I'm in a bit of a quandary here and I imagine this may help someone else. I graduated college about a month ago and have been waiting tables while looking for a "real" job. I'm currently subleasing until the end of July and looking for apartments was (relatively) simple: find the cheapest and go with it.
Well, I got a phone call from HR at one of the places I applied and she said they were ready to make me an offer, contingent on a background check. Which means more money which means I can look at better apartments in better locations.
But I don't know how much I should budget for an apartment. I know they won't rent to you if the rent is higher than 1/3 your income, but I'm suspecting it's best not to push up against that wall. I live pretty simply and have about $600 a month in loan payments for the next year and then $350 a month after that.
So what percentage (roughly) of one's income should they budget for rent? I need to know what price range to look at, but I have no idea where to even start.
Try no to get into the habit of expanding your spending to match your salary. If you could be happy in a cheap place is it really necessary to get something better? At least in the beginning...
This is where people get in trouble. "Oh...I would be happy with X but I can afford Y so why not just get that?" You get into a habit of spending increases instead of saving them.
Personally I would probably still do the cheap apartment for a year until your loan switches over and, if you're happy with where you're living, longer so you can pay off your debt and save up for future goals.
I've done this. I was living on ALL of my salary and managed to pile up about $10k in debt (really bad, I know...not a drop of savings but lots of stops at Ann Taylor Loft on the way home) so when my lease on my $980/month studio was up I moved into a $700/month shared house. I could have gone cheaper but I would have been miserable so this was as much as I was willing to do. Over the next year I managed to put 15% into my 401k as well as pay off all $10k of that debt. Obviously it took more than the $280/month I was saving on rent, but that was just the first step in a reduction plan. I cut back on lots of things - including dropping hundreds each weekend at the bars and expensive dinners out.
Eventually I was able to move out on my own again but this time it was with a nice cash cushion behind me and a newly developed frugal lifestyle.
But, if you really want a %, my rule of thumb is no more than 25% of income, but depending on where you live, that might not be possible.