Ask Brianna: How can I budget when my rent is so high?
"Ask Brianna" is a column from
Q: A huge portion of my income goes toward rent, and I already have a roommate and am not able to move right now. How can I manage other financial priorities, like paying off debt, with such high housing costs?
A: For some readers, this question might summon a vision of 20-somethings in
In 2015, almost half of all
Maybe moving to a different apartment or city would be too expensive now. In the meantime, try these budgeting strategies so you can pay the rent, then make room to build savings and reduce debt.
FIRST COMES SAVING
The 50/30/20 budget recommends spending no more than 50 percent of your earnings on necessities like housing, food and transportation; 30 percent on wants; and 20 percent on debt repayment and savings. But when you enter your information into a budget calculator , rent might take up nearly the entire "necessities" category. That means you'll likely have to cut back on your "wants" — but don't scrimp on savings and debt repayment.
Saving now means building a cushion that prevents you from taking on more debt and that can help you afford to buy a place someday. To start, make sure you've got at least
Next up is saving for retirement. If your employer offers a match on 401(k) contributions — say, up to 3 percent of your income — designate at least enough to capture the match.
THEN COMES SLASHING DEBT
Once emergency and retirement savings are on track, you're ready to pay extra toward debt.
One way is to prioritize what to pay down based on interest rate. Aim to eliminate credit card balances first, which often have the highest rates. If you still have money left over, add to your rainy-day fund so it covers three to six months of essential expenses, and increase retirement savings.
CUT OTHER EXPENSES
Sure, you can try to cut back on boozy brunches or buying books to free up some cash. But limiting larger-ticket items, such as car-related costs, may get you further, says
The average loan payment for a new car was
Searching for a better cell phone plan might also yield savings. Carriers often change their offerings, and plan prices are more and more competitive, Tyson says.
RE-EVALUATE YOUR CITY
Finally, think long term. Rent doesn't have to be the expense you organize everything around forever. Every year, take stock of whether your location makes sense for your career, says
You may live in a place that has lots of opportunities for professional advancement. "However, put a time frame on the high expense," she says. "If the area or position is no longer serving you, consider looking for other options."
This column was provided to The Associated Press by the personal finance website
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https://nerd.me/budget-calculator
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