How much leftover money would you need every month to feel comfortable?

kelley198721 · February 2015

My FI and I are looking at apartments and we are trying to figure out our budget. We're getting married October 10th this year and we ideally would like to find a place by this summer. I live with my aunt and he lives with his parents to save money but we're ready for an apartment and some much needed privacy.

So in trying to figure out a budget, we are trying to decide how much money leftover we need. How much is enough, that is.

How much do you need leftover to feel comfortable? And this is after all bills and living expenses are paid.

simplyelise · February 2015

How much money do you guys have in savings? How secure are your jobs? Do you have consumer debt? Do you need to be putting money away for the wedding/honeymoon costs? Are your cars in good condition?

A good rule of thumb is that your rent should be about 25% of your take-home pay, but that really depends on the COL in your area. Personally, I'd want a lot of wiggle room, even if I've got a 3-6 month emergency fund in place. Anything less than $500 extra after all the bills have been paid would make me very uncomfortable.

Now, I've been there where I was taking home 21k a year, rent was 465 and I was paycheck to paycheck. Sometimes you gotta do what you gotta do. But it's a stressful way to live.

lifeonthehill · February 2015

H and I paid $530 for our first apartment and we ate plain pasta because within a few weeks of moving in his job cut back to one 4hr shift per week. We lived pay check to paycheck and went to bed hungry more nights than I care to remember. Having that experience in mind I would want at least $500 in spare money after our budget each month so we could have saved it up for a rainy day fund.

If you already have a good chunk in savings or you could stretch one income to cover the bare minimums then I would feel more comfortable.

als1982 · February 2015

We can pay all our bills on one income, and I still don't feel completely secure. Rent practical and don't try to keep up with the Jones.

hoffse · February 2015

Honestly? We like a lot leftover. Sometimes we spend it (home improvements), sometimes we save it, but it's really nice to know that we essentially have an entire income that's not "necessary" to pay the bills. It gives us a lot of flexibility and options.

AprilZ81 · February 2015

We can technically live on one income but our savings and "extras" would be cut to the bone if not eliminated all together. There are still times where I wish we had more money to put back in various accounts.

You do *NOT* want to be house/apartment poor. Get the cheapest apartment that is in a save area and fits your needs and maybe a few wants.

Housing should not take up more than 25-35% of your take home income, and the 35% should only be if you are living in LA, NYC or other high cost of living locations.

Sisugal · February 2015

A basic rule of thumb is to keep housing costs (rent, utilities, and renter's insurance) or if buying a house (mortgage, PMI, taxes, insurance, utilities, HOA) to no more than 25% of your TAKEHOME pay. (30-35% in a HCOL area).
That can/should be adjusted downward if you have a good deal of debt.

You need to set up a basic budget - track your spending and make adjustments to meet your goals.
Smart Couples Finish Rich by David Bach would be a great book for the 2 of you to read and discuss.

Make sure you have a good 6 months expenses (or more) in emergency savings.

I am sure you are aware that you will need a first and last month's rent deposit as well as a security/cleaning/damage to just get into the apartment.

You may find that our recommendations may limit the number and kinds of apartments available to you at this time. Do NOT overspend on your apartment - especially if you have any debt. You need to live within your financial limits, pay off debt, save and build financially secure lives.

vlagrl29 · February 2015

I would want a savings of 3 months and $500 extra

Xstatic3333 · February 2015

I like to be able to cash-flow a $1000 emergency within the month, even if it means pausing savings goals to do so. I also like a bigger "fun" budget than many here, so we chose a house payment that leaves about $400/month for fun, entertainment, blow money, etc. plus money to put aside to travel in the best of times (which we're not currently in) and significant money for savings or debt ($600-1000, depending on the season). For us, this worked out to about 20% of take-home, not counting utilities.

kmurphy2131 · February 2015

As others have mentioned you need to look at what your income is (after taxes!) and work from there. We keep housing between 25-30% which is high for many people, but we live in a relatively high cost of living area. We also are renters and plan to be for at least the next 3-5 years because of location uncertainty, so we are comfortable paying a slightly higher rent to be in a nicer apartment. If we were planning to buy in the next year or two as we originally planned we would be looking for a much lower % so we could save faster. We also have a 4/6month (current lifestyle/bare bones) emergency fund saved. That said, we still have a buffer of $1300-2000+/month (H has irregular hours) to help meet savings goals and things we want to do. So look at your long-term savings goals and decide where you want to be in the next 1, 3, 5, 10 years. Do you want a house? Do you want a condo? Do you want to stay renters? Do you want pets and/or kids soon? If you want to buy a house or grow your family you may need to more aggressively save.

edit: corrected the last sentence because I accidently wrote "if you want to buy a family" hah

jessica490 · February 2015

After paying bills and putting money in to savings, We keep about $200-250 in our checking account for gas or anything else that pops up, but we do have an e-fund to borrow from in emergencies and other separate funds marked for other things...house down payment, vacation...etc

Wulfgar · February 2015

We don't have any "left-over". Everything is ear-marked for a specific purpose. MW and I are focused on debt repayment and home repairs currently.

Depending on which expert you listen to, you should be putting roughly 10 to 15% of your income towards retirement and another 10% to savings. You should also have an emergency fund in the 2 to 6 month range.

AprilZ81 · February 2015

Wulfgar said:

We don't have any "left-over". Everything is ear-marked for a specific purpose. MW and I are focused on debt repayment and home repairs currently.

Depending on which expert you listen to, you should be putting roughly 10 to 15% of your income towards retirement and another 10% to savings. You should also have an emergency fund in the 2 to 6 month range.

Our is all ear-marked too, but in the case of an emergency most of our ear marks are some form of savings or things like our fun money and entertainment budget that we could reallocate if we really needed to.

kelley198721 · February 2015

Thanks for the input everyone. I guess we live in a LCOL area. A nice two bedroom apartment here typically goes for $850-875. However, we found a two bedroom apartment that is gonna be about $760-780. Not sure on exact price yet since we haven't applied and apparently we're a little too early. We want to move in around May or June but the few apartment complexes we've visited has only been able to give us prices as far out as April.

Anyway, the cheaper two bedroom apartment we found has absolutely terrible reviews online so I'm very nervous about it. And it's certainly not as nice. But it's the cheapest without resorting to section 8 housing and we make too much money for that.

We did find a very nice one bedroom apartment somewhere else that is about $730 per month. But FI and I are concerned about us not having enough space. We really wanted a two bedroom so we could put his computer desk in the spare bedroom. He is a gamer and I do not want his cluttered desk filled with video games in the living room or our bedroom. And FI also wants to start hosting D&D nights with his friends every other weekend and the second bedroom would be ideal for this. That way, they can be in the second bedroom without bothering me haha.

I just don't know what to do. I would like us to stay under $800 per month but in order to get a two bedroom in that price range, we would have to go with the cheap apartment with terrible reviews. Or we go with a one bedroom and try to figure out where to put his computer desk.

We could technically stretch our budget and get a nice, decent two bedroom that is $850-875 per month. But I worry about us not having enough money left over if we do that.

simplyelise · February 2015

I wouldn't really call that a low cost of living, but then again, our nice 2BR is $690 with cable/internet included, so ours is really LCOL. What are the negative reviews related to? Is it the management/maintenance or the safety/neighbors?

What's your monthly take-home?

Maybe you could do the one bedroom and as the FI to keep his desk visitor-friendly in the living room. Then you could get a TV for your bedroom so you have a little space when you need it. Maybe his D&D nights are your time to visit with your friends/family.

formerlyGDaisy09 · February 2015

Wow decent 2BRs in our area go for $1300/month! 5 years ago H and I looked at one 2BR that was 700sqft with a hallway kitchen and tiny rooms for $900/month!

amazes me sometimes to realize how high-cost our area can be!

juliebeannn · February 2015

Wow! 2BR in our area are at least $2k/month (our 700sq ft 1BR was 1600). it's amazing how totally relative COL can be!

simplyelise · February 2015

formerlyGDaisy09 said:

Wow decent 2BRs in our area go for $1300/month! 5 years ago H and I looked at one 2BR that was 700sqft with a hallway kitchen and tiny rooms for $900/month!

amazes me sometimes to realize how high-cost our area can be!

Yeah, it's ridiculous how much that can vary. We live in a 950sqft apartment with W/D hookups in college town with about 100k people. The big issue here with rentals is that there is a wide gap between luxury student apartments ($600/BR for 4 BRs) and crappy run-down places in high crime areas. Thankfully our place doesn't allow undergrads and is mostly old people, so the crime and disturbance rate is very low.

als1982 · February 2015

juliebeannn said:
Wow! 2BR in our area are at least $2k/month (our 700sq ft 1BR was 1600). it's amazing how totally relative COL can be!

Holy cow. The mortgage (including insurance, taxes and PMI) on our 3 bedroom house is $1,300 and we're in a desirable part of the city that costs far more per square foot than others.

I've always wondered if incomes in expensive cost of living cities are really higher to make up the differences... (H who lived in San Franciso after grad school seems to lean toward no.)

Xstatic3333 · February 2015

In our renting days, H and I frequently debated the 1 vs 2BR issue. I was okay with less space, but it drove H bonkers to feel cramped and just wasn't worth it to him. He's a gamer too, and was in a Magic phase with his friends when we lived in the 1 BR for a year. It worked out ok, but when his friends were over I'd go in the bedroom to read or watch a show on my computer while they nerded out. The biggest concern, however, was lack of storage.

In general, I'd say go for the two BR if it's a long-term location but suffer the one BR if it's a quick stop while you save for a DP. Feel free to post your budget too if you want to get more specific!

juliebeannn · February 2015

als1982 said:

Wow! 2BR in our area are at least $2k/month (our 700sq ft 1BR was 1600). it's amazing how totally relative COL can be!
Holy cow. The mortgage (including insurance, taxes and PMI) on our 3 bedroom house is $1,300 and we're in a desirable part of the city that costs far more per square foot than others. I've always wondered if incomes in expensive cost of living cities are really higher to make up the differences... (H who lived in San Franciso after grad school seems to lean toward no.)

yeeaaahhh. our mortgage (PITI + PMI just outside of NYC in NJ) is $2150 -- and that's in a 3br/1ba fixer upper home in an OK neighborhood with OK square footage and half the property tax ($6500) than neighboring towns.

i think income in our area (NYC) is a bit higher than the rest of the country, but i don't think it's nearly enough to make up for the difference in COL.

our combined income is around $135k. DH is a firefighter (2nd year) and his salary will increase by just shy of $10k for 7 years. most of my friends (who mostly work in finance in NYC) have combined incomes of $200-250k/year. most recently, a couple we know purchased a $750k house (+13k in prop tax). :-O

end thread jack! sorry!

Xstatic3333 said:

In general, I'd say go for the two BR if it's a long-term location but suffer the one BR if it's a quick stop while you save for a DP. Feel free to post your budget too if you want to get more specific!

i totally agree with this. we stayed in our 1br while we saved for a house. living in tight quarters gave us more of a sense of urgency to SAVE and get into a HOUSE. we thought moving into a 2br would get too comfy and we wouldn't save as aggresively on top of already having less to save.

formerlyGDaisy09 · February 2015

als1982 said:

Wow! 2BR in our area are at least $2k/month (our 700sq ft 1BR was 1600). it's amazing how totally relative COL can be!
Holy cow. The mortgage (including insurance, taxes and PMI) on our 3 bedroom house is $1,300 and we're in a desirable part of the city that costs far more per square foot than others. I've always wondered if incomes in expensive cost of living cities are really higher to make up the differences... (H who lived in San Franciso after grad school seems to lean toward no.)

at least in our area the answer is no. I've been working in my position for 2 years and still make in the bottom 10% for what my position gets nation wide. for the position I was in for 3 years before that I was in the bottom 10% in our region. It's taken 2 years and an amazing boss for me to start to make progress on income...even so the promotion required to get me an increase in wages still keeps me in the bottom 10% for what others in the same position make in the region. My next major career move will likely mean relocating.

kelley198721 · February 2015

Thanks guys, it looks like FI and I have some more consideration to do for the 1 bedroom/2 bedroom issue.

Our combined monthly take-home pay is $2,680. However, I am estimating a little bit on my pay. I just started a new job last month as an assistant pre-k teacher and I am supposed to get my first paycheck tomorrow.

I can post our budget in another thread.

Xstatic3333 · February 2015

I will say that in our area, at least, you can get much better deals by looking beyond "apartment complexes." I live in a similar COL area to Gdaisy and a traditionally nice 2BR would be $1300ish here, too. However, for our last 3 years renting we found a two-bedroom duplex on a boring street in a boring town for $875. It wasn't perfect. The layout was awkward, the ventilation was weird, the street was noisy (but we sleep like rocks) and it was extremely drafty. However, we had two bedrooms, basement storage, and a nice landlord who wanted to keep us happy since he needed our rent to pay his mortgage. He only raised our rent once the whole time we were there, and was extremely apologetic about only $50.

Where I live, there are lots of triple deckers and duplexes and they are almost always a lot cheaper than a shiny new apartment building. They're often good situations too, as long as you like your landlord, and can have a bit more character. Some have yard access. You may have already looked into situations like that, but if not I'd recommend it. The one downside is that it's nearly impossible to plan ahead. Most places just list on Craigslist the month before they are available.

vlagrl29 · February 2015

With it being that much money I wonder how much renting a house would be in your area? I've never rented but just putting that out there.

kelley198721 · February 2015

I've been looking on Craigslist last week for houses to rent in our area but haven't really found any good prospects. The one house that was under $800 didn't look like it was in good shape from the pictures. But I will keep looking!

How much leftover money would you need every month to feel comfortable?

Re: How much leftover money would you need every month to feel comfortable?

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