Time for another New York Story! SandyVoice is a frequent commenter on this site, and I'm pleased that she answered the call to contribute a story. She is a musician, and as such, she probably represents a great many New Yorkers who come to this city to pursue careers in the performing arts:
I've had a financial career rather like a trip on the Cyclone at Coney Island, but three and a half years ago, I took a full time job, and now I'm making about $50,000 a year, with another $300 or so a month from extra gigs. The health insurance I get through my job pays for most of my prescriptions, saving me about $600 a month that used to come out of my pocket. After thirty years of unsuccessful self-employment, it took me a while to get used to knowing exactly how much money I was going to have each month. About a year ago I started to keep track of how much I was spending, and on what. In February I started to formulate a budget, which I'm trying to make more realistic each month.Thanks for giving us this detailed look at your finances, SandyVoice! I think SandyVoice's life illustrates what many people in NYC go through-- it's really tough to make enough money to make ends meet, but it would be even tougher to have your chosen career in any other city. I also noticed that her monthly health insurance cost is quite high-- another tough issue for many people who may work at a number of part-time or freelance jobs to maintain a career in music or theater or art, as opposed to the kind of full-time corporate job that tends to have better benefits. SV's story also shows that it really is important to know how much you spend when you're on a tight budget, and that however much you struggle with cutting expenses, sometimes you might need to look at making more money! (See Rules #10 and #13.) Best of luck and thanks for your story and regular comments, SandyVoice!
Aside from the Monthly Guaranteed Expenses, the amounts I originally put in the budget were estimates of how much I thought I had spent in the previous year. I left those estimates in place for six months, until I had a better idea of whether I could stick to a budget; then I adjusted them to get closer to reality, and I'll adjust them again after I do my taxes. You'll see, below, that the current estimated monthly expenses are about $500 above my actual expected income. But I've been keeping running totals for ten months, now, and the aggregate expenses in most categories are pretty close to, or under, both the proposed budget and my income. The actual average expense has been $343 over my income, most of which has been the recent extra health expense, which I took out of emergency savings. Once that expense stops, the expenses should be about $150 per month less than my income, and that extra money will go into retirement savings.
The budget is based on take home pay only, and includes only expenses over which I have control. Health insurance ($406) and withholding taxes ($324) are taken out of my paycheck before I get it, and are determined by my contract, so I don't include them. I have a home office and business expenses that are not reimbursed, and I pay estimated taxes on the income from the outside gigs. For the past four months I've had health expenses that were not covered by my insurance, but that should stop in January.
Here are the basic categories. I usually don't make a comment if I was at or below the budget; if I was above for some reason, I try to tell you why.
EXPECTED TAKE HOME PAY: $3900
MONTHLY GUARANTEED EXPENSES:
Total Guaranteed Expenses $2925
- communication (aol, cellphone, land line, DSL) 135.
- Con Ed 93.
- debt relief 1000. (apartment renovation expenses on credit cards, on schedule to pay off by 01/01/10)
- prescription copays 160.
- co-op maintenance 511.
- metrocard 76.
- mortgage 850.
- savings (emergency & retirement) 100.
OTHER MONTHLY EXPENSES:
Total Other Monthly Expenses $1480
- charity 10. (over budget this year for a one time special donation)
- clothing 100. (over this year, as many old business clothes had to be replaced, should be okay in 2008)
- dry cleaner 15.
- entertaining & gifts, business 25. (over this year, but I already bought 2008 biz gifts, so next year should be very low)
- entertaining & gifts, personal 50.
- groceries & basic supplies 225.
- grooming 100.
- health care (not inc. drugs & insurance) 250. (this has gone $500 over budget each of the past four months, but that should stop soon)
- home decor & repair, housecleaning service 75.
- materials/print/supplies, business 50.
- materials/print/supplies, personal 15. (over budget this Fall; I bought books when I was stuck at home, needing entertainment)
- memberships, pers. 15.
- office supplies, postage, copying 40.
- restaurant 100.
- research & tickets for biz 10.
- travel (aside from metrocard) 125
- once a year expenses 245. (made up of estimated taxes, recital expenses, vacation, education, tax prep, union fees)
- miscellaneous, business 15.
- miscellaneous, personal 15
Total Projected Expenses $4405
Actual Expenses Average $4,243.75
It seems pretty clear that certain budget items are particularly affected by living in New York City. I don't need a gym, because I walk about ten miles a week, and climb stairs constantly. I don't need a car -- like many native New Yorkers, I've never even been behind the wheel of one. My public transportation costs, i.e., Metrocard and train tickets, use a very small portion of my income. I bought an apartment in a formerly scary Manhattan neighborhood just about a month before gentrification hit full speed, so I only spend $1454 on mortgage, maintenance, and utilities combined, which is very low by middle class New York standards (what is "middle class", anyway?), and I'm not sure that could be much reduced elsewhere. Aside from occasional taxis, restaurants, and books, I don't have much "latte factor".
I really think that if you can manage to find affordable housing, New York is one of the best places, financially, for a person without much money, and no children, to live. As far as culture is concerned, it's probably the most interesting city on the face of the planet, and a lot of the best stuff is free or cheap. I'm sure I couldn't be a full-time musician anywhere else, and for that reason I've never considered leaving New York. Besides, I come from a New York City family, and have lived here most of my life, and wouldn't want to move, because this is my home town, and I'm a total snob about it. All in all, while I don't feel like I have an extra dollar, I don't think I would manage better anywhere else. The real solution to my financial problems, I think, is to make more money!
I'm working on it.
Other posts in this series:
New York Stories #1: Bronx Chica
New York Stories #2: Orange
New York Stories #3: Bama Babe
New York Stories #4: K
New York Stories #5: Frugal Female