There once was a woman who found the apartment of her dreams. It was the right price, closer to friends and family, and a huge upgrade from the apartment she currently lived in. But there was a catch: Her lease wasn't up for another few months and the thought of breaking it was making her break out in hives.
If you're one of the 100 million Americans who rent, you're probably familiar with signing a lease—but you might not be as familiar with the clauses in the contract you actually agreed to.
Leases vary by state and property, so if you're looking to get out of one, the first thing to do is reexamine your contract. The next step is to consider the consequences of breaking it. Landlords can sue you for missed rent you've agreed to pay, which can mean additional legal costs, and a dent in your credit score if the outcome isn't in your favor. A landlord-tenant dispute can also make it harder to get approved for a new place when you're ready to move.
But before you completely give up on getting out early, there are a few options worth exploring.
Dig out that lease and check for the following:
- A subletting clause
Some leases allow for subletters, which means if you can find a suitable person to rent your space from you for the same price—and potentially take over your lease when it expires, you're golden. The next step is to talk to your landlord about what they require and/or need to approve a sublease in order for you to start searching for someone to take over your place.
- A 30-day notice clause
You may think you have a yearly lease, but if you read the fine print, it might be a month-to-month rental that only requires thirty days notice to move out. If this is the case, contact your landlord in writing with your 30-day notice (you should also check to see if the notice must be accordance with the first or last day of the month).
- An early termination clause
Sometimes, landlords include a clause that lets you out of your lease early in cases of unexpected hardship. As Moneycrashers notes, this can include anything from losing your job to medical emergencies.
Have a conversation with your landlord:
Feel out your landlord by explaining your situation in soft terms (you're thinking of relocating and you're curious how flexible they are when it comes to an earlier lease expiration date). Ask whether they would be open to it, what kind of advance notice would be optimal for them, or if they'd be willing to consider an "out" if you found a suitable tenant to rent the apartment. They may welcome the chance to rent the apartment out earlier than expected, depending on when you're looking to move out. If they seem amenable, follow up in writing with your proposed dates.
Find a suitable tenant:
If your landlord agrees to let you out of your lease on the condition you find someone to replace you, you still have some work to do. It's time to do some glamour shots of your place, create a landlord approved listing and spread the word on social media. Be sure to include any stipulations your landlord will require—from credit checks to security deposits—so your prospective replacement comes prepared and ready to impress.
Check for breaches of contract:
Maybe you're ready to move because your apartment is unlivable. On your lease, you should find the clause wherein the landlord agrees to provide a "warranty of habitability"—or a safe, habitable environment that doesn't negotiate your well-being. Breaches of such an agreement may range from repeated infestations, mold issues, lack of heat or plumbing problems. You need to have proof that you've previously complained about the issue and that your landlord has been remiss in his or her duty to rectify the situation. Take pictures, make sure your complaints or requests are in writing. You may need to call on this evidence if your landlord does take you to court over your broken lease. For more on your rights as a renter and landlord requirements, check out this detailed breakdown.
If you're still out of luck, make your landlord an offer:
If breaking your lease isn't looking promising, prepare to fork over some cash—but hopefully not as much as you think. Depending on your relationship with your landlord, you still might have a shot at negotiating a deal. You could offer your security deposit or a set sum that benefits your landlord and gets you out of paying rent for the next several months on a place you're not prepared to live in. You could also see if your landlord is open to a long-term payment plan that would allow you to cover the lost rent in smaller deposits.
Ultimately, when it comes to breaking a lease, you have to weigh your options and how much you're willing to risk and spend. As for the woman who found her dream home (ahem, this writer), she ended up making a deal with her landlord and forfeiting her security deposit plus a month's rent in order to resolve her old lease. It was a financial hit in the short-term but now that she's settled into her new place she has zero regrets.
- Breaking A Lease - Know Your Rights - Tenants Union of ... ›
- Breaking a Lease | The Maryland People's Law Library ›
- How to Break Your Lease and 4 Reasons Why You Shouldn't | Move ... ›
- How to break a lease in NYC ›
- Breaking an Apartment Lease: What You Need to Know | My Money ... ›
- How to Break a Lease (and What to Know Before You Do It) | Moving ... ›
- Breaking a Lease and Leaving Early | Nolo.com ›
- Breaking a Lease: What to Know and How To Do it ›
- How to Break a Lease on Your Apartment | Rent.com Blog ›
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.