Managing credit card debt doesn’t have to undermine the excitement around renting an apartment or home. One of the most important factors in this decision is your budget and getting rid of credit card debt. As part of Financial Literacy Month, Talking Cents wants you to have a better understanding of how renting impacts your budget and debts.
Renting & Staying on Budget
Since housing can account for up to 35% of a healthy budget, it’s important to be smart about your choices. If you are carrying student loans, a car payment, or credit card debt, maxing out your budget for a shiny, new downtown loft probably isn’t the best idea. Saving money in your housing allowance can free up money that can help you get out of debt faster.
Staying on Budget with Rent & Utilities
Are utilities included in the rent? Depending on where you live and who your landlord is, utilities can mean very different things. Is it gas and electric? What about cable or water? Utilities must be clearly defined and understood. Your budget could easily explode if you thought heat was included in your rent when it’s actually not. On a positive note, if you have credit problems, paying utilities on time can help improve your credit history.
Nice features, like a garage or fitness center, all come at a cost. It’s important to understand what you need in a rental and what you want. Fixed costs won’t change if you suddenly realize you can’t afford the rent anymore. Remember, if your goal is to pay down credit card debt, stick to it!
Save Money with Roommates
One of the best ways to save money in your budget and eliminate credit card debt is to take on roommates. Splitting costs among three or four people is much cheaper than living on your own or even with two people. You can all pitch in for commonly stocked kitchen items, furnishings and more. Just make sure everyone is named on the lease.
Cost of Renting with Pets
Usually the market is smaller for renters with pets, especially dogs. Discuss pets early in the process so there are no surprises. Find out if there is a pet deposit up front, monthly charges or any other costs the landlord may expect to charge. These costs must be a part of the budget. As always, get this in writing.
Most likely, you won’t need to file a claim on your renter’s insurance policy. However, if a leaky pipe caused the ceiling to fall on your computer, you will be responsible to replace your own computer, not the landlord. Without insurance, you may find yourself with even more credit card debt than when you started if an accident takes place.
Other Budget-Friendly Steps to Take When Renting
Having a poorly written or understood lease can cost you money in the end. Make sure everything on your lease is filled out in entirety and that you understand everything. If anything changes, you and the landlord must initial the change on the lease AND both get a copy. It’s also a good idea to take an inventory and photos of the apartment. Once you take the photos and inspect, alert your landlord to any issues so you won’t be held accountable for damages caused by the previous tenants.
Renting an apartment or home that may not have the luxuries you hoped for, but saves you money, can be a great way to manage your credit card debt. This sacrifice will payoff in the end. Happy searching!
To speak to a credit counselor today about budgeting and managing your finances, call 800-769-3571.