Moving out 101
Growing up, as teenagers, we all wanted the same thing: to be adults so we could be on our own. But it wasn't until we acquired that 'dream' that we began to realise just how much of a nightmare the real world truly is; and, in hindsight, just how much our parents did for us emotionally - and, moreso, financially.
I was one such teen. The craving to break away from the nest was too real, but when I received the opportunity to move out of the home, into my own quarters to the rear of the building, it was bittersweet. By then, I had already come to terms with the reality that my mother and father took care of everything when it came to the house, and while I contributed to the bills, it was nothing like what I had experienced when I decided to be on my own.
Don't get me wrong, I wasn't alone, but that didn't stop the pressure from building when I saw the rent, light, water and grocery bill added to my regular student loan payment. And even though it was split evenly, it still wasn't enough. We moved with some furniture but had to take out appliances on hire purchase, so there was yet another bill to look forward to. After crying over the change, I was determined to get through it myself. But the thought consumed me: how was I going to survive on my paltry salary with all these bills, particularly grocery, which boasted increasing prices month after month?
Luckily for me, when my back is against the wall, I always turn to my mother, who functions as my best friend as well. We sat down and went through a budget deciding how to allocate my pay monthly, and create balance as it relates to having just-in-case money. It wasn't easy, but over time, with her help, I got the hang of it.
Pretty soon, I was sharing the knowledge and we were on our way. The convenient thing about living so close to home was that when they could, my parents would offer breakfast or dinner. Now, I have lived to see the tables turned with my household giving back to theirs. But that very first month on my own was one I will never forget.
Shanoy Coombs had a different case. She had actually lived alone, away from her parents, while attending university.
"I had lived within the comforts of a family home all my life, until I went off to university and lived alone. So that helped in gaining some independence from my parents. Moving from home to live alone at university was a culture shock. My older brother and mother were taken aback that boys lived on the same place as girls did."
After moving out, she noted, her relationship with her parents improved. Things she once took for granted were appreciated more as they were now further away and she needed to make a deliberate effort to see them, "To this day, my greatest comfort is sleeping in my childhood bed."
She revealed that after returning home from college, she moved out of her house at 24 years old to start her new life with her husband. Everything was new and different.
"Sharing space with another person was a different story. It did not take much to adjust though, as we were excited to be starting life together. Financially, getting furniture and appliances set us back a few months as we hadn't acquired much furniture individually. But we played it smart by getting essentials first. We had a bed, so we focused on a stove and refrigerator, then gradually added things along the way."
If you are considering moving out from your home, or have already done so and are struggling to come to grips with the changes, here are a few financial tips that could help you on your way to independence, courtesy of Jamaica Money Market Broker's financial adviser and educator, Michelle Sinclair-Doyley, and Spectrum Insurance Brokers' financial adviser, Beverly Pantry-Dixon:
When bearing the burden of all household expenses on your own, it is important to ensure you can manage your financial emergencies just in case you lose a job, incur a medical expense, or encounter some other unexpected financial burden. Your emergency fund should be at least three to six months of your expenses.
Although your immediate goal may be to rent, your long-term goal will more than likely be to purchase a home. So try to get an affordable place, which still allows you to save towards a sizable down payment on a home. Remember, the smaller the amount you borrow, the less your mortgage payments will be each month.
Amount I can afford in rent = Salary - (Savings towards house + Emergency savings +Living Expenses + Loans)
You may need three budgets.
• Out-on-my-own budget: These will include rent, utilities, groceries, cable, transportation, etc.
Before moving, find out the average amount persons spend on their bills and inflate it by about
20 per cent to be on the safe side.
Create an account and practise saving this amount every month. If are able to do this for three to four months, without touching this money, you may be ready to be on your own and this could act as your security deposit. If not, you may want to delay moving out for a little while longer.
Analyse your expected transportation expenses very carefully before choosing a place to rent. Taking an inexpensive apartment that costs a lot in transportation costs (which are prone to increase and is variable) may make it harder to budget.
Remember, the landlord has the right to increase the rent by seven and a half per cent annually without the permission of the Rent Board. So ensure you factor this potential increase as well as other increases in utility costs, etc., into your budget each year.
• Before-I-move-in budget: These will include the security deposit and connection fees for utilities. These are unavoidable. So you need to be prepared for them.
• Set-up-house budget: These will include furniture, appliances, utensils, curtains, sheets, etc.
You may find that the home you purchase requires different furniture and appliances. So, when getting furniture and appliances for your rental, it may be best to:
• get only the bare essentials;
• purchase as inexpensively as possible; and ask friends and family to donate as many things to you as possible.
You have to be ready psychologically... make sure you are leaving on your own terms and no one else's.
Look at your net salary and develop an Excel spreadsheet so you can manipulate various scenarios.
In my experience, from my net salary, I still had to have my savings goal in mind: furthering my qualifications, saving towards retirement, owning my own home and vacations/leisure are imperatives in my life.
Whatever is left after that is what will be used for living expenses, including the big one, rent. Implement a realistic budget. Where there is a shortfall, then you know you've either set the bar too high or have to revise the budget.
You have to think about not only the rent but also groceries, utilities (what may not be included in the rent), ability to maintain your car, a small emergency fund, health needs, and self-maintenance (hair, nails, clothes, etc). After rental expense, you must be able to afford these.
Be strategic with the use of a credit card. Spending more than you earn is always a trap.
After you decided what you can afford, narrow it down to the area you want that would be accessible to work and relatively safe.
Adjust your expectations. Ideally, you may have wanted a one-bedroom apartment with a
living room and kitchen, including fridge and stove, in one of those new complexes with a security guard at the gate and the newest fixtures. But you have to adjust your expectations and focus on the bigger picture and your goals. The key is knowing what you want and having goals.
While looking for a place that fits into your budget, never settle for less than you are worth. Don't settle for a rude landlord because its affordable or somewhere in an area prone to break-ins because its affordable. It must feel like home when you open those doors. At the end of the month, you have to be comfortable with that large percentage of your precious income being used for rent.
I also suggest that preparations begin from a year in advance. Join a credit union from first thought. That will help with the purchase of larger appliances, and it's cheaper to repay the loan than the interests associated with hire purchase.
Please include life insurance in the list of must-have financial obligations.