Author Topic: Case Study - 20something Couple in Manhattan  (Read 4684 times)

Sweetpotatofries

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Case Study - 20something Couple in Manhattan
« on: June 17, 2016, 11:54:42 AM »
Background: Couple looking to figure out ways to save next year. Will share 1-bedroom apartment in Manhattan, both work in Midtown. One person's salary is $107K, the other will be $50-70K depending on job found. If living on far East Side between midtown-east 80s, can walk to work and save MetroCard fare.

If we assume gross pay for both will be $160K, between fed/state/local tax (25% federal, 6.65% NY State, 3.6% NYC) take home will be closer to $110K.



Monthly Expenses:


Rent - $2,500 (?)

401K for Person 1 - $1,500

401K for Person 2 - $1, 500

HSA Contribution - $300++

Combined Student Loans - $1400

Health Insurance - $250

Co-Payment for Doctor/Dental Visits $30 per month

Utilities - $100

Internet - $15

Netflix - $8 (one screen)

Cell Phone - $60 (for one person, other's covered by work)

Laundry - $40

Dry Cleaning - $15

Vitamins/Medications - $15

Toiletries - $20

Household Supplies - $20

Transportation - $110 including occasional MetroCard usage for each person ($50 per month), Train to family home for weekend visit - $60 for both people round trip

Food - $500

Gifts/travel to weddings - $100/month when averaged out

Other travel - $100/month averaged out

Clothing - $40/month averaged out

Blog - $15 for hosting (don't make an income stream yet, it's a "healthy living" blog that does have ads but not the reach needed. Looking to change for side income).


Assets: Between the two, have $120K in savings (half in current 401K/IRAs) and $50K interest for one person in apartment owned and rented out (outside NY).

Liabilities: $85K in interest-free student loan for one person, $20K loan @ 4% interest rate for other person. Paying off at $1k/month and $400/month respectively.


Anything we're missing? Any ideas on ways to cut costs in these areas?

We're also interested in trying to see if we can live solely off the one (higher) income and save the rest for reasons that might make sense down the road. Granted, that might come with a move to the suburbs (rents in White Plains, NY/Stamford, CT/etc are much lower for a similar size and condition apartment or condo).








 
« Last Edit: June 19, 2016, 07:15:55 AM by Sweetpotatofries »

2Birds1Stone

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Re: Case Study - 20something Couple in Manhattan
« Reply #1 on: June 17, 2016, 11:58:50 AM »
You can rent for much less than $2500 if you are creative/patient.

I would recommend you both contribute to IRA's Roth or traditional depending on Tax brackets, MAX out HSA.

mozar

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Re: Case Study - 20something Couple in Manhattan
« Reply #2 on: June 17, 2016, 12:19:50 PM »
If you want to pay 2500 you'll be looking at studios. Don't let a broker tell you that you "need" a one bedroom so you can be in separate rooms.

czr

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Re: Case Study - 20something Couple in Manhattan
« Reply #3 on: June 17, 2016, 12:22:41 PM »
I think you are missing monthly expense lines like things for Drinking/Entertainment, Clothing, and Misc. Household supplies unless those are built in to the other ones. These numbers are too round though. I'd try to track every single red penny spent for few months so you have more accurate numbers. That rent is expensive not so bad as long as you are close to work but that is the biggest thing that stands out.

Sweetpotatofries

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Re: Case Study - 20something Couple in Manhattan
« Reply #4 on: June 17, 2016, 12:24:58 PM »
If you want to pay 2500 you'll be looking at studios. Don't let a broker tell you that you "need" a one bedroom so you can be in separate rooms.


We decided we needed 1 BR because currently, the studio means that if one person gets home from work at 10-11pm and has to keep working, the other person can't sleep. Fairly common scenario for us. We've found some 1 BRs on the far East Side between $2100-$2500/month and would try to get it on the lower end, but that might mean sacrificing being close enough to walk to work, so the cost/benefit would be negligible.


I think you are missing monthly expense lines like things for Drinking/Entertainment, Clothing, and Misc. Household supplies unless those are built in to the other ones. These numbers are too round though. I'd try to track every single red penny spent for few months so you have more accurate numbers. That rent is expensive not so bad as long as you are close to work but that is the biggest thing that stands out.


The numbers are definitely estimates right now. We don't spend $$ on drinking (I don't drink and he only drinks when it's paid for by work!). Clothing, neither of us buys much although I do buy new running shoes 1-2x/year (both of us run and workout outdoors so no gym fees). We did forget to include household supplies. While we both use Mint separately, we're trying to figure out how it will be when we combine finances at the start of next year, which does make it tough.

« Last Edit: June 17, 2016, 12:27:04 PM by Sweetpotatofries »

charis

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Re: Case Study - 20something Couple in Manhattan
« Reply #5 on: June 17, 2016, 12:57:30 PM »
If you want to pay 2500 you'll be looking at studios. Don't let a broker tell you that you "need" a one bedroom so you can be in separate rooms.


We decided we needed 1 BR because currently, the studio means that if one person gets home from work at 10-11pm and has to keep working, the other person can't sleep. Fairly common scenario for us. We've found some 1 BRs on the far East Side between $2100-$2500/month and would try to get it on the lower end, but that might mean sacrificing being close enough to walk to work, so the cost/benefit would be negligible.


I think you are missing monthly expense lines like things for Drinking/Entertainment, Clothing, and Misc. Household supplies unless those are built in to the other ones. These numbers are too round though. I'd try to track every single red penny spent for few months so you have more accurate numbers. That rent is expensive not so bad as long as you are close to work but that is the biggest thing that stands out.


The numbers are definitely estimates right now. We don't spend $$ on drinking (I don't drink and he only drinks when it's paid for by work!). Clothing, neither of us buys much although I do buy new running shoes 1-2x/year (both of us run and workout outdoors so no gym fees). We did forget to include household supplies. While we both use Mint separately, we're trying to figure out how it will be when we combine finances at the start of next year, which does make it tough.

Yikes to the bolded.  I hope this is either temporary or you expect an income jump.

Sweetpotatofries

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Re: Case Study - 20something Couple in Manhattan
« Reply #6 on: June 17, 2016, 01:08:51 PM »
If you want to pay 2500 you'll be looking at studios. Don't let a broker tell you that you "need" a one bedroom so you can be in separate rooms.


We decided we needed 1 BR because currently, the studio means that if one person gets home from work at 10-11pm and has to keep working, the other person can't sleep. Fairly common scenario for us. We've found some 1 BRs on the far East Side between $2100-$2500/month and would try to get it on the lower end, but that might mean sacrificing being close enough to walk to work, so the cost/benefit would be negligible.


I think you are missing monthly expense lines like things for Drinking/Entertainment, Clothing, and Misc. Household supplies unless those are built in to the other ones. These numbers are too round though. I'd try to track every single red penny spent for few months so you have more accurate numbers. That rent is expensive not so bad as long as you are close to work but that is the biggest thing that stands out.


The numbers are definitely estimates right now. We don't spend $$ on drinking (I don't drink and he only drinks when it's paid for by work!). Clothing, neither of us buys much although I do buy new running shoes 1-2x/year (both of us run and workout outdoors so no gym fees). We did forget to include household supplies. While we both use Mint separately, we're trying to figure out how it will be when we combine finances at the start of next year, which does make it tough.

Yikes to the bolded.  I hope this is either temporary or you expect an income jump.


That's the person with the $107K income - financial services industry, second year working. Expecting income to climb to $130K for Y3/4, typical for very specific niche industry is $200K+ (with bonuses) by Year 6/7. Of course we'd like to see if the two of us together can live off the one ~$100K salary so that if kids come along we can still manage on the one salary.

aFrugalFather

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Re: Case Study - 20something Couple in Manhattan
« Reply #7 on: June 17, 2016, 01:10:51 PM »
While we both use Mint separately, we're trying to figure out how it will be when we combine finances at the start of next year, which does make it tough.

Can't you just make a new (third) mint account with both your accounts in it so you get an easy accurate total spending?

Sweetpotatofries

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Re: Case Study - 20something Couple in Manhattan
« Reply #8 on: June 17, 2016, 01:25:17 PM »
While we both use Mint separately, we're trying to figure out how it will be when we combine finances at the start of next year, which does make it tough.

Can't you just make a new (third) mint account with both your accounts in it so you get an easy accurate total spending?

We had not thought of that but thanks for the idea!

Mariposa

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Re: Case Study - 20something Couple in Manhattan
« Reply #9 on: June 17, 2016, 02:05:40 PM »
First of all, $160k is a lot of money (even for NYC), so congratulations!

We lived on the UES for 4 years and then bought a place in Queens last year when we had our baby. A couple of thoughts:

-25% is your marginal fed tax rate, not the overall federal taxes you pay. Also, don't forget FICA at 7.45%. Looks like you'll be sheltering some of your income with 401k, IRA, HSA, etc. I'm guessing your overall tax burden will be closer to 40k rather than 50k. This is a decent calculator for NYC: https://smartasset.com/taxes/new-york-tax-calculator

-$2500 is a reasonable budget for a small (~500-600 sq ft) apt on the far east side. Right now, it's a long walk to the train station, but things should be better when the 2nd Ave subway opens.

-Try to get the transit benefit from your employer, and you'll save ~42% (your marginal tax rate) off that $115 unlimited metro card.

-NYC is a really bikeable city. If you're willing to bike commute to work, you can expand your radius of neighborhoods that don't require an unlimited metro card.

-$500 is a reasonable food budget if you are doing a fair amount of cooking at home. Plenty of people at your income level eat BLD out.

Choices

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Re: Case Study - 20something Couple in Manhattan
« Reply #10 on: June 17, 2016, 03:01:47 PM »
Once you combine finances, pay off all your debt immediately and before you purchase a home. If your interest in the apartment can be liquidated, this will get you halfway there.

chesebert

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Re: Case Study - 20something Couple in Manhattan
« Reply #11 on: June 17, 2016, 03:20:06 PM »
First of all, $160k is a lot of money (even for NYC), so congratulations!


Really? That's like an effective salary of $60-90k in flyover countries. Good pay? yes. A lot of money? hardly.

2Birds1Stone

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Re: Case Study - 20something Couple in Manhattan
« Reply #12 on: June 17, 2016, 07:51:39 PM »
First of all, $160k is a lot of money (even for NYC), so congratulations!


Really? That's like an effective salary of $60-90k in flyover countries. Good pay? yes. A lot of money? hardly.

It's 3X+ median US household income ;)

ShoulderThingThatGoesUp

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Re: Case Study - 20something Couple in Manhattan
« Reply #13 on: June 17, 2016, 08:58:04 PM »
First of all, $160k is a lot of money (even for NYC), so congratulations!


Really? That's like an effective salary of $60-90k in flyover countries. Good pay? yes. A lot of money? hardly.

Which a couple with degrees can easily pull without working 16-hour days...

brooklynmoney

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Re: Case Study - 20something Couple in Manhattan
« Reply #14 on: June 17, 2016, 09:42:12 PM »
Utilities seem very high. I pay about $40 in gas and $60 in electric and I have central air and heat in a 750 square foot place. Of course I do my best to not use them.

erae

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Re: Case Study - 20something Couple in Manhattan
« Reply #15 on: June 17, 2016, 10:06:52 PM »
The cost of renting on the UES is greater than the cost of a second unlimited Metro card. We've been out of NYC a year or so, but I think a pass is only $112 or $119/month. If you want to live on the UES and walk to work for lifestyle reasons, fine, but that is costing you money vs. staying in a cheaper part of town and buying a second Metro card.

Mariposa

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Re: Case Study - 20something Couple in Manhattan
« Reply #16 on: June 17, 2016, 11:00:22 PM »
Utilities seem very high. I pay about $40 in gas and $60 in electric and I have central air and heat in a 750 square foot place. Of course I do my best to not use them.

Agree. We pay about $50 a month for electricity and $16 for gas for our 1100 sq ft place in queens. Electricity in this city is expensive, but we use less of it in our comparatively small living spaces.

Mariposa

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Re: Case Study - 20something Couple in Manhattan
« Reply #17 on: June 17, 2016, 11:24:11 PM »
The cost of renting on the UES is greater than the cost of a second unlimited Metro card. We've been out of NYC a year or so, but I think a pass is only $112 or $119/month. If you want to live on the UES and walk to work for lifestyle reasons, fine, but that is costing you money vs. staying in a cheaper part of town and buying a second Metro card.

I don't know. Rents in almost every NYC neighborhood with a good commute has been going crazy. Even where we live in Queens, you can now expect to pay $2000+ for a 1-bedroom. The far east side is the cheapest neighborhood to rent in Manhattan south of 96th street. The op could save some money renting in East Harlem or Washington Heights. Or live in the Bronx. Depends on their priorities & what they want from their neighborhood.

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Re: Case Study - 20something Couple in Manhattan
« Reply #18 on: June 18, 2016, 04:25:35 AM »
Utilities seem high we spend somewhere in the 50-200 range on an 800 sf apartment with high ceilings and we are not mustachian about our power usage because we have a small dog who overheats and needs the air conditioner.  When looking at rentals make sure to get one that includes heat/hotwater/sewer.  We wound up in a place in queens that charges us for water/sewer which is just stupid for NYC.

Is the person working financial services in FiDi?  If that's the case you might do better looking in brooklyn and using some amount of citibike for commuting.  Granted the far upper east side isn't bad to look especially since the 2nd ave subway line will supposedly open in December.  You might also consider living in Jersey City instead to avoid the 3.5% NYC income tax which would save you (currently) 5k in annual income tax.  The NYC income tax is a bitch.  There are places around grove st that are pretty nice and grove st is a nice area off of the path.  (Again this is assuming FiDi for the financial services person, disregard if otherwise - it wouldn't be a terrible commute for the UES based person -- path to 4/5/6 probably under an hour).  A monthly path card is $89 which you'd have to consider, but you'd save a lot in income tax, still live in a nice area, and probably find a nicer apartment.  I'd bet the commute from Jersey City to FiDi is shorter door to door than the commute from far on the UES to FiDi.

For cellphones: I just switched to cricket ($35 per month if you are on autopay for 2.5 gigs of data, unlimited talk and text) and I get great service all over NYC.  It uses the AT&T cell phone network.

You should be maxing out all of your ways to reduce pretax income - HSA, Roth IRA, and 401k.



Sweetpotatofries

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Re: Case Study - 20something Couple in Manhattan
« Reply #19 on: June 19, 2016, 07:14:51 AM »
Utilities - this was a high estimate, and we were counting not just heat/AC/water but also Internet and other stuff that we separated out reflected in the new list. Also took into account TRIP benefits through work for the MetroCards.

Currently both people have Midtown jobs (Grand Central area) so the thought right now is actually looking toward White Plains/Stamford as easy commutes to Grand Central, with the potential for one person to take a job in one of those cities instead, if we can figure out whether the difference would really be significant in rent/food/utility costs versus higher transportation costs.

We're maxing both 401Ks right now (so I don't think we can also do IRAs, correct me if wrong?) and plan to continue. We would max HSA if we were able to given the combined incomes.

BadWolf

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Re: Case Study - 20something Couple in Manhattan
« Reply #20 on: June 19, 2016, 07:37:48 AM »
$120 is really high for cell phones. I'm with Ting (https://znf21s30lna.ting.com/) and for two adults we pay a total of $26/month + tax for 500 minutes and 1000 messages [no data - just use free wi-fi which is almost ubiquitous these days]. If you can take your devices to Ting or similar, you could save close to $100/month.

Sneaking up here from my own NYC-related post for some tips.

What's the deal with Ting? How does it work? I browsed around their website but I'm not sure I understand how they sell mobile devices for half the price....quite intriguing.

Mariposa

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Re: Case Study - 20something Couple in Manhattan
« Reply #21 on: June 19, 2016, 11:35:50 AM »
Currently both people have Midtown jobs (Grand Central area) so the thought right now is actually looking toward White Plains/Stamford as easy commutes to Grand Central, with the potential for one person to take a job in one of those cities instead, if we can figure out whether the difference would really be significant in rent/food/utility costs versus higher transportation costs.

Any higher transportation costs would be more than offset by the NYC tax you don't pay outside the city. But if your partner is coming home at non-peak times, the trains may not run very often then. Also, if you don't live within walking distance of the train station in White Plains/Stamford, you'll be adding a leg of bike/car commuting.

Personally, I love living in the city and being able to ride the mta anywhere 24/7. There are green spaces & plenty of free activities to take advantage of during the weekend. And we pay NYC income tax for that privilege.

Mariposa

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Re: Case Study - 20something Couple in Manhattan
« Reply #22 on: June 19, 2016, 11:54:09 AM »
$120 is really high for cell phones. I'm with Ting (https://znf21s30lna.ting.com/) and for two adults we pay a total of $26/month + tax for 500 minutes and 1000 messages [no data - just use free wi-fi which is almost ubiquitous these days]. If you can take your devices to Ting or similar, you could save close to $100/month.

Sneaking up here from my own NYC-related post for some tips.

What's the deal with Ting? How does it work? I browsed around their website but I'm not sure I understand how they sell mobile devices for half the price....quite intriguing.

Just switched to Ting myself (from a T-mobile pre-paid plan), after reading some of the communications threads on this forum. So far so good. The devices Ting sells are cheap because many of them are refurbished.