Renting is often a cheaper way to live than owning a home. While the monthly payments can be as much or higher than a mortgage, you also need to factor in that you’re not paying property taxes and some other expenses are still worked into the rent. It’s crucial to know the full cost of renting so you know it’s the best scenario for you. Here are a few things to consider when renting:
What’s in a Rent Payment?
When you’re budgeting for rent, make sure you know what a monthly payment covers. Landlords in different areas include specific things in the price of rent. For example, in some cities, landlords are required to provide heat, hot water, and utilities. Elsewhere, you’re required to pay for some or all of these services on top of the rent—as well as arrange for them. Hidden costs like these can tack on as much as a few hundred dollars a month to what you pay for housing, so make sure you’re aware of them as you start to plan.
Car and Renter’s Insurance
If you’ve got a car, it’s not covered under renter’s insurance, even though it’s one of your possessions. Since there’s more risk and higher value involved, cars require their own separate insurance policies. In fact, car insurance isn’t just a good idea—it’s required by law.
Policies for Two (or More)
Most states allow you to take out a joint renter’s insurance policy with one or more roommates or with an unmarried partner. Not all companies offer joint coverage, though, so shop around for something that meets your needs. When you’re ready to sign, make sure that each person’s name is included on the policy so that you’re all guaranteed coverage.
It’s easy to forget to include utilities when you’re thinking about home finance costs. But when you factor in electricity, gas, heat, phones, and other costs, the total can be surprisingly high. A little care and research can be helpful in keeping these costs down:
- Keep air conditioning and heat off when you’re not home, or set them on a timer to regulate how much they’re used
- Shop around for the best phone calling plan, and make the effort to switch plans if it’s going to save you money
- If you have a cell phone with lots of free minutes, consider using it as your main phone to avoid fees on a land line
- If you have a dishwasher, use it to wash your dishes—it uses over a third less hot water than doing them by hand—but not to dry them, since it uses a lot of electricity