Question: My husband is immigrating soon to USA and i am looking for a new apartment. I currently live with my mom and aunt but me and my mom will move out this month. Rent in my area has drastically increased and only few apartments are available to choose from. Average apartment will cost me $1750 with utilities but there is one very nice bigger one with balcony and it will cost around $1950 with utilities. I am working part time and my mom is full time. After we pay rent my mom is left with half her monthly and i am left with hardly $100. My hubsband will also work. If he finds a job he is qualified for sooner he will make around 75-80k. If not then average like 34k for entry level to improve CV. Once he works I won't work as i will study dedicated for 8 months. After i pass I will also make 34k or maybe more in future like after 6 months. I also have around 30k in savings right now my mom also have like 20k. I saved because i lived rent free. Do you think i should not sign a lease with $200 expensive one?

Answer: Is It Worth Spending an Extra $200 on a Bigger Apartment?

Introduction

Deciding whether to spend extra money on a larger apartment is a significant financial decision, especially when you're anticipating changes in your household income and expenses. Let's break down your current situation, future prospects, and the potential impact of choosing the more expensive apartment to help you make an informed decision.

Current Financial Situation

Future Financial Outlook

Considerations

  1. Cash Flow Analysis:

    • Current Rent (\$1,750): Leaves you with minimal disposable income.
    • Higher Rent (\$1,950): Increases monthly expenses by \$200, potentially leaving you with a negative cash flow.

  2. Income Uncertainty:

    • Husband's Job Search: May take time; higher-paying jobs might not be immediately available.
    • Transition Period: During your 8 months of study, household income will rely heavily on your husband's earnings and your mother's income.

  3. Savings Depletion Risk:

    • Living Expenses: Higher rent could require tapping into savings for day-to-day expenses.
    • Emergency Fund: Depleting savings reduces your financial safety net for unexpected expenses (medical bills, car repairs, etc.).

  4. Debt and Credit Impact:

    • Credit Score: Maintaining a positive cash flow helps in keeping a good credit score, essential for future financial endeavors.
    • Loan Applications: A strained budget could affect your ability to secure loans or favorable interest rates.

  5. Quality of Life:

    • Bigger Space Benefits:
      • More comfortable living arrangements.
      • Additional space might reduce stress, especially with more people in the household.
    • Cost vs. Benefit: Weigh the improved living conditions against the financial strain.

  6. Lease Commitment:

    • Duration: Most leases are for 12 months or more.
    • Flexibility: A higher rent commits you to larger payments regardless of income fluctuations.

Recommendations

  1. Opt for the More Affordable Apartment:

    • Financial Stability: Keeps your monthly expenses lower, providing a buffer in case your husband's job search takes longer than expected.
    • Savings Preservation: Allows you to maintain your savings for emergencies and future investments.

  2. Create a Detailed Budget:

    • Track Expenses: List all current and anticipated expenses to understand your financial standing better.
    • Include All Income Sources: Factor in your part-time income, your mother's full-time income, and potential income from your husband.

  3. Plan for Income Variability:

    • Conservative Estimates: Base your budget on the lower end of your husband's potential earnings (\$34,000) until his actual income is confirmed.
    • Adjust Accordingly: If his income is higher, you can reassess your budget and consider upgrading later.

  4. Delay Upgrading Until Financially Secure:

    • Re-evaluate in 12 Months: Once your husband's employment is stable and you've completed your studies, consider moving to a bigger apartment if affordable.
    • Short-Term Sacrifice for Long-Term Gain: Living modestly now can lead to greater financial freedom in the future.

  5. Consider Alternative Solutions:

    • Negotiate Rent: Sometimes landlords are willing to negotiate, especially if you can sign a longer lease.
    • Look for Deals: Seek apartments offering move-in specials or reduced rates.
    • Shared Housing: If comfortable, consider renting a larger space and subletting a room to offset costs.

Conclusion

While the larger apartment with a balcony is appealing, your current financial situation suggests that opting for the more affordable apartment is the wiser choice. This decision prioritizes financial stability and ensures you have sufficient funds to cover living expenses without depleting your savings.

Final Thoughts:

Remember: Making a modest choice now doesn't prevent you from moving to a better place in the future when your financial situation is more secure. Prioritizing financial health will provide peace of mind and flexibility as your family's circumstances evolve.