Living life, Saving
January 14, 2015
Keep your rent as low as possible in Toronto

My rent is due tomorrow. Yay! Not.


Luckily, I’ve always  had really cheap rent for Toronto.


I currently pay $1100 for a 1 bedroom.  The average for the GTA  is  about $1137, but for a condo  it’s really about $1775.


When I used to have roommates, my rent varied between $500$600. Doubling that was quite a jump, but you do get to a point where you’d rather pay than deal with other people’s dishes in the sink and hair in the shower.


Still, I can’t imagine paying the prices some of my friends pay, although the siren call for an en-suite washer dryer and underground parking is quite loud at times.


The outrageous prices many of my friends pay include $1250 for a bachelor, $1850 for a 1 bedroom, or  $1300 with roommates. These are not made-up numbers, these are normal Toronto numbers. This is sad.


Although its true Toronto rental prices are legitimately out of control, most people are clueless and don’t realize there are other options than renting ultra-expensive-granite-boxes condos that they find on Craigslist. Additionally, most people have a deep-seated fear of “investing” in a place they don’t own, and so will pass-up on a reasonably priced place if they have to get a new showerhead, change an ugly backsplash or caulk, even though that “investment” will cost a one-time fee of less than a 10th of the price difference in the rent for the more expensive place they end up getting that already has a fancy showerhead. Why spend $500 one time fixing a place up when you can spend $500 extra a month for the next 12 months?


So although people appear to understand that spending more than you can comfortably afford on rent is bad, they are also excellent at rationalizing this monthly purchase: “I  work so hard, I deserve a nice place.”  ” Well, it has a gym so I’m actually saving money”. “I don’t want an outdated kitchen.” All real quotes I’ve overheard that have resulted in friend spending hundreds more dollars  than they planned.


Numerous ways exist to find cheap(er) rent, as long as you’re prepared to compromise and sacrifice on location, amenities and renovations. And I think it’s essential to make those sacrifices. Not all of them, but pick what’s most important to you and let the rest go. (If you do nothing else, just avoid condos, since those are pricier than any other sort of rental stock available.)


Not because you don’t want a quartz island, an undermount sink,  a walk-in closet and baseboards that actually meet the floor, but because having a high fixed expense gives you so much less flexibility in your budget.  You can always cut internet, you can always eat ramen noodles, you can even shut off the heat, but you can’t adjust your rent. Can you still manage with your current rent if you lose your job, want to go on vacation or  change your savings goals?


You also have less of a need to be frugal. Why are we constantly trying to save on the small things — lattes, avocado toast — when in one fell swoop we can save hundreds monthly?


It’s also nice to have more money for everything else. Even if I could afford to live in a condo by myself and pay $1850, I wouldn’t. I would want to, and some days I think it’s worth it to pay an extra $750 a month to have a concierge accept my online shopping packages, but then I remember how much more online shopping I can do with an extra $750 a month.


So how much should you aim to spend on rent then?


An outdated statistic says that housing costs shouldn’t exceed more than 30% of your take-home pay, but let’s get real…if you live in an urban area it’s likely to be 50%.  Nevertheless, both of these percentages are arbitrary. A better way to figure out how much of your take-home pay to spend on rent is to look at your lifestyle and budget holistically:


  • Are you an introvert or extrovert? If you spend most of your time at home feeding your cats and watching Netflix, than it may be worth it to you to spend more on rent. If you have a high-powered job and are only home to sleep, keep your money for take-out, since you’re probably too tired to cook


  • Can you still save at least 12% of your take-home pay for retirement? Can you still afford to save for a down payment, if you have a goal of home ownership? Will you still be on track to pay your student loans?


  • Will your place make you spend money elsewhere? If you get a cheap place in a bad location,  for example, will you have to buy a bus pass or be tempted to take cabs everywhere?


  • Are you really going to use those amenities you’re paying for?  Ha! You think you’re not paying for that pool in your building, but it’s why the maintainance costs are so high, and thus, why your landlord has to price your rent so high. Nothing’s free. Except for lunch


  • Are there any additional housings costs like hydro? With electrical floorboard heating, for example, your true living costs can jump hundreds of dollars in winter


Rent, for at least a year, is both a fixed expense and your biggest expense. It’s a line written in your budget in a big, fat sharpie. So keep it low.


**But please avoid FREE RENT aka living with your parents, because that is a recipe for you to be lazy. It’s better to spend more on rent than to live with your parents. Seriously. Check out  this article I wrote about my feelings on this for the National Post, “No job and no money? Here’s why it’s the perfect time to move out.” so I don’t have to repeat my rant here.

I want to improve my financial literacy without hating my life

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  • […] all part of my philosophy that you should find cheap rent, and then spend a bit to spruce it up.  I wish I took before and after shots to show you […]

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