Financial Poise
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How Much Is Too Much to Spend on Your Rent And/or Freedom?

Victoria was very pleased with how her life was going. She was 28 years old, had since graduated college, held a steady job and paid off all her student debt.

Her parents agreed to allow Victoria to live in their suburban home as long as she committed to saving a portion of her income for her future. At first, Victoria did just that. She took all of her income and used it to pay off her student loans; she saved the balance in a low-interest savings account.

While Victoria had a beautiful bedroom with a canopy bed and a mother to cook gourmet dinners most nights, commuting back and forth to the city was a real drag.

Some days, Victoria felt like an old woman letting her life slip by.

Too Much Saving; Not Enough Freedom

Victoria sat next to women on the train who rushed home to husbands and children, and yet she only rushed home to watch tv shows and snapchats of her friends’ exotic lifestyles. The highlight of her week was spent hanging out with her dog, Buttons, at the park.

To save money, Victoria restricted herself to never spend time or money socially.

Not seeing her money increasing—and feeling suffocated by her parents’ rules—Victoria decided she was ready to move. Three of her female friends had an apartment in the city and their fourth recently announced that she was leaving. There was an opening in their apartment should Victoria want it. She had been to their apartment before and remembered thinking that these women had a great deal.

Not really investigating any other options, Victoria ran over to the apartment to speak with her friends. They indicated that there were a few other potential roommates coming to see the place, but whomever signed first would get the spot. The four women would share their kitchen, living room space and one small bathroom. There were two bedrooms, each with two twin beds.

Although the space was much tinier than her luxurious bedroom at home, Victoria envisioned her freedom. She could taste what it would be like to just take a quick subway home, instead of the hour-long commute each way. She thought how she could use the extra time she would have to scope out the local museums and maybe make a few new friends.

Maybe even a boyfriend….

She knew she would miss her parents and Buttons, but she was almost one-third of a century old. What was she waiting for?

Sometimes, Our Eyes Are Bigger than Our Stomachs. Or Our Checkbooks.

Victoria’s share of the rent would be $875 per month, and she would have to kick in another $100 for internet, cable and electricity. Since she was done paying her student loans, and she didn’t have any other obligations (no car payment or credit card debt), Victoria quickly signed the lease committing to one year’s tenancy. She didn’t read the terms or even have her parents come to see the apartment. She just did not want to get shut out.

Victoria moved in the following week, and things were fine. At first.

After a few months, Victoria’s roommate Julie decided she wanted her boyfriend, Romeo, to move in with her, since the other roommate, Susie was moving out. Agreeable, Victoria moved into Susie’s bed across the hall, and Julie and Romeo stayed in the original room. Having Romeo move into the apartment did not go as smoothly as Julie had promised it would.

Romeo was a big guy with a big presence. He reminded Victoria of Gaston (from Beauty and the Beast). He left his smelly socks (and sometimes even his briefs) on the bathroom floor and often left his dirty dishes on the counter, kitchen table, coffee table and sometimes even in the sink.

Victoria grimaced when she saw the dirty dishes, and being the “good girl” she always was, would clean up after Romeo. She would make comments about it to both Julie and Romeo. While Julie would murmur apologies for Romeo’s rude behavior, Romeo would grin, rub her head and say things like, “you are such a great little sister” or “I’ll make it up to you next week.” Romeo never made it up to her, and Victoria’s resentment grew.

Her own new roommate was no fun, either. She played loud music, smoked in their bedroom and entertained frequent visitors.Victoria decided she had to get the heck out of there.

Instead of forming a budget and really thinking through whether she could afford to move out on her own, Victoria decided that she was going to go for it. She began looking for rentals in the area and found a great little place not too far from her job. She figured she would be able to walk to her job, which would save her commutation costs and the thought of having her own place left her aglow in pride.

The rent was quite a bit steeper than her current $975 room. (In fact, the new place was almost 3 times more!)

But, Victoria rationalized that not having to clean up after people and put up with their crap would be worth the extra cost. She had saved up a bit more money in the time she lived with the roommates and therefore easily paid the initial required security deposit along with the first month’s rent. She barely glanced at the terms before signing the lease.

When You Fail to Plan Ahead, Expenses Catch Up with You

Victoria was a bit appalled by the moving company’s charges. She really could not believe how much money they wanted to move her few belongings across town. But, she had committed to the new place, so of course she was going to pay to move her stuff. After paying the moving fees and waiting for her belongings to arrive in her very new apartment, Victoria went to the new space and immediately started cleaning.

As she cleaned on that first Saturday afternoon, Victoria had her music playing at a relatively low volume and was surprised when the tenant in the apartment below started banging up on her floor. Was she imagining this banging? She ignored the noise and continued her cleaning project. But not for long.

Less than an hour into her work, there was a knock at her door. It was the downstairs neighbor, “Don’t you hear me knocking on my ceiling?”

Victoria confirmed she had heard the knocking but was not sure what to make of it. The neighbor said he was a nurse and had been up all night in the emergency room. If Victoria wanted to be “happy” living here, he continued, she had better get the idea of being quiet in the apartment.

Victoria was taken aback, but in a rush to accommodate (as she always was) she agreed to shut the music, and the neighbor went away. This was not the last problem she would face.

What had she gotten herself into? A barking dog kept Victoria up at night, but no less than her mounting bills. Whereas the month before she was awash in cash, her bank account had dwindled to less than $100! She wasn’t going to be paid again for almost a full week.

Credit Cards Aren’t the Answer; They’re a Signal for Help

Victoria had credit cards with no balances, so she quieted her fears by telling herself she would use her credit cards until payday, and then pay the bill when she got paid. That worked the first month…. barely.

When the second month’s rent came due, Victoria again found herself short. Victoria didn’t really know where her money was going. She was very careful to buy groceries and make herself most meals at home. She brought her lunch to work. But, somehow, there was never enough money.

Each month her credit card bills were higher, and Victoria was not able to pay the bills in full. She fell into the trap of paying the monthly minimum amount due. This went on for months, as Victoria lived in fear and self-disgust.

Finally, not more than six months in, Victoria broke down. In tears, she informed her parents she had over $10,000 of credit card debt. She did not know what to do or to whom to turn.

Her parents look of shock and disgust only caused more tears and heaving sobs of misery.

Could Victoria break the lease?

Could she sublet the apartment to someone else?

What rights did she have?

Victoria did not know, she did not even know where she put her copy of the lease.

Before You Sign that Lease…

When you sign a lease, you are committing to pay for that space for the term of the lease. The landlord has obligations to you, and you have obligations to make payment. Failure to make that payment can mar your credit, result in a judgment against you and even garnishment of your wages.

We all crave freedom and the thought of independence. Still, we must be financially responsible. Analyze closely the terms of every lease you enter into. Take the time to read the fine print—it is there for a reason!

If you don’t read it, you have no idea what you commit to.

You may have agreed to all kinds of terms, including late fees, attorneys’ fees, and collection costs, to name just a few. Leases are, however, often negotiable. But you won’t know unless you actually read the terms and participate in negotiating.

In addition, you have to know how much you can afford. Just guessing does not work.

So, How Much Should You Spend on Rent, Really?

Some experts suggest that your rent should not exceed 25% of your net take-home income. Victoria’s rent for her private apartment was closer to 75% of her net take home income – 75%!

While the rent included electricity, it did not include

  • internet
  • cable
  • food
  • toiletries
  • clothing
  • the cost of a social life
  • and any number of other living expenses.

Victoria went deeper in debt every month. She could not possibly afford the lease terms she committed herself to.

I was, and still am, amazed her the landlord rented her that space. Even so, that is not the current to which I bring your attention.

While Victoria started out with no outstanding loans—or debt of any kind—and a slowly growing bank account, her failure to analyze her income budget for rent appropriately caused her to go from a very comfortable living to an untenable roommate position and finally to an even more untenable (and financially disastrous) situation.

Money is the currency we live with. The only way to make it work is to focus on it directly. You have to know how much you have, you have to be able to save from every paycheck and watch your net worth grow. You cannot blindly enter into agreements and sign your commitment to making payments unless you know you can honor those promises.

If You Mess Up, You Can Always Make It Better

Fortunately, Victoria was able to sublet her apartment to a new tenant.

She is still liable on the lease for another five months—if the new tenant doesn’t pay the lease, Victoria will have to make those payments. She is back living in her childhood bedroom and commuting with the gals on the train. Instead of paying down her student loans, she is now using all of her earnings to pay down those credit cards used to support her moments of “freedom”.

What percentage of your income do you spend on your rent or mortgage and living expenses? Do you know?


“It’s fine to celebrate success but it is more important to heed the lessons of failure.”

– Bill Gates


“Patience, persistence and perspiration make an unbeatable combination for success.”

– Napoleon Hill



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About Michelle Gershfeld

I’m a debt settlement and bankruptcy attorney who negotiates resolutions between clients and their creditors. I am also a real estate attorney involved in both sides of purchasing and selling distressed real property. I am passionate about teaching people about money and helping individuals of all ages achieve financial independence and success in a "no…

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