$75k is a decent salary in most of the US, but if you're in NYC or SF, even his 20% variance (bringing it up to $90k) just isn't enough. If you want to save money, buy a house in the future, and have money to do things, then $120k is minimum in Manhattan, and $90-100k in most of the rest of NYC. Yes, you can live very cheaply in NYC, but at the expense of time; I personally don't want to travel for an hour or more to get to an office, myself.
Saying that a salary is "enough" because that's where happiness flattens out is silly. Most people have no idea how to manage their money, stay out of debt, and prepare for retirement, so they're happy once their salary outstrips their immediate ability to spend.
Most people have no idea how to manage their money; therefore, $75k/year is probably an overestimate if you can soundly manage money. Besides... it's not silly; it's a generalization that (like all others) has caveats.
What I'm saying is that the metric of 'happiness' to determine whether a salary is enough or not is flawed. In most major cities, $75k is simple not enough to live well, save for major purchases, and put away enough money to retire. The reason that 'happiness' isn't good here is that most people don't understand how much they actually need to save for the short and long term, but rather look at their bills and extrapolate from there. In other words, it's happiness in the short term ("are my bills covered and am I able to go out to dinner occasionally?") at the expense of the long term big picture.
A lot of people end up married, and when you put two $75,000 salaries together, it can make living and saving much easier. Unmarried people in big cities often have roommates, which makes it much easier to save and pay off debt. When I first moved to the DC area, I had three roommates and paid around $500 a month in rent and had no car.
Let's also not forget that around half the people in New York do not pay market rate for their rent. Talking about income and rent in NYC is more complicated than this thread would lead you to believe.
And if you live in a major city, you often have significantly lower transportation costs. Yes rent is high in urban areas, but transportation costs are very low. The two should be added together to compare cost of living between two areas.
> And if you live in a major city, you often have significantly lower transportation costs. Yes rent is high in urban areas, but transportation costs are very low.
Eh?
MTA: $104/month, unlimited
Muni: $74/month, "A" pass
CTA: $100/month, unlimited
You can buy a car for $150/month, and call it another $200 for gas/insurance, so $350 total.
The rent difference is way more than $350/month for an equal size/quality place.
Then consider all the other costs of urban living, like high sales tax:
Your numbers are off in essentially every area. Car payment is $200-$250 a month, insurance is $100 a month, gas is $50 a month, and call it an amortized $100 a month for repairs and other expenses. In total, an average car costs $500 a month. And never mind the cost for parking. In contrast, passes for public transportation cost somewhere from $50-$100, _but_ you can usually get them subsidized and/or pre-tax. In Boston, I'm able to get an unlimited pass through my employer for $35 pre-tax a month and my car costs me $500 post-tax a month. In major cities, cars are strictly a luxury. Note, I bought one a few months ago and couldn't be happier, but I'm under no illusions: it is a luxury.
If you are getting a T pass for $35 then your company is just paying for a portion of it; some companies give it to their employees for free, but that doesn't mean it's free.
That said, a T-pass is $70/month and most people can pay that pre-tax. Still considerably less than car ownership.
I highly doubt the average car payment is anywhere near $150 a month. That's really low for even a lease, let alone actually trying to own it outright. And you're completely forgetting maintenance and repairs (oil, tires, batteries, lights, environmental checks, repairs). Even a modest car is probably at least $500 a month with everything added together, and from what I've seen, a lot of people can't make do with a modest car.
And then if you lose your job, you have no defined transportation expenses. Lose your job and you still owe all of that money for your car payment, insurance and whatever else.
And again, many of us are married. Needing multiple cars, gas, parking for two people (or additional cars for kids stuck in the middle of nowhere) starts to ad up.
$500/mo for a modest car? Wow, people on here have a warped sense of finances. $500/mo is a lot of car. My brand new car with all the bells and whistles is $380/mo and I'm very happy with it.
Instead of a new car, I could've used my down payment to buy a used car instead.
To clarify, I'm not saying $500 for just the car, but $500 for the car payment, gas, insurance and savings for future maintenance.
I think $500, when you factor in all of that, is a fairly modest car.
My wife and I have a Honda Fit that is paid off (I would call this a pretty modest car), and when a car reaches a certain point in its life, you may'll have more maintenance to pay for.
And yet this woefully imprecise factoid getsa resputtered every 3 mmonths like it's some major revelation, even though it is completely obvious that everyone who can count can figure out how much is the cost of a middle class lifestyle plus retirement plus college for kids.
You guys are making the US tax code out to be much simpler than it is. The more you save for retirement, the lower your taxable income is. We also have deductions for mortgage interest and student loan interest. Our system is also progressive, so a lot of people making less money have very little taxable income. Maybe you make $90,000 a year and can't fathom how someone could live off of and save off of $75,000 a year, but the difference in your take home pay is not $15,000.
Yup. IIRC a former roommate of mine has a plan on how to get every deduction under the sun to the maximum amount and it is actually possible to pay no taxes on like $100k, but it requires putting something like $40k towards savings each year.
The takehome on $36k wouldn't even be able to cover my tiny (~180sqft) studio in Manhattan ($1700/mo), let alone a decent place. And that place was a steal. As I said, it's possible to live very cheaply in NYC, if you're willing to be far away from everything; I know people who travel an hour and a half each way to get to work, to save a few hundred dollars a month. I can't make that sort of tradeoff -- my time is just worth too much to me.
Edit: I should note, this is the primary reason I left NYC about 6 months ago. I'm paying all of $1400/mo for a large house in CT now, and working from home. Much as I love it, living in NYC is just too crazy.
The best place to live in New York City is actually New Jersey.
Hoboken and almost all of Jersey City are under 30 minutes from many Manhattan offices by the Path subway or bus or even ferry. Rent goes very roughly 25% cheaper than Manhattan for similar digs, everything from basement studios to ultramodern luxury towers. There's plenty of supermarkets and any other businesses you need. And access to the rest of the world via car or airport (Newark) is considerably easier from NJ. Bonus: NJ sales tax is less, and you dodge the NYC income and commuter taxes.
I've lived on the NJ Gold Coast and commuted to Manhattan for basically my entire professional life, and pretty satisfied with it. My 15 minute ferry ride is just long enough to decompress and relax without getting bored.
Whatever smelly downtrodden ghettoey reputation New Jersey once had is not at all universally true. Hoboken and downtown Jersey City are first-class modern neighborhoods. There's worse areas up into JC Heights and down to Bayonne, but by and large the region served by the Path is the equal of anything in Brooklyn/Queens.
This thread & the thread yesterday on cost of living in SF miss some vital, real-world data. Most people simply don't live like this. I worked 4 years in Goldman Sachs, downtown Manhattan. One thing every MD consistently told me was that only fools live in Manhattan proper. Every one of these MDs had multi-million net-worth, liquid even, & still took either LIRR or NJ Transit or lived in Brooklyn/Queens/Jersey City/Hoboken/across GWB & took the Path & A train & whatnot. I lived in Fort Lee in a comfy gated $900 1-bdrm & took a bus + the A train - very adequate.
Now I live in the Bay Area & take the BART & am able to land $1.5K 2-bdrm houses in the east bay very easily, stone's throw from the bart. When I hear my colleagues complain about the insane $3K studio rents in Nob Hill SF, I don't know what to say. Live in the burbs, wake up an hour earlier & take the BART. Nob Hill can wait.
Your best friend is the local realtor. Talk to her over a starbucks latte & she will tell you how the locals hack real estate.
People are happy to ignore questioning if living in the highest-demand locations in the entire country is really a reasonable and responsible use of money.
Apparently, irresponsible spending is only when others spend on things I don't value.
If you want walking distance to Bart, I'm talking concord, walnut creek, pleasant hill. on a lucky day, orinda or lafayette even. If you have a family & want a nice large 3 bdrm with small yard, you can get one for under 2K in nearby San Ramon and take the BART commute bus to the actual BART...I know tons of people who do this everyday. I actually considered doing that myself but was able to land a nice albeit small 2brm with walking distance to bart. If you don't mind an additional 30 minutes of car commute time to the actual BART station, it dramatically opens up possibilities...Danville is very nice.
8 results. Total. All are apartments (one is a duet, a couple aren't actually in P-town but are apartments nonetheless).
(edit: I'm not trying to dick with you here. I've just been searching for valley housing for a long time and have a good idea where certain cities land price-wise.)
Sheesh! And that doesn't even come close to what some people pay. NYC > Manhattan. It's insane! I live 10 minute bike ride from Manhattan, and pay just under $500.00 a month w/ two roomates (GF and best friend) for the first two floors of a brownstone, plus basement and backyard. I've had about four apartments in the past 10 years in this range in my area, it really does pay to live just a little out of the way! I do pretty well for myself these days and am stashing around 50% of my income away. I feel like people who pay some of these whopping amounts of money don't even get to enjoy the true treasures of the city, and money is tied to everything. Stressful.
The monthly take home on $36k in NY would be $2,250 [1]. So after rent you'd have $550 for groceries etc.
Sure, it wouldn't be a comfortable life, but definitely doable, especially without a car.
I agree with you on the commute though. I'm paying almost $1,800 for a one bedroom in Silicon Valley just to be able to ride my bicycle to work.
paying $1700 a month in rent on $36K would be total insanity. The general rule is that rent should be no more than 25% of your income.
On $550 a month after taxes and rent you'd not just have to pay for food (which can easily hit a few hundred a month if you aren't eating catfood), there is also:
- utilities
- clothing (employers appreciate this)
- transportation (the NYC subway is now $2.25 (going to $2.50?) a ride, or a monthly unlimited is currently $104, so there's 1/5th of that 550)
- phone bill (likely a very low end cellphone with limited use)
- laundry (coin op machines can run up $20-$30 a month), if you have dry clean clothes then this is quite a bit more
- medical ? does that $36K have health insurance as well? On a low-end insurance policy, the copay for a PCP visit is about $50, and if there's any kind of meds you need to take that can easily cost $50-100 a month.
- renters insurance ? in case your apt. burns down, it's a good idea
- any kind of occasional expenses that go over what's left, probably go on the credit card. So it's very likely there's 18-20% interest payments on a few thousand dollars going on at any given time as well.
$550 a month after rent is really not workable for an active, functioning adult.
$550/month after rent is totally doable. That's a good bit more than what my wife and I live on (per-person). This is possible, in that we do it, so how?
March through February of last year my wife and I were living with another couple (who we met via craigslist, both couples hoping to save money) in a three bedroom apartment in Somerville MA. Food was communal, and we took turns cooking. All numbers I'm giving are per person per month.
utilities+food+household goods: $110. This included heat, hot water, internet, electricity. AC only in one room, and only on a few very hot days. By cooking our own food and not eating out we saved a lot of money.
clothing+other optionals: $150. My wife and I each give ourselves an 'allowance' for discretionary spending. Clothing, eating out, cell phones, entertainment. Clothing we mostly buy at the local thrift store. They have good clothing quite cheap. I'd go down once a month or so to look through things for an hour maybe. My phone now is $30/month and has unlimited texts and data (via t-mobile) but at the time I didn't have a phone (preferred to spend the money on other things).
transportation: $60. Unlimited public transit pass. (This is now $70.)
laundry: We did our laundry with a hand-crank machine at the apartment. Not worth it; too much work. When we used to use a coin-op washer that was about $20/month for two people ($2/load, 2 loads a week) so $10. We would hang clothes to dry, which also makes them last longer.
renters insurance: not worth it. Better to have savings. If our apartment had burned down we wouldn't have lost much of replacement value anyway.
credit card: if we couldn't afford it we didn't get it. Credit cards are a trap.
medical: paid for by my work. If we were buying it on our own that would cost about $150.
This comes to $480 (counting the health insurance costs and laundry).
(We're still spending a similar amount, somewhat less now, but I don't have the data as well organized.)
Why are we living so frugally? So we have more money to donate to effective charities.
> medical: paid for by my work. If we were buying it on our own that would cost about $150.
where on earth would you get health insurance for $150, and you have no copays of any kind for doctors or medication? or you're fortunate enough to have no medical issues ?
I'm not advocating the decision to spend this much on rent on such a small salary, I was just correcting the claim that $36k wouldn't even be enough to pay for a $1,700 apartment.
Millions of people survive on less than $550 per month. Sure, you won't have your daily Starbucks, no cable TV, and your cell phone plan will most likely come from a low cost provider like Virgin Mobile. In a $36k job, you can probably get away with clothes from Kohl's or even the thrift store, and your apartment is probably not filled with expensive stuff so renter's insurance isn't that much of an issue.
At $20-$30 a month on coin-op laundry you are probably better off looking for full-service laundry that charges by the pound. Before I moved into a place with a washer/dryer of my own I was spending ~$10-$15 every two weeks (50 cents per pound) to drop a laundry basket full of cloths in the morning and pick it up perfectly folded later that day (took about 4 hours, but I would pick up in the evening).
full service laundry in new york city is always at least 40% more money than doing it yourself - which is logical since it's the price of the machines plus the service. I believe you might be comparing two different areas.
edit: some googling reveals 85 cents a pound is the cheapest and most are 90c-$1: http://centzy.com/nyc/laundry-10024 so about $20-$30 for your size of load, guess our loads are bigger.
Hmm, the cost of doing it myself (at the same place that did it for me) with coins, plus the cost of detergent, worked out to about the same price as having them do all of it. I assumed that cost of full-service and cost of machine-time and detergent would more or less scale together.
No, I'm not trolling, it's not illegal, and yes, that was a steal. It was in a convenient location (15 minute walk to work), first floor, and in a nice (if a bit dangerous at times) area. Since I know people spending hundreds more for a slightly bigger place (maybe 240sqft) in a less convenient area, it absolutely was a steal; most of the places around me were more like $2k/mo.
1700 for 180ft, is a price almost 100 per 10 ft. if they have 240 ft and they're paying "hundreds more" that should be about right - it's not a steal. it might be average, but not a steal.
I can confirm this because (a) I too lived in a tiny studio in a super convenient area for a while and (b) after shopping around for a while I can confirm that $1.7k in Manhattan is definitely a steal.
Why would that "wow" you. I'm confused by you. Many, many, people live in real poverty, live barely paycheck to paycheck, can only afford basically what is on the dollar menu. These people effect the average dramatically, and you think
"doubling" that average is like some amazing number that someone would be crazy to think is not enough? ... Kind of a "wow" for me too. :)
I'm not the person you are responding to, but I suspect it is a matter of what is "enough". I suspect living in Manhattan is unnecessary and it is 100% luxury.
Spending 1700 a month for a 180 sq ft studio seems beyond idiotic to me. 1700 is enough to cover the mortgage on a 380k house. 380k on a house = incredible mansion in 98% of America. In Nashville where I currently live (nice city btw) it gets you between 3500-5000 sq ft. In small town America it's even nicer.
Especially with the remote and work from home options these days it seems absurd to pay so much for so little. (I understand not everyone can work from home, but you don't have to live in Manhattan)
I understand your point but I don't think it is really a question of "enough" per se. The parent was saying "wow" as if it is just crazy talk to think you would need more than double the average where the average is brought down by people in extreme poverty. I don't think it's fair at all to imply that is somehow expecting or desiring some posh luxurious, whatever "bad" adjective is preferred, lifestyle. Let's be honest, if you have a family, you have desire for a middle class lifestyle, saving retirement, college funds, unexpected expenses, etc, $75K is not some amazing sum, even if you live the South East with cheaper living costs. Let's just be honest about that!
Once you're in the SF/NYC scene with your job, you are kind of stuck because there are no houses to buy for $380k anywhere around you. So the fact that $1700 could pay a $380k mortgage is irrelevant, because that purchase can't happen. Also, where did you get the $95k+closing costs=$115k cash down to get that $380k mortgage if you're making $75k or less?
> Once you're in the SF/NYC scene with your job, you are kind of stuck because there are no houses to buy for $380k anywhere around you.
There are lots of things available in NY outside of Manhattan. As for SF, there obviously isn't much in the city (28 foreclosures), but a quick search gives me 233 results inside of 45 minutes, and 940 inside of 60.
> Also, where did you get the $95k+closing costs=$115k cash down to get that $380k mortgage if you're making $75k or less?
1. You don't have to have 20% down to buy a house (maybe you should, but it definitely isn't a requirement.
2. I wasn't even considering downpayment, the houses I was talking about were < 380k total, so mortgage would actually be even less factoring in any downpayment.
3. That's the point. If you are making 75k you shouldn't be spending 1700 a month on rent either. If you want to live in Manhattan, get yourself an awesome job paying 250k+. Otherwise it's to me it seems pretty stupid to live in Manhattan. 1700 a month for 180 sq ft just seems bizarre and absurd. That's not a good deal.
> As for SF, there obviously isn't much in the city (28 foreclosures), but a quick search gives me 233 results inside of 45 minutes, and 940 inside of 60.
Believe me dude, there's nothing unless you want to live in San Leandro (hint: you don't) or don't care about the condition of the house.
> You don't have to have 20% down to buy a house (maybe you should, but it definitely isn't a requirement.
Granted, but then your monthly payment raises several hundred $$ because of PMI. Your original point was based on monthly payment, so this is a problem.
> 3. That's the point. If you are making 75k you shouldn't be spending 1700 a month on rent either....
Criteria - Within 60 mins of SF, < 380k, 2br+, 1ba+
Granted they are pretty much all foreclosures, so you'll likely have to work to find one in good shape, but there are 1201 results. And this is obviously not downtown, up to an hour commute, but still. I think I'd rather have a large portion of these than a 180 sq ft studio. Oh well, to each his own.
It wowed me because I have earned over 70k a year in my life and also have only earned 26k a year. I studied economics at university. I know what I am talking about. You must not ever have been poor. That is a good thing.
Here on hackernews 70k a year is almost working class. But I know families of 6 that live on 35k a year. So to read over 70k is not a lot of money to someone stuns me.
You are extremely out of touch with the day to day reality of most of New York. One hour commute is really the norm, and people making 60,000 a year are on average quite comfortable here, all throughout Queens, Brooklyn, the Bronx and Staten Island. 75k is really comfortable. Rents for nice 2 bedrooms are from 1300-1800 within an hour of the city in really nice neighborhoods.
I'm well aware of what people do, but it's something I would never do unless I had absolutely no other choice. With a one hour commute, assuming 48 working weeks a year, that's 20 days of your year that are burnt just getting to and from work! My life means more to me than money.
Do not assume that money is the reason for living an hour away from work. There are many reasons, including schooling, which is even more important with special needs children. I realize you didn't intend to say that, just making it clear however. =)
On that note, don't also assume that an hour long commute means an hour wasted. As someone who makes that hour-plus long trek every day, I've learned how to fill that time. I'm a big audiobook fan, and because of the commute, I'm able to commit to reading a lot more than I would otherwise.
On top of that, in the city, commuting becomes easier with public transportation. When I was living in Montreal, I could read more than just audiobooks.
I'm not saying it's for everyone, but those days aren't necessarily burnt.
My parents made maybe 40K and we lived in the Bronx in a comfortable neighborhood when I was in high school. It took me about ~45 minutes to get to school on the subway and I saw plenty of executive-looking people on the train.
The last time I saw this story it included the detail that the study authors specifically noted that this figure held in NY and other high cost areas. Their theory as to why that was true was that NY provided more of what was required for happiness (people, variety) for free.
At 90k in NYC you can easily cover a nice 3k / month 1br apartment and have ~2,000$ / month leftover which is enough to cover expenses and have solid savings.
No landlord is going to rent you a 3k/mo apartment on a 90k salary. Most require your gross annual income to be at minimum 40x the monthly rent, ie $120,000.
The whole point of living in a top-tier city like New York is to experience it and enjoy it. Living like an austere hermit isn't the way to do that in NYC, where so much of the scene revolves around putting expensive things in your mouth in front of other people. Maybe on the West Coast, where people can ride bikes without being ground to paste by ten ton trucks running red lights and walk down elegant boulevards that aren't carpeted with human waste, you can live frugally and experience a good life in the city. But not here.
Fair point. We definitely have more trash though. So much of it. Frozen great mounds of snow-covered hepatitis in winter, and stinking black fermenting vessels full of distilled evil in the summer.
Please. Everything here is either worse or better than it is everywhere else. That's why the whole of the rest of the world without any exception at all is in absolute awe of New York. :)
I don't know amount most places, but Archstone (http://www.archstoneapartments.com/) was willing to rent me a 3k apartment while I was making 70k. I had a roommate that was going to move in in a month, but they did not care when I was signing the lease. They also have apartments in NYC so the option is open.
At $90K in NYC you're taking home about $58,500, or $4875/month. Spend $3k/month on rent and you're left with $468/wk for everything else in your life. Half of that can easily go towards feeding yourself in NYC.
Hmm, according to www.paycheckcity.com 90k = $5,014.58 / month after taxes which is significantly more tax than I was expecting. However, if you think 33$ on food per day is necessary your clearly doing something wrong. Learn to cook or buy more normal food or something?
A big aspect of the NYC lifestyle is having very little space or stuff at home and living your life outside the home. Most New Yorkers don't have what anyone in the first world would consider a kitchen... at best you've got a two-burner stovetop, a toaster-oven-sized oven, maybe a microwave, a miniature refrigerator, a tiny sink, and a few square feet of counterspace. And one or two plates. Most of your meals come from the huge assortment of restaurants and delis that fill all NYC neighborhoods.
For many years I lived in NJ and worked in NYC, and I typically spent $20/day for a bagel and coffee in the morning and take-out lunch from a local shop. That's not exactly an extravagant lifestyle.
$33 dollars per day is not "wrong". A bottle of drink costs $4. Coffee or Tea? Egg sandwich? Noodle soup lunch special? $10 A few beers with friends? God forbid a date? Popcorn at the movies? Takeout indian or sushi? Oh and buying a steak on sale and freezing it at the same time..
Is there a law against bag lunches in NYC? Needs and wants are not the same thing. Refusing the acknowledge that is a big reason so many people with comfortably middle/upper-middle incomes can "barely make ends meet", since as their income goes up so do the "requirements" of their lifestyles...
Is spending 60% of your take home pay on an apartment commonplace in New York? I realize the cost of housing in NYC is very high but I guess I assumed most of the people living in the city were making more than 90k.
People usually spend half their paycheck on rent. It's not too bad considering you don't need a car, especially if you are a couple living together. In the rest of the US you'd each need a car which is easily $800/mo when you account for depreciation, maintenance, gas, insurance, and misc costs.
Saying that a salary is "enough" because that's where happiness flattens out is silly. Most people have no idea how to manage their money, stay out of debt, and prepare for retirement, so they're happy once their salary outstrips their immediate ability to spend.