Did you have a New Year’s resolution to make this the year you’d finally get your budget-conscious self together and really start saving?
So how’s that going for you?
You can tell us—we won’t judge. After all, people in glass houses shouldn’t throw stones. (Who are we kidding? We don’t have glass houses. In fact, we don’t even have houses. We’re renting, remember?)
But we’re determined to stay the course this year. We’re going to save that money! High rent be damned, our Mint goal trackers aren’t going to laugh at us this year!
Of course that means we’ll have to wise up to some of the major money mistakes we’ve been making. But we believe we can—and so can you!
We just need to stop doing all of the following things.
1. Not reading your lease
OK, you know you’re supposed to read your lease, and you mostly did, but it’s lo-o-o-ng and full of jargon. So you probably just skimmed it instead.
But that can come back and bite you. Hard, and in a place you don’t want to get bitten.
“The biggest mistake renters make is not understanding their lease,” says Bennie Waller, professor of finance and real estate for Longwood University in Farmville, VA. “Many tenants sign the lease without reading or understanding the consequences.”
The financial consequences: Only paid attention to the beginning of the lease? The end of the lease could include an automatic renewal clause, leaving you stuck paying early termination fees if you want to move out. Didn’t read the security deposit section? You might have just agreed to a $150 nonrefundable cleaning fee (like we did).
2. Overlooking small costs and fees
When you’re comparing two (or more) rentals, it’s easy to get caught in what we’ve dubbed the “rent is cheaper” trap.
Here’s how it works: Say you like one apartment at $1,000 a month and one at $1,075. You go with the cheaper one, right?
To get the best deal, you have to compare all the costs including optional (or forced) monthly fees such as parking and pet rent. If the $1,000 apartment is charging pet rent, for example, you could end up paying $600 more a year for your pooch.
The financial consequences: $10 to $50 per month, on average
3. Not being prepared for disaster
Many renters think they aren’t responsible for major disasters—such as a fire or roof collapse—because they’re not the owners. And they’d be right—sort of.
If disaster strikes your rental, you aren’t on the hook for your landlord’s property. But the landlord isn’t on the hook for yours either.
The only way to save yourself from the potentially huge financial loss is getting renter’s insurance. It’ll run you $15 to $30 a month on average, according to the National Association of Insurance Commissioners, but it’s worth it.
The financial consequences: You could end up paying $10,000 and up if you suffer a total loss.
4. Or being underprepared
OK, let’s say you have renter’s insurance. So you’re good, right? Maybe not.
Many policies pay in “actual cost” for your stuff, meaning you’ll get the current value (minus depreciation from age and wear and tear) and not the amount you actually paid for the stuff.
Instead, renters should make sure their insurance coverage is for replacement costs, Waller says. That will get you full original cash value for what needs to be replaced.
The financial consequences: You could end up paying $1,000 and up if you suffer a total loss.
5. Turning down useful optional services
Shortly after you moved in, your landlord might have mentioned he offers alarm systems, but you’d have to pay for the monthly service. And then you thought, “Geez, dude, I already gave you all my monies—what more do you want from me?”
The financial consequences: There are a couple of very good reasons to consider those extras.
Since the system is already installed, you can skip the installation fee—which in our experience can cost up to $350.
Having a security system could save you money on renter’s insurance, up to 15%!
6. Overcommitting to monthly services
Then again, be careful which service contracts you’re signing. You probably already know this, but companies such as cable and Internet providers often offer the best promotional deals for the longest terms. We want that deal so we sign up, figuring we’ll deal with it later.
The financial consequences: But when later comes, your bank account could cry when you have to pay $350 to move the service or a ginormous cancellation fee. Before you sign, read the fine print and know how much it will cost if you have to move on without your precious cable and Internet.
7. Not getting your landlord’s approval
Not that we would ever admit to it, but most of us have probably tried before to sneak a small “home improvement” past our landlord. Whether you’ve succeeded in the past, we want to issue a word of caution about altering the rental property.
The financial consequences: Even if you don’t paint the living room blood red (repainting could cost you nearly $500!) or take out all the cabinet doors to get that “open look,” the little things could take a bite out of your security deposit.
“Installing a satellite dish is a big one,” Waller says. You could be dinged with a fee for the landlord to uninstall that dish. So if you need cable, make sure you get written approval before you let the installation guy up on the roof.
8. Overstaying your welcome
When you do finally move, we know you’ll be careful to notify your landlord, clean your rental, and take all your stuff with you. But if that takes too long, you could end up shorted on your security deposit.
The financial consequences: Most leases have a “carryover” clause that says you’ll be charged if you aren’t moved by the lease-end date. So if you were supposed to be out on the 30th, but it took until the 2nd to get the place cleaned up and the keys turned in, you could be charged two additional days of rent.
And who wants that?