PART THREE: Continuing our MOVING OUT series, let’s dive into all the costs of moving out and sustaining your new life out on your own. If you haven’t checked out PART ONE or PART TWO yet, check them out by clicking on the links.
Now that you have finally made the decision to start looking for apartments, you are going to have to make sure you can afford one. This is the most critical aspect of moving out, because if you suddenly cannot afford to live somewhere after 3 months, you cannot back out of your lease and your landlord isn’t going to just let it slide (READ MORE ABOUT LEASES HERE). Your lease locks you into a certain amount of time and you are legally obligated to fulfill it no matter what. If you don’t, there can be serious consequences in the short and long term.
Your first step, of course, is creating a budget. Click HERE to read how to do a basic budget for beginners. Your budget needs to include your income (or projected income) for the month and a list of all your expenses. Make sure you remember all of your expenses: car payments, insurance, gas, maintenance fees; recurring payments and automatic payments, like Spotify or automatic bill pay; personal expenses like the salon or your makeup obsession; and every other thing you spend money on. The best thing to do is track your expenses for a few months, write down every dollar you spend and then go through the month and create categories for each item. See how much you spend on eating out, buying clothes, or your hobbies. Once you realistically know how much you spend a month, you can figure out a few things. First, you can see how much money you actually have left over and second, you can see if there is anything you can cut back on to start saving money for your new life.
Doing all of this takes time and commitment, but moving out is a course in time and commitment, so if you are truly ready to be grown up, you need to start working at it.
So, you have a realistic view of your money situation and you think you are in a good place to be able to afford your dream place. Not so fast! Do you know how much you truly need to rent that $500.00 a month apartment? Hint: It’s more than $500.00 a month!
- Application Fees: Not all rentals will require an application fee, but many do. This money, usually around $50 depending on your state, is usually used to process your background check and credit check. Even if you are not approved, this money is not refundable. Rental companies will run these checks to make sure they are not renting to criminals, for example, or to people who may not be able to pay their rent. Hopefully up until now, you have been working on keeping a high credit score so that you can be prepared for these life events. If you don’t have a credit score or need to work on it, click HERE to understand how the credit score works and what part it plays in your financial health. Having no or a low credit score can lead to higher rates and possible the need for a cosigner (someone who will take the financial responsibility if you are unable to pay).
- RENTAL INSURANCE: Some renters will require you to carry renter’s insurance. Even if it is not required, it is a good thing to consider carrying, as it will protect you from theft, damage, and loss of property. It is pretty easy to shop for an affordable rate and you can usually choose to pay monthly or a one time yearly payment. Having this insurance protects your property while also protecting the rental company or landlord from having to pay for any problems. I was able to find a decent policy for my daughter’s apartment for about $175/year and it cover up to $50,000 worth of damage or loss. Not a bad fee for the peace of mind in case of a fire or a break in.
- SECURITY DEPOSIT: Almost all landlords expect a security deposit on the day you sign the lease, along with the first months rent. The amount of this is usually equivalent to the amount of monthly rent, although it could be less. The purpose of the security deposit is to protect the landlord from any damages you may do to the property. If, for example, you had a cat that wasn’t allowed in the rental and the property smells like cat urine when you move out, the landlord has to pay to clean the carpets and remove the smell. They will use your security deposit to pay for that damage. If, on the other hand, you leave the property the same way you found it, your security deposit should be paid back to you. Your lease should tell you how long it may take to refund the security deposit back to you, but it should take no longer than 90 days.
- AMENITIES OR HOA FEES: Depending on the type of property you are looking at, you may have some sweet amenities, like a pool or a gym, that is accessible for renters only. However, these may come at a monthly cost to you, whether you use them or not. If you find a condo or a place in a nice area, you may have to pay Home Owner Association fees (HOA), which are used to pay for maintenance and upkeep to the yard, etc. These costs vary depending on the area you live in. I would suggest you find out how many extra fees you are expected to pay before settling on a location.
- PARKING OR STORAGE FEES: Just as above, sometimes you have to pay for these things even if you don’t use them, however some places may only charge you parking if you have a vehicle. Again, these fees vary and you should ask about all of them when you first look at the apartment or beforehand. All the small fees can add up and ruin your budget!
- PET FEES: If you are looking for a place to keep a pet, always mention this during your initial walkthrough to make sure the property is pet friendly. If they are, there will almost always be a fee. This fee is optional, unlike the earlier fees mentioned, and only applies if you have a pet. The fee is used to cover any damages the pet may cause and any additional cleaning that may need to be done when you move out.
- UTILITIES: Some rentals include some or all utilities while others will require you to be responsible for them. Utilities include: electric, water, gas, cable, internet, garbage removal, etc. It is hard to give a quote on how much utilities will cost, because most of it depends on how much you use. If you need to keep your electric bill lower, for example, you might be more careful about leaving your lights on. Some utilities will be a set cost, like the internet and garbage. If you ask your landlord or property manager during your walkthrough, they may be able to tell you what the average cost is based on previous renters. Remember, the more utilities that are covered by the renter, the higher the rent will be. Don’t forget, if you haven’t had utilities in your name before, you may have to pay an upfront security deposit on that as well, which may be applied to future bills but can be quite the surprise when your first bill is $200 more than you expected. Also, your credit score will be checked again by the utility companies to decide how much of a security deposit you will need.
- LAUNDRY: If your rental has a space for a washer and dryer, you will need to figure out how much the machines will cost you, as well as how much your utilities will go up. If the property has a laundry room, you may have to pay to do your laundry by the load. Look into all of your options and make sure you plan accordingly.
- MOVING FEES: Are you moving to another city or state? Are you going to need a moving truck or moving service? Make sure you factor in these costs before you move. Although it is a one time fee, if you are barely scraping by after all of the other fees are paid for, it might set you back to rent a truck.
As you can see, there is a lot to consider financially before moving out and most of it is hard to predict how much it will cost. That is why it is imperative you learn to budget and track long before you start this journey. You don’t want all of your income going to all of these expenses, you still have other expenses and you need to have fun! Making sure you have a steady, reliable income and a decent credit score is the most important step to moving out.
Check back next week for Part Four of the Moving Out Series. Follow me on social media and like and comment down below. If you have gone through this journey already, which expenses surprised you? If not, what questions do you have for me? Let me know if there are any other specific topics you’d like me to address!