The rule of thumb is that your rent should not be more than 30% of your income. Of course, this isn’t always possible. Some cities are just really expensive, and you won’t be able to find anything for a reasonable price even if you’re willing to move to a shoebox. Some people have student loans or just a lot of debt that already takes a lot from their income so 30% is not possible. So yes, there are exceptions to the rule, but the idea is that you don’t spend your entire income on rent.
This is something to keep in mind when the rent starts going up. A slight increase in rent is manageable to most people with stable jobs. A huge, non-negotiable increase is another story, and definitely the kind that should make you reconsider renewing your contract. Here’s what you should keep in mind:
Is the Place Worth it?
This is the time to be pragmatic and forget about feelings, so this isn’t a matter of worth in terms of sentimental value. Rather what should be taken into account are more concrete, practical things. Take your sentimental goggles off, put the practical goggles on, and ask yourself the following:
- Is the neighborhood ok? You don’t want to live in a neighborhood where you don’t feel safe, or where you need to drive for miles just to get groceries or find a pharmacy. More importantly, you need a neighborhood that fits your lifestyle, if you’re thinking about starting a family maybe it’s time to move from the neighborhood with the trendy bars, likewise if you’re a social butterfly who likes to throw parties and your building is starting to be filled with new families, you might want to start looking.
- Does the property need a lot of renovations? How has the place held up throughout time? If there’s a lot that needs to be done for your place to be at its best, like your bathroom needs to be fully renovated, or your kitchen needs to be done, you’ll have room to negotiate, or maybe decide to start looking.
- Can you find something better? As stated before, there are cities that are just expensive, so when your rent goes up, other properties go up as well. Take a look at the market prices and see if you can find a similar property for the old price. If you can’t, it might be better to stay.
Could You Weather It with Some Cutbacks?
Another thing to take into account is your lifestyle. Sometimes your rent will be more than 30% your income but a) the property is 100% worth it, and b) you can still make it work. You can afford to make some cutbacks on other aspects of your life, as in eat out less, forego cable, and maybe cancel that gym subscription you never used anyway. If that sounds reasonable and enough effort while you find a better job or some extra income, go for it.
The important thing to remember is that you should not be living beyond your means. Having a place to live shouldn’t mean you can’t afford your groceries. In that same tone, an ok apartment isn’t worth having to make some major cutbacks. So the best you can do is assess the situation and decide whether a move is better than agreeing with a higher rent.