Do you gaze out of windows and dream of moving to a far-away locale? Or are you rooted in your hometown and never want to leave?
Either way — or at any point in between — you should take a good hard look at your lease for the New Year.
Is Your Rent Too High? Cost Matters
Why? Because too many millennials pay a lot of rent. 56 percent of all Americans say rent is their largest monthly expense, and 25 percent spend more than half their pre-tax income on housing. In other words, if they make $60,000 annually, they are paying $15,000 annually on a roof over their heads. That's $1,250 per month.
Spending that much on real estate limits your other life choices. It may be difficult to save for a down payment on a house or have retirement savings, for example. Making car loan payments may be a challenge. Frankly, spending over 50 percent of your pre-tax income on rent means you may have difficulty paying for utilities and groceries.
That's one of the reasons that millennials are pioneering moving to cities like Detroit and Des Moines, Iowa. Detroit looked bankruptcy in the face a few years back, and the Midwest used to be unpopular with young and trendy people. But now, both cities look attractive to millennials. Yes, part of the reason is that both have become artsy and upcoming. But another important factor is that housing is very affordable there.
Affordable housing makes everything else in your life more affordable.
So, one key variable in the "should I stay or should I go" equation is the relative cost of each decision.
Going or Staying: Your Life and You
But the other key variable, of course, is what you want to do in your life. The biggest factor in this decision should be your ultimate life objectives. And there are as many life objectives as there are people.
Do you want to see the world while you're young? If so, your lease evaluation might consist of thinking how quickly you can break it! Whether you currently live in the Midwest and dream of the West Coast or are presently in a large eastern seaboard city and dream of an affordable farm, there's no time like when you're young to see the world. You're unencumbered by a family and, if you don't own a house, you can easily move.
Do you want a city where you can have a good job, a vibrant nightlife and affordable rent? The five top cities for millennials to move to, based partly on affordable rent, a lively nightlife and a good supply of entry-level jobs are:
Durham, North Carolina
Pittsburgh, Pennsylvania
Nashville, Tennessee
Des Moines, Iowa
Charlotte, North Carolina
These may be your dream cities, or they may not be, but it's interesting that cities with sky-high rental prices, like San Francisco and New York City, are not among the top 10.
Are you moving for a specific reason, like job relocation or a partner's job/place of residence? Then where you'll be moving is fixed, and you need the best deal on real estate you can swing.
Have you already seen the world and are moving back to be close to family? The majority of Americans, after all, live about 20 miles from their parents.
Always Reevaluate Your Lease
So, a large part of evaluating your lease is considering those two factors: what you're paying for rent and your heart's desire regarding where you live.
If you move, what's the best deal you can get on rent while getting as many of your desired features as you can? Make a list of those things. They might be proximity to work for a great commute, green space to walk to hike, culture and arts offerings or green living options, such as a rooftop garden.
If you stay, what's the best deal you can get on housing costs? If you have a great deal where you are, congratulations. But if you'd like to reduce your rental costs and stay in the same area, it's good to check around and see what kind of a deal you can get.
Why? You can also get sweeteners that take a month's rent or more off your total rent for the year. One is called an upfront special. An upfront special is one month free or two months free at the beginning of a lease. In other words, if you're paying $1,250 per month, you'll have from $1,250 to $2,500 in the first several months to decorate your apartment, get to know the city and more.
Fortunately, you're reading this now! Because early in a new year is a great time to evaluate a lease.
You see, most people in the United States move between May and September. Families who move choose then so that their kids can get settled and then start a new school year. College students move back home. College grads relocate to take their first job.
Not many people move in winter. As a result, landlords with vacancies need people to move in. That gives people moving in the winter more negotiating power than they'll have in the spring when there is more competition for the vacancies.
So whether you're going or staying, it's worth negotiating the rent and asking if there are specials for signing or renewing a lease.
Millennials wondering if they should move or stay should evaluate the cost of their rent and its impact on their overall lifestyle and their goals. Winter is the cheapest time of year to move, so you can negotiate both rental prices and leases more easily.
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