Money And Apartments

I've always been frugal with my apartments and living situations, but this year I went too far, and I have suffered the consequences. I didn't search hard for the place I'm currently in, and I have regretted that fact since the first day I moved in. It seemed like a phenomenal deal: $500/month, the upstairs of a house mostly to myself, NO UTILITIES. Free internet, cable, electricity, and heat. The downstairs was rented out as well, and the person who lived there also used the kitchen. I thought I had it made. It turned out, however, that my landlord is crazy. The story gets way to long for me to sum it up (although if you really want the gory details, just check under my "Landlord" tag), but suffice it to say, I'm moving out at the end of this month. I spent a lot of time searching, so I thought I would divulge some financial words of wisdom with respect to finding a place. Some of these lessons are learned from hard experience!

1.) Actual Rent and Utilities
These are the most obvious considerations when getting a place, but when I started renting in college, I saw a lot of newbie renters get tripped up by unforeseen heating bills they hadn't factored into their budget. It costs A LOT to heat a house in Minnesota, so if your landlord isn't paying the heat, you may have to factor in a few hundred dollars a month during the winter to keep the place warm. If you are paying utilities, make sure to ask your landlord how much you should expect to pay. I've always found them to be forthcoming. Oh, and at least in the state of Minnesota, landlords have to have decent windows to keep the heat in, so if you find you have a huge draft coming through, you can ask for a reduction!

2.) Location
Make certain you factor in where you'll be driving.

The IRS tells us it costs an average of ~40¢/mile to drive a car--that's gas, maintenance, depreciation, etc. SAD FACT: every 10 miles you decide to move from work costs you almost $180 A MONTH, or over $2,000 a year.

How's the bus sound, now?

Most of our driving is to and from work, but I had an additional factor to take into account, distance-wise. My girlfriend is in Saint Paul, and my work is in a suburb. While I would LOVE to live just south of Uptown in Minneapolis, and I have a lot of friends who live there and who would like to car pool, I would have to put an additional leg on my journeys to make it to her place (leases and things make it difficult right now for us to move in together). Uptown, unfortunately, was out.

I choose, instead, to pick a place between my girlfriend's apartment and my work, which still landed me in a nice location, neighborhood-wise. I can't run around Lake Harriet, but I put myself near Summit Avenue in Saint Paul, which has a nice broad median to jog along.

3.) Safety
Safety first! Most cities have dynamic crime maps, so you can figure out where the bad neighborhoods are. Also, you can call the non-emergency line for your local police department and talk to them about a neighborhood you want to move into. I found out, as a reporter back in the day, that you can even ask them how many 911 calls have been made for a specific building. If you don't know anything about the locale, you should at least check the crime maps. If not for you, take into account that you'll have guests to worry about.

4.) Apartment Amenities
I need a dishwasher. I don't watch TV and I don't need the internet at home, but I HATE doing my own dishes. Also, I prefer a washer and dryer in my apartment. In my present locale, I'm back to communal laundry, which irks me to no end, mostly because I'm that guy who likes to leave his clothes in the dryer, and warm them up for a few minutes on a cold winter day. Also, laundry isn't cheap: it costs about $2/load, and since a person probably does about 2 loads/week, that comes to another $20 or so a month. Plus, for me, I NEVER have change. I'm going to see if I can include a few extra bucks in my rent every month in my new locale, and have the landlord drop the laundry tokens in my mailbox, so I don't have to think about it.

5.) Sharing Space?
Roommates can detract from you monthly expenses, but they can also add layers of complexity to your living situation. Consider this carefully. I'm moving into a one-bedroom apartment without a roommate, and I'm actually going to miss having one. I don't generally room with people I know well, as a rule, because I don't like to put any strain on my friendships, but I have found I LIKE having someone else in the place, even if we don't spend a ton of time chatting, just because I find it comforting to have other people around. A lot of people consider it more "grown up" to live alone, but I disagree. People in Europe live with roommates at a far higher rate than those in the states. Also, there's nothing childish about saving money!

6.) Buy Or Rent?
That’s a good question, and one that I wrestled with mightily on this last go-round. I went through my finances thoroughly, and I realized I could buy, but because I was in a hurry to leave, I didn’t want to make any snap decisions that I would regret. Aside from my budget spreadsheet, which allowed me to project what my finances would look like this next year, I used a handy calculator that the New York Times created a few months ago, that projects the financial benefits of buying vs renting, given considerations such as rent amount, mortgage and interest rates, etc.

Check that one out here.

Take a look at a simple mortgage calculator like this one (you can Google “mortgage calculator” and you’ll get a million like it). I like this one because it doesn’t require a lot of variables, so I was able to get a quick snapshot of how much I would pay per month with different mortgage amounts. For the real mortgage, I’ll use my cousin who does mortgage brokering, because my other family members who have used him say he’s the bomb. You can also go online and stick your name in a service like Lending Tree, and you’ll have about four people call you in ten minutes to help you out. My experience with this was surprisingly pleasant—everyone was polite and they went out of their way to say they weren’t going for a hard sell. I made sure to tell them that I was just checking to see if it was possible, and they were great. As soon as I told them that I had decided to use my cousin, they stopped calling.

Anyway, I’m not buying right now--I’m going to do some more research, pay down my credit cards so I have a credit score over 800, and wait for the winter, when the market tends to slump, or so I’m told.

7.) Miscellaneous Startup Costs - Business
I split startup costs into two types: business and personal.

Business startup costs include safety deposit, fees for credit check, and moving costs. States will usually have some limit on the fees a landlord can charge for credit checks. It's illegal for them to take fees for credit checks after a place has been rented. A $30-$50 fee is not unreasonable for a credit check.

Landlords usually charge one month's rent for a safety deposit, but some areas go as high as three times the rent. Which would suck. My landlord actually charges less than one month's rent, with the idea being that people won't try to skip out on the last month's rent if they know their deposit won't pay for the whole month. (It's illegal in Minnesota to skip out on the last month's rent and force the landlord to use the deposit. That's probably universally true across the country.)

The last business expense I'll address is the truck. Are you having friends move you, or are you paying the professionals? Consider how far you're going, how much stuff you have, and how many people like you enough to show up. WHEN YOU RENT A TRUCK, most of the cost will actually be in millage, NOT the rental fee. You can get the truck for $30-$60, but at 50¢-$1.20/mile, unless you're only going a block or two, that's where your significant cost will be. ALSO, don't cheap-out on your friends--beer and pizza are the normal moving fee, and that will cost you about $100, depending on the number of people help out.

8.) Miscellaneous Startup Costs - Personal

Personal costs are hugely variable, but you should do your best to keep these in mind. Do you need a couch (I do!), and did you last roommate have all the dishes? Don't get stuck with paper plate! Little things like waste baskets and cleaning supplies can add up quickly. Do an inventory check.

That's all I've got right now!
Thanks for stopping by!