Ppl in high cost states - How do you save money?

[PricklyPete]

I'm 38 now, but when I was 25, I was pretty much thinking the same.

I did the following:
1) worked hard at increasing my income
2) Got rid of debt. Once you are used to living without debt, it becomes increasingly difficult to go back into debt and you naturally tend to prolong large purchases.
3) once I got married we switched to just living off of my salary.

Obviously the simple "spend less than you make" statement applies, but there are lots of creative ways you can limit yourself that makes the process easier to deal with.

 

[Exterous]

I feel that I have stepped into crazy land.

I'm a bit surprised that suggesting a low mileage civic or corolla ended up at "crushing his lifestyle down to the absolute minimum necessary for survival." Apparently I've just barely been scraping for the last 11 years that I've driven one. Hell its a high mileage one now so I'm probably almost dead

 

[Svnla]

This isn't necessarily true for everyone. If your skill set is worth enough more on the coasts to overcome the cost of living difference then you're better off on the coasts - Everything else costs the same (cars, electronics, etc), so if you're making 3x the median household income on the coasts vs say the midwest you'll have a lot more buying power in disposable income on the coasts.

Make the money in the high income area, then move and exploit the cost of living difference when you want to retire. The housing/tax load is the price you must pay to play in the high opportunity areas.

Viper GTS

Having been to both sides of the coats (LA and SF on west and NYC, DC, NJ and surrounding area on the east) I do not believe the high cost of living is justified. And the number of 3x income is not correct either. I did check the pay for similar jobs as mine on the coats and at best, they are about 1.5x, not even 2x. I did the calculation and I would be breaking even or just a tiny extra bit. Not enough to move and live there and pay that kind of housing cost. <awe>

Don't get me wrong. I love to travel and spend vacation/fun time on the coasts/big cities but to pay such high price to live there everyday is no go for me. Plus the day to day traffic load would drive me crazy.

Also, while other things (cars, electronics, etc.) cost about the same, other costs associate with things such as car insurance, home insurance are a lot higher in the coasts/highly populated areas.

 

[ponyo]

I'm a bit surprised that suggesting a low mileage civic or corolla ended up at "crushing his lifestyle down to the absolute minimum necessary for survival." Apparently I've just barely been scraping for the last 11 years that I've driven one. Hell its a high mileage one now so I'm probably almost dead

His Mazda3 is not the problem. Trading his reliable econobox for used Corolla won't change much and could negatively impact him in minor way economically if the used Corolla turns out to be a lemon. He knows what he has now. Plus he has to spend time and the hassle of doing the trade. It's not worth it. He already said it would impact him convenience wise for the length of the ownership.

 

[Viper GTS]

My objection was primarily the assertion that any amount of money I'm unwilling to send someone must be meaningful (which is absurd). Secondarily, bashing someone for 'over-spending' on a new economy car two years ago when they appear to have their current finances largely under control is pointless. It's not like he can undo it, and even if he could I'm not going to fault someone for buying a new economy car if they plan to drive it a long time. If someone generally has their shit together the decision to buy a new economy car vs a used one is largely personal preference.

And no, obviously a CPO Civic is not subsistence level.

Viper GTS

 

[ponyo]

well, good for you?

I guess other people have different priorities and needs than ponyo, maybe?

I could eat for several years on that money--and eat well--cooking for myself.

I mainly said that because of his sell the perfectly good fit car and buy used Corolla comment. I could understand it if he bought some crazy wasteful expensive car but he drives a modest Mazda3 econobox. Buying new $17k Mazda3 is not bad purchase. I actually think he made really smart choice with the car. Mazda3, Corolla, Civic are all the same class of cars. I prefer the hatchback feature of the Mazda3.

 

[Exterous]

His Mazda3 is not the problem.

If you want to save money you need some combination of making more and\or spending less. Thus any expense is part of the problem but those expenses may or may not be worth the tradeoffs.

I mainly said that because of his sell the perfectly good fit car and buy used Corolla comment. I could understand it if he bought some crazy wasteful expensive car but he drives a modest Mazda3 econobox. Buying new $17k Mazda3 is not bad purchase. I actually think he made really smart choice with the car. Mazda3, Corolla, Civic are all the same class of cars. I prefer the hatchback feature of the Mazda3.

Good lord. Please point out where I said he should sell it. I specifically asked him if he needed it because he actually might have. Perhaps his job required a truck and that was for his truck. I had no idea what his remaining car payment was or its resale value and still have no idea if his car has any issues . It was a jumping point for a future post depending on his answer but you and Viper jumped in with the 'meaningless savings' and 'crushing lifestyle' BS. Stop making stuff up in your mind and then objecting to it

He already said it would impact him convenience wise for the length of the ownership.

Thats a weak excuse as most things can impact convenience. Its more convinent to pay to have someone clean your house. Doesn't mean its necessarily a good idea for someone looking to save money

Secondarily, bashing someone for 'over-spending' on a new economy car two years ago when they appear to have their current finances largely under control is pointless.

bashing? Please point out where I bashed the OP. All I asked was if he needed it and provided a potential alternative. Do you honestly feel thats bashing?

It's not like he can undo it, and even if he could I'm not going to fault someone for buying a new economy car if they plan to drive it a long time. If someone generally has their shit together the decision to buy a new economy car vs a used one is largely personal preference.

Of course - but its also a cost center and he specifically asked for cost saving options

 

[Viper GTS]

Having been to both sides of the coats (LA and SF on west and NYC, DC, NJ and surrounding area on the east) I do not believe the high cost of living is justified. And the number of 3x income is not correct either. I did check the pay for similar jobs as mine on the coats and at best, they are about 1.5x, not even 2x. I did the calculation and I would be breaking even or just a tiny extra bit. Not enough to move and live there and pay that kind of housing cost. <awe>

Don't get me wrong. I love to travel and spend vacation/fun time on the coasts/big cities but to pay such high price to live there everyday is no go for me. Plus the day to day traffic load would drive me crazy.

Also, while other things (cars, electronics, etc.) cost about the same, other costs associate with things such as car insurance, home insurance are a lot higher in the coasts/highly populated areas.

I wasn't suggesting that you would make 3x on the coasts. If you have a job or jobs (married) that collectively produce a household income 3x the median in either area the amount of money you will have left over in the high cost of living area will be larger. That's using median household income as a rough analogue for cost of living obviously if you want to do more detailed cost of living analysis relative to your desired locations that's fine. It also makes things like retirement contributions have a lower impact on your takehome - Maxing a 401k with 12% contributions etc.

In my specific industry the coasts are the only places that pay well as they're the only places that do it at scale to justify my skill set. At a TV station in the midwest I'd probably make $40k.

Viper GTS

 

[zinfamous]

I mainly said that because of his sell the perfectly good fit car and buy used Corolla comment. I could understand it if he bought some crazy wasteful expensive car but he drives a modest Mazda3 econobox. Buying new $17k Mazda3 is not bad purchase. I actually think he made really smart choice with the car. Mazda3, Corolla, Civic are all the same class of cars. I prefer the hatchback feature of the Mazda3.

well, I paid $12k for my 30k mile, 2008 Mazda3 in 2009. (not the hatchback, which I wanted, but yeah--that $4k+ difference b/w the two)

but...I agree. And that is not the type of money I want to pay for a car but, like you, it was about getting a newish car that will last 10-15+ years until I kill it dead, dead, dead. My comment was not about selling what you now have and do something else, but: don't do that again! Yes, not helpful now, but still.

I paid off that loan ~3.5 years later.....5 years behind what I wanted to do, but whatever. Living in CA was freaking expensive. I've only put ~28k miles on that car in 8 years, and that includes a 3k mile trip across the country 2 summers ago. ....The fact that I only drive when I absolutely need to means I also save a sh$t$n in fuel and maintenance costs. everything adds up!

 

[rh71]

This is why I like to live in cheaper cost of living area. I can save a lot more money and can retire and do my things on my own a lot faster than living in the coasts.

<<-- is saving at least $20K a year after all expenses and investments/retirement/vacation/fun money/misc expenses.

You can save more than that in a year in a high cost of living area so long as your income is high enough, which usually comes with the territory. What defines high cost of living here on LI is the taxes ($15k for a house). If [dual] income can make up for that and then some (ie. $250k household), the +$10k taxes are no big deal. Milk, gas, water, electric, etc. are not all that different.

The big issue about being here is the initial cost of a house and saving for that if you have debt. But in short, savings is obviously a product of your income/expense differences and not just a simple high cost of living location. Savings amounts can vary greatly from neighbor to neighbor depending on what they do.

 

[z1ggy]

FWIW, coworker said average bonus is around $10k pre tax, and 4% annual raises. I'm hoping that because I'm in sales now and deal with customers etc, that I'm at the forefront of the company and worth more than 4% per year.

 

[Platypus]

FWIW, coworker said average bonus is around $10k pre tax, and 4% annual raises. I'm hoping that because I'm in sales now and deal with customers etc, that I'm at the forefront of the company and worth more than 4% per year.

If you're genuinely worth more than what they're going to give you then go find some place that will pay you what you're worth. That sounds like back handed advice but it's sincere/honest. If you've tried all avenues internally to get compensated appropriately, it's probably time to move on. There are a lot of factors we don't know about your situation though, but in general based on what you've said, that is my opinion on it.

 

[Anubis]

well, I paid $12k for my 30k mile, 2008 Mazda3 in 2009. (not the hatchback, which I wanted, but yeah--that $4k+ difference b/w the two)

but...I agree. And that is not the type of money I want to pay for a car but, like you, it was about getting a newish car that will last 10-15+ years until I kill it dead, dead, dead. My comment was not about selling what you now have and do something else, but: don't do that again! Yes, not helpful now, but still.

I paid off that loan ~3.5 years later.....5 years behind what I wanted to do, but whatever. Living in CA was freaking expensive. I've only put ~28k miles on that car in 8 years, and that includes a 3k mile trip across the country 2 summers ago. ....The fact that I only drive when I absolutely need to means I also save a sh$t$n in fuel and maintenance costs. everything adds up!

i put 28k on my car yearly simply driving to and from work. 28k over 8 years is well below the average a person drives

 

[rh71]

^ hell I work from home F/T and my 8 year old car has 52k miles.

 

[z1ggy]

If you're genuinely worth more than what they're going to give you then go find some place that will pay you what you're worth. That sounds like back handed advice but it's sincere/honest. If you've tried all avenues internally to get compensated appropriately, it's probably time to move on. There are a lot of factors we don't know about your situation though, but in general based on what you've said, that is my opinion on it.

It's tough to say. This job is a bit different than my last, but my last job I averaged about 5% per year, so I assume overall I am a good employee. 4% is good, but since there's no "promotions" here, ie going from worker-->manager-->director, etc... I'm not sure how I'd go about getting big jumps in pay other than leaving and going elsewhere.

If I apply most of my bonus toward my car debt, then my full tax return, I should be able to pay the $9k off later in 2017. I own a rental home though and only have about $11k in savings, so I've got to be careful ditching all my liquidity toward fairly benign debt. That atleast puts me on a path toward more savings. And luckily my g/f's mom lives close and is retired, she'd watch our future kids fo' free.

 

[ponyo]

^ hell I work from home F/T and my 8 year old car has 52k miles.

Damn, that's lot of miles for someone who works from home. I just broke 10k miles on my 10 year old C6 Corvette. Wow, I can't believe it's been 10 years already. I do drive my truck for work and then drive the minivan at home. So I only drive the Corvette once or twice a month on weekends. So I paid the depreciation, insurance, tag, and maintenance for 10 years so I could drive it about once a month for personal enjoyment. And I feel like it was worth it.

 

[ponyo]

It's tough to say. This job is a bit different than my last, but my last job I averaged about 5% per year, so I assume overall I am a good employee. 4% is good, but since there's no "promotions" here, ie going from worker-->manager-->director, etc... I'm not sure how I'd go about getting big jumps in pay other than leaving and going elsewhere.

If I apply most of my bonus toward my car debt, then my full tax return, I should be able to pay the $9k off later in 2017. I own a rental home though and only have about $11k in savings, so I've got to be careful ditching all my liquidity toward fairly benign debt. That atleast puts me on a path toward more savings. And luckily my g/f's mom lives close and is retired, she'd watch our future kids fo' free.

I would play safe and bump up the savings. I wouldn't feel comfortable with $11k and you can never have too much cushion IMO. You're lucky you'll have free daycare. Not only do you save big money but you'll have the piece of mind of knowing your kids are safe. My wife stayed home with the kids while I focused on work. So we saved on childcare. But she has stayed home since day one of our marriage so we never had to deal with the stress of going from two earner down to single earner income.

 

[zinfamous]

i put 28k on my car yearly simply driving to and from work. 28k over 8 years is well below the average a person drives

Oh, I know it. I don't drive daily (free bus to work!) and only use it for short Costco trips or weekend excursions--and not every weekend.

I used to drive my cars like crazy, but then I moved to cities/areas that didn't require driving all that much.

 

[zinfamous]

It's tough to say. This job is a bit different than my last, but my last job I averaged about 5% per year, so I assume overall I am a good employee. 4% is good, but since there's no "promotions" here, ie going from worker-->manager-->director, etc... I'm not sure how I'd go about getting big jumps in pay other than leaving and going elsewhere.

If I apply most of my bonus toward my car debt, then my full tax return, I should be able to pay the $9k off later in 2017. I own a rental home though and only have about $11k in savings, so I've got to be careful ditching all my liquidity toward fairly benign debt. That atleast puts me on a path toward more savings. And luckily my g/f's mom lives close and is retired, she'd watch our future kids fo' free.

I assume the interest on the car is really low, ~2%? Pay it off faster, but don't kill yourself and your savings doing it. The real killer is cc debt or any debt that has interest above inflation + expected S&P growth, where you should be parking savings. Car debt is bad msotly because it's a chunk of money that could be going elsewhere. As long as its low interest, it isn't the worst (but it also isn't deductible like student loan debt)

 

[PricklyPete]

Damn, that's lot of miles for someone who works from home. I just broke 10k miles on my 10 year old C6 Corvette. Wow, I can't believe it's been 10 years already. I do drive my truck for work and then drive the minivan at home. So I only drive the Corvette once or twice a month on weekends. So I paid the depreciation, insurance, tag, and maintenance for 10 years so I could drive it about once a month for personal enjoyment. And I feel like it was worth it.

I take the train to work nearly every day and my wife is home with the kids and just occasionally runs errands. We still managed to put 55k on our car in 3 years. How? Lots of weekend trips to Steamboat,Telluride, Crested Butte, Moab/Fruita, Frisch, etc...and even a trip to Nor CA for a mountain biking/marathon pilgrimage. Even if your daily life doesn't involve a lot of driving...your leisure life might.

 

[Imp]

Share. Get roommates/family to live with, share everything. Cable is only ~$25 with 4 people, internet is $15, rent is $500, etc. Then have no life or have a very low threshold for stimulation. And no car or share car.

I guess polygamy is the best answer, but you need a "new age" approach to your wives. Don't keep them at home churning butter and washing clothes, make your bitches work.

 

[WhoBeDaPlaya]

Ouch OP, that rent sounds painful!

I'm lucky that I got a pretty good deal rent-wise ($800 / month for furnished 700sq-ft apt, incl. sat, cable, internet and first $80 of utilities),
though technically it is in Farmers Branch (in the good part north of 635 just shy of Addison).

Work is 2.5 miles away, pretty much everything is available nearby, and there's a MicroCenter and 3x Fry's within driving distance

 

[Anubis]

Ouch OP, that rent sounds painful!

I'm lucky that I got a pretty good deal rent-wise ($800 / month for furnished 700sq-ft apt, incl. sat, cable, internet and first $80 of utilities),
though technically it is in Farmers Branch (in the good part north of 635 just shy of Addison).

Work is 2.5 miles away, pretty much everything is available nearby, and there's a MicroCenter and 3x Fry's within driving distance

im curious where you live that you have that sweet deal on rent

even where i am in middle of fuck no where NY a non shithole place is more expensive to rent than that.

 

[WhoBeDaPlaya]

im curious where you live that you have that sweet deal on rent
even where i am in middle of fuck no where NY a non shithole place is more expensive to rent than that.

Farmers Branch, TX (really Addison) - got very lucky with a coooperative owner.
Was initially charging $1K for month-to-month corporate rentals, got it lowered down to $800 for a 3-year lease.

 

[RockinZ28]

I made 60-76k/yr for 4 years (went up each year) while living in SoCal. Rent was $1400. Wife worked, but she just paid for groceries and cell phone bill. With my income, was able to save $70k cash in 4 years. Having no debt helps big time. Left CA as 70k wouldn't buy you a shack in Los Angeles, and put 20% down on a badass brand new house in Indiana.