Half of Everything Goes to Rent
Tue 21 Apr 2009 – 20.08
It has long been known that twentysomethings in New York, especially those who are straight out of school and into their first job, will spent half of their wages on rent alone. That’s half to rent, and half to everything else. Turns out this practice is no longer just for the young lot. A new study reveals that a higher percentage than ever, 27%, are crossing that tragic 50% barrier.
That percentage is up 13% since 2002, with 82,159 more NYC residents throwing more than half their income into the ravenous rent hole, as compared to seven years ago.
The numbers are quite troubling, but also a bit stoic. If you’re interested in the figures, Gothamist tells the story, as do a number of other news sources.
When I was looking for my first apartment I learned of a magic formula, relating to rent and income: Your annual income must be 40x your monthly rent burden. So if you make $40,000 per year, you shouldn’t be paying more than $1000/month. Trouble is, $1000 isn’t what it used to be. In fact, that price point almost guarantees you’ll have to live in the outer boroughs and suffer the tragic commute. Even when living with roommates, an apartment in Manhattan will cost each tenant can easily cost $1500 for something that might generally be considered puny and ridiculously small.
The 40x rule comes into play when signing on to a lease, especially through a proper leasing agent. If you do not reach that magical threshold, you’ll have to find a guarantor to back you up on the lease — usually a parent with deep pockets. I’ve heard rumours that some agents require this person to earn 100x the month rent, which is pretty absurd by anyone standards. Hell, my parents don’t make $100,000/year. But the 40x rule kinda makes sense as a guideline; doing the math in reverse reveals that figure to be approximately half of you take-home pay. But this is half of overall pay, leaving an even tinier slice for … everything else!
Considering the rising cost of healthcare, food, fuel, utilities, New Yorkers are getting squeezed even harder. It’s more of a struggle than ever to afford those $14 martinis.
Since moving to Jersey City, my rent has gone down quite a bit, but so has my income. In fact, my income these days comes largely from unemployment, but I’m still not quite up to that 40x mark. Times are tough, my friends.
What percentage are you paying?
posted by Scott in careers,health & fitness,life,personal finance,real estate.
Welcome to Your Quarterlife Crisis
Sun 05 Apr 2009 – 21.15
This week, I was quoted in an article in Toronto’s Eye Weekly about what’s it’s like to go through the quarterlife crisis. Somehow, it seems that after our nearly-hour-long conversation, the writer extracted an awkwardly worded quote about how education is a lie and how finding a job stinks.
Among the implicit promises made to this generation of twentysomethings was that they would have work that was engaging and creatively fulfilling. A 27-year-old freelance graphic designer with a graduate degree who is struggling to find work, Prescott says “You could always say the whole premise of education is that if you study, get good grades, acquire skills, you will have more options in a ‘career and life’ point of view. If you get a degree, you don’t have to work in a factory or have to work in a farm. That’s proving to be a huge lie, because you have people coming out of school and there are just no jobs, especially in ‘middle-class’ fields.”
Ugh, did I really say that? I think you can distill the sentiment from that jumble. And no, I don’t really use those ‘inverted commas’ in every sentence. Good thing they didn’t use my last name…
posted by Scott in careers,education,life.