I knew this was coming sometime. I was just hoping it was going to happen a year and a half from now. The timing is just off for it to happen right now. I need to move.
The first 3 years of rent rates were affordable with minimal rent increases. Then the place was bought by corporate. They turned on the hot water with the rates the last couple of years.
Now they want to gentrify the place. Guess who is in an older abode? Moi & Co. I have been here half a decade. It’s walls contains many a life experiences. Some so dear to my heart that I am having a difficult time thinking about parting ways with the place. But I don’t have a choice to stay.
The business is reducing my leasing time and increasing my rent to where I personally will be hitting my cap in ability to pay. They want me out so they can renovate the place. They could not come up with a solution to keep its current tenants in and renovate at the same time. Or so they say. But I guess it doesn’t matter. I can’t afford it anymore. :(
To Stay in the Guidelines
Sentiments aside, the real issue is staying within my budget. Lower the expenses, faster I can pay off this debt. In deciding how much rent I can afford, the general guidelines say rent should be 30% of your income. Net or Gross? I think gross is great when a landlord is figuring out how much a tenant can afford. But as a tenant, I think budgeting net is a good compass to one’s level ability to pay rent (especially as a single parent).
Gross: $91,000 ÷ 40 = $2275
Net: $65,000 ÷ 40 = $1,625
As you can see, my current rate of $1715 is somewhere in between that. Personally, it’s a lot of money. And my monthly budget shows 30% gross rent payment would not in my (debtor’s) situation Because if I factor in the new rate, I am left with a deficit (see below):
see the red. that was caused by the “new rate”. right now my current budget leaves me $6 left over.
But technically, I need to factor out the debt payments and 3rd paychecks when calculating the 30% rule.
Note: I don’t count in any 3rd-paychecks into the equation (there are 2). Which keeps me safe, allows room for error, and/or gives me snowballs to use.
Gross: $91,000 – $12,000 (annual debt payments) – $4,600 (3rds) = $1,860
Net: $65,000 – $12000 – $4,600 = $1,210
In this case, 30% based on gross could be adequate in this case, but net would be optimal.
By downsizing our quarters:
yes, it hurts knowing I pay $1,000/m in debt.
The new rate would leave me a tiny bit of wiggle room.
The current rate had me reduce the family’s clothing expenses to $0. The new rate would allow me to put the $50 clothing expense back into the monthly budget. It would be a nice expense category to have back.
As a SIK (single income with kid(s)), an approximate range of $200/m makes a world of difference. And talk about parental guilt, that having debt is causing us the need to downsize. Debt Sucks. Stupid debt.
Overall, I will be looking at this as a challenge (because change is hard). A fun challenge towards becoming debt free. It’s team in training for tiny house living. The amount of money saved will really not be conducive in accelerating my debt payments, but it will keep us in budget. That’s key, right? And while this move is temporarily… temporary usually is longer than planned. So staying organized and spending more time outdoors will be key. Okay, I am off to finalize the details and play with the furniture layout of the new place. Thanks for listening to me rant and sort things out in my head.