Friday, October 14, 2005

How I COULD be living...

I like these "what if" scenarios.
I'm always telling myself I can't afford things, but that is because I have certain rules for myself and certain goals in mind. What if I didn't? What if I lived by other rules?

First off, basically a lot of Americans save NOTHING. Let's say I make somewhere around $85,000 with bonus, gross. If I didn't have any 401k deductions, didn't use a flex spend account, I estimate my spendable income would be about $4332 per month after taxes.

Many New Yorkers spend more than 30% of their income on housing. But let's just say I spent about 28%, or $2000 a month. That might get me a studio in Manhattan or a 1-bedroom in Brooklyn, maybe a small 2-bedroom in parts of Brooklyn, if I was renting.
If I was buying, with 20% down and a 5.5% interest rate (which would probably have to be one of those interest-only ARM deals), I could buy an apartment priced at about $350,000, assuming the maintenance would be $500. If I put 10% down, I could only spend about $300,000. $300,000 is about the minimum going rate for studios in the more desirable neighborhoods of Brooklyn. In Manhattan, maintenance charges tend to be higher, so I really wouldn't be able to find anything at this price beyond the tiniest of unrenovated studios (with a hotplate for a kitchen) unless I went way uptown, which would be a longer commute than being in Brooklyn.

In any case, I'd be left with about $2332 to spend on the rest of my expenses:
Food: as it is, I sometimes spend over $800 a month on food, without eating in restaurants more than once or twice a week. Most New Yorkers eat out a lot more often than that. $1000 a month is probably still quite conservative compared to a lot of people at my income level or less, who buy their lunch every day and eat dinner out 3-4 times a week and order in Chinese food the rest of the time. So that leaves me with only $1332 for everything else:
Subway pass would be $76 a month
Gas/electric maybe $80 a month
Telephone is around $120 a month
Renter's insurance about $13 a month
AOL about $24 a month, but if I had DSL that could be more like $50 a month, I think.
And what if I had cable TV with premium channels? Say another $60 a month? (Maybe a cable modem package deal would be less, I admit I'm not that well informed about it!)
Now I'm down to $1173 a month.
Haircuts are $80, almost every month. (I could easily spend more than that, especially if you also accounted for things like makeup, manicures, laser hair removal, etc.)
Clothes: I managed to spend an average of $300 a month last year on fairly basic things like a couple of suits, a couple pairs of shoes, some basic jeans, pants and tops from stores like Ann Taylor, the Gap and J.Crew, often on sale. What if I'd thrown in the almost obligatory Seven for All Mankind jeans at $180 and a pair of Manolo Blahniks at $600? A handful of designer items at full price could easily double my clothing expenses to $600 a month.
What if I had a car? I guess I could lease one for a couple hundred dollars a month. Parking in Brooklyn would probably be $150 a month or more. And car insurance must be a fortune here, though again, this is not an area I really have a clue about!
Suddenly I'm pretty much out of money, without covering all these things I haven't even talked about:
Gifts
Travel
Charity
Entertainment (a movie every other weekend is already $20+ per month)
Gym (easily $100 a month and more in NYC)
Medical
Books/newspapers/magazines/music
and good old "miscellaneous"

Of course this is very New York-centric view. If I lived outside NYC some of these expenses (food, rent, gym, clothes) could be a lot less, but I still think I wouldn't be able to afford a lot of things that most people take for granted. And of course it's hardly a sob story if someone making $85,000 a year can't afford Manolos and Seven jeans. But the things I'm describing are how a lot of people live here, and as always, that keeping-up-with-the-Jones thing comes into play. Not everyone might do all of these things, but I bet there are plenty of $30,000 a year assistants who are eating PB&J for lunch every day, not just because they heard Anna Wintour does it, but so they can afford to buy clothes, do Pilates, have a dog and drink $12 cosmos all night, just like everyone else they see. The idea of putting a few dollars in the bank is the last thing anyone thinks of, because it's not a conspicuous marker of status in any way. If we all had to display our net worth on our foreheads, it might be a different story! This is one of the ironies about the way people deal with money. It's considered inappropriate to publicly discuss how much money one earns and has in the bank, but it's practically required to discuss or at least display how much money one spends.

12 comments:

Jane Dough said...

As Charles Dickens wrote in Great Expectations:

We spent as much money as we could, and got as little for it as people could make up their minds to give us. We were always more or less miserable, and most of our acquaintance were in the same condition. There was a gay fiction among us that we were constantly enjoying ourselves, and a skeleton truth that we never did. To the best of my belief, our case was in the last aspect a rather common one.

Those feeling that they must spend to "keep up" with others will never truly feel a sense of belonging.

It is interesting to imagine what could be - but far better to prepare for what will be.

Caitlin said...

MX, regarding your point about the irony - *very* well said and an excellent point.

I still go a-goggle at NYC housing prices, when honestly, Boston can be that bad too. And a hotplate for a kitchen has nothing on the woman on Small Spaces, Big Style who's shower and bathroom sink were basically in her kitchen (though she did have a separate "water closet"...but it didnt have a light!)

Anonymous said...

Very excellently put post. I hate the way that is...I see it around me all the time.. among friends AND family.

DS Dan said...

I don't think I know anybody who works in Manhattan who can actually afford to live there--friends all live in Hoboken or Brooklyn...also anywhere along the northeast corridor NJTransit route usually works out for a decent commute

DSD

Miguel said...

That was a well-delivered and powerful post. Not much to add, you covered it pretty well.

While NYers are particularly vulnerable to the "keeping up with the Jones" syndrome, it happens everywhere. Maybe the rents are cheaper, but so are the salaries. We live in a society that is constantly conditioning us to buy now, pay later, as the American way.

It is a struggle at every point on the income and net worth scale. Despite acheiving the 7-figure mark, I must continually remind myself of my bugdetary limitations. Temptation lurks everywhere.

Miguel said...

That was a well-delivered and powerful post. Not much to add, you covered it pretty well.

While NYers are particularly vulnerable to the "keeping up with the Jones" syndrome, it happens everywhere. Maybe the rents are cheaper, but so are the salaries. We live in a society that is constantly conditioning us to buy now, pay later, as the American way.

It is a struggle at every point on the income and net worth scale. Despite acheiving the 7-figure mark, I must continually remind myself of my bugdetary limitations. Temptation lurks everywhere.

tmwhalens said...

"Despite acheiving the 7-figure mark, I must continually remind myself of my bugdetary limitations."

Yeah, right. You make a 7-figure mark, you say? I HIGHLY doubt that, otherwise it's HIGHLY unlikely you wouldn't be sitting on a blog about trying to survive financially in New York. Hope you feel better playing pretend with monopoly money, LMAO.

Tiredbuthappy said...

tmwhalens, I interpreted Miguel to mean he has a net worth of 7 figures, not an income of 7 figures.

Big difference.

chance4976 said...

Wait till the kids are around! Take my sister-in-law: Hubby's a home builder. Builds you a modest home in an affluent subdivision. There are great schools around and most of your neighbors are drs, stockbrokers and professors at the large university in town. You're a stay at home mom, just like everyone else on the block. Three kids. They want the same things that every other little spoiled kids get: Xbox 360, Nike Shoks, obilgatory DVD player in the van, horseback riding lessons, leagues for every sport and season. It can get ridiculous! And once you start that cycle of giving in and spending, it's hard to break explain to a five year old why she can't keep taking gymnastics.

It's not just singles who live in a dizzying world of consumerism that are at risk of living above their means and saving nothing. It's families in Midwestern towns who also try to keep up with those damn Joneses. There are many young families putting everything on credit cards...

Frugal Duchess: Sharon Harvey Rosenberg said...

Great Post! It made me homesick for New York.

I left Manhattan for Miami during the 1990s. Life is somewhat cheaper in Miami, but not really.

Many of us where our wealth or lack of wealth on our sleeves..

Anonymous said...

""Despite acheiving the 7-figure mark, I must continually remind myself of my bugdetary limitations."

Yeah, right. You make a 7-figure mark, you say? I HIGHLY doubt that, otherwise it's HIGHLY unlikely you wouldn't be sitting on a blog about trying to survive financially in New York. Hope you feel better playing pretend with monopoly money, LMAO."


I think miguel meant 7-figure net worth. Not so far fetched at all.

financial freedom said...

How I would be living if I did not need to save a cent?

I would buy a nice car. Maybe a convertible... eat in fancy restaurants and buy branded goods.

Oh well. Savings and investments are just delayed gratification. Hopefully once I am financially free, I will be able to live a lifestyle close to what I desire.

I enjoy your blog. Do visit mine =)