Experts say rent increases likely to continue for at least the next two years.
If you’ve been watching your rent payments increase significantly over the past few years, you’re not alone – and unfortunately, you’re probably not even close to the end of the payment increase tunnel. That’s according to a new survey of real estate experts by Zillow. Over half (51%) of the experts polled who had an opinion believe rent affordability won’t improve for two years or more.
That’s troubling news for consumers who are trying to achieve financial stability so they can reach financial goals like homeownership. Traditionally, renting is a stepping stone to eventual homeownership once your income got high enough that you could afford such a big financial responsibility. However, with rent payments higher than mortgage payments nationally and in key metropolitan areas, renting hardly offers the transitional advantages it did before the recession.
“These ongoing rental payment increases are hurting Americans’ ability to achieve financial success,” says Maria Gaitan, Housing and Business Development Manager for Consolidated Credit. “High rent payments eat away at paychecks, making it difficult to save for anything from unexpected financial emergencies to generating the money needed for a down payment on their first home.”
How do you get ahead with higher rent every year?
Simply put: You have to take action to offset the burden of higher rent.
Luckily, it’s a good year to do just that, because employers are opening their corporate checkbooks to get and keep qualified workers in their ranks. While salary increases have stagnated in the past few years following the recession, the outlook is better this year. With that in mind, it’s the right time to negotiate a raise with your current employer or update your resume to find a higher paying opportunity.
At the same time, you also need to review your budget to close any spending leaks you have. That’s where you’re spending more money than you should on a certain expense. This often happens with incidental purchases, such as spending a few bucks every day for coffee or spending too much money on apps and song purchases in iTunes.
You can find spending leaks by comparing your transactions and receipts for a month to your monthly budget. If you’re spending more than the amount you have set for a particular expense, then you have a spending leak. If you close the leak, you increase the cash you have available for saving.
Another way to increase cash flow available for savings is to minimize debt. Every credit card balance you carry means another bill you have to care of every month. If you eliminate your overhanging debt, you cut those bills out of your budget entirely, leaving plenty of cash for savings.
With a three-prong attack of increasing your income, streamlining your budget and keeping revolving debt eliminated, you may be able to offset the financial burden of higher rent payments every year. If you have questions or need help to make a plan that reduces your debt, we can help. Call Consolidated Credit at 1-888-294-3130 to speak with a certified credit counselor or fill out our online request form to ask for help now.