Kamran shared this article with me recently from one of his fancy lawyer blogs called “Earning $250,000 Does Not Make You Rich, Not in My Town“, and while I agree that $250k doesn’t make you anywhere close to rich in NYC, it’s ridiculous how out of touch people are with how much money you need to survive:
I own nothing (mmm… judgment proof) — not a stock, a bond — and the only market for my “assets” is the “Cash for Gold” shop in Atlantic City. I pay a ridiculous premium to live in my 2-1-2 area code, and I live in a hovel so embarrassing that when non-New Yorkers come to visit, they assume I’ve just been robbed. As we shuffle by Park Avenue apartments that I can’t afford to even look at, my dog tries to break her leash and get herself adopted by someone who can afford her upkeep. I’m a professional blogger, yet my computer is so old I can’t even download decent porn off the internet anymore. Last night I got a text from my Manhattan bedbugs which read, “Dude, we can’t live like this no more, peace out loser.”
In Ohio, my salary could give a family of eight a super-extravagant lifestyle, but here, it can get me half of an apartment in Brooklyn, eight plane tickets, a closetful of non-designer clothes, a couple of major electronics purchases, and all the homemade meals I can handle every year. (Luckily, Kamran helps me out in the dinner department.)
Basically, no matter how much I save up, I will never, ever own a home in NYC. Even if I wanted the very cheapest and tiniest studio apartment–250 square feet for $250k, let’s say–I can’t imagine a time in my life when I’d have the $50k down payment. I accept that while the middle of the country bases their success on owning homes, I have to base mine on . . . having lots of free time to blog?
Recently, I decided to make a deposit on a minorly life-changing thing (it’s a yacht, people! it’s a yacht!) (just kidding), and I had to figure out if I’d actually have the money for it. So I made something for the first time in my life that I realize probably every one of you have had forever: a budget.
And I feel SO. MUCH. BETTER. I’m actually spending waaaaaaay less money than I used to, but I somehow feel so much richer just because I know I can keep myself debt-free and saving if I stay within my weekly allotment. It’s so great to be able to stare a $32 pressed powder compact from Sephora in its sweet, foundationy eyes and say, “Are you worth not being to go out for dinner before our bowling match Sunday night?” And it isn’t.
I even set up a (so far, really pathetic) SmartyPig goal that will someday allow me to live luxuriously without guilt for three entire months when I get fired. Click on the “Feed Me” button to see how cute the site is and to TRANSFER YOUR BANK ACCOUNT OVER TO ME:
So, I’m not rich, and I’m not even $250,000 rich, but I’m working on it.
Do you budget? I’d love to hear your tips and tricks!
38 Comments
What’s the lifechanging decision? What is it!??!?!! Are you going to buy Ohio?
My money is on Kamran got placed with a judge and you are moving…
Well, I’m buying a small pizzeria in Ohio. You probably haven’t heard of it, but it’s called ADRIATICO’S. And I’m going to remodel the bathroom so that more than half a person fits in it.
It’s not that Kamran got a clerkship, although you can bet I’ve been looking at DC apartments and drooling.
That’s awesome! A foodie owning a pizzeria. Love it!
Oh, sorry, don’t take me seriously at all. Adriatico’s is just my favourite pizza joint in Ohio, and Tina gets to eat there every day, making me endlessly jealous.
Adriatico’s is no good. What are you thinking? What is all of OSU thinking? I know I am alone on this one…
My own best friend hates it! But she also hates whipped cream, mayonnaise, and veggie burgers, so I discount her opinion entirely.
I’m way too trusting. :) Neat idea, though.
We have *always* budgeted. I actually have a spreadsheet with the regular bills arranged by due date and income organized by pay check that I refer to every payday to divvy up stuff.
We have an amount we budget for groceries, which includes EVERYthing (bathroom stuff, pet supplies, etc.), an amount for date night every Friday, an amount for “eat out money” (you would fall off your seat if you knew how small that number is per week) and an amount for the lottery. :)
Tips & Tricks (from a person who’s always been poor):
1. Make a list for groceries – and stick to it
2. Make a budget for groceries – and stick to it (I literally use a calculator as I get mine, but I know that’s sooo small town)
3. If you make a strict budget for yourself and intend to stick to it, make sure you allow realistically for the daily stuff and the things you KNOW you’re going to get anyway (coffee, donut, a pair of shoes a week, etc.)
4. Put money in savings BEFORE the budget for the other stuff – in other words, budget for saving, and put it away before you even see it to use for other stuff (our banks will do this automatically for us per payday)
5. Be realistic, but be strict with yourself (resist, resist) or it won’t work
Good Luck!
I went the spreadsheet route, too, and while I know I’ll never be diligent enough to add in all of my entertainment and clothes and restaurant expenses like they always tell you to, what I did do was make columns for:
• rent
• plane tickets
• electricity and gas
• groceries
• SmartyPig contribution
So I know that anything I have left over can be saved or spent in any way I want. So if I want coffee one day and have the cash for it, I’ll get it. But if I don’t, I won’t. And every time I buy something online, I remove that amount of cash from my wallet.
So far, it’s working really well, but I’m a little scared about keeping enough wiggle room for emergencies. When you’re not relying on credit, you realize how little you really do have to spend every month.
Sounds like you’re on the right track!
The only debt we have right now is medical bills, and those have to wait til I have income. We haven’t had a credit card in years. I’ve really only had one a few times in my life and had to max them right after I got them each time (divorce, wedding, car stuff). NOT the way to handle credit. *sigh* Some day…
Oops… and student loans. Ah, yes.
I was actually thinking of your medical bills when I mentioned emergencies. I totally take my health for granted.
I think it’s important that you know debt like that will be ongoing but don’t let it affect the rest of your spending. I used to tell myself, “I don’t make enough money to afford anything, so I’m just going to buy everything I want and not worry about it.” Obviously the exact opposite of what I should’ve done.
The Baltimore market is similar to NY (although not nearly THAT bad) in that while I can’ t afford anything but a shitty fixer-upper rowhouse here, I could easily afford a huge house w/ property back in Ohio where I grew up. Hence, I’m still an apartment dweller.
Housing can be so insane…
And on one hand, there’s a lot that’s great about renting. Never having to fix anything yourself, not worrying about the value of the property decreasing by hundreds of thousands of dollars at the drop of a hat, not having a yard to mow, not having appliances to replace, and on and on.
It just kind of scares me to watch poorer people get pushed farther and farther out into Queens and Brooklyn while prices in Manhattan skyrocket even while real estate is crashing everywhere else. Owning your house at least means you’ll never get priced out of your neighborhood.
Property taxes and – if you own a co-op or condo – common charges can very easily price you out of your neighborhood. Owning only makes you more interested in keeping those costs at bay. I used to love libraries, schools and firemen.
But I think the most interesting part of this post is what you put a deposit on. Or, more accurately, imagining what you might have put a deposit on since you didn’t say. It’s not real estate and it’s not a restaurant. Clearly you’re getting breast implants. Awesome idea. I just hope you’re not going to pretend like you didn’t after you do.
YOU know what it is that I’m putting a deposit on, because you attempted to lure me halfway across the country for an upgraded one and lost your gym friend in the process.
I had no idea you had specific opinions on the adequacy of my rack, so I’m especially glad I wrote this post. Next time, I’ll vaguely hint at other things to learn how you feel about my hairstyle and granny sweaters.
You know I’d flash that shit all over town if I had it, though. Boobs, I mean.
I have never been able to budget. I’m broken in that category.
I also have crippling debt … so … that’s basically how that’s working out for me.
I’m really into spending money. So-called retail therapy totally makes sense to me. But I think saving money might actually feel even better. Although I’ve only been doing this for about a month now, so who knows when I’ll crack and buy up 200 Kindles to line my bookshelves with.
I imagine it’s sort of like my diet. It feels awesome to eat well, to feel healthy, and to lose weight for two weeks. But on the third week, I eat a bunch of Cheetos and remember how fun it is to be fat.
But, um, I still recommend a budget for the times when you’re not spending outrageously?
I know. I’ve tried, again and again. Maybe I’ll do a whole new leaf thing when I move. It seems like the right time to establish new habits. Of course, I suppose I’ll need an income to come up with a budget ….
Yeah, I feel kind of guilty, because I keep wanting to pressure poor Tracey into setting up a SmartyPig goal just because I’m enjoying mine so much, and then I have to remind myself that she’s a lifetime student and will probably beat me if I suggest that she budget for crap when it’s so much more fun just to go out some weekend and buy entirely new major appliances for her house on a whim.
No matter how much money you have, if you spend it all, you will need more.
Kevin and I were just talking about this last night. How do we get back to the mental state where something that costs $100 is expensive to us? If we could do that – if we could feel like $100 is a lot of money, we probably wouldn’t spend so much so regularly and then be disgusted with our consumerist lifestyle.
I think I stopped feeling like $100 was a lot of money as soon as I got a credit card. I just love all of that cash back and those airline miles and the whole deal. But I realize that when it’s not physical cash I’m spending, I never feel like anything’s too expensive.
Maybe you should try what I’m trying and just give yourself a set amount of cash at the beginning of the week and not allow yourself any more once that’s run out.
That’s actually what we’ve been doing. But then someone pukes on the carpet and we need to call ServePro, or the DPFE sensor in my SUV goes bad. Goodbye $300.
True stories. All of them.
That must have been SOME puke. This is why being an adult is scary. I hear my co-workers who own homes say things like, “The upstairs bathroom flooded, and I had to spend $3k replacing the flooring.” And I’m like, “I’m not equipped to handle having an upstairs, let alone re-flooring one!” Eek.
Something that helps me save is using an online savings account separate from my checking. I have Bank of America for checking and ING for savings. ING has tad bit higher of interest rates than brick and mortar banks, so I get a couple bucks more back each month, and it takes about two days to transfer money from my savings to checking, so I really think about touching my savings when I have the urge to impulse buy.
I love that idea. I actually set myself up a nice savings account before I noticed that my bank charges me a FEE if there’s not a certain amount left in it. Luckily, SmartyPig pays a pretty decent quarterly dividend, so I can build a little interest while I save up, but I don’t want to put ALL of my money there. I’ll have to look into ING.
Along the lines of transferring funds, the availability of ATMs is really killing me here.
I use mint.com to keep track of my spending which I like because it gives a really clear visual of where it all goes. I don’t keep a strict budget, but then I am a naturally frugal person and feel guilty about pretty much any large unnecessary purchase. The only time I really budgeted when I was living in England, and then I would play the game “how many meals can I make with 10 quid worth of groceries.” It’s kind of amazing how far you can make your money go with a little effort and planning.
I also have my checking account set up to transfer a small amount in savings each month. It’s not enough that I really miss it, but it adds up over time.
Um, in about two seconds of looking around and adding my accounts, I LOVE mint.com. Thank you!
I USED to be a naturally frugal person when I was a kid and got the tiniest allowance from my parents, but as soon as I started making a little money, I suddenly saw all of the ways in which I could improve my life with THINGS. Ugh. Especially while living abroad, I have no idea how you managed to not buy everything in sight.
God, that link made me feel ill for so many reasons. I’m sure the people who make a million dollars a year have similar justifications for why that “somebody else, those rich bastards” should pay taxes.
I never was able to stick to any sort of chart-like budget but always try to calculate my bank and savings account balances and the rates at which they’re going up (or down, like now). It’s something I can actually do. In New York and and in most places (so maybe big town Ohio and not small-town Ohio?), the vast majority of your money is spent on rent. So if you don’t live in *the* trendiest area (finger is pointed at you, Williamsburg-er), and you search really diligently for a well-priced apartment, you can have much more significant savings than cutting back on say…the bagels and lox of the day. But bagels and lox is ridiculously expensive. I bet that’s where all the bagelshop moguls make their millions.
NYC actually has a lot of programs for low and middle income people to buy houses/apartments. If you make 50,000 a year, and are really good at paperwork, I think you can, eventually, have a passable home.
Those low- to middle- income house-buying programs always drive me crazy, because I make juuuuuuuuust enough not to qualify for any of the ones I’ve seen, and I’m always like, “Effin’ poor people, suckin’ up all the good housing!” But then I remind myself that I’m a socialist and go back to my giant bedroom in my apartment in *the* trendiest area and feel okay about myself.
I know you’re right, though. My rent is OUT OF CONTROL. When I hear people say that your rent should constitute no more than a quarter of your rent, I scoff and then throw up. But I would basically pay anything for convenience and for, like, not living in a hovel, so I guess I have to be prepared to never have a savings account in the double digits.
People who live in the ghetto and lead really artistic lives that don’t involve $100 dinners always seem so romantic to me somehow, but I don’t think I’m cut out for that. Even when I lived with two other people in college and was paying $250 in rent, I was buying iBooks and TVs and all sorts of things to make me feel like I was rich.
I am NOT a buyer-then-returner. I don’t make that many impulse purchases, and by golly, when I do, I intend to stick to my frivolity.
But then last week, there was a Huge Fiasco™ involving customs not releasing my dog to my father (absolute insanity; for a while we didn’t know if they even WOULD, or if I’d have to skip work, fly down to Atlanta that same day, sign off on her myself… customs kept her in a shipping crate with no food, water, anything for well over 30 hours). ANYWAY, end result of Huge Fiasco is that I zombie-walked into Sephora…
And bought a $32 Makeup Forever compact…
And then was like WTF; I shouldn’t be buying this right now.
And returned it.
I thought you might think I’m making it up to copy you or something, so here is a photo of the return receipt:
http://img.photobucket.com/albums/v192/novelnovelbits/mufereturn.jpg
And this is why we’re friends. I mean, in addition to being prettier, smarter, and generally better than everybody else, obviously.
Duuuuuuuuuuuuude. That customs craziness is terrifying. And ANNOYING.
Unfortunately, I am nothing but impulse purchases. For instance, when I wanted a new laptop in college “on which to write my thesis, because you can’t write a thesis if you’re not in front of the TV watching ‘Laguna Beach'”, instead of saving up and purchasing it online with the proper specs like a normal human, I had to march into the Apple store AT THAT MOMENT with credit card in hand and pick up whatever was available, which turned out to have waaaaaay not enough RAM and haunted me for the next five years until I could afford to buy another one.
Anyway, what I’m saying is that you should turn right around and re-buy that compact, because at least you didn’t feed your feelings with ice cream like anyone else would’ve done, and you should reward yourself with debt.
How’s Brad?
I have never budgeted, which is really stupid considering what I’m like, but I have always had this mindset that if you run out of money you can always find a way to make more. Things like recession and rampant poverty throughout the nation probably speak against this point, but I always come back to it anyway. So far so good, I guess.
I have, however, scaled way back on impulse purchasing lately and developed this weird buyer’s remorse thing I’ve always heard about but never understood that has led to me becoming a frequent item return-er. So, baby steps?
PLUS, now that I’m completely house-poor in NYC once again (so worth it) I’m implementing all those rules like 1.) Never pay for my own drinks; 2.) Convince my new employers that a pencil skirt and a button-down totally counts as “corporate best” so I can return Banana Republic’s entire suiting department; and 3.) Never eat again.
Honestly I think this city makes people smarter about money.
Funny–I kind of always assume the opposite with money. I’m like, “This is all I have, and this is all I’ll ever have, so I’d better start planning for retirement using it.” I guess I could always get a second job, but unless it’s stripping–which I assume is what you have in mind–that 9 bucks an hour ain’t gonna help much.
I hate that forcing myself not to buy a lot has made the tiniest purchases suddenly seem important. Like, I bought a $4 double pack of lipglosses the other day and immediately thought twice about it as soon as I checked out. FOUR DOLLARS. For two!
I like your rules. They don’t in any way apply to me, but I should probably develop my own similar set that involves, like, never paying for my own cupcakes or something.
I’m so proud of you! Normally, I’m a big believer in budgets, but the wedding has blown a crater-sized hole in the middle of that right now, so you know.
What’s the life-changing decision?! I’m dyin’ over here!
I think about you when I’m budgeting, because I know you have to be on top of it as a writer. I hope I never, ever get an advance on the romance novel I’m someday sure to write, because you KNOW I’d blow it immediately on, like, a pool for my apartment’s living room. I totally don’t blame these one-hit wonder R&B stars who make a few million, buy a mansion, and declare bankruptcy ten days later.
You already know about the life-changing decision from my LJ. No biggie, really.
I used to want to live in a big city and pay big city prices but then I decided that I’d rather be a home owner in the subburbs. I’m SO lame.
Yah, so my house has 4 bedrooms, is two stories, has a two car attached garage 2000 Sq feet and is on a cul-de-sac in the subburbs of Pittsburgh. And I paid less than 200k for it. While, yes, it says something about Pittsburgh, you’d be amazed at the taxes I spend yearly…OUCH!
When it comes to saving and budgeting, what my husband and I do is pay for everything on our discover card and then once a month pay it all off. Every last cent. Not only do we get cash-back bonuses, but we also know how much we spent in one place. It has those fancy graphs and pie charts and such. I find it so much easier to just pay everything off in one place.
However – when I was not married and I didn’t have a great job, what I’d do was only use cash. That’s it. I’d give myself so much a week and if I ran out, I ran out. SOL, you know? It worked and it worked well, because we were then able to put a nice down payment on our house.
I do applaud you though, on saving! Take those bulls by their balls!
I think some people are just meant to have luxuries like cars and children, and some people are meant to pay $900 a month to live with a near-stranger. Funnily enough, though, after living here for 5+ years, I feel like I actually prefer my boyfriend’s studio to a big house. But who knows how I’ll feel in another 5 years.
I love your idea of using the same payment method everywhere and seeing how you spend all of your money, but it’s just become apparent to me that I don’t consider credit card money real money. I was buying three plane tickets at a time just to have them ready and then not paying them off for months. Awful! So I think I’ll go to the cash route for now and switch to the credit card route when I become a big girl.