In the wake of the economic downturn, many people in hard-hit areas lost their jobs or were forced to make hard cuts to their paychecks. If you are one of these people, be it a regular paycheck or temporary loss of income, I recommend getting serious about your finances.
Every month, figure out how much money you’ll need to live on after mortgage, taxes, insurance, utilities, food, utilities, car insurance, vacations, and medical costs are subtracted from your income. Once that’s done, you’ll have an idea of how much of your monthly income you can set aside in your savings account or emergency fund.
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For most people, this amount is about six months’ worth of expenses. If you or your partner lost your job and are now on unemployment, you should consider setting aside six months’ worth of expenses while you wait for your unemployment benefits to kick in. If you have any construction or sales jobs lined up and are looking to make a side hustle, that could also help get you through the six months.
When you figure out how much you’ll need, it’s time to figure out how you’ll come up with the money. Many of us choose to dip into savings or our 401(k) contributions for short-term financial needs, like rent. That’s a smart move. Taking a little more risk is a good way to generate additional income or keep up with increases in your expenses.
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Sticking to a budget gives you a metric to evaluate yourself against, and it makes comparing what you spend to the amount you make and your savings harder. But it can be a tough and tedious process.
Here are a few helpful tips:
» Comparison shop your rental options.
» Check your credit score, and if you’re in danger of having a blemish, contact your credit card company to tell them.
» Get a reference from someone who can vouch for you as a tenant.
So how do you sublet your apartment? This is the most difficult part of the process. To use an example, what do you do if your parents are downsizing and want to move into a short-term rental in your apartment building? You can ask them to live there and live rent-free for a few months. You can ask them to sign a lease on an apartment they don’t really want, but can’t afford. Or you can let them stay for three months and then ask to be reimbursed by their insurer. And there are ways for you to get a discount on the monthly payment.
Now, if your parents are downsizing and you are moving out of your family home and renting a portion of your apartment, it’s a little easier to find an affordable apartment you can live in, but it’s still not as cheap as you can find a traditional, long-term lease for. (And in the spirit of honesty, if you have to put down a deposit in some of your rental requests, let your parents know before you submit your application for the apartment.)