this post was submitted on 01 Oct 2023
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So I'm getting closer to 30 so I think this relates to me and my experience well to share.
I've been paid a pretty reasonable pay middle class+ generally just shy of that perfect $70,000 of legend on average. Managed to pay off my absurd credit card debt from college and stopped payments on my college loans. I don't have a car I bile to get around and am generally frugal and had my company helping pay for a lot my stuff
I had about $11,000 pre COVID and that was practically all wiped out during the worst of it because Florida didn't believe in unemployment. At which point I was 26ish.
I think pre COVID I may have actually managed to hit over $30,000 by early 30s enough to actually put down on a house.
I now make over $70,000 a year... I have saved about $2,000 this last year living the same frugal life, still no car, still no debt payments really... I don't think your math works anymore. It's so completely soul crushing now how fast I went from doing ok to being in a gutter.
What are the main differences? If you don't mind, could you share your budget?
I know housing has increased a ton recently, but according to BLS data it isn't that much higher (like 10-15% from 2020 to 2022, which is high, but not "end of the world" high). Food has increased a lot, but food away from home has grown a lot faster than food at home, so I'm thinking there's a difference in what people eat (e.g. more delivery than before perhaps?).
I'm fortunate because I bought before 2020, so my housing costs are largely fixed. However, running the numbers with local data still indicates that buying is feasible, it'll just take longer.
In Florida, rents and house prices have increased way more than 10-15% in the last few years, where are you? We bought our house in 2020, the house across the street (slightly smaller and less yard but comparable) sold for 54% more than we bought ours for; and that price was in line with the other houses being sold.
I really thought we were buying at the peak when we did buy the house, assumed it would decrease from what seemed an outrageous amount (double what the previous owners paid in 2010) but it's about impossible now for most. Everyone I work with rents, unless they had a house before I did.
I'm in Utah, and we're in the same situation (our house doubled since we bought, which was ~9 years ago). The numbers I cited are national though, so obviously it'll lose a bit of nuance that's more relevant to specific states, and numbers can vary wildly from city to city. Also, other expenses can vary wildly as well, such as auto insurance being much more expensive in Florida (from what I hear) vs Utah, despite both being no-fault states.
But even in my area, there are still affordable houses. Mine may have doubled, but houses just 15 miles or so away haven't increased nearly as much.
Well the most obvious difference is rent and utilities and food.
My rent went from 1550 a month for a small condo in Florida to 2600 because my landlord sold the unit to a new owner who went out of their way to fight me on the price and make the few months I was under them pretty awful. (They offered to go month to month while we figured it out and after the first month raised the price by a shit ton) So then I spent a good amount of money having to move all my stuff (which I did take the bold decision to pay a couple grand to completely leave the state in order to save on rent) but I'm in a cheap rent city with abundant housing and am still paying more at about $1850 months now plus $250 in utilities each month and about another $180 for phone and Internet since it's not like I have a family plan.
I do really like to eat more than hotdogs and try to be healthy but it means I spend probably about $600 a month on food even cooking at home 5 nights a week.
Part of the massive loss of money has been trying to move to find work, cheaper rent, and a state that might treat me better.
I have an HSA that doesn't have any matching from my job because I work tech which means I'm a contractor that is owned by a company in India making a lot off of me and I thought I would put $250 a month to my 401k but it's not matched either and is just a waste of money since it won't amount to anything when I retire.
Then I now have to pay $175 for student loans and about $50 for credit card debt cause I'm trying to raise my credit score.
I definitely feel like I should be saving more per month than I am but actually don't know where it goes. Public transit isn't cheap actually, but I doubt it is eating my income. I think it's just costs of like, getting a passport renewed cost hundreds, tooth filling fell out and dental work cost hundreds, we got fleas from buying used items and treating cost a couple hundred. Just things just one issue at a time eat into what I have
Paying credit card interest doesn't increase your score whatsoever, paying your bill on time does. Just pay whatever is due (statement balance, not minimum payment) and you'll get positive payment history. Don't waste money on interest.
It sounds like you need a budget. Track every penny so you know where everything goes. Worst case scenario, you don't find any waste, but you do know where your money is going.
I do that and make corrections every so often. I'll realize I'm spending more than I expected at restaurants, or my car insurance went up, or whatever.
Perhaps it's time to look around for a new job. I don't know what you mean by "work tech," but surely you're worth more than whatever they're paying you (you can at least get better benefits). I also don't know if you're Indian or American, but I do know plenty of companies can handle immigration paperwork (e.g. mine does, we have plenty of people who used to work at InfoSys at my org).
Right now is a rough time to look, but there are opportunities everywhere.
Good luck! I hope you can get into a more comfortable financial situation.
That rent hike is insane, I'm sorry that hit you. Not sure if you're looking for suggestions, if not ignore my message.
All those numbers seem right, except maybe the internet/phone adding up to $180 - I use mint mobile, which has you pre-pay, but can be as cheap as $15/month. Also make sure you're calling into your ISP and asking for promotions - unless you're under special conditions, internet shouldn't be more than $75/month.
This part I'm less sure about without knowing deets like what rate your student loans/cc are at, but I think you have the right idea with not paying into your 401k when you have outstanding debt, which is an inverse 401k. If the interest rates are manageable I'd first ensure you have an emergency fund of a few months cost of living, then put that towards paying off debt faster.
LoL yeah the rent hike was killer and I have since decided to try and do better so I'll be trying to get a rental acquainted real estate agent and do lots of my own searching in a month. I think I might be able to get back to 1600 at least and I have a GF to help split costs now.
Phone plan is from getting scammed by Verizon and I know it's awful but I need to let about another year go by so I don't get forced to pay them like a thousand straight out for my phone. After ill probably move to mint or whatever, maybe Fi, anything that's cheaper. My home Internet is actually the cheap part at like $55 for gigabit fiber.
And student loans are just gonna be a fucked thing forever. It was a private loan cause my dad said it would be a smarter idea to go with his bank and it has a variable interest that i thinks is up to 18% now on..... so yeah I just find the minimum I can (which is more than 0 now cause I get paid enough) but yeah I'm trying to make sure I can have 3 months of rent and cheap food costs in my account but it means I really won't get enough to put a down payment on stuff to get a car or house.
Edit: I'm just realizing it really might be a good idea to see if literally anyone else is willing to give me a loan for the amount of my outstanding student loans just so maybe i can get a fixed rate
Refinancing that is an EXCELLENT idea especially at 18% interest rate. That shit should be illegal and sounds downright predatory...
That's not a cheap rent city. You're in a higher priced area. My area is a lower cost of living area. Rent is under $1,000/mo unless you want to live in a luxury high rise by the water.
I pay $80/mo for Internet on one of the higher plans and $45/mo for a cell phone plan. Total $125/mo. How is yours so much higher?
This is where tracking your income and making a budget comes in.
Where exactly are you spending your 70k that leaves you with only 2k at the end? Especially when you're not paying off debt? Genuinely curious.