Am I insane to spend this much on rent with my salary

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hellototheworld
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Am I insane to spend this much on rent with my salary

Post by hellototheworld » Sun, 25 Jul 2021 6:17 pm

Hi,

I’m single and 27 years old. Currently earning gross $8500 in Tech. I’m renting a room at the moment but realised I just want to have my own place. I’ve had a good look around and sure there are some cheaper condos and some more expensive ones. However I just can’t get this condo I’ve seen out of my mind. It’s a 1 bed and it’s approx $3.2k a month. Including bills + cleaner it will probably total $3.5k.

My current budget is as follows:

Savings: $1500
Rent: $3500 (including utilities)
Monthly outgoings: $2500
Tax (approx): $500
Holiday fund: $500

All my friends and colleagues here think I’d be insane to spend so much on rent but wondering how my budget compares to other expats?

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Re: Am I insane to spend this much on rent with my salary

Post by sundaymorningstaple » Sun, 25 Jul 2021 8:53 pm

All expats have different pain thresholds. Also depends on where the expat calls home as to what they are willing to spend.
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Re: Am I insane to spend this much on rent with my salary

Post by Lisafuller » Sun, 25 Jul 2021 9:44 pm

Like SMS says, to each his own. I personally wouldn’t be comfortable spending more than $2.5K at that salary.

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Re: Am I insane to spend this much on rent with my salary

Post by midlet2013 » Sun, 25 Jul 2021 11:58 pm

I don’t think peer advice makes sense. You should rent this place. You will either learn a valuable lesson or be happy. Both are good in ur case.

If I had to do this, I would rent a cheaper condo for now. And set a dream condo as a goal. Once I felt financially comfortable I would go for it. Luxuries r not going away. If not now , two years later.

It’s nice to have cash and work toward goals.

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Re: Am I insane to spend this much on rent with my salary

Post by malcontent » Mon, 26 Jul 2021 12:47 am

3500/8500 = 41%

During my 25 years in Singapore, there have been times when I’ve easily spent more than 60% of my salary on housing, but it’s closer to 40% if you average it all out.

However, when I was single, my rent was only 20% or less. So, given that you are still single, it is definitely indulgent/extravagant IMO. It’s better to save as much as you can now, because once you’re married with kids, you will have no choice but to get a bigger place. By that time, you ideally want to have saved enough for a down payment to buy a place and stop throwing money away on rent.

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Re: Am I insane to spend this much on rent with my salary

Post by abbby » Mon, 26 Jul 2021 9:34 am

If you are willing to live in a small space like 300-400 sqft studios, they are usually going for about $1.8k - $2.4k, that might save you a bit on rent. They're quite easy to find.

41% of salary on rent, seems a bit much..but also depending on your personal needs.
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Re: Am I insane to spend this much on rent with my salary

Post by Lisafuller » Wed, 28 Jul 2021 6:56 pm

I personally would not be comfortable spending more than 30% of my salary on housing. After Mal put it into numbers, 41% seems a little too extravagant, maybe start smaller and then work your way up to a larger place.

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Re: Am I insane to spend this much on rent with my salary

Post by BBCDoc » Wed, 28 Jul 2021 10:31 pm

Depends if you have a good safety net - rich parents or deep trust fund?

If so, go for it!

Otherwise Mal has given good advice, set long term goals and work towards realising those….


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Re: Am I insane to spend this much on rent with my salary

Post by Lisafuller » Thu, 29 Jul 2021 11:47 am

Seems like OP is intending to finance himself, so safety net is not a relevant consideration.

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Re: Am I insane to spend this much on rent with my salary

Post by Wd40 » Thu, 26 Aug 2021 3:03 pm

There is no right or wrong. It depends on what you want at the end of the day. You should first figure out how much you want to save/invest Vs spend and then figure out of the amount you spend what gives you maximum happiness.

I watched this brilliant Bogleheads interview by a human behaviour expert and it was really interesting how we all think about money and now irrational we are. I urge everyone to watch this, it will be time well spent, trust me :)

https://youtu.be/OztmXoMPjjQ

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Re: Am I insane to spend this much on rent with my salary

Post by Lisafuller » Thu, 26 Aug 2021 8:04 pm

True, there is no right answer. It’s all up to the individual, what works for me may not work for you. I do think that some degree of financial prudence never hurt anybody.

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Re: Am I insane to spend this much on rent with my salary

Post by malcontent » Thu, 26 Aug 2021 9:33 pm

Wd40 wrote:
Thu, 26 Aug 2021 3:03 pm
There is no right or wrong. It depends on what you want at the end of the day. You should first figure out how much you want to save/invest Vs spend and then figure out of the amount you spend what gives you maximum happiness.

I watched this brilliant Bogleheads interview by a human behaviour expert and it was really interesting how we all think about money and now irrational we are. I urge everyone to watch this, it will be time well spent, trust me :)

https://youtu.be/OztmXoMPjjQ
I watched it, the guy knows his stuff.

Maybe I am unique — I can understand how spending on a credit card would seem less painful to others. But for me, there is absolutely no difference. Even before I submit a form of payment I feel the pain… no matter cash or credit. Of course, I’ve never paid less than the full balance in my entire 30 years of credit card usage. The very thought of spending money that I don’t have is just a bizarre idea to me. The only outstanding loan balance I have ever had is on a mortgage and a car loan (back in the US, not here).

The other thing is, anytime I get any kind of major bonus or windfall, it doesn’t even register in my brain… it just goes straight into savings and onward to investment. It’s almost like I feel the money is not even mine to begin with; any money I don’t need to spend belongs to my investment portfolio! Again, maybe I’m a little strange.

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Re: Am I insane to spend this much on rent with my salary

Post by Wd40 » Thu, 26 Aug 2021 11:34 pm

malcontent wrote:
Thu, 26 Aug 2021 9:33 pm
Wd40 wrote:
Thu, 26 Aug 2021 3:03 pm
There is no right or wrong. It depends on what you want at the end of the day. You should first figure out how much you want to save/invest Vs spend and then figure out of the amount you spend what gives you maximum happiness.

I watched this brilliant Bogleheads interview by a human behaviour expert and it was really interesting how we all think about money and now irrational we are. I urge everyone to watch this, it will be time well spent, trust me :)

https://youtu.be/OztmXoMPjjQ
I watched it, the guy knows his stuff.

Maybe I am unique — I can understand how spending on a credit card would seem less painful to others. But for me, there is absolutely no difference. Even before I submit a form of payment I feel the pain… no matter cash or credit. Of course, I’ve never paid less than the full balance in my entire 30 years of credit card usage. The very thought of spending money that I don’t have is just a bizarre idea to me. The only outstanding loan balance I have ever had is on a mortgage and a car loan (back in the US, not here).

The other thing is, anytime I get any kind of major bonus or windfall, it doesn’t even register in my brain… it just goes straight into savings and onward to investment. It’s almost like I feel the money is not even mine to begin with; any money I don’t need to spend belongs to my investment portfolio! Again, maybe I’m a little strange.
I am also like you :)

I guess great content like this often gets read by people who are already into it, so it becomes a bit like preaching to the choir. People who really need to learn this stuff are the least interested.

I started reading the book "The millionaire next door" and I am like, I already know all of this and this has been my philosophy all throughout :)

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Re: Am I insane to spend this much on rent with my salary

Post by malcontent » Thu, 26 Aug 2021 11:39 pm

True, my brother is just the opposite of me. He can’t even have a credit card because he will go crazy and spend until he can spend no more… with out any thought about how to pay it off. Could I get him to watch that video? Not a chance!

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Re: Am I insane to spend this much on rent with my salary

Post by Addadude » Fri, 27 Aug 2021 12:45 pm

malcontent wrote:
Thu, 26 Aug 2021 9:33 pm
Maybe I am unique — I can understand how spending on a credit card would seem less painful to others. But for me, there is absolutely no difference. Even before I submit a form of payment I feel the pain… no matter cash or credit. Of course, I’ve never paid less than the full balance in my entire 30 years of credit card usage. The very thought of spending money that I don’t have is just a bizarre idea to me. The only outstanding loan balance I have ever had is on a mortgage and a car loan (back in the US, not here).

The other thing is, anytime I get any kind of major bonus or windfall, it doesn’t even register in my brain… it just goes straight into savings and onward to investment. It’s almost like I feel the money is not even mine to begin with; any money I don’t need to spend belongs to my investment portfolio! Again, maybe I’m a little strange.
[/quote]

You're not that unique. I'm the same way. In fact I prefer to do most of my spending via NETS or cash. I use my credit card very sparingly - to the point that I can almost predict what my bill will be before I get it and without looking at the app. I do have 2 credit cards but they are there in case of some kind of emergency where I need to access a largish sum fast. I HATE the thought of being in any kind of debt (apart from my mortgage which should be fully paid off in the next 2 or 3 months). And, yes, any bonuses I've received have pretty much gone straight into savings or investment. But that's not to say that you're not a little strange... I know I am! :shock:
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