Whether you’re browsing the local paper or using one of the many apartment listing apps out there, finding a decent place to hang your hat that’s also in your budget can feel like trying to uncover the the lost city of Atlantis.
Turns out, there’s a reason for that, according to a new analysis conducted by Zillow.
The real estate company used information from their database to analyze median rents in 15 major housing markets in the U.S., as well as the number of apartments built in the past 3 years. From this, they discovered the median rent for the least expensive third of apartments outpaced the overall rental market. Also, most new apartment growth is comprised of luxury units for wealthy renters.
In layman’s terms, there is growing demand for affordable rentals, but instead of meeting that need developers are focusing on adding to the supply of luxury units, pushing apartment rent prices higher across the board.
“We’re simply not building enough at the bottom and middle of the rental market to keep up with demand,” Svenja Gudell, Zillow’s chief economist, said in a press release. “As a result, these segments are becoming very competitive, as both new renters look to find their first place and existing renters get shut out of homeownership because of extremely limited for-sale inventory. Apartment construction at the low end needs to start ramping up, and soon, in order to see real improvement.”
By the Numbers
This is playing a major role in property affordability, according to Zillow, and is especially affecting lower-income Americans who are likely to rent. Below are the findings for the 15 cities Zillow analyzed.
Before Renting Your Apartment
As you search for your next place to call home, it’s important to remember that any potential landlord is probably going to look at a version of your credit report as part of your application. You may want to consider reviewing your credit before you apply so you have an idea of where it currently stands. (You can see your free credit report summary, updated each month, on Credit.com.) This will help you get a better idea of what terms and conditions you may qualify for on a mortgage, as well as if there’s any credit repair work you may want to do before applying for a new rental.
Q. What are the pros and cons of a home equity loan instead of a home equity line of credit? I’m thinking of using it for college tuition.
A. Deciding the best place to take money to pay for college tuition is a hard decision that can stick with you for years after the student graduates.
You’re talking about taking funds from the value of your home to pay the tuition bills.
There are differences between a home equity loan and a home equity line of credit, or HELOC.
With a HELOC, the amount of the loan is basically your credit line and you draw on the credit line only when you need the money, said Sheri Iannetta Cupo, a certified financial planner with SageBroadview Financial Planning in Morristown, New Jersey.
The rate on a HELOC is variable.
“It is usually based on the prime rate plus or minus a factor, therefore there is the risk that the rate will rise while you are paying back the loan thereby increasing your expected monthly payment,” Cupo said.
Your monthly payments for a HELOC cover interest only during the draw period.
“This provides flexibility, but we recommend you pay more than the monthly required payment so you don’t dig yourself into a hole,” she said.
A home equity loan, in comparison, comes with a fixed rate and you get the funds in a lump sum. You’d also be in a regular payment plan the repay the money.
“A home equity loan could jeopardize need-based financial aid as the money received from the home equity loan that is not yet used to pay for college will negatively impact the FAFSA,” she said.
With either kind of borrowing, your home is collateral for these loans. If you cannot pay your loan then you could lose your house, Cupo said.
And if the value of your home falls, she said, you could end up owing more than your home is worth.
“Interest is generally deductible when these loans are used for college unless you are subject to Alternative Minimum Tax (AMT). Then home equity interest is only deductible when used to improve your home,” she said. “Home equity indebtedness — as opposed to a mortgage used only to buy or build a home — is only deductible on amounts up to $100,000.”
So which is best for you? That depends on your situation. Consider meeting with a financial adviser who can go over your entire financial picture to help you make the most informed decision for your family.
[Editor’s Note: Remember, missing payments on a home equity loan or HELOC can hurt your credit. You can see how your credit currently fares by viewing two of your credit scores for free each month on Credit.com.]
For most people, moving day is a dreaded day – especially in a busy, crowded place like New York City. But Felix Zeltner, 34, and his wife Christina Horsten, 33, are planning to move 12 times in 12 months, all in the pursuit of the perfect (and affordable) New York apartment.
The couple, who are parents to 20-month old daughter Emma, are calling the adventure 12×12 . The idea to try a dozen neighborhoods in as many months grew out of their own frustration at the rising cost of living in the city. The average one-bedroom apartment in Manhattan rents for an $3,359 per month, according to the latest Manhattan Rental Market Report.
The couple moved to New York City from Berlin, Germany four years ago when Horsten’s employer, the German newswire service Deutsche Presse-Agentur, named her its New York correspondent. Horsten grew up in Germany but was born in New York.
“At first we went to [Manhattan’s] Upper East Side, where my family had lived, and then we got priced out,” said Horsten. “Then we moved to Park Slope, [Brooklyn,] and we got priced out there. It was tiring. We didn’t want that to keep happening.”
When their Park Slope landlords announced a $400 monthly rent hike, they felt overwhelmed by the prospect of finding a new apartment.
“We looked around and thought all of these different neighborhoods were so interesting,” Horsten said. “At first it was this crazy idea, that maybe we could try so many of them.” Their German friends thought they were crazy. New Yorkers, on the other hand, were far more enthusiastic.
“[Our New York friends] had such enthusiasm and so many contacts. So all of a sudden we thought, maybe we can do this,” said Zeltner.
They’re hoping to live in a dozen different neighborhoods across all five of New York City’s boroughs thanks to the kindness of New Yorkers and some serious downsizing.
‘This might not work.”
In preparation of their big move, the couple took a hard look at their possessions and went immediately into purge mode.
“We arrived in New York with one suitcase each, and somehow we ended up with so much stuff over the years,” Horsten said. They donated many of the things they no longer needed to New York City nonprofit Housing Works.
Meanwhile, Zeltner, who is self-employed and works on a variety of media and startup projects, told his wide swath of professional contacts about his family’s plan.
His friend and collaborator, Amol Sarva, made the family a generous offer: For the first month of their experiment, Sarva offered to let them stay rent-free at East of East, an apartment building in trendy Long Island City, Queens. Sarva, a startup founder and architect, designed and constructed the building in 2012. In exchange for a month-long stay in one of Sarva’s vacant lofts, the couple agreed to pay for utilities and supply their own furniture. When they move to their next spot, they will leave their furniture behind for Sarva to use to stage apartments.
The couple hasn’t completely decided which neighborhoods they will move to from month to month. As of now, only August is a sure thing. They found a place to rent in Chinatown. As for the next 10 months, “We are not really sure,” Zeltner said.
“This has been so freeing, so liberating. But the fact that we don’t know where we’re going to live in September, that’s not such a cool feeling,” he added. “This is an experiment. It might not work.”
Finding mostly-free digs for their first month was a lucky break they don’t reasonably expect to replicate. They plan to keep working full-time and pay their way the rest of the year, looking for furnished apartments that rent for $3,000 a month. Through a newsletter they launched with their website, they’re hoping to crowdsource tips about affordable rentals from their subscribers.
“This is like a crowdfunded project, without the funding,” Zeltner said. “We need more New Yorkers reaching out to us, whether it’s recommending a neighborhood, telling us about a place their auntie rents, or helping us move. We can only do this if people continue to help.”
After a reporter at local news site DNAinfo wrote about their project, a woman contacted the couple to offer to let them house-sit her Upper West Side, Manhattan, apartment for free in March 2017.
Other help has come in the form of discounted services, including an offer from moving box rental company Gorilla Bins.
The couple is “deeply appreciative” of the assistance and support they have received, Zeltner said, and they plan to give back in several ways.
At every 12×12 apartment, they will host a large dinner party for their temporary neighbors. The couple are also planning to launch a podcast series about their neighborhood experiences and discoveries, featuring many interviews with locals.
Ideally, the couple said, they will find enough apartments to keep the project going for all 12 months and ultimately settle on the perfect neighborhood to raise their daughter. But, for now, the project is really about exploring the city.
“[We] can wake up and have a Uruguayan breakfast, go to a Nigerian neighborhood for lunch, have coffee with Italians, and end the day at an old American diner with a burger and a milkshake,” Zeltner said. “You can’t get that diversity of experience in any other city. We want to experience as much as that as possible.”
As soon as my sister Melissa returned home from after giving birth to her son via cesarean section, the medical bills started poured in. Even with her employer-provided health insurance, she was still on the hook for thousands of dollars. Like an increasing number of Americans 40% of Americans, her plan came with a hefty deductible. She had to pay $3,000 out of pocket before her insurance even kicked in. Once she hit her deductible, she was still on the hook for 20% of her remaining fees. When all was said and done, she owed $8,800.
When she was ready to have her second child two years later, Melissa thought she was ready. She planned for a C-section and braced herself for her first post-delivery hospital bill. But even using the same insurer, she was stuck with an even larger bill than her first delivery. Her total out-of-pocket costs after insurance: $12,700.
This time around, she requested an itemized bill. When she opened it, she found charges for everything from $80 for one dose of ibuprofen to $1,800 to cover an out-of-network nurse practitioner who assisted with the delivery.
“I could have brought my own ibuprofen to the hospital if I knew it was going to cost that much,” she said. “And I never even saw the out-of-network nurse who assisted with my delivery or gave my consent to use her.”
The financial blows kept coming. Melissa realized that her insurer had billed her differently this time. Rather than treating Melissa as an individual seeking care, they automatically added her daughter to the insurance plan and based their coverage off the plan’s much-higher family plan deductible. She knew the bill was incorrect and set out to challenge the charges.
“I spent a year fighting with them and writing them letters,” she said. “I spent every lunch break on the phone with them.”
When insurance isn’t enough
The cost of childbirth in the U.S. is notoriously difficult to predict. Prices can vary from state-to-state and even from hospital-to-hospital. A 2013 Truven Health Analytics report found that average total charges for women and newborns with employer-provided commercial health insurance was $32,093 for vaginal births and $51,125 for cesarean births.
The Affordable Care Act requires maternity care coverage for patients. But the new law does not state which services have to be covered. Individual states can decide what is actually covered and insurance plans tend to be vague about prices. Add that to the fact that deductibles and copays for employer-sponsored and individual plans have been increasing and you’ve got an expensive mess.
“It’s hardly a fair consumer market,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform (CPR), a nonprofit corporation pushing for greater transparency in health care quality. “You would never go into a Best Buy and choose a TV without knowing the price first.”
In addition to the lack of transparency, Delbanco said that consumers often have to share a higher portion of the cost of medical services. Over a six-year period (2004-2010) the average out-of-pocket costs for vaginal and cesarean births nearly tripled, according to the Truven report.
Even if a family knows their policy by heart, some expenses are simply impossible to control in the middle of a delivery.
“One of the biggest pieces, which is not limited to pregnancy and delivery, is surprise medical bills when there are providers inside the hospital that are not in-network,” said Dania Palanker, a Senior Counsel for Health and Reproductive Rights at the National Women’s Law Center. This practice is called “balance billing” in industry speak.
My sister had no idea one of the nurses helping her was not covered by her insurance policy. Hospital staff don’t typically stop a woman mid-contraction to call the 800 number on the back of the insurance card. The consumer rarely finds out about the extra charges until they are at home and receive their bill in the mail.
Some states now have laws that protect consumers against some forms of balance billing and several others are currently working on passing such laws. Healthcare and women’s rights advocates agree that there is still work to be done.
Carol Sakala, director of childbirth connection programs at National Partnership for Women & Families, said the Affordable Care Act could have done more to protect women from exorbitant delivery costs. “Prenatal care is a plus. No cost preventive services is a plus,” Sakala said. “But we’re still not serving women during labor and delivery.
It took my sister one year to smooth out the errors on her hospital bill after her second delivery. Fortunately, she was not stuck with the $1800 bill for her out-of-network nurse. But she still owed a total of $10,000 in bills for both children. She negotiated a payment plan with the hospital’s billing department, paying $400 per month, but it would have taken three years for her to pay it off.
She decided to get rid of her debt and move on instead. Melissa negotiated a lump sum settlement — $7000 — and agreed to pay off her entire balance at once.
“[I wanted] to be done with it,” she said.
How you can avoid sticker shock
Read your policy thoroughly. Do your best to be sure everyone working on your delivery is covered by your insurance plan. Review your policy carefully as well. Some insurance plans have a guarantee built into the contract so that even if an out-of-network nurse or doctor sneaks into the room, consumers won’t be stuck with the bill, Palanker said.
Shop around if you can. If you and your doctors believe you might need a cesarean section, it is possible to find estimates of how much hospitals in your area charge for the procedure by going onto their website. Also, check your insurer’s policy. They may cover your C-section entirely.
Don’t accept your bill if you think it’s wrong. Medical billing errors are increasingly common, with some advocacy groups estimating they are as high as 75 or 80 percent. If you receive a bill for services that you believe are not accurate, request an itemized bill. That way you know exactly what you are being charged for and you can contest any unwarranted charges.
Don’t be afraid to negotiate. Regardless of what your bill says, negotiate. Some billing departments may be willing to settle your unpaid bill for a lower amount. Insurance companies negotiate costs with the hospital all the time. My sister saved $3,000 by negotiating her bill directly with the hospital. “It’s worth it to negotiate costs,” Sakala said.
One of the hardest things about paying off debt is figuring out where to start. Should you go after the biggest balance first? Or would it make more sense to start knocking out some of the small stuff? One of our readers found themselves in such a dilemma:
I received a windfall of $6,000 and I want to pay off 2 credit cards entirely, but my husband wants to pay down one for $11,000. Which would be the best idea?
Like all financial decisions, each of these options has its pros and cons. And while we don’t know the interest rates on these credit cards, we can still go through some of the things our reader may want to consider before putting that $6,000 to use.
What Option Saves You the Most Money?
Again, we don’t know the interest rates on these debts, so the reader has to do a little math. A credit card debt payoff calculator (we have a free one here) can help them figure out how much money they could save in each scenario. In many cases, it makes sense to go after the balance with the highest interest rate, so you can reduce the amount you pay in the long run. But a card with a low interest rate and a high balance can also end up being really costly if you take a long time to pay it off. It’s really important to run the numbers when making a debt-payoff decision.
How Do These Decisions Make You Feel?
There’s a lot to be said about leaving emotions out of financial decisions, but a little can actually be helpful. Paying off two credit card balances can be really satisfying, and you’ll have two fewer things to worry about. On the other hand, making a dent in an $11,000 credit card balance can feel like incredible progress. Staying motivated is crucial to getting out of debt, so if there’s an option that excites you the most, it may be the right choice, even if it doesn’t save you the most money over time.
What’s Your Credit Like?
One of the most important aspects of your credit score is your amount of debt and how much of your available credit you’re using. To figure that out, you add up your total credit card balances and divide it by your total credit limits — that gives you your credit utilization rate, which credit scoring companies advise consumers to keep as low as possible (preferably below 30% and, ideally, below 10%). As our reader considers putting $6,000 toward their overall credit card debt, no matter how they distribute that money, they’ll lower their credit utilization rate.
The utilization rate on individual cards also plays a part in credit scores. If one of those cards is maxed out, it could help their credit scores to lower that card’s balance. (You can see how your credit card debt, and other things, are affecting your credit by getting two credit scores for free on Credit.com.)
It’s unclear from the reader’s comment if the credit card debt belongs to one person or both individuals. Each person has their own credit score, even if they’re married and have joint accounts, so that’s something for the reader to consider as well. Say the two credit cards the reader wants to pay off are their only credit cards and their credit score is suffering from the high balances. Paying off those cards would help their credit score, which may be important if the couple wants to buy a house or a car in the near future.
There’s not a single “best” answer to our reader’s question, but they can arrive at a smart decision by considering the outcomes of each possible choice and understanding how it could affect their financial future.
If you were someone who wasn’t satisfied in school unless you had a report card filled with As, then maybe a blemish-free 850 credit score is your adulthood equivalent. You’ve heard it exists, but you’ve yet to see the perfect credit score yourself.
But that may be OK, as “there is absolutely no advantage to having [an] 850 versus any other 800 number (or even high 700, in most cases),” Thomas Nitzsche, media relations manager for ClearPoint Credit Counseling Solutions, said in an email.
Is Perfection Possible?
While it may not be essential, the fact of the matter is, getting a perfect credit score isn’t easy. Credit scoring algorithms are complicated, and even if you do take a look at your credit and see a gold-star 850, it’s unlikely you’ll keep it forever.
“A perfect score is possible but very rare,” Nitzsche said.
And, really, once you have what is deemed “excellent credit” — typically seen as about 750 on a 300 to 850 scale, which most major credit scoring models follow — you’ll likely qualify for the best interest rates and credit products anyway. Whether you have a score of 780 or a perfect 850 won’t make much of a difference to anyone (except you, if perfection is your thing).
Good Habits That Lead to Excellent Credit
What we’re saying is that, yes, you can get perfect credit, but you don’t have to. However, working toward having great or excellent credit is certainly something to strive for. So, how do you do it?
“If you pay your bills on time, keep your balances low and apply for credit only as needed, over time you can build the credit scores you need to get the credit you want without unnecessary stress or frustration,” Rod Griffin, director of public education at credit bureau Experian, said in an email.
In addition to having a strong payment history, good debt usage (which experts say is at least 30%, and ideally 10%, of your combined credit limit) and few hard inquiries, it’s important to note that your age of credit and diversity of credit accounts are other factors impacting major scores. (To see where your credit currently stands, you can review your free credit report summary, updated each month, on Credit.com.)
And organized perfectionists rejoice — getting a good credit score is your time to shine.
“Those who set reminders, obsess over due dates and outstanding debt, notice when bills are missing, etc. have an advantage over those who are more impulsive,” Nitzsche said.
What to Avoid
Nitzche said it’s important to stay current on payments, as missing one can harm your score and keep (or significantly delay) you from achieving credit perfection.
“Payment histories remain on your credit report for 7 years, so missing just one payment can haunt you for a long time,” Nitzsche said.
He added, “Beyond this, the most common problems we see are folks not using credit at all (thus having low scores) and consumers who overextend themselves, using too much of their available credit.”
Griffin pointed out that you should avoid comparing your scores to other people’s, as that’s not what lenders are doing.
“It is possible for two people to have the same credit scores but for very different reasons,” Griffin said. “The only way to know what you need to do to maximize your credit score is to identify the specific items from your personal credit history that are most affecting your personal credit score.”
Now’s the Time to Start Building Good Credit
So, whether you’re after that perfect 850 or just want a score that will help you get better terms and conditions on your lines of credit, it’s never too late to start.
“Don’t wait until you need good credit to start working on a great credit score,” Nitzsche said. “It may not feel like it right now, but you will likely have financial goals in the future that require a good credit score — or that will be easier if you have a great credit score.”
Ever wonder what happens when you apply for a credit card? You submit the application, but what happens afterward remains a mystery to most people. That’s because credit card applications can be processed a bit differently, depending on the issuer. Underwriting standards vary, issuers may look at different versions of your credit reports or credit scores and varying algorithms get crunched.
Still, regardless of how a credit card issuer chooses to review your application, there are a few things that are certain to happen during this process. Here are five of them.
1. Your Identity Will Be Verified
When asked for their personal information, some people would prefer to remain anonymous and create a pseudonym. But intentionally providing misinformation — or lying — on a credit card application is illegal (it’s essentially considered fraud.) Plus, when you apply for a credit card, you will be asked for a lot of personal information, including your name, your birth date and your Social Security number. All of these must match up with a real person who has an actual credit history before your account can be considered. If you don’t provide all of this relevant info or make a mistake when filling the form, you can expect the card issuer to contact you for accurate info.
2. You’ll Receive an Immediate Response
The credit card issuer will always respond to your application immediately but not necessarily with a decision. In some cases, applicants receive instant approval, but they’re just as likely to only receive confirmation that their application has been submitted with a promise of further review.
3. Your Credit History Will Be Examined
Once the card issuer has verified your identity, it will research your credit history with at least one of the three major consumer credit reporting agencies. In fact, your authorization to do so was included in the fine print you agreed on when you submitted your application. Scrutiny will be placed on your payment history, the amounts you owe and any other recent applications for new credit.
4. You’ll Receive a Decision
Every job seeker has had the experience of applying for a job but never hearing back from the employer. At least when you apply for a credit card, you’re guaranteed to find out if you were approved or denied. If it’s the former, you can look forward to receiving a card in the mail, along with a statement of benefits and terms and conditions. If your application is denied, the card issuer will send a letter called an adverse action notice. This legally mandated notice will explain why your application was denied, say, for carrying too much debt or having too many recent credit inquiries on your credit report.
5. A Hard Inquiry Will Appear on Your Credit Report
The credit pull that the issuer conducts is considered a hard inquiry, which will almost always appear on your credit report and can hurt your credit score. That’s why it’s generally recommended that you refrain from applying for too many credit cards at once. Instead, you’ll want to do some research ahead of time to find out which one is right for you and whether your income and credit score can qualify for it.
Understanding the Application Process
Knowing a little bit about the credit card application process can allow you to maximize your chance of approval. First, you can make sure you accurately fill out the personal identification section of your application, double-checking all of the identity information that you supplied. But more importantly, you should also be verifying that the information in your credit history is accurate.
As soon as you apply for a credit card, you can also take a look at the confirmation. If it doesn’t offer an approval or denial, it may still provide an application confirmation number and a phone number to follow up with for an immediate decision. If your application is denied for any reason, you can learn why from the adverse action letter and take steps to fix the problems it identifies.
If you’ve ever tracked how much money you’re spending each month, you’ll know that one of the biggest categories you can overspend on is food. In this day and age, we love our modern conveniences. But things like pre-packaged convenience foods, going out to eat and just not planning ahead when you go to the grocery store can wreak havoc on your monthly spending.
I’m the mother of 7 kids, and I have been a stay-at-home mom for the past 17 years. One of the ways that we have been able to afford to do this is by cutting corners in the kitchen. Here are some of our favorite tricks.
1. Don’t Wash Produce Until You’re Ready to Use It
Did you know that if you wash your produce it won’t last as long? There’s nothing worse than opening the produce drawer to find the strawberries you were going to use slimy and moldy. Instead of washing it when you get home, just stick it in the refrigerator in the packaging that it came in. This will prevent bacteria from growing prematurely, and will help you to not waste that food that you spent your hard-earned money on.
2. Ditch the Paper Products
Why use paper products when you can use the real deal? Instead of using paper towels and paper napkins, we use cloth napkins, dish rags and dish towels. We just throw them in the laundry and reuse them as needed. We rarely use paper plates either, unless we have a large gathering of friends come over for a meal.
3. Shop at the Less Expensive Grocery Store
In our area, we find that Aldi has the lowest prices on most everything. But in other areas, you may find that it’s a different store. Take some time to compare prices on the products you use the most. For an easy way to do this, make a list of your most-used grocery items, and then visit each of the stores and write down the prices at those stores. You’ll find the grocery store where you should be doing most of your business quite easily.
4. Eat Leftovers
If you don’t get into the habit of eating your leftovers, you’re leaving money on the table. You could take them to work for lunch, serve them to the kids, freeze them as TV dinners or recycle them into a whole different meal (like a roast into beef stew). Whatever you do, don’t waste that food! For me, I like to make a Crockpot Freezer Meal and get my husband a portion out for tomorrow before I feed everyone else. That way, we’re guaranteed to have a little bit left over.
5. Re-use Foil, Baggies & Old Food Containers
If you regularly use these items, you may want to try this little trick to save money in the kitchen. I grew up watching my mom do this, and know that if I need to cut corners, these conveniences are one of the first to go.
6. Make Your Own Dishwasher Detergent
Have you ever tried making your own dishwasher detergent? You can make it using ingredients you can find at the grocery store. Making your own is like paying pennies on the dollar for dishwasher detergent.
Try this recipe:
1/2 c citric acid OR LemiShine
1/2 c non-iodized salt
1 c borax
1 c washing soda
Mix together well, and use 3 tbsp per load. Be sure to use vinegar in the rinse compartment.
7. Buy Store Brands
Store brands are typically canned, boxed or jarred in the same factories as the more expensive name brands. They typically taste the same, too. Try switching out some of your nonessential name brands for the much cheaper store brands and see if you notice a difference.
8. Meal Plan
If you go into a store without a plan, you’ll come out spending a whole lot more money than you were planning. Be sure to make your meal plan at least a week at a time so you’re not making several trips to the grocery store throughout the week. If you think you don’t have time, I already have a One Week Freezer to Slow Cooker Menu that you can try out for free, so no excuses allowed! When you plan your meals regularly, you save yourself a lot of money. It means you eat out less and eat less boxed and convenience foods, which in turn saves you money.
9. Buy Food in Bulk
There’s certain foods that it pays to buy in bulk. You can find food at drastically reduced prices by watching the sales circulars, shopping the big box stores (like Sam’s Club and Costco) and by using coupons strategically. For our family, we buy our ground beef from a local farmer, our produce and canned goods from Aldi, and our cheese, peanut butter and other dairy products at Sam’s Club. We save $1.50 to $2 a pound by buying our cheese in this way. It really does pay to watch the prices at more than one store and to continually check back for sales.