Reader Mail: The Rules We Live By

I found your piece on NYC rents, and the exorbitant amounts we spend on them really interesting. It’s an issue I fret about, too. What’s a good rule of thumb? Should we spend 1/4 of our income? One-third? — David

When I completed my graduate program five years ago, I had the option of either moving back to California, or staying in New York to find a job and live off some of my savings. I chose the latter, as did two friends from school, and we quickly realized we wouldn’t be able to afford to live in Manhattan, and started scouring Craiglist for a three-bedroom apartment in either Brooklyn or Queens.

A few days into our apartment search, we found a spacious three-bedroom close to the subway in Woodside, Queens that was listed for $2,000 a month. The neighborhood wasn’t very pretty, but the living room was huge, and there was a balcony. One of the bedrooms also seemed impossibly tiny — there was just enough room to fit a full size bed and a dresser, but nothing else.

“Maybe we should keep looking,” one of my roommates said. But then the landlord said he’d lower the rent to $1,900 a month if we agreed to take the apartment that day. The recession had just hit, and everyone was playing Let’s Make a Deal.

“How about $1,800?” we countered, and when we got a nod, my roommates and I looked at one another.

“I’ll take the small room if I get to pay less,” I offered. My roommates agreed, and I paid $550 a month for the two and half years we lived there, which was great, because I was earning $30,000 at the time, and every cent was important to me.

I had student loans to pay. I was sending home money to my parents, who were being crushed by the weight of a falling economy like many other middle class families. My wallet was perpetually empty, but there was nothing to be ashamed about because in the recession, everyone’s wallets were perpetually empty. When I said I couldn’t afford to go out to dinner, or to get a drink after work, there were no arguments, mostly just nods of recognition.

It turned out that my tiny bedroom was exactly what I needed to weather the recession. It also turned out that $550 was all I could really afford if I wanted to make steady payments on my student loans and send home money to my parents. I had my priorities, and I stuck to them. I had made up my own rules about where my money was allowed to go, and those were the rules I lived by. These were the rules that made life possible for me — the rules that carried me across a canyon of economic despair during a time when so many other people were falling in.

The question isn’t how much of your income you should dedicate to rent. The question is really, “What are your priorities?”

This is a roundabout way of saying that I could have simply wrote:

“Dear David — When considering how much you should be spending on rent, a good rule of thumb to follow is to not spend more than one-third of your income on rent. In New York City, most landlords won’t even consider you eligible to rent an apartment unless you earn at least 40 times the monthly rent, or about 30 percent of your pre-tax income. You don’t want to spend more than that on rent, because you’ll also want a chunk of your money to go into savings and retirement, and you’ll probably want to have some spending money for the weekends, too. Hope that helps. Love, Mike.”

I would never write a column like that. I could never write some generic advice to David, hoping that he’s a generic person, living a generic life. We are all very different people (just take a look at me and Logan!).

Yes, there are always rules of thumb to follow, and a quick Google search will lead you to the same advice repeated over and over again in an almost mind-numbing way. But the best rules to live by are the ones you make for yourself to fit your own lifestyle — the ones that will carry you across all the canyons you come across in your life.

My friend Amy, for example, found that after years of living with one psychotic roommate after another, she absolutely needed to get her own apartment. So, after a few years, she decided to make the leap to go roommate-free, even if it meant having to spend a little more than half her income on rent. It was hard at first, but she made her place her own. She adjusted her life so that she wouldn’t have to live with another roommate again. She said goodbye to the days of opening up the freezer, and finding a roommate’s dead pet rat in a Ziploc bag. She used her new space to launch her own business. She spent less money going out, but she thrived on her own. Screw spending no more than 30 percent of her income on rent — she has never been happier in her life.

I have never followed the rules of thumb prescribed by people like Suze Orman, or Dave Ramsey, or even from my very own mother, because none of these people are me, and none of them are living my life. Like Amy, I really value having my own place now, and will say no to all the after work and late night meet-ups at bars if that’s what I need to do to pay my rent and all of my bills.

So, David, the question that I have for you is: Why is the amount of money you spend on rent something you fret about? Is there something else you’d rather have that money go to? If so, those are your priorities, and the rules you live by should be the ones that focus on those things, because those are the things that will ultimately make you happy.

Photo: Flickr/Stu Seeger