Illustration: Chelsea Miller
Smart Living 4 min read

Home Money Smarts

It helps to know the ins and outs of home finance.

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.

Utility Cost-Cutting

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

Guest or Tenant?

Having guests in your apartment is a gray area in terms of leases and legality. Most leases state the maximum time you can have a guest, usually no more than a few weeks. Past that, you're technically supposed to notify your landlord, and you can be evicted for failing to do so. And if your guest stays for a really long time, he or she may have to fill out a rental application and be responsible for the terms of your lease.

Of course, if your landlord is fairly lax, there's no reason why you can't have a guest for as long as you want. Just remember that having a long-term guest will probably cost you money in terms of utilities, wear and tear on the apartment, and groceries.

It's easy to forget to include utilities when you're thinking about home finance costs.

You may also be tempted to earn some extra money by making your place available through a short-term rental service like Airbnb, but most likely this is not ok with your landlord—or your neighbors. It may even be illegal in your city. Make sure you follow the rules on this one.

Illustration: Cristi Cash

Rules for Roommates

If you're living with one or more roommates, it's common to have some difficulties about how to handle sharing costs. There's no sure-fire way to avoid this, but there are systems you can set up for taking care of household expenses:

  • Keep a jar where everyone puts receipts and bills for what they spend on household items and settle up differences every week or every month
  • Have a different person take responsibility for the bills and/or shopping each month
  • Break your regular household expenses down into relatively equal groups, and have each person pay for one group

These aren't the only methods out there, and there may be another that works better for you and your roommates, depending on your financial situations and how careful you want to be about keeping things even. All that really matters is that you find a system that works for everyone and stick to it.

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