rent the exact unit that you’re considering buying. If you’re considering buying an RV from an independent seller or from an RV rental company, ask if you can rent the RV for at least a few nights to try it out.

If you’re buying a new RV, you probably won’t be able to rent the exact unit you’re considering. However, try to rent a similar unit to make sure the size and features are a good fit for your travel style.

For example, my wife and I rented two models before buying our RV. The first rental required extending a slide to sleep in the master bed (see photo below). We learned that was a no-go for us, as we wanted the ability to book campsites that didn’t require the extra space to extend a slide.

(Photo by JT Genter)

After renting a towable RV, you might figure out you despise backing the unit into campsites. In that case, a motorhome might be a better choice. Or you might find that a Class C RV is too big and you’d rather have the flexibility of a Class B van. These are all personal decisions that are best figured out by renting an RV and trying it out yourself.

If you’re considering buying a former rental RV, consider taking advantage of Cruise America’s rent-to-buy program. This unique rental rebate program lets you get up to $3,000 off the purchase of a used Cruise America RV within six months of a rental. That gives you the chance to road-test a model. Plus, you practically get to try it for free — as the rental costs go toward your purchase.

Figure out financing and insurance

RVs aren’t cheap, and not all sellers will finance the purchase of an RV. If you aren’t paying cash, make sure you have financing lined up before you go through the process to buy an RV.

Also, contact your insurance company to set up insurance before you purchase an RV. You don’t want to have an accident shortly after driving your expensive new RV off the lot just to realize your insurance doesn’t kick in until a few days later.

Get your RV inspected by a professional

One of the best investments you can make when buying an RV is getting the unit inspected before you buy. RVs are generally assembled by hand and can have quirks or issues that you may not notice until after you’ve completed your purchase.

A full inspection will check systems and details that you may have never thought to check before buying your unit. When I bought my RV, the full inspection report stretched 94 pages and covered everything from inspecting the propane systems to a detailed inspection of the roof for any signs of leaks.

If you’re considering buying an RV…

RVing is one of the most freeing travel experiences there is. It’s incredible to head out on the road or into the wilderness with many of the comforts of home, giving you the ability to sleep pretty much anywhere.

If you’re only going to use an RV for a few weeks a year, renting is likely the most practical option. However, if you’d like to go on an extended road trip, want to camp more often or want to become a full-time RVer, you’re going to need your own unit.

An RV is not a cheap purchase, so make sure to do your homework. Figure out what type of RV works best for your travel style, decide on whether a new or used RV is best, test out the model you’re considering purchasing, make sure to have financing and insurance lined up, and — most importantly — have the RV inspected before you purchase it.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

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Here’s your guide to Houston home buying and renting.

The Houston housing market in 2023 is marked by a mix of rising rental costs and a somewhat competitive market for home sales, with significant variances across different neighborhoods.

To get to know the situation better, let’s dive into the details of the Houston housing market and the rental market that underscores it.

The Houston rental market

In terms of rentals, there’s been a notable increase in average prices. Apartments in Houston range between $1,208 for a one-bedroom and $1,520 for a two-bedroom. Compared to 2021, these rates reflect a substantial increase, with a two-bedroom apartment averaging $1,637, indicating a 23.08% rise. This increase is even more pronounced when considering the rent for a studio apartment, which is around $1,242, and a one-bedroom, which is $1,208, both showing significant increases from the previous year.

Home sales in Houston

On the home sales front, the overall market in Houston is moderately competitive. Homes in Houston generally receive around three offers and sell in about 29 days. The median sale price in Houston was $325,000 last month, showing a modest increase of 1.3% since the previous year.

The median sale price per square foot also saw a rise to $176, up 3.5% from last year. This overall trend of moderate competitiveness and slight price increases is a consistent theme across the city.

Home prices by neighborhood

Diving deeper into specific neighborhoods, the differences become more pronounced. Downtown Houston, for instance, saw a significant jump in home prices, with a 37.1% increase compared to last year, bringing the median price to $405,000. Midtown Houston experienced a 40.7% bump, with an average house price of $390,000.

The Inner Loop West area also increased significantly, with the median sale price rising 12.0% to $560,000. In contrast, some areas like Cypress and Kingwood witnessed a decline in median sale prices. Cypress saw a 1.4% decrease, while Kingwood experienced a similar decline, with its median sale price dropping by 1.4%.

Other areas within Houston show further diversity in trends. The Greater Third Ward’s median sale price increased by 1.1%, while Greater Heights reported a 6.7% increase. Fourth Ward’s average house price saw a significant hike of 23.7%. However, some regions like University Place and Memorial experienced slight decreases in average house prices, with University Place seeing a 0.26% drop and Memorial a 4.2% decrease. Conversely, areas like Northeast Houston witnessed a 6.3% increase in their average house.

Settle down in a Houston home

The Houston housing market in 2023 is characterized by a general trend of rising rental prices and a housing market that is moderately competitive. The trends in home sale prices and competitiveness vary widely across different neighborhoods, with some areas experiencing significant increases in median sale prices, while others see modest decreases or stabilization. This variability reflects the diverse and dynamic nature of finding a home in a hot city like Houston.

Source: rent.com