Where do you live, and what on earth are you spending your money on? Housing may be absurdly costly in many cities but $5.5k a month after tax (assuming you're American) is enough to do much better than "barely ok" almost anywhere. Are you significantly in debt or living above your means?
>Where do you live, and what on earth are you spending your money on?
Bay area
~$5,000 net monthly
$2500 Rent/PGE
$1000 Car/Insurance/Gas/Parking/Phone/Internet
$500 Food/Clothing
$500 IRA
That leaves ~$500 monthly discretionary income, which I usually try to save as much as possible but inevitably gets eaten up by all the stupid little things in life that cost too much nowadays. I can't even imagine supporting a family on this income and it is far higher than most people will ever see.
Yes, housing is extremely expensive in the Bay Area. However, consider your options before deciding that there's no way to save more. I pay $500/month for your "Car/Insurance/Gas/Parking/Phone/Internet" category (old car, cheap MVNO, don't take the car to places where they charge for parking) and $300 for food/clothing. And that's for a family of 3. I do pay a bit more than you for Rent/PGE ($2750 all told) but again, family of 3 -- we need the second bedroom (and lived in a 1-bedroom for the first two years after my son was born anyway).
I'm certainly not saying that my choices are the "right" ones, but I am saying that if you make saving for the future a high priority it's possible to do at your income level, even in the Bay Area.
Living the Bay Area and paying $2,500 for rent, you have $1,000 net discretionary income. Even if you decide not to shrink your expenses or grow your income, you are still in a great position.
PS One day you will realize that things you once thought important are actually unimportant. If you keep saving for that day, you will be in fine shape. There is no need for angst, today. If I might make a recommendation - run some numbers as to where you will be if you decrease your expenses, increase your income, save more, etc. Do all that, forecasting for a set period of time, and do not pay any financial advisors or ask anyone else. Just use your own efforts to investigate. If you do that, I believe you will make the best decision for what to do.
Money is relative, $500 a month is nothing. It will take a year of savings to pay the deposit if he ever has to move out, or to cover the rent if he ever gets unemployed.
You're talking about things that have nothing to do with my comment.
But, on your point - you did the math wrong. He has $12,000 discretionary income not $6,000. He likely already paid his last month's rent of $2,500, and he already mentioned savings. So, it makes no sense for you to infer that it will take him a year to move if he loses his job.
I'd consider that too low a salary premium to justify Bay Area rent. There's an aspect of "because people are willing to put up with it" to "why are prices so high in some areas."
Socking away 10% of your take home income for retirement is not "barely making it".
Also, do you have a 401k contribution coming out as well? I assume the $500 IRA is a Roth IRA?
By that same argument I could make $200K, sock $5000 per month away in savings and say "I only have $500 in discretionary funds each month! I'm barely making it!"
That's basically my point though. I'm doing just OK, not getting rich or anything, just not worried about bills and able to save for a retirement. But this used to be the standard for American families. Not the 90th percentile outlier. The economy has changed so fundamentally that it's either get rich or die.
That is definitely a localized phenomenon. I don't live in the Valley and my expenses are generally lower than that. (Or at least they are if I translate my expenses into single life. Though my "rent"/mortgage is just straight-up lower than that and you'd probably cry to see what I get for it.)
I tend to agree with you. In your position, you need to really want to live in SV for it to be worth it; you're paying a huge premium for the benefit of paying that huge premium.
There are plenty of major metropolitan areas where the salary vs cost of living make a lot more sense.
I live in one of the 25 most affluent counties in the US and just bought a brand new build 5 bedroom 3.5 bath house 2900 square feet for a little over 320K.
