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Post by Deleted on Dec 9, 2015 22:05:38 GMT -5
Sorry that I don't have the link. I read it on MSN. The new housing crisis is people who pay half their paycheck on rent. As usual, the article doesn't differentiate whether that is before deductions or after deductions.
Half my paycheck before deductions would be $2500. That would rent you one of the most luxurious homes around here. So, no, I can't see paying half my paycheck on rent.
But take-home? Because I have a lot deducted, that's about $2300. So a house for $1200 a month is just your typical garden home with little yard space. I know because my ex-bf's daughter just rented such a house. It is a 3-br but small (less than 1000 sf) with a tiny yard. But it is in a very family-oriented, safe neighborhood with an A+ school system. They were paying about $1000 for an apartment in a similar community, but not as safe.
I couldn't pay that. I know renting has its advantages, but they still have to do lawn maintenance since it is a house. Our house payment, including taxes and insurance, is $750 a month. Remember that I'm at the top of our paychart at $60,000. I haven't gotten a real raise since 2008, and it won't happen this year either.
Do you live in an area where buying a house is "cheap" compared to renting an apartment.
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Malarky
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Post by Malarky on Dec 9, 2015 22:14:31 GMT -5
A one bedroom apartment in a crappy neighborhood starts at $1200.
That's why DS still lives at home. Coupled with the fact that many companies aren't hiring full time workers, so income becomes an issue.
The young people I know who have left the nest are all paying at least 50% of their income for housing. Only one of them is a saver, and none of them are saving for retirement.
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Post by The Walk of the Penguin Mich on Dec 9, 2015 22:23:25 GMT -5
Right out of college I moved to Boston for a job. My apartment in Boston was 50% of my salary. I took home $120/week (minimal deductions) rent was $250. This was for a 200 sq ft apartment in the basement back in 1981. After a year, I got another job and rent dropped to about 40%. I couldn't afford a car on that salary, so used public transportation. By the time I left 5 years later, my rent was closer to about 35% of my take home salary. I had enough breathing room at that point to buy a beater.
No no one I knew, not even the PIs I worked for, lived in a house bought in Boston. They couldn't afford it either. Most either lived west of the city, or in NH. Everyone had major commutes of well over an hour.
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CCL
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Post by CCL on Dec 9, 2015 22:24:47 GMT -5
A one bedroom apartment in a crappy neighborhood starts at $1200. That's why DS still lives at home. Coupled with the fact that many companies aren't hiring full time workers, so income becomes an issue. The young people I know who have left the nest are all paying at least 50% of their income for housing. Only one of them is a saver, and none of them are saving for retirement. What general area are you in?
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NastyWoman
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Post by NastyWoman on Dec 9, 2015 22:28:54 GMT -5
I googled this yesterday for the foodstamp thread but based on these numbers I would guess that there are plenty of people around here that use half their paycheck for rent:
"As of October 2015, average apartment rent within 10 miles of San Jose, CA is $2856. One bedroom apartments in San Jose rent for $2410 a month on average and two bedroom apartment rents average $3019."
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CCL
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Post by CCL on Dec 9, 2015 22:29:27 GMT -5
There was a time when I paid 65% of my income on rent. It was a rough life.
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LlamaLlamaDuck
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Post by LlamaLlamaDuck on Dec 9, 2015 22:35:34 GMT -5
Monthly mortgage for my little house in a funky neighborhood of a rustbelt city takes about 15% of our household income.
We make it up by buying expensive coffee, and paying a little extra towards principle each month.
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Value Buy
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Post by Value Buy on Dec 9, 2015 22:48:13 GMT -5
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justme
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Post by justme on Dec 9, 2015 22:58:05 GMT -5
Of my take home it's about 38% on mortgage/tax/insurance/PMI/HOA. But my take home is large enough that the 62% left is enough that I save around 23% a month. Though that number might be a little less as I'm using credit to pay for updates my new condo sorely needs. So 38% doesn't seem so big when I'm saving 23% and only spending 39% on other stuff and still not always spending all of that. And none of that takes into account the 8% of gross to retirement or all the deductible benefits - add in that and it's a lot less than 38%.
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haapai
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Post by haapai on Dec 9, 2015 23:06:36 GMT -5
It's not the question that you asked, but I will answer.
Yes, I have spent half of my net pay on rent. It's surprisingly doable when you aren't supporting a car, paying for health insurance or any form of health care, have spartan tastes, and have a lot of nice clothes left over from better times. It also helps to be cute no matter what you are wearing (I was), and have parents who will let you back into the house if things get ugly (I did).
If you have these things in place, with a bit of luck and common sense, you can live a pretty carefree life for a surprisingly long time. I have disturbingly fond memories of my car-free, debt-free, decade as a slacker in a college town in the late 1980s and early 1990s. Looking back on it now, I suspect the key was discretionary income. My shelter may have been half my net, but after that, my only other fixed expense was food. The amount of my income that I could spend on fun and irregular stuff was pretty amazing. I always seemed to have money, and if I didn't, I could always work a few more hours, cut some sort of deal with someone or "donate" plasma.
I almost always maintained a savings balance equal to a month of shelter costs and an equal amount in checking. I suspect that my fixed expenses were around 70% of my net pay. Then I went back to school, took out student loans, and bought a car after graduation and didn't achieve the same metrics of financial fitness and stability for almost a decade.
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Tiny
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Post by Tiny on Dec 9, 2015 23:44:48 GMT -5
Hasn't the cry that shelter/rent/mortgage takes up 50% of ones paycheck been around for a long long time?
Let's say you are earning $15 an hour and get paid for 40hrs a week - that $600 a week/$2400 a month/$31,200 a year. The paycheck calculator I used sez that's $914.00 every two weeks.
In my area finding an apartment in that under 1K range is doable - but you are looking at studios or 1 bed/1bath most likely garden apartments. It's not going to be palatial and you'll have lots of neighbors but you'll have a place to live.
You can actually buy a 1 bed/1bath apartment converted to condo for 50K and under in my area. Some of them are in so-so buildings (on busy streets or on the train tracks) but you can find them in better places. I was contemplating purchasing one of these (in an 8 unit building not on a busy street) but I never got around to it.
If you are living with some one who also has a $15 an hour full time job - you suddenly have a lot more options.
Actually, I would think 2 people with those $15 an hour jobs who had plans for the future - could tough out a year or two or three in an under 1K a month apartment - and could save money (or pay off debt). The crucial part of this is that they are working a plan to increase their income.
I don't anyone is going to be able to live a comfy life if they think they can just keep working a low paying job for the rest of their life -- and I don't mean a low paying job that gaurentees income increases - I mean like a job that will ALWAYS be minimum wage - no matter how long you work the job.
This isn't anything new - I remember hearing this concept about 'pay' and 'career' back in the early 80's when I was in Jr. College... ie you wanted to avoid the dreaded "dead end job" - especially one that felt like you were getting paid a lot - but there was no way to increase that income.
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Tiny
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Post by Tiny on Dec 9, 2015 23:57:09 GMT -5
The whole comparing paying 'rent' to paying a 'mortgage' is tricky. In my area, a lot of the rents include things like cable and heat/water and trash pick up-- so the tenant is most likely just paying for electricity (and maybe natural gas for the stove). Odds are they don't have access to laundry facilities so they have to use a local laundromat (there are some very nice ones!). So, a $1200 a month 'rent' - it's possible that $200 a month of that is for the included utilities.
When deciding on an apartment you have to compare what's included in the rent and what you expect to pay in addition to rent.
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svwashout
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Post by svwashout on Dec 10, 2015 0:02:15 GMT -5
I googled this yesterday for the foodstamp thread but based on these numbers I would guess that there are plenty of people around here that use half their paycheck for rent: "As of October 2015, average apartment rent within 10 miles of San Jose, CA is $2856. One bedroom apartments in San Jose rent for $2410 a month on average and two bedroom apartment rents average $3019."When I left last year I was paying less than $1000 per month for a small studio not far from Good Sam hospital. Rent rises are limited to 8% per year so it's still one of the best deals in town. Plenty of illegal garage conversions cost only a bit more than a room in a house. And if you don't mind driving Hwy 152, it's about 90 minutes from Hollister or Los Banos where housing is much cheaper. Buying there would also be expensive, like the nearby 50-year-old wood frame 3BR/2BA houses around 1250 sq ft run 850-900K or about 4K/mon according to Zillow. In much of the country a place like that would be a starter home, but it'd be a stretch for a dual income new grad couple. In engineering they'd have to make senior before their household income would cross the ~300K/yr to afford such a place. I can't imagine schoolteachers or retail workers being able to afford to live there. The local "A+" school system is in Palo Alto but there the housing gets to be very expensive. The 2BR condos in Palo Alto Central built in the 1980s recently crossed the 1M mark. Houses in the 1500-2000 sq ft range run about 2-3M. An engineer colleague of mine lives there, but he bought his house decades ago, it'd take an IPO strike to get in at today's levels.
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Post by The Walk of the Penguin Mich on Dec 10, 2015 0:16:22 GMT -5
The whole comparing paying 'rent' to paying a 'mortgage' is tricky. In my area, a lot of the rents include things like cable and heat/water and trash pick up-- so the tenant is most likely just paying for electricity (and maybe natural gas for the stove). Odds are they don't have access to laundry facilities so they have to use a local laundromat (there are some very nice ones!). So, a $1200 a month 'rent' - it's possible that $200 a month of that is for the included utilities. When deciding on an apartment you have to compare what's included in the rent and what you expect to pay in addition to rent. Not anymore. It is very rare in my experience to find an apartment complex that covers cable, heat, water and trash. When I rented my last place, water and trash were included in my rent. During my tenure there, those got dumped on the tenant (and added about $60/mo to my rent as they were not billed by any company. Amount owed was dependent upon the size of apartment you had...not how many were living there. So despite me being one person in a 2 BR place, I paid more than a couple living in a 1 BR). Cable has never been covered, and heat is normally electric. Adding a weekly laundrymat visit these days is going to cost about $10/week. If the laundry facilities are available in the complex, they are a little cheaper, but normally they have smaller machines.
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Post by Deleted on Dec 10, 2015 8:11:23 GMT -5
Yes, that's it. I got the impression that they meant family income and that they weren't talking about young people just starting out. Rather, these are your former homeowning population who are now renting.
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cael
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Post by cael on Dec 10, 2015 8:45:48 GMT -5
When we get a house in the spring/summer, my goal for total monthly mortgage payment to stay at or under would come out to about 40% of our take-home, at what we make right now. Sadly that seems good to me... and a 2br apartment in a moderately decent area would probably not be a whole lot less than that. Rents are out of control where we are (north shore of Boston).
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TheHaitian
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Post by TheHaitian on Dec 10, 2015 8:46:01 GMT -5
Currently for us (before bonuses) it comes to 21.5% gross and 35.5% net. When we bought last May it was ~26% gross and ~44% net :eek:
But starting out, we definitely lived in a few places that were at the 50% rate if not above, that was the only way to get a descent place.
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sarcasticgirl
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Post by sarcasticgirl on Dec 10, 2015 8:49:39 GMT -5
DH and I pay $1400 per month for a no frills 1 BR. It is a vintage building with character I love but no central AC, radiator heat, shared laundry in the basement. That is less than 1/4 of our take home pay. A house in our neighborhood is easily over a million. There is a 7.5 million dollar place just a block north. Needless to say, we won't be buying anything any time soon.
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TheHaitian
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Post by TheHaitian on Dec 10, 2015 8:50:31 GMT -5
When we get a house in the spring/summer, my goal for total monthly mortgage payment to stay at or under would come out to about 40% of our take-home, at what we make right now. Sadly that seems good to me... and a 2br apartment in a moderately decent area would probably not be a whole lot less than that. Rents are out of control where we are (north shore of Boston). You can say that again sister!!! The other day we talked about it again: moving closer (Natick/Framingham) or staying put... Even if my next job is in Boston long term financially it is in our best interest to stay put unless we are willing to do some serious downgrade.
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zibazinski
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Post by zibazinski on Dec 10, 2015 8:57:38 GMT -5
DH's cousin lives in San Fran. When her son got out of college he got a good job but it didn't pay for anything but his parents basement. He paid them $300 a month which she sent to her mother to help out her mother with expenses. I met him at a funeral and told him to save every dime he could while he lived for so cheap and then take that money and get a place where he could rent out rooms to people and help offset his mortgage. He saved over 50k and put a down payment on a place. It was a tiny three bedroom with two baths and cost a small fortune. But each roommate pays a grand a month so he, along with his own money which of course, is no longer $300'a month, helps him make that payment. He has no shortage of people wanting to rent from him. One asked if one of the guys would share his room with him! Most kids want to get out from under mom and dad but need a start. His parents gave him one. Another couple I know moved in with her grandma. The entire family is on board with it because that means grandma has company. They both work but live with grandma for free. The deal is that when grandma dies or needs nursing home, the kids can step up to the plate and buy the place but in the meantime, there is someone to make sure grandma at least eats dinner and has company. There are ways even in expensive areas to make it work. It may not be fancy but it will work. I bought a house and it had no furniture except for my bedroom set for many years. Didn't matter to me. I worked and went to school. My first purchase was a washer and dryer. My parents finally gave me a lot of their old furniture because they couldn't stand it anymore that I didn't have furniture. Never bothered me.
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steph08
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Post by steph08 on Dec 10, 2015 9:15:45 GMT -5
We are at 24% of net right now (PITI), and I wish it was lower!
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teen persuasion
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Post by teen persuasion on Dec 10, 2015 9:29:34 GMT -5
I believe DS2 said his rent was $1k / month, but a group of them are sharing the apartment. The number varies, there are 5 currently, and they love it. He graduated this spring (as did most of his roommates), but they all decided to stay on together (only one current student in the household). They're all good friends, act like a family - eat meals together, all joined same local sports team, I saw on FB the other day that they went out to cut down a Xmas tree together in their flannels.
DS2 couldn't afford 50% on housing - his student loans start up soon, he just had to borrow to buy a car to replace his beater (got him thru college) since he's commuting to the Finger Lakes for work, and a zombie medical bill just appeared this week. It took him a few months to find steady work after graduation, so he'd done temp stuff and run down his EF, and things are just hitting at once. But the roommate situation is perfect for him and his friends, they do it for fun.
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cael
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Post by cael on Dec 10, 2015 9:32:44 GMT -5
When we get a house in the spring/summer, my goal for total monthly mortgage payment to stay at or under would come out to about 40% of our take-home, at what we make right now. Sadly that seems good to me... and a 2br apartment in a moderately decent area would probably not be a whole lot less than that. Rents are out of control where we are (north shore of Boston). You can say that again sister!!! The other day we talked about it again: moving closer (Natick/Framingham) or staying put... Even if my next job is in Boston long term financially it is in our best interest to stay put unless we are willing to do some serious downgrade. Oh yeah, we may be downgrading before we even have anything to downgrade! We've actually started to consider including condos and two bedroom houses in our search (which we had originally been dead set against), just to increase chances we could stay in our target cities and find a good price... I'm willing to go with a 2br house if the overall size is decent and maybe there'd be room to expand someday. I don't think our first house will be our last, and at this point we're thinking we may only have the one kid, but we'd like at least some spare area for office space/guest room etc. But again, yeah at this point we'd look at a 2br if the price and neighborhood were right. It's brutal out there.
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zibazinski
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Post by zibazinski on Dec 10, 2015 9:33:06 GMT -5
That's how DS lived until he moved in with girlfriend. He loved every minute of it.
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emma1420
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Post by emma1420 on Dec 10, 2015 9:42:57 GMT -5
I think a lot of this depends on your paycheck, if you have kids, and the housing costs in your area.
I could probably spend half my take home on rent and be okay. Granted I wouldn't be able to do everything I do now, but I would financially be fine. However, I also have a decent job (although not six figures), and more critically I don't have kids to support. When I was in grad school my rent (luckily my utilities were included) was almost 70% of my take-home (which was $665 a month). So even if you are a low wage earner, I think it's doable for a limited stretch. I couldn't have lived that way endlessly. I like my creature comforts too much!
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zibazinski
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Post by zibazinski on Dec 10, 2015 9:46:42 GMT -5
Then you get a roommate. The difference between a one bedroom and a two bedroom apartment isn't double what a one bedroom costs. Shoot, I know a group of nursing students who live four in a two bedroom. Rarely is more than one of them there at a time. They leave notes on the chalkboard for each other!
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yogiii
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Post by yogiii on Dec 10, 2015 9:52:24 GMT -5
I believe DS2 said his rent was $1k / month, but a group of them are sharing the apartment. The number varies, there are 5 currently, and they love it. He graduated this spring (as did most of his roommates), but they all decided to stay on together (only one current student in the household). They're all good friends, act like a family - eat meals together, all joined same local sports team, I saw on FB the other day that they went out to cut down a Xmas tree together in their flannels. DS2 couldn't afford 50% on housing - his student loans start up soon, he just had to borrow to buy a car to replace his beater (got him thru college) since he's commuting to the Finger Lakes for work, and a zombie medical bill just appeared this week. It took him a few months to find steady work after graduation, so he'd done temp stuff and run down his EF, and things are just hitting at once. But the roommate situation is perfect for him and his friends, they do it for fun. That's what I did for my first few years out of college, except we were in Cambridge so it was $600/month per person to live in the biggest piece of crap house we could find. It sure was a lot of fun!
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Dec 10, 2015 10:17:56 GMT -5
I googled this yesterday for the foodstamp thread but based on these numbers I would guess that there are plenty of people around here that use half their paycheck for rent: "As of October 2015, average apartment rent within 10 miles of San Jose, CA is $2856. One bedroom apartments in San Jose rent for $2410 a month on average and two bedroom apartment rents average $3019."When I left last year I was paying less than $1000 per month for a small studio not far from Good Sam hospital. Rent rises are limited to levels. Aw, I was born at Good Sam! I was raised in the Blossom Hill neighborhood. My first sister was born at Good Samaritan. My second sister was not because she was twisted up in her umbilical cord and the Army sent my mother to Oakland.
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MJ2.0
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Post by MJ2.0 on Dec 10, 2015 10:35:43 GMT -5
after deductions I take home about $2800/month. My rent is $1075/month (for a mediocre 1 bedroom apartment with crappy coin laundry, no AC in the bedroom, faulty heating system, and loud/disrespectful neighbors). I live in central NJ.
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Chocolate Lover
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Post by Chocolate Lover on Dec 10, 2015 10:40:46 GMT -5
The whole comparing paying 'rent' to paying a 'mortgage' is tricky. In my area, a lot of the rents include things like cable and heat/water and trash pick up-- so the tenant is most likely just paying for electricity (and maybe natural gas for the stove). Odds are they don't have access to laundry facilities so they have to use a local laundromat (there are some very nice ones!). So, a $1200 a month 'rent' - it's possible that $200 a month of that is for the included utilities. When deciding on an apartment you have to compare what's included in the rent and what you expect to pay in addition to rent. Not anymore. It is very rare in my experience to find an apartment complex that covers cable, heat, water and trash. When I rented my last place, water and trash were included in my rent. During my tenure there, those got dumped on the tenant (and added about $60/mo to my rent as they were not billed by any company. Amount owed was dependent upon the size of apartment you had...not how many were living there. So despite me being one person in a 2 BR place, I paid more than a couple living in a 1 BR). Cable has never been covered, and heat is normally electric. Adding a weekly laundrymat visit these days is going to cost about $10/week. If the laundry facilities are available in the complex, they are a little cheaper, but normally they have smaller machines. I live in an apartment that includes water, sewer, trash, and has an allowance on the power bill. (heat is electric so I didn't skip that part) I do have to pay the "rent" on addtional satellite boxes beyond the first one but waaaayy cheaper than subscribing myself. I have W/D connections and a very sweet sister who bought me an inexpensive set for Christmas last year when we figured out the ones I had stored had bitten the dust. There's also a pool and gym. It's about 1/3 of my take home pay. Still more than I want to pay, but a house that would fit my family is comparable once you factor in paying the full utilities yourself. The pool/gym may not be with all apartments in my area but the rest is standard, with the exception of the electric allowance.
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