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When I moved into a more expensive living situation, I knew that I needed to so something to ensure that I would always have the funds available to pay rent on time. I currently pay $735/month for a studio apartment in the Seattle area. Based on my research, it is a good price given the area it is in. Since it was so much more than my usual rent, I decided to create a rent savings plan.

I figured there are roughly 21 week days during the average month. I then took $735/mo and divided it by the 21 days and I got $35/weekday. So each weekday I have my financial institution automatically transfer $35 from my checking to my savings. By the end of the month, I should have the $735 needed to pay rent.

This is an easy way to plan ahead for expenses without having to do a lot of thinking about it. The small daily transfer gives me some consistency, rather than a larger transfer at the end of each week where I may forget it is going to take place. If I had it my way I would have the transfer take place each day of the month, but my institution does  not support that.

I think that anyone who is having trouble making an expected monthly payment on time should consider taking up this savings method. It really works for me and this type of budget could easily work for you too! I encourage you to give it a try.

Think moving is cheap and easy?

Think again.

I am moving this next week on the cheap, and it is still expensive.

Factor in a few expenses and it really starts to add up. For example, my security deposit was $400. Next, add in my first month’s rent of $735, plus a partial month as well. Also take into consideration that I have to pay August’s rent for the place that I am currently in. There goes another $400. You can also add in your standard application fee. This one went for $40. So just to get in, it is costing me $1075 plus $400 in rent that I currently pay.

Other factors include gas spent driving around looking for places. I factor that at about $50. Time spent looking valued at 8 hours x $13/hour = $104.  Luckily this is an in-city move, otherwise I would have had to get a rental truck, and those aren’t cheap. I also lucked out because I have a relatively low initial deposit, and I also don’t have to pay last month’s rent either. Thank goodness for that. Otherwise you could easily tack on an additional $1000. Just what I need.

Other things that I haven’t even got to include setup fees for utilities. These all seem to be random amounts that don’t really make a ton of sense, but there isn’t a whole lot that you can do about them either.

The other day I concluded my hunt for an apartment! Although it is a bit more than I had initially wanted to spend, I think that it should work out pretty well. It is nice because I can just walk from the park and ride instead of driving. Theoretically this will save me money, but the park and ride at my old place was directly between my place and my girlfriend’s place, so I was going to have to drive that way anyway. Assuming she stays in the same place, it works out that I save $3/mo in gas by staying at this new place. I am going to also assume that my new bus will save me 10 minutes each way on my commute, and if I value my time at $13/hour, then this new place saves me $90/month.

Of course there are other things about my new place that are priceless to me. First of all having an entire space to call my own without having to deal with roommates and all that other nonsense. Although roommates tend to help out with bills and can help to make things interesting, they can also be a large pain as well. Being able to use the kitchen whenever you want and watch whatever you want on TV definitely has it’s perks. I think that I can justify spending the extra money for these amenities.

I can officially move in less than a week from now, and I can’t wait! It will be nice to leave what I call the “hippie house,” named after the interesting people that have inhabited this place over the past 10 months or so.

The other cool thing about my new place is that it is month to month after the first nine months. Most places don’t give you that option.

This morning I read an article on Yahoo Finance by Charles Wheelan, who authored the book “The Naked Economist.” The article was titled “High Fuel Costs Could Spur a New Rationalism.”

In summary the article basically says that people will make economic decisions based on how prices affect them. Right now the price of gasoline is the primary driver to consumer’s economic choices. He says that as the price of gas continues to rise consumers will no longer find it rational to commute long distances to work because the cost to them is so great. Wheelan predicts that as the cost of gas rises consumers will be forced to make economic decisions about where to live, work and how to commute.

Wheelan suggests four changes that could possibly be made in order to cut one’s energy spending.

• Move into a smaller house. Having a large house out in the country may be nice, but energy prices will soon have you feeling not so happy about your grand palace. When you consider the costs associated with heating and cooling your home as well as the gas driving to and from work you might start to see your energy bill skyrocket.
• Businesses may make smarter location choices. Although city commercial space is pricey, a firm will have a better chance of attracting quality employees if they are located in a central locale. “Suppose you’re considering two jobs: One is in a building three blocks from the commuter train station, and the other is in an office complex 21 miles away from anything except cornfields. How is that decision affected by $6 gas?”
• People may start moving back to the cities. Many people often consider cities to be polluted and dangerous places, but the opposite is starting to become more true. “Both Chicago and New York City had the fewest number of homicides in 2007 than in any year since the mid-1960s.” Cities also tend to have more options when it comes to entertainments as well. They tend to have more sports teams and performing arts centers to name a few. They also tend to have more universities located nearby as well. Downtown Seattle has three major universities to choose from. Larger cities would likely have even more options.

Although I currently live inside the city limits of Seattle, I will take all of these factors into consideration when my lease comes due here at the end of August. Since I use transit to get to work, the cost of driving to downtown isn’t really a factor, but instead the cost of getting to transit is more of a concern. Here is what I will be considering when I move.

• Cost of the rental unit
• Size of the rental unit
• Distance to nearest reliable bus
• Distance to girlfriend’s place
• Parking availability
• Time it takes to get to work from the rental unit

After considering all these factors, I might end up choosing a place that costs a little bit more in rent because the cheapness of another unit could be outweighed by the cost of gas to travel from one place to the next. I would also pay a premium to be close to a reliable and quick bus.

As I mentioned a few posts back I read a book called “How to invest in Condominiums” by Andris Virsnieks. I did not finish this book entirely, but this is mainly because the book did not fully captivate my attention. Mind you that I read this book because I have been very interested in investing in real estate in one form or another for quite some time.

According to the title of the book, it covers such topics like:

• Select the right condo
• Make the real estate market work for you
• Attain positive cash flow
• Reduce your tax basis through depreciation
• Live rent-free and retire early

Judging by the cover it seemed like an interesting read. After getting a ways into the book it seemed to cover the same stuff over and over again. I guess that since I had been thinking about investing in real estate for so long I had already thought about many of the strategies that Virsnieks covers in the book.

The basic investment plan suggested by Virsnieks essentially goes a bit like this. First you must select a brand new condo. A remodel or apartment conversion just will not do. He does not believe in buying an older unit to upgrade into a more valuable one. Not only must the condo be new, but it also must have high demand for the units. If there is not high demand for them, then it may be harder to sell them later. The other main point that the author reiterates throughout the book is the value of hiring a property management company to take care of all the dirty work for you. Virsnieks claims that the management company typically takes about 9% of the rent for their services, but it is well worth not dealing with all of the hassles. He says that by purchasing a new condo and hiring a property manager, then you will only have to spend about 40 minutes a month on your investment. That 40 minutes will be spend going over the property management statement and depositing the check in the bank.

Virsnieks makes the whole process sound quite easy in the book, and indeed it should be. There are a few problems that I have with how the book is set up though. The majority of his purchases were made back in the 1970s, so it is somewhat hard to wrap my head around the purchase of a $23,950 condo in Seattle that rents for $265/month. These days a cheap livable condo in Seattle goes for about $175,000 or more. He also makes mention of mortgage payments in the 13%+ range, which is unheard of these days. If you applied everything on a strict percentage basis, it would all probably match up about the same, although in Seattle I believe that condo prices have increased more than rents have.