How Much Should You Spend On Rent?

You again find yourself waiting on that next paycheck, you got bills coming up quick. This one’s gotta go to rent and utilities and your car. You’ll have to make those payments towards debt next time, and you sure as hell can’t put that money in savings.

Living in luxury doesn’t have to mean making millions or working overtime all the time. In fact, there’s a very simple way to figure out how to never want for anything, how to be debt free, how to and how to start putting away money. The secret is how much of your money you’re funneling into rent.

Just think about it. If you work full time, that means you’re spending all day, five days a week at work. Let’s say that you do this mainly to pay the bills, but your biggest bill is where you live. Is it sinking in? Let me try phrasing this another way- you spend 5% of your time driving, and 70% of your time working somewhere to afford a place you only spend 25% of your time, 12% of which you’re asleep.

This isn’t something I came up with by myself. It’s the result of advice from smart people, and from a simple equation. The answer to how much you should spend on rent is actually really simple: you shouldn’t spend more than about 25% of you income on your place.

That leaves 75% of your income for other bills and taxes, for repaying debts, for your car expenses, to put in savings, to spend on things or experiences, or even to work less hours. It’s an equation geared to how people actually spend their waking hours, and one that prioritizes abundance.

There’s a dangerous cycle we are prone to getting trapped in, and it’s the same as the paycheck to paycheck life. Each moth, you’re putting nothing of your pay in savings, half or even more to rent, and the rest to bills and other living expenses. In that situation, there is no growth, and you are held hostage as a human bill payer. In that lifestyle, you are in always in survival mode, which is the opposite of an abundant lifestyle.

If you want to follow the equation of abundance, you have two options:

Option one is to increase your income.

This is perfectly doable, and there are tons of side hustles you can start doing to earn extra each month. You could work more hours, ask for a promotion, or just start looking for a better paying job. The downside to this option, of course, is potentially spending more of your time at work.

Option two is to reduce living expenses.

There are lots of ways, big and small to do this. For example, think about how much you spend on entertainment. I mean really look, because it’s always more than you think. It includes how much you spend on fancy coffee and snacks everyday, how often you go out to eat, what you pay for cable television, your magazine and book budget, and whatever you spend on things you don’t really need.

The next step up is to reduce your living expenses with location. It’s no secret that some areas are more expensive than others. Like how living in the neighborhood downtown is more costly than the neighborhood just a few more miles away. Hell, even some entire states are more expensive than others. Arkansas is certainly a different economic climate than Hawaii. It all depends what your priorities are, and if you can find the same things for less elsewhere.

Maybe though, you don’t want to live in the middle of nowhere. You like the big city, your state, or the ritzy town where your friends and family are. For this situation, the best thing to consider is downsizing. Not just small everyday things like in the first example, but on bigger life expenses. An example of this is your car. A brand new car, as everyone knows, depreciates in value as soon as you drive it off the lot. Especially if it’s just a personal commuter rather than a commercial investment. Same with electronics like cell phones, which can now cost upwards of a thousand dollars before your cellular plan. Buying used or refurbished whenever possible can save you thousands on major purchases.

Another way to downsize, and the route I advocate for, is literally the size of your house. How much space do you really need? Do you actually use your big backyard? What could you save if you lived somewhere with just one bedroom fewer, or if you went all out minimalist. Consider rent that’s just $400 a month.

Waiting to win the lottery is no strategy to start living more abundantly. What opportunities would open to you if your rent was reduced to a quarter of your income?

Starting Over in a Suitcase

I moved to another state with a suitcase, a backpack, five hundred dollars and a student loan. It’s a funny thing, going through all of your belongings, deciding what you want and need and what just isn’t going to fit. I was faced with the question you’ve only asked yourself if you’ve tried to start completely anew:

What do I need to bring when I’m leaving everything behind?

There are a lot of uncertainties that accompany a move. Even if you’re just moving a few miles away and into a similar sized place, or you’re leaving temporarily, there are lots of unknowns about your new home. There is stress too, from going through all your belongings. It’s an eye opener to have everything you own packed away in boxes, and the space where it used to live so empty. I believe it’s a taste of a past life, one where we as human beings used to move from place to place, chasing the seasons and leaving to look for more than what we had where we sat.

It’s hard to know whats going to happen when you leave. Will everyone forget about you? Will you meet new friends and family and grow fresh roots? Will you make it out there? There are lots of things to consider and decide in a move, one of the biggest being packing. Especially if you’re moving from a cold climate to a hot climate or a hot climate to a cold climate. I was moving from the top of the Pacific North West to Southern California, and had never even visited the place I was moving. I saw it for the first time when I arrived. Needless to say, I was pretty high-strung in the days before my flight, and I probably made a dozen lists of what to pack. In the end, the best way to prioritize and organize my limited luggage was with three categories.

1. Replaceable

Things that are replaceable are of little or no sentimental value, they are extras or multiples, and they are also inexpensive, and not terribly difficult to find. For example, shampoo, flip flops, lotion, band aids, mugs, dinner ware and pretty much all of your cooking items, sheets etc. These things can be tricky to identify, because they are typically basic essentials, but they take up too much room and the cost of shipping it all would be the same as just buying it new when you arrive.

The biggest worry when getting rid of things is that you might end up needing it. The way to resolve that worry? Imagine you do get rid of that extra pair of shades and you end up missing them or really needing them. Couldn’t your just get another pair? Or make do with the first pair? Would it really be so difficult without them? Try to solve the hypothetical problem. If the solution is easy, or the dilemma not exactly an emergency, then you should be fine without it.

2. Essential

Photo by Héctor Martínez

Items that I deemed essential are the opposite of replaceable. They are things that are on the spendy side, they’re one of a-kind, and things that you wouldn’t get very far without. For example your medication, electronics, identifying documents like your drivers license, social security cards and birth certificate, as well as things like a good jacket, shoes and your glasses.

These are things you need to live. Not things you might need sometime, but items you use or wear pretty much every day. It different for everyone. I really needed to bring my computer and chargers, as well as my hair clippers that save me money I would have to spend paying for hair cuts every few weeks. Sometimes it’s not obvious either, but when you take a few minutes to think about it, you realize your sketch book and marker set you doodle with all the time are totally essential.

3. Sentimental

Photo by Laura Fuhrman

This category can be difficult, because it can be hard to leave behind knick-knacks that you collected on vacations, or gifts from family and friends, but it’s important to only pack the things that will give you joy and strength instead of the things that will hurt your back carrying or give you a headache trying to organize. Things you should let a family member hold on to or give away are heavy or fragile things like dishes, snow globes, jewelry and artwork. Other things to leave behind include large or otherwise cumbersome things like furniture.

I did end up bringing a few sentimental things that broke the rules, like large stuffed animal turtles a dear friend got me, a mug from my sister and photos, but they make me happy, and as long as you limit yourself to just a few small or lightweight things you’ll be in the clear.

How to live is the question we are all trying to answer. Settling, moving, more or less and with who are the important things, the rest are just details we figure out along the way. The truth is, you are responsible for your own happiness. Wherever you go, whatever you have, you are the navigator of your own life. I think day to day, we get so caught up with the “problems” we’re facing, and we forget that we are not bound by fear or worry, or by things. We are capable of so much more than that, we as humans are powerful, you are powerful. We’re not like trees, that stay still and are bound to the place they were planted. (Most of us) were born with feet and legs and brains that dream, we build cars and trains and planes and boats and space ships to go places because we’re explorers. *que the Intersteller soundtrack* We evolved to travel beyond what we know, to see and experience.

This life is too beautiful to not explore it, and too short to not seek out happiness wherever it might be.