How To Budget (From Someone Who's Actually Budgeted)

Updated 7/3/2024 for inflation (HOLY CRAP!)

While I've never moved out and am relying on secondhand information, one aspect about living on your own that I've practiced for years is nearly constant, and is applicable to lots of money issues: Budgeting.  Your resources are finite.  So, you need to figure out where each part of those resources are going to go.  You also need to prioritize some items over another.  This in a nutshell...is budgeting.  So how do you do it for living on your own?  Here's how you do it:

1. Take the last three months worth of pay stubs. Add the total of your net pay, then divide by 3. That's how you much you have to work with in your monthly budget. Either write that figure down on paper, or put it in a spreadsheet.

2. Below that number, we're going to write down our expenses. First of all is figuring out rent. Take your monthly income figure, and divide that by 3. Write that number below as rent. Remember this number: This is your target rent for finding an apartment or rented house. Whenever you look for a place, find one that rents for that amount or lower.

3. Next, write down all your current debts, such as student loans, credit cards, etc. Write down the minimum payments for each one.

4. Next, write down all your other expenses, such as cell phone bill, car insurance, etc.

5. Next, go to this website (https://www.fns.usda.gov/cnpp/usda-food-plans-cost-food-monthly-reports) to get an estimate of your groceries. Here are some figures for May 2024:
   
   For a single male 20-50 years old, a monthly Thrifty plan would cost $303.90 (in 2021, it was $194). A low-cost plan costs $301.90 (in 2021, it was $251.80). A moderate-cost plan would cost $378.20 (in 2021, it was $314.80). A liberal plan would cost $461.10 (in 2021, it was $385.40). For females, it's $242.40, $261.60, $319.90, and $407.90 (in 2021, it was $172.20, $218.60, $267.20, and $342.50), respectively.
   
   These figures are presuming that all meals and snacks will be prepared at home.

6. Next, you'll want to know how much utility costs are. Look up utility rates for your target city. For example, according to AreaVibes (https://www.areavibes.com/ottawa-ks/cost-of-living/), estimted monthly utility costs are $217.10 (in 2021, it was $151.66). Remember, this is just an estimate. Also, add in about $30 (In 2021, I used to suggest $20) for water.

7. Now, take your monthly pay, and subtract all your expenses. If it's at zero or above, congratulations, you have a balanced budget. If it's less than zero, then you can't afford to move out.

Honestly, it's that easy.  (2024 me is calling that sus)  

  

How To Move Out (From Someone Who's Never Moved Out)

(Updated 7/3/2024 to account for inflation and age)

I'm 37 years old.   I've lived at home my entire life.  If this were 70 years ago, this idea would be complete anathema.  Today, I sense it's one of those things that's the "new normal".  

Anyway, recently, I've decided to try to move out.  For years, I've learned all about how renting works.  I know I still have much to learn, but I wanted to share what I've learned with all of you from the lens of someone who's never moved out, someone whom Dave Ramsey would call a "turkey".

Firstly, I've made a list of things someone needs to do in order to get their first apartment or rental house.  Again, I must stress, this is coming from someone whose knowledge of these things are secondhand, I highly suggest you talk to a landlord or someone who's rented before for more information.  However, consider these points:

1. Budget, Budget, Budget!

You gotta budget. Find out how much on average you make per month. I'm talking about your net pay, what you take home. Now, divide that number by 3. That is how much of an apartment you can afford per month. Some landlords are even strict with this, they won't even consider a renter if they don't make three times the rent. (Some landlords are even stricter, they won't even consider a renter if they don't make four times the rent!)

You'll need to budget for the following:
Rent
Utitilies (includes electricity, water, sewer, trash, etc.) Do some research on how much utilities are in the area that you wish to live.
Groceries (A great place to find common grocery costs would be the USDA Food Plan website.)
Internet
Cell Phone Bill
Car Insurance
Gas
Renters Insurance (some landlords require this)
Any Outstanding Debts

2. You Need To Save Up Money...A Lot of Money.

(Updated 7/3/2024 to account for inflation, because, yes, the rent is TDH)

In order to even be considered for a rental, you need to save up some money. This is what I suggest: Save up $2,800, plus $700 for every person that plans to live in the apartment. For one person, that's $3,500.

I figure that $3,500 would be spent this way:

First Month's Rent: $700
Last Month's Rent: $700
Security Deposit: Usually one month's rent, or $700
Moving Expenses/Application Fee: $200
Furniture: $1,200

For each additional person, add $700. $350 a piece would go into First month / last month / and security deposit.

You know, now that I think of it, those moving expenses probably aren't that cheap. Maybe add in another $350.

3. Get References...Wherever You Can

As a first-time renter, you will likely lack rental references. In order to make up for that, I suggest getting work references, especially from people who know your work ethic and character. Find people that are likely to hold you more accountable for your work, such people are great references.

4. Get A Letter From Your Employer

In addition, get a letter from your employer, stating how long you've worked for the company, what you do, how much you get paid, and, this is important, make sure the letter contains something to the effect of “We don't expect any layoffs in the near future.”. Why do I include this? Mainly to give you the best chances of getting approved for a rental. You seriously have to sell yourself, not just in getting a job, but in getting a place as well.

5. Check Your Credit Score

This is SUPER important. If you've never taken on debt before, get a credit card. Make a purchase and pay it off as soon as possible. This way, you establish credit. (Yes, this is where Dave Ramsey and I part ways, besides other reasons.)

Also, get a free credit report.

6. Get A List Of Places Where You Need To Change Your Address

Make a list of all the things in your life that require an address. These are the things whose address you will need to change when you move out. Believe me, this will make it MUCH easier to get the mail in your new mailbox sooner. Here are some ideas for what to include in that list:

Car Insurance
Health Insurance
Dental Insurance
Vision Insurance
Any Retirement Accounts
Work
Your Bank
Prepaid Debit Cards
Credit Cards
Voter Registration
Amazon
PayPal
Netflix

7. Inventory All Your Possessions

Make a list of all your major possessions. You'll need this to help figure out coverage for renter's insurance. This would be a good time to take a real good look at your possessions, to see if you can downsize. To alter a quote from Bob Harris, “Light moving is happy moving”.

8. Get Your Paperwork Ready

Get at least the last six months worth of paystubs and the last three years worth of your tax returns, so the landlord can get a good sense of your income. Also get some recent bank statements of where you have your checking and savings accounts. Yes, the landlord might require fewer of these documents, but be ready anyway.

9. Look At Apartments

Now that you're all saved up, you have references, and you have a budget that won't break the bank, let's go look at apartments. You can ask about one on Facebook, look in the newspaper, basically, ask around. Once you've found a few, note the rental prices, what their pet policy is, how many bedrooms, etc. Ask to set up an appointment to look at an apartment. THIS IS IMPORTANT: You MUST inspect the apartment before you commit to ANYTHING.

In addition, be prepared to answer questions about yourself before the landlord even shows you the apartment.  Sample tenant screening questions are here, from the YouTube Channel Rev N You.

What should you look for?

1. Are the floors clean? Do you see any bugs?
2. Do all the doors and drawers work normally?
3. Are the shelves and cabinets clean?
4. Are the baseboards clean and free of dust? What about the blinds?
5. Are the outlets clean and free of dust?
6. Does the water flow smoothly in the kitchen and bathroom sinks? Does the garbage disposer work properly?
7. Do the appliances work the way they should? Also test the burners on the stove to see if they work well.
8. Does the toilet flush well?
9. Is the shower head clean? Does it run well?
10. Do the lights work?
11. Do the outlets work? Get a small night light to test each and every outlet.
12. Is there a smoky smell? If so, unless you yourself are a smoker, STAY AWAY from that apartment.

10. Fill Out An Application and Pay The Application Fee

So you've found an apartment that fits your needs. This is where you fill in all that information about your personal info, your pay stubs, your savings, your references, your roommates, etc.

Virtually every apartment is going to have you pay an application fee, usually between $30 and $80.  This is nonrefundable, even if you get turned down for a place.  This is why you need to make sure you can afford the place before you even begin the application.  Ask and MAKE SURE you meet their income requirements.  If not, you'll have to keep looking for apartments, and pay the application fee again and again and again.

Then, they will check your credit. This is known as a hard pull, which will lower your credit score a little Don't worry, you're applying for an apartment, so this is a good thing. Just don't apply to too many apartments, that will make the credit score drop even worse in the future. If you have a credit score at around 720 or higher, you should be good to go.

11. Breakdown of the "Down Payment"

Now, I've talked about the first month's rent, last month's rent, and security deposit. Let's go over all of these:

1. First Month's Rent: This is obvious. You're simply paying for the first month of living there.
2. Last Month's Rent: This is usually charged as a sort-of “down payment” for the annual term, and this is another thing you need to know about: Very few properties offer what's called “month to month” leasing, meaning you pay the rent one month at a time, and can move out at the end of any month. No, the most common type of lease is the one-year lease, meaning that you're committing to one year's worth of paying rent. It's like your cell-phone contract, which is usually a two-year commitment. And just like your cell-phone plan, it's difficult to break the agreement in the middle of the year, so READ THE LEASE AGREEMENT, as I will explain later.
3. Security Deposit: This is also like a “down payment”, except the money doesn't go towards the rent, but rather placed in a separate account to pay for damage to the property whenever you leave it. You ever wonder why people talk about trying to get their security deposit back? This is why: Besides normal wear and tear, any damage you do to the apartment, or any mess you leave in there, any dirt, etc. will be cleaned up and repaired, and your security deposit is used to pay for it. It's entirely possible to get back some, or even none of your security deposit if you're not careful. Keep the place nice, and don't trash the place, and you just might get all of your security deposit back.

12. Get Renter's Insurance

This is a good time to apply for renters insurance. Try to get it through the same insurance company as your car insurance, as they'll likely give you a discount. Renters insurance is used to reimburse you for your items that may get stolen, damaged in a fire, etc.

13. Read the Lease Agreement, then "Final Answer" (or "Lock It In" if you're in Australia :) )

If you're approved, you will then get a lease agreement. READ THE LEASE AGREEMENT CAREFULLY AND IN FULL. With a lease agreement, you are legally promising to do all that is written. It's like a contract or a promissory note. If you violate ANY of the terms of the lease agreement, this will give landlords the right to evict you, sometimes within a few days or sooner. Usually, the landlord will give you 14 days to fix the problem, but not always. If you break your word, they have the right to kick you out. Once you sign the agreement, you're legally bound to it, as in “Final Answer”.

14. Get Moving!

So you've signed the agreement and are given your keys. Now, it's time to move out. Some of that money you've saved up will go towards moving expenses. You can either get some friends to help move your stuff (Do pay them with cash or kind.), or get a moving truck. I personally like the Uhaul U-Boxes (they didn't sponsor me, I just think it's cool), where for a fee, you can put all your stuff into a pod-like structure. Then at the apartment, call them up, and they will send you that pod to get your stuff out.

15. Change Your Addresses

16. Buy Furniture and Stuff

Finally, with the rest of the money you save, buy some furniture and some essential items, like cutlery, laundry baskets, things you will need for the home. Look up “things you will need for your first apartment” for ideas.

If there's anything I've missed or anything that's inaccurate, please don't hesitate to leave a comment and let me know.  However, I'm almost certain that the process for renting an apartment, especially one that's managed by a company rather than owned by an individual or couple, is daunting.  I've had co-workers who experienced their own adventures of moving to their first apartment, for a place over 30 miles away!  Moving out is no cakewalk.  If moving out is for you, get the facts, and get ready.