Author Topic: Case Study: NYC on a budget  (Read 5658 times)

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Case Study: NYC on a budget
« on: January 04, 2018, 11:32:30 AM »

Long time lurker and MMM reader here! My wife and I just completed our first full year living and working in NYC. I’m not really looking for anything specific out of posting this, I just wanted to write down all the numbers somewhere, but comments are welcome! Our goal is to become FI within 10 years.

Life Situation:
Married filing jointly, 25 & 26 years old, no kids (we plan to have one in around five years)
Canadians living in NYC - we’ll probably have to return to Canada eventually.
Unlike most New Yorkers, we have a car (you can park on the street in Brooklyn). It’s a hassle and we never use it in NYC, but we drive to visit family (~700 miles roundtrip) probably 10x annually. It’s cheaper than flying. I’m on my father’s insurance plan which he generously pays for.
I use Mint religiously.

Income:
Our combined gross salaries are 112k annually (~75k net), plus I have a small side business which brings in variable amounts - about $24k after-tax for 2017 (will probably shrink in 2018). We’re hoping for some big wage growth soon; I’m currently looking for a job that comes with a big raise (~$30k).
No 401k offered by our employers, but that might change in 2018.
My employer pays 100% for my zero-deductible health insurance. I have $20/month deducted for dental insurance for the both of us, and my wife has $235/month deducted for high-deductible medical insurance.
Current net income is around $99,000 annually.

Assets:
Taxable brokerage account: $270,000
Traditional IRA: $11,000
It’s all in equity ETFs, split 50/25/25 American/International/Canadian. No bonds since we’re young and very risk tolerant and I’m mentally prepared for a recession.

I should mention that my wife and I are both ridiculously privileged in this area. Wedding gifts, inheritances, and other gifts probably account for around $180k of our nest egg. We also both have Bachelor’s and Master’s degrees from a Canadian university at the cost of only a few thousand annually, which our parents generously covered. I also got a scholarship and was a TA during my Masters. Since we lived with parents rent-free throughout our education (our current home is our first), we graduated with more money than we started with.

Expenses:
Total: $3,450/month or $41,400/year, for a savings rate of 58%.

Our average monthly expenses are:
Rent: $1700 Half our total expenses. One bedroom in Brooklyn, a great deal for our neighborhood.
Travel: $530 Our biggest expense, which I view as a good thing.$6,362 for around 35-40 nights on the road. We are big travelers. This includes a three week honeymoon around the world, a 9 day hiking vacation in the Canadian Rockies, and numerous long weekends. It includes all expenses from the Uber to the airport to the Uber home. We are travel hackers/credit card churners so most of our flights and some hotels are free. It does not include road travel to visit family.
Groceries: $302 Surprisingly, this is less than the $352 you’d get from food stamps. To be fair, it does not include food when we travel (probably 6 weeks of meals overall) or restaurants (around twice weekly). It does include the NYC price premium. We’re vegetarians so no expensive meat. Otherwise, I don’t understand how others spend more than we do. We buy lots of berries, produce, frozen meals, $6 pints of ice cream, the occasional farmers market, and even a tiny $7 yogurt from time to time. I estimate that 90% of our calories can be covered by $100 a month and the rest goes to what we consider luxuries. We don’t shop with our middle finger.
Restaurants: $215 We like eating out. Almost always at “inexpensive” place (that’s $10-$12/meal + 25% tax/tip in NYC).
Utilities: $76 Electric & gas. Heat and water are included in rent.
Internet: $45 My $35 promotional rate just finished
TV: $25 We have Sling TV, plus occasionally we pay for Hulu. We mooch off my MIL’s Netflix account.
Phone: $50 T-Mobile unlimited $100 for two lines. Includes free calling/texting/4g to/from Canada which we highly value. My wife’s half is reimbursed by her employer.
Public Transit: $80  My wife takes the subway to/from work 4x weekly (1 day works from home). I walk to work, a mile each way. This also includes the very occasional Uber.
Car Expenses: $92 This includes gas, tolls, repairs, and two parking tickets. Most New Yorkers should spend $0 here.
Shopping: $116 I can mostly blame my wife for this one
Home: $52 Includes furniture, plants, decorations, etc.
Pharmacy: $46 Includes all toiletries, cleaning products, anything you can get at Walgreens. Not sure how it adds up to this much but apparently it does.
Pet Rabbit: $44 This is mostly paying for someone to take care of him when we travel. It’s not cheap.
Entertainment: $34 Spotify premium, occasional movie/sports game/concert
Laundry/Haircuts: $36 No laundry in our building. We pay $0.90/lb for drop off service. Now I’m addicted to having someone fold all our stuff, so I don’t mind this expense too much.
Gym: $0 FitnessBlender.com > Gym
Misc: $8



According to the Networthify calculator, we can retire in 8.8 years (11.5 if we didn’t inherit anything). Should be even less since we expect raises. I expect that eventually our non-rent expenses will go up a little in FI, especially if we have a kid, but rent/mortgage should be much lower when we leave NYC. Travel costs should also go down, so I expect to spend around $40k forever. This gives us a nice round target of one million.

Thanks for reading if you made it this far!



mo_money_mo_principal

  • 5 O'Clock Shadow
  • *
  • Posts: 26
  • Location: New York, NY
Re: Case Study: NYC on a budget
« Reply #1 on: January 04, 2018, 05:19:28 PM »
Hello fellow Brooklynite! I can definitely relate on having a car to travel to family, worshipping at the church of Mint, and coming from a place of privilege. Though you spend way less than we do and that is enviable (we dine out way too much and do fancy gym stuff). Stay warm in the current "bomb cyclone"!

Engineer93

  • 5 O'Clock Shadow
  • *
  • Posts: 80
  • Age: 31
  • Location: East Coast
Re: Case Study: NYC on a budget
« Reply #2 on: January 05, 2018, 05:35:24 AM »
Can you tell me about your 3 week honeymoon?  I'm getting married in April 2019 and want to do a 2 week trip.  I'm hoping to get the flights paid for by credit cards so I only need to pay for food/lodging.

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Case Study: NYC on a budget
« Reply #3 on: January 05, 2018, 09:55:10 AM »
Thanks mo_money, I enjoyed reading your journal! Lucky you for having a parking spot!
Engineer, we went to the Seychelles, India, and Bali. Spent around $3000 total. It was quite an amazing trip! I'll PM you some more details.

Steeze

  • Handlebar Stache
  • *****
  • Posts: 1205
  • Age: 36
  • Location: NYC Area of Earth
Re: Case Study: NYC on a budget
« Reply #4 on: January 15, 2018, 02:09:06 PM »
Also in Brooklyn! Looks like you are on your way with only a few luxuries and a healthy savings rate. Congratulations on doing this in NYC. Most don't think it is possible.

DW and I are in a similar situation with similar income and expenses except for student loans which we pay 3k/mo on and will be done in July. We only save around 1k/mo. We are 29 & 30 yo and are trying to figure out how to do the baby thing next year. We are just getting started on our FI journey unfortunately. Another 15+ years to go by my estimates. Our only assets are 35k in retirement accounts. DW just graduated from grad school and has been making about 20k/yr. I just started making a decent salary last year. Her income should increase dramatically soon, but with a baby in our plans who knows.

Anyways, best of luck to you! Though you probably don't need it. Cheers.

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Case Study: NYC on a budget
« Reply #5 on: January 17, 2018, 02:53:36 PM »
Steeze, your situation sounds like it will get a lot better very soon! 3k/month extra in savings plus the raise from $20k to something much higher. Good luck with the baby, I'll have to report back in 5 or so years to see how we do when we're your age!

Ihamo, that's a good idea, I've never really thought hard about it. I might go exploring for some cheap produce. It would have to be somewhere close though, I think most of our expenses go towards perishables so our "stocking-up" trips our monopolized by Trader Joe's!

Steeze

  • Handlebar Stache
  • *****
  • Posts: 1205
  • Age: 36
  • Location: NYC Area of Earth
Re: Case Study: NYC on a budget
« Reply #6 on: January 17, 2018, 05:58:47 PM »
Ah! make me sound so old! haha.

As far as groceries, we shop at a market in China Town called iFresh on Mott Street - the produce is much cheaper than a regular market. The store there isn't as well kept as a TJ's and the produce doesn't look like it came out of a magazine like at Whole Foods, but you can get some good deals. Meat is usually far cheaper, particularly fish. Eggs are $1.50 for 2 dozen. Some stuff there is more expensive such as the western style groceries like oatmeal or cereal or US name brand products. Worth checking out anyway.

There is another good grocery in china town on 8th ave in Brooklyn attached to the food court in the mall there. Awesome place to grab a meal in the food court for under $5 and grab groceries for cheap while you are there. Last time I went I snagged a roast duck over rice with veggies for $4.50 and it was a huge serving - menu was all in Chinese though, so good luck!

freya

  • Bristles
  • ***
  • Posts: 476
Re: Case Study: NYC on a budget
« Reply #7 on: January 24, 2018, 06:42:47 AM »
Thanks for the pointer to iFresh!  I've been hitting a grocery on Canal Street close to the 1 train stop, but this looks even better.   There's also the food court in Flushing - is that the one mentioned above?  I was there once and loaded up on groceries that were less than half the prices charged by the local market.

For the meat eaters in NYC:  there are several butcher shops sprinkled around the city.  Some of these are breathtakingly expensive and upscale, but a few are thoroughly old school.  I found a couple in the Hell's Kitchen area, right off the west side bike path.  The Big Apple Meat Market is well known for good deals.

I've had bad experiences with laundry dropoff/pickup services, mainly because I'm allergic to Tide.  The pickup services will happily take your preferred detergent but won't necessarily use it for you.  Great if it works for you, but just so you know, portable washers are a huge lifestyle boost, pay for themselves in short order, and are very easy to use.  It's not hard to find a seller who will send it in "discreet packaging", as this is common as mud in NYC.  I have the Laundry Alternative washer, which is like the Haier but is light enough for me to pick up and carry and easy to hide away at need.  I use it in the bathroom and there's zero chance of a leak, because it's on a bath mat that can absorb a lot of water and I've caulked any potential trouble spots on the floor.


Steeze

  • Handlebar Stache
  • *****
  • Posts: 1205
  • Age: 36
  • Location: NYC Area of Earth
Re: Case Study: NYC on a budget
« Reply #8 on: January 24, 2018, 10:28:26 AM »
The flushing food court grocery is the largest, has the best variety of produce, but is out of the way for me. If I am in that area for some reason I always stop by there.

The brooklyn one on 8th Ave is a different location in a different china town.

tickledginger

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Case Study: NYC on a budget
« Reply #9 on: January 24, 2018, 11:19:56 AM »
Oh, this thread is giving me LIFE. Posting to follow.

We're a bit older and way further behind on our FI journey - working in the creative arts/entertainment can do that - but I'm also so glad to hear of iFresh and will stop by the next time I'm in Chinatown!

FIreSurfer

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Case Study: NYC on a budget
« Reply #10 on: January 24, 2018, 11:49:48 AM »
@mattp
Just want to give you props on the budget- DW and I just left BK for LA, but in BK we had a car, and one subway traveller and one work at home-er, and our per month budget was nearly identical to yours - and I am a serious penny counter I've been told - so I don't think there's much lower you could go.
And we didn't even have an extra bunny mouth to feed!

Keep up the good budgeting, goodness knows its hard in NYC.....when we were poor my ol roomie and I used to try not to leave the apt. with credit cards or bills larger than $5 in our pockets because in NYC "every time you step out of the house you spend $20"....

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Case Study: NYC on a budget
« Reply #11 on: January 24, 2018, 03:29:53 PM »
I'm getting a lot of grocery info out of this thread! I'll have to check them out sometime, although I rarely venture far for groceries.
@TryingtoFIREinLAnow, I think a big thing is that my wife and I are very much homebodies in NYC , especially for our age. Not liking parties/"nights on the town" is a good trait when you want to save money! Unless night on the town means 16 Handles or Ample Hills - ice cream is our weakness.

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Case Study: NYC on a budget
« Reply #12 on: March 06, 2019, 06:59:31 AM »
Thought I'd add a 2018 update!

Life Situation:
We're both full-time remote (but still in NYC)! Through fortuitous circumstances, both of us went from spending 4-5 days at the office to virtually none, while keeping the same job.
- My wife works for a company based out of California. Before my wife was hired the company let their marketing director move to NYC. She hired my wife to create a two-person office. Then she left, my wife got promoted and took over her role, so she's all alone here!
- My company (~150 employees) is based out of Tennessee with a ~20 person office in NYC. Over time I've moved to working almost exclusively with my coworkers in TN (via Slack & video calls), so I go into the office only when I feel like it.

This has worked out really well for us. We often go away for weeklong trips to visit family in Montreal, or rent a place in Maine, stay with family in Florida or Vermont, accompany each other on work trips, etc. We probably spend around around 10 weeks a year working on the road (with nights and occasionally afternoons to ourselves), 4 weeks vacation, and the rest in NYC.

Although we could probably get higher-paying jobs if we started actively looking, we like our current arrangement. Now that we're no longer tied to NYC, we are thinking about moving to New Hampshire where's there is ocean, mountains, no traffic, and no tax! We're looking at Portsmouth, where rent is at crazy NYC levels, but our quality of life should improve.

I am also inquiring with my employer about them sponsoring me for a green card. This way we (especially my wife) can freely work for any company. Most importantly, we can retire in the US, where there are many more options. If it doesn't work out, or Obamacare is repealed, or we decide we want the generous Canadian child tax credit, we can always move back to Canada after getting duel citizenship.


Income:
Me: $100k + 3% 401k match (hoping to get a raise to ~$120k soon)
Wife: $60k + 1% 401k match
Side Job: ~$20k after tax

Deductions:
$38k 401k
$6k HSA
$300 transit card

Net income, assuming 25% future tax on 401k: $138k
If we move to NH, this will increase to ~$149k.


Assets:
Taxable brokerage account: $386,000
Traditional IRA/401k: $48,000
Roth IRA: $18000
HSA: $2100
Credit Cards: -$20,000 (with promo 0% interest)

Net Worth: $434,000 (counting 401k as 100%)


Expenses: (2017 in parentheses)
Total: $3786 or $45,432/year, for a savings rate of 67%.

Rent: $1700 ($1700)
Travel: $552 ($530) Two weeks in Italy and Slovenia, one week in Scotland, various weeklong work-remote trips, long weekend in California.
Car expenses: $357 ($92) We spent $71/month on gas, tolls, and parking. Sadly, we spent $3,426 on maintenance.  My 2011 VW Golf needed no major repairs for the first 7 months of its life, but year 8 was a different story. I needed an expensive new alternator, new summer tires, new winter tires, new battery, and a bunch of other little things. I hope to get many more cheap years out of this car, otherwise I'll have to buy a Honda next time.
Groceries: $276 ($302) We spent around 25% of 2018 outside of NYC, so this might be around $367/month at home.
Restaurants: $197 ($215) See above
Shopping: $214 ($116) A little lifestyle inflation to go along with my wife's $18k raise. She promises to be better this year.
Home: $68 ($52) Furniture, plants, etc., and $5 renters insurance. We have the nicest apartment, so I consider this worth it.
Utilities: $86 ($76) Electric & Gas
Phone: $50 ($50) T-Mobile Unlimited $100 for 2 lines, wife's half reimbursed by her employer.
Internet: $45 ($45)
TV: $28 ($25) Upgraded from Sling to Spectrum (choice of any 10 channels).
Public Transit: $26 ($80) I started getting commuter benefits in March so public transit expenses are taken out of my paycheck pretax and not counted as an expense.
Pharmacy: $36 ($46)
Pet Rabbit: $55 ($44) Mostly boarding when we travel. Sadly, he passed away in early 2019 at the old age of 9.
Entertainment: $50 ($34) Movies, Spotify Premium, occasional concert/sports game.
Laundry/Haircuts: $45 ($36)
Healthcare: $0 ($0) We have a high-deductible plan now, but my employer contributes $104/month to my HSA which more than covers everything.



freya

  • Bristles
  • ***
  • Posts: 476
Re: Case Study: NYC on a budget
« Reply #13 on: March 07, 2019, 06:48:57 AM »
You guys have it made!!  That telecommute setup is outstanding.  Congrats.  Also congrats for keeping spending so tightly locked down.

I assume "shopping" translates to "clothes"?  $200/month clothing budget is not bad, really, as long as your wife cuts back once she's done with the wardrobe update.  It helps to go through everything in the closet & drawers, get rid of things you don't wear anymore, and rediscover stuff at the bottom of the drawer before you buy something that closely resembles it.  If you're both no longer office rats, there should be no need for expensive workwear.

One danger of your working from a distance plan is the out of sight, out of mind problem.  Eventually you may find yourselves being regarded as increasingly peripheral by the company and a good layoff candidate.  However, with your savings rate you probably only need to keep these jobs another ~6 years.  If you can keep up the side gig you could be FI a lot sooner, maybe 2 -3 years.

Let us know how it goes for you in New Hampshire!

JoshuaSpodek

  • Bristles
  • ***
  • Posts: 285
  • Location: Manhattan
    • Leadership, values, meaning, purpose, importance, passion
Re: Case Study: NYC on a budget
« Reply #14 on: March 07, 2019, 07:14:07 AM »
If the main reason for the car is driving to Montreal, have you considered selling it and taking the train?

For food, have you considered joining a CSA? I get most of my food from mine in Greenwich Village and hear Brooklyn has some great ones.

Beside your dollar budget, if you also care about your effects on others, the travel is making your pollution and greenhouse emissions budget way over IPCC recommendations. If it's not a concern, it's not a concern, but if it is, there are ways to get the value of travel without it.

MrThatsDifferent

  • Handlebar Stache
  • *****
  • Posts: 2317
Re: Case Study: NYC on a budget
« Reply #15 on: March 07, 2019, 10:44:40 AM »
You’re doing great, change nothing you don’t want to. Since you want to have a kid, maybe project and anticipate those expenses and impacts, but I’m sure your families will help with the kid’s college and such.

mattp

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Case Study: NYC on a budget
« Reply #16 on: March 07, 2019, 02:01:00 PM »
@freya: Shopping is mostly clothes, though also some gifts. Mostly unnecessary!
I'm very aware of the out of sight problem. The move will definitely hold me back career wise. Really, the best thing for me to do (financially) is to look for a better job - in my field I think I could make ~$130k now and hopefully more soon. Or move to my company's HQ in Tennessee, I work mostly with my coworkers there (over video calls and slack). Or move to San Diego where my wife's company is based and she can advance quicker and I can always find a job there (as opposed to NH).
But like you said, I'm only around 7 years from FI anyways. My thought process is that we love being remote, and I think I'd rather 10 years with our current situation than 5-7 years in an office. Plus we can always move to another big job in a big city in 2-3 years (especially if we get green cards). I'm hoping we don't get laid off, which is very possible if there's a recession, but if so we can travel for a year and then try to find another job when the worst is over.
On the other hand, maybe if I tough it out and look for the best job possible, FI could be even sooner and more secure (less likely to be laid off). So I may end up regretting this decision, but hopefully not!

@MrThatsDifferent: yeah, it will be hard to know how much to budget for a kid, but I don't think we'll be too wasteful. We'll aim for a 3.3% withdrawal rate, and we'll work longer for a more expensive house if we want one. College doesn't scare me - if we're conservative, we can save an extra ~$40k (four months longer to FI) for when s/he is born. When s/he is ready for college it should have ~$100k in it! Family is always a backup, though I'd rather not depend on them.

@JoshuaSpodek: I've only heard horror stories about the train. It's always delayed and it's really slow, driving is cheaper and faster. Plus we go on trips to other more rural areas, and we'll need it if we move to NH.
As for travel: we fly only using points or very cheap fares. The airlines buy and fly more planes to sell expensive seats to business travelers. We just take the seats that would have gone empty otherwise.
Also, I'm not a conventional environmentalist. I don't worry about global warming, I think humans will adapt. What I worry about is animals, especially the billions we are currently torturing in factory farms. So I became a vegetarian and travel guilt-free!
« Last Edit: March 07, 2019, 02:08:38 PM by mattp »