For Rent signs outside of a apartment in Vancouver, British Columbia on June 23, 2014.Ben Nelms/The Globe and Mail
Welcome to our Gen Y money blog, where a recent grad chronicles her journey to becoming a financially independent adult.
This past summer, I decided to move out on my own.
I've been living with roommates in downtown Toronto for almost five years. In that time, I've managed to pay down half of my student debt and become completely financially independent from my parents – mostly thanks to being able to split rent and divide monthly household bills with roommates.
I hadn't seriously considered moving out on my own until my roommate unexpectedly left, putting me around $4,000 in the hole. Unable to find someone new to live with in my rented two-bedroom apartment, I decided to figure out what I was really in for.
Here are four questions I asked myself:
1. Can I actually afford it?
Obviously, the first step was making sure I could pay for my own place. I knew I'd likely have to shell out a bit more for a bachelor or one-bedroom apartment, but how much more could I realistically afford, if I was to stay within my set living expenses and meet my debt repayment goals?
I started by calculating what my maximum monthly housing costs should be – 30 per cent of my monthly income (after tax) – and set that number as the top end of what I could spend. I subtracted my regular utility and Internet bills to find the maximum I could afford to pay for rent only. I used some online calculators like this one to get started – you simply plug in your annual income, as well as your projected monthly rent, debt repayment and savings amounts. I kept track of everything in a housing comparison spreadsheet so I could easily adjust numbers and organize my decision-making process.
2. What kind of place can I afford for my price range?
I'll be honest – this was the part I was most nervous about. Now that I had my budget – which wasn't ridiculously low, but also wasn't exactly high, either – I dreaded facing the potential reality that my apartment hunt would yield nothing other than a low-ceilinged, windowless basement shoebox.
I applied the appropriate filters (price range, location, number of bedrooms) on Craigslist, Kijiji and ViewIt.ca, and braced myself for the results. Unsurprisingly, there were plenty of overpriced shacks, but I was relieved to see a few liveable potential gems in there. By some miracle, I ended up finding an affordable third-floor one-bedroom apartment in a neighbourhood I like.
If I had been contemplating moving cities, I could have gotten some insights from the "Where in Canada can you afford to live?" tool, which interestingly (albeit depressingly) informed me that I could afford to rent a mansion in Kamloops, BC or Guelph, ON, whereas in Vancouver, I'm pretty much be living in a rented shack.
3. How much is moving going to cost?
Moving – even to a one-bedroom apartment around the corner – is expensive. The quotes I received for hiring movers were well over $500. I ended up renting a van for a couple of days and enlisting the help of friends and family, the total cost of which was only slightly cheaper than hiring a moving company. (In retrospect, however, I'm not sure that the hundred dollars or so that I saved was worth the stress of heaving my box spring up my fire escape.)
On top of the cost of movers or vans, there are plenty of other costs to consider, such as packing materials, some necessary pieces of new furniture and other random household items. I had to tap into my travel savings to cover these costs.
4. What are the trade-offs?
Finally, I considered how the move would impact my budget and lifestyle, aside from increased rent and the costs associated with moving. Since the goal of my move was to cut out some of the stress linked to living with roommates, I wanted the rest of my life to also remain stress-free.
The location of my new place adds ten minutes to my daily work commute but it's closer to other amenities, like a grocery and drug store. Aside from increased rent, I also had to take into account the fact that I'd be the only one covering my bills, which required some budget readjustment and, in the case of the Internet, some monthly plan re-negotiation.
Overall, living alone is costing me about 20 per cent more each month than living with a roommate. Although my monthly savings amount has taken a slight hit, I've been able to re-adjust my budget elsewhere - namely in the travel and "fun" categories - so I can still keep chipping away at my student debt.
For me, living alone is totally worth it. The apartment hunting process in Toronto requires quick action, so as with most things, planning your budget ahead of time is key – and makes holding your own apartment key feel so much better.