Credit and Urban Living—Three City-Centric Mistakes

 

City living is filled with opportunity. From employment prospects, new restaurants, theatre and concerts, there’s always something to see and do. If you are a current urbanite, you understand the cost of fast-paced living. The average rent and food prices are higher than rural areas and it can seem impossible to make it through the day without spending money. Despite the monetary setbacks, it is possible to achieve financial health. Keep the following mistakes in mind as you pursue credit repair. A little attention could help you redirect your resources.

Mistake #1: Overpaying for location.

Park views and high ceilings can recommend any apartment, especially one that’s close to public transportation and your favorite coffee shop. Living in the center of everything usually comes with a high price. For example, while a rehabbed one-bedroom on the North side of Chicago costs $1,250 a month, the same type of rental is likely to cost more than $1,900 in the central neighborhood of River North. The key here is prioritization. Choose a location that agrees with your bank account while providing a reasonable commute. The money you save will help you prepare for future opportunities and, with any luck, higher ceilings.

Mistake #2: Spending money every day.

It’s not easy to economize in the city. The average daily budget could include one or all of the following:

  • Start the day with a cup of coffee at Starbucks ($3.75)
  • Catch the subway or bus to work ($2.50-$4.00)
  • Work, then eat lunch at the Italian place around the corner ($12.50-$25.00)
  • Catch the subway or bus home ($2.50-$4.00)
  • Meet friends for drinks or dinner downtown, then take a cab home ($25.00-$45.00)

Spending habits like these can cost nearly $82.00 per day. While this may not be your norm, you probably splurge on coffee, lunch, dinner and entertainment a few times a week. While we can’t argue with the price of commuting, other expenses are negotiable. Consider cutting your costs by 25 percent on non-essential items. Brewing your own coffee and preparing food at home could save you hundreds of dollars, allowing you to pay down debt, save for retirement and build liquid assets. Start referring to yourself as a “foodie” and change your spendthrift ways.

Mistake #3: Failing to build positive credit.

The average city dweller may spend more money, but that doesn’t translate into credit health. Without the help of installation debt like a mortgage or car loan, your score may be suffering from an imbalance. Relying too much on revolving debt (i.e., credit cards) can yield a weaker score. It can also affect the length of your credit history, a deciding factor for lenders who will consider you for future loans. Examine your credit health by learning more about scoring factors and speaking with a professional who can help you make positive changes. Don’t allow lifestyle to dictate the limits of your credit potential.