Moving Out and Moving On

So lately you’ve been thinking about moving out on your own. Maybe you’re a post-grad and have been living at home with your parents/relatives; maybe you’re looking to make a big career move that requires relocation. No matter what your circumstances may be, learning how to set yourself up financially is the best move you can make before you actually move. Here are some tips to help you along the way!

1.     Make a list and check it twice

We all have amenities that we want when we live on our own. Make a list to determine the most important features to your new place as it’s very likely all of your wants won’t be satisfied. Here are some of the most common amenities that people consider when moving:

a.     Access to subways, buses, and commuter rails – this is usually first on the list for people looking to live in big cities (i.e. New York City)

b.    Neighborhood safety – especially in these days and times, it’s important for ladies to stay safe. If you like to go out at night, you don’t want to have to worry about being constantly met with danger. When looking for a place, scout the neighborhood to see what it’s like before you sign that lease.

c.     Pets allowed in the unit – some landlords don’t want animals in their building, so make sure that you’re allowed to have a pet. Landlords will usually state this in the lease; however, some landlords will allow pets (sometimes there is a weight limit).

d.    Laundry room – unless you like lugging a bag full of dirty clothes every week to the laundromat and dealing with long waits and annoying people hogging the big load washing machine, building laundry facilities may be a high priority. Just note that having a laundry room in your building doesn’t mean you do your laundry for free so keep quarters handy!

e.     Parking – depending on where you’re looking to live, parking spaces can be slim to none, especially in NYC. If you have a car, see if your building provides on-site parking; just keep in mind that it’ll cost you extra. If the building doesn’t have parking, invest in a good car alarm system and The Club (for those that don’t know or remember what The Club is, it’s a steering wheel lock...and yes, I have one.)

2.     How much are you willing to spend?

That loft you’ve been eying complete with modern kitchen appliances, deep soaking tub, and walk-in closet may be your perfect apartment, but may be out of your financial league. To avoid living above your means, it would be best to create a budget when searching for a new place. As I mentioned in “Resolve to be Fiscally Fit in 2011,” no more than 30% of your income should go towards rent. The easiest way to figure out whether you need to scale back your budget or up your income is to solve this equation:

(Annual salary x 30%) ÷ 12 = Maximum monthly rent you should be paying

In addition to figuring out appropriate rent, also keep in mind that the process of moving in itself is costly. You’ll need about 2-3 months of rent (1 month for the security deposit, first month’s rent, and last month’s rent) when you’re ready to move in addition to moving costs, furniture, etc.

3.     Choose your living arrangement…wisely

Be honest with yourself: would you prefer living by yourself or do you think that you can handle living with a roommate? If you’re looking to lower your rent, a solution may be to have a roommate, but you must choose wisely. Living with another person means living with another person’s habits. If you are going to have a roommate, discuss important things like housing expenses, cleaning responsibilities, what to do when company comes over, and other house rules. Also, do your homework on your roommate especially if you don’t know them.

4.     Diversify your searching methods

When apartment hunting, there are plenty of ways you can find apartments. There are plenty of websites with apartment listings such as Craigslist, HotPads, Trulia Real Estate Search, etc. You can also search the old fashioned way by combing through newspaper ads. While you may not be able to see pictures of the potential place, you’ll get basic information such as rent, contact info, whether the unit is furnished, etc. If those methods take up too much of your time, you can hire someone who does have the time. Of course, this service is not free. Usually a broker will charge you a percentage of the rent. You can find brokers in classifieds, Yellow Pages, etc.

5.     Visit potential places

You won’t just be living in a new apartment, you’ll be living in a new neighborhood and it’s important to get to know the area. Spend a day and night driving around. Look for shops and restaurants, check out the school district (especially if you have kids or are planning to have some soon), and get to know the many ways to get around the neighborhood.

6.     Get it in writing!

No matter what anybody says, always make sure you get a lease in writing and with any contract, you should read the fine print. Don’t assume anything because we all know what that does. If there are any provisions in the lease, see if you and the landlord can come to some sort of compromise. It would be helpful for you to come up with any questions beforehand. Below is a list of common concerns.

·         What utilities are included in the rent?

·         How is security handled throughout the building?

·         How is the trash handled? (If you dispose of trash at the wrong location or time, you may be fined.)

·         How much notice do I need to give when leaving?

·         Are there any routine maintenance performed throughout the building (i.e. extermination)?

·         Are pets allowed?

7.     Don’t just pay attention to State Farm for their commercials, make use of them.

As much as those State Farm commercials are fun to watch, they (along with other insurance companies) provide renter’s insurance. Should you ever have a burglary, fire, or any unfortunate event where your possessions are damaged or stolen, you need to be protected. To get started, take an inventory of your belongings (and yes, that includes clothes) and estimate the replacement cost, not the actual cash value as clothes, jewelry, electronics, and other possessions usually depreciate in value over time.

Resolve to Be Fiscally Fit

The new year is almost upon us and of course it's the time to reflect on the year and make some plans for the future. Maybe you want to take a vacation next year. Or maybe in your quest for new experiences in the new year you' plan to take up a new activity. Whatever your plans are for the next 12 months, there's always some tips we can learn to cut down on the bills and keep the money in our wallets for the new year.


1. Learn to Keep Score
There is a Nigerian proverb that states, "Not to know is bad. Not to wish to know is worse." In this case, not knowing or not wishing to know your FICO credit score should be a habit you're looking to kick in 2011. In order to be fiscally fit, you must be well informed by obtaining your credit reports from the 3 big credit bureaus: Equifax, Experian, and TransUnion. Every year, you're entitled to one free report per credit bureau by getting them at www.annualcreditreport.com. After you see all your reports, make sure you check for any mistakes; if you overlook a mistake, it can cost you a good credit score that will remain in bad shape for a long time. If your reports are mistake-free, then you can get your FICO score by logging on to www.myfico.com. Here are some things you should know before getting your FICO score: 1) scores will be varied since they are coming from 3 different credit bureaus, 2) scores range from 500 - 850, with 500 being the worst and 850 being the best, and 3) to get one FICO score it costs $15.95. 
(via Suze Orman, The Money Book for the Young, Fabulous, & Broke) 


2. Don't Be Late
Speaking of credit card scores, paying your credit card bill late this is one of the top ways to screw up your credit score. You can improve your credit score by paying your credit bill on time. Although you can pay the minimum balance, I would suggest you pay more than that. If you can pay half or even all of the balance, that would be better because if you only pay the minimum balance, it takes a long time to pay off the total balance and you'll end up paying more than what was charged in the first place. As far as when to pay, if you're going to mail your payment, allow at least 5 days before the due date. If you're paying online, allow at least 2 days before the due date. If you have a problem remembering due dates, don't forget to mark it on your calendar, iPhone, Blackberry, or any other device you have. 

3. Pay Yourself 
If you're tired of living from paycheck to paycheck and stretching out your last couple of dollars until the next payday, start paying yourself first. And no, that doesn't mean that you pay yourself by buying those cute pumps in the window display before you pay your rent and utilities. What it means is that before you do anything with your paycheck, put a percentage (10% is recommended) of it towards your savings account. It may seem impossible especially when you have other expenses, but trust me, it works; you just need some discipline. One way you can discipline yourself is using the direct deposit at your company to put a fixed amount into your savings account. That way, you never see the money; out of sight, out of mind. Before you know it, you'll have a healthy savings account. For those of you who may not have a savings account, I highly recommend ING Direct Savings. They're easy to use and you can set up sub accounts for different types of savings like a vacation fund, emergency fund, etc. For more info visit www.ingdirect.com. 


4. Live Within Your Means 
I can't tell you how many times I've heard of young women living fabulously yet being fiscally destitute. If you spend all of your money on clothes, shoes, hair, etc. but don't pay your rent on time, then you're doing yourself a major disservice. A way to get yourself back on the right track is to live within your means. There should be a set percentage on how much you spend on expenses. According to Carmen Wong Ulrich of CNBC's On the Money,  30% of your income should be put towards housing, 18% should be put towards transportation, and 14% should be put towards food. As for your other expenses, set those percentages accordingly. If your clothes and other disposable income makes up for much of your living expenses, it's time to scale down. Don't look at this as a setback; your wallet will thank you in the end. In the meantime, be a frugalista and shop around for deals. 


5. Terminate Your Debt 
If you're already drowning in a sea of debt, don't worry. You can trim down that debt. First off, figure out how much debt you actually have by pulling together all your bills that have a balance. Depending on how many outstanding balances you have, you might want to keep track of them by creating an Excel spreadsheet with all the info you need to have on hand. After totaling up your debt, figure out how long it would be for you to pay it back. I would suggest you go to http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp and use it to help you calculate when you'll be out debt. From there, you can put a strategy in place to get rid of the debt.You can either attack the high balances or high interest fees first or start with the lowest balances and fees.