How to Budget for Extra Costs When Moving to a New Place

Whether you’re moving to a new apartment (like me) or calculating your current budget for job or life changes, we all end up asking the same question.

How much rent can I afford?

With all the excitement of moving into a new place and getting settled in, we might have a tendency to overlook some important factors. But you can use these simple steps, to help determine how much you can afford to pay.

Start by Calculating a New Budget

A good rule of thumb is to spend about 25 – 30% of your monthly take-home pay on housing costs (rent, mortgage, insurance and etc). My current rent is 19% of the net income from my full-time job, which of course, gives me a little wiggle room.

I’m not including my freelance writing or social media gigs, since I’m only starting to get those off the ground.

Any extra income I make will go towards traveling and investing my Roth IRA. I don’t want to make the same mistake I’ve made in the past and become house rich and cash poor.

Then Test it Out

Just to be sure I can actually afford a higher rent payment, I will be “paying myself” an extra $300 for the next 2 months.

I’ll be including it within the budget and taking the money out when the rent is due, just like a normal expense. This method has a dual purpose for me:

  • I can truly see if affording a higher payment is easy or difficult
  • The extra money I’m paying saving, can be used towards incidentals

Speaking of extra costs, there’s lots of other variables to consider when moving to a new place. Below is a list of added expenses to think before moving to a new apartment.

 1. Apartment Fees

Apartment fees vary widely, since some rentals are owned by companies and some are owned by individuals.

Most landlords will require a security deposit equal to one month’s rent and possibly even a move-in fee to hold the apartment. Many of them even tack on application fees, administration fees and pet fees.

2. Commuting Expense

If you plan to stay in the same general location, there won’t be much of a change in commuting or transportation costs. But if you start thinking of moving further out of the city, you might need to allot for a longer commute, which means higher gas and maintenance costs.

On the flip side, if you move closer to your job, you will be saving money each month which provides more cushion within the budget.

3. Replacement Costs

Whether you hire movers, or get friends to help, once you start moving your personal belongings, there’s no guarantee your stuff will arrive in one piece.

Plus theirs a much higher chance of damaging the apartment with so much going on, which means you might ruin any chances of getting the security deposit back.

So you might have to shell out extra cash to replace broken furniture and fix any damaged areas of the apartment.

4. Utility Changes

Unless you’re downsizing, you’re probably moving to a new bigger and better place, like I am. But along with the extra space comes higher utility bills.

Likewise, some rental companies include water/trash in the monthly rent while others do not. There’s additional expense for moving the electricity, TV/cable and internet to the new location which should be included in the budget as well.

5. Rental Insurance

For me rental insurance is a must, and only costs $72 a year to have all my stuff completely protected from fire, floods and theft.

Factors that determine the insurance rate include how secure (or not secure) the rental complex is, if the buildings are made out of brick or wood, in what year they were built and so on.

The monthly insurance premium might go up or down, once you move to a new place.

6. Double Rent Payments

Unless you have perfect timing, your rental payments from one apartment to another will overlap. It’s hard to find a new place, move all your stuff and cancel your old lease right when your new one begins.

The added cost could be pretty significant, so try wait for as long as you can, before making the move to the new place.

 

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[Disclosure: if you sign up through my link, you will get $10 and I will get a commission, but it won’t cost you anything. This is a special offer just for my readers.]

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About the author: Carrie Smith is the financial artist and owner of Careful Cents, a site that helps creative freelancers discover the art of making a living. In May 2013 she quit her full-time accounting job to pursue entrepreneurship and blogging. Since then she’s been featured in sites like The Huffington Post, Glamour Magazine, and Kiplinger Finance. In her spare time she enjoys painting, sketching, and making food with her chef husband. You can connect with her in real time on Twitter or Instagram: @carefulcents.

Comments on this entry are closed.

  • Daisy May 9, 2012, 8:29 am

    I love the idea of testing it out – definitely something I’ll have to do when we move!

  • Jordann @ My Alternate Life May 9, 2012, 8:43 am

    Moving definitely contains a lot of hidden costs. I think when I finally decide to move into a more permanent place, I’ll use your method of testing the waters, it’s a good idea!

  • Modest Money May 9, 2012, 10:34 am

    I usually avoid the double rent payment by doing arranging to either move out a little late or move into the new place a little early.  I always wondered how other people handle that situation.  It does make the move rather stressful when it’s all on a time crunch.  You make a lot of good points of all the potential higher costs of moving to a new apartment.  Sometimes you also have to consider other things like how much more often you might go to restaurants or if you’d end up going to a more expensive grocery story.  When I lived downtown for a while I didn’t realize just how much extra I’d end up paying for that kind of stuff and things like parking.

    • Carrie Smith May 9, 2012, 11:39 am

      That’s a good point. I actually wrote that down in my notes, but forgot to mention it. My new place has covered parking (which I definitely want) but it will cost $40 extra per month. That’s an added expense I’m not currently paying for.

  • TacklingOurDebt May 9, 2012, 12:32 pm

    I’ve never had the opportunity to have an overlap between moving from one place to another either. It is quite tricky to do an entire move in one day and clean up the old place. A lot of work, but a bit easier if you have a moving company helping out.