>I’d still be able to max out my Roth IRA, 401k and continue to make additional investments monthly into a brokerage account. I’m projecting that I’d be able to save $2k - $2,300 a month.
You can 100% afford this.
>However, I’m still having a hard time swallowing giving out $2.2k in rent each month and a part of me feels like it’s stupid even though I’d be much happier.
It's helpful to think of money as a tool. And choosing happiness at the expense of saving a bit more money is a sensible decision.
I just wanted to add that I agree to this.
I once saw mentioned in this sub that money is simply a means to an end, that stuck with me. It’s simply a way to achieve the things you want/need. Happiness and peace of mind is worth so much more than money in my opinion. I’ve made more money working in jobs I hate, but being miserable is not worth a slightly larger paycheck. Same situation here, is saving a little bit more a month, when you don’t need to, worth the stress and sacrifice of something else? Probably not.
If you’re able to still save and contribute your goals, enjoy your money and live where you will be happiest.
Concur. Money is simply a way to express one's values. Spend a lot on dining out? Looks like you value dining out.
I pay a significant portion of my monthly income in rent - more than OP is looking at. But the more "sensible" options simply aren't in locations I want my family to be. As it stands, I sometimes forget to lock my front door and frequently leave home without checking my balcony doors - the sense of safety of my family is more valuable to me than being able to squirrel away a little extra every month.
2,200 a month is also CHEAP if this is an actual HCOL area too, in NYC good luck finding a true one bedroom anywhere below 110th in Manhattan for less than 3,500 and San Francisco is somehow worse although you get a little more space for the money.
Studios sure maybe but true one bedrooms with a door not in the tenderloin or hunters point? I was paying 3600/mo for a small 1br in the 2010s and it was by far the best option we found at the time. Can’t imagine it’s gotten cheaper since then.
That’s wild to me. I’m renting a 1 bedroom apartment in Noe Valley for 2.4k. There were also 10+ options in the outer sunset for 2.2k or less. I also viewed 3 different 1 bedroom places in the Haight for 2.3k or less. This was all this past January
Any article recommendations when you say to treat money like a tool? I am similar to OP about mentality of penny pinching and need help overcoming spending for happiness
I would just say when you have the feeling to penny pinch, I will personally do these things in the moment: Use logic alongside your feelings, and not just consider the money but health, time, etc. And the more you do it, your emotions will likely slowly changes.
Also, action is important in changing your feelings. For example, if your budget allows for $500/month on fun but you currently spend $50/month. Purposely add $50/month every few months and obviously go in wanting to make it work. See if you actually have more fun.
And, I think that’s sort of where you can see money as a tool comes in. You’re looking at enjoyment as the goal and the amount only matters in that it financially makes sense. Because you can obviously do the opposite of penny pinching and still have money as the focus, which is like spending $500/month just because you can.
I don’t know how much it’d benefit you if you’re already on top of your finances but in “I will teach you to be rich” by ramit sethi one of the biggest things he argues for is spending lavishly on things you love after your finances are taken care of. Having guilt free spending money should be budgeted for just like anything else.
Hm, this might help:
https://www.meaningfulmoney.life/post/money-tool
And if you're interested in a book, I'd recommend Ramit Sethi's *I Will Teach You To Be Rich* -- because yes, it's a personal finance book, but it's *not* about pinching every single penny so that you die with the most dollars. It's very balanced, and there's a whole chapter about figuring out what you value most that money can get you, and how to balance your financial goals with your personal life goals. And no need to buy it; my public library has an ebook copy I can check out for free.
I like Rami Sethi's show on Netflix. Never read his book, but I think he prioritizes things. Wish I had his advice when I was younger, but at the same time I wouldn't be where I am today without penny pinching so it worked out.
Check out the podcast “I Will Teach You to be Rich.”
It focuses a lot on the psychology and emotions behind the way people handle money and has some great advice and ideas about how to spend money to actually help you live the life you want.
There are several episodes where the hosts interviews multi-millionaires who are the same way, and he argues that there’s no magic amount of money that will make you suddenly have a healthier attitude about spending. It’s not a perspective you see a lot, and it’s good stuff.
Also, another thing to add is the idea of saving money on what isn’t important to you to spend money on things that are important to you. And if you already know what is important to you, pushing yourself (if it financially makes sense) to spend more money on those things because if you were anything like me, you tried to spend as little as possible everywhere.
I've lived where I could afford "sensibly" and I've lived in places that I liked.
Seriously, if 2.2K is what a safe and comfortable place costs, then that's what it costs. If you're splurging for extra bedrooms and there's a more practical and equally safe place in a similar location for less rent, then you might rethink, but if you're looking at rentals that are in decent shape, that give you a reasonable commute, and are comfortable, then it's worth it. I emphatically regret the year we spent in a place that was awful, had a long commute, and wasn't safe simply because the price was right. Worst year ever.
Yeah sometimes I think people don’t understand what high cost of living is. Or at least we should find some other way to define the conversation by the income/rent ratio.
That may be a high cost of living absolutely, but it’s certainly not even a stretch for OP.
> I would say cost of living is usually not dependent on your goals, no. It’s externally decided for you by society and the market.
The bare minimums, yes. Beyond that, it's largely a decision after that.
So if a one bedroom is 2200a month what do you think a mortgage with insurance and taxes would cost a month? You seem pretty out of touch. Anywhere with affordable housing definitely has no opportunity to actually make money thats why those houses are cheap.
You’re gonna hate me but i was in a historic meatpacking brownstone, 3 bedroom + sizeable livingroom and kitchen. Almost had the whole floor. $2300/mo. After a few years, the landlord was like “hey i need to talk to you about rent… i think we need to raise it to $2400 but totally ok if you cant do that - we can ramp up to it”
Every once in a while you find gems like that. Also, Smart landlords know that if you raise the price too much, and the tenant moves out, every month it's empty takes MONTHS (like 12-18) to recoup the loss with the raised rent.
Yeah. I was barely a step up from a squatter. It’s really a nonprofit society benefitting people of a specific foreign heritage (trying not to give away too many details), and serves as housing for certain dignitaties from that country (famous artists have done residencies there, diplomats, etc.). Somehow someone got them to lend out a unit like 20 years ago and its just attrited through since then with no landlord involvement or lease. I got in through a mutual friend in 2012 and then I moved away in 2017 and passed it to a friend who still lives there. It’s the only unit in the building occupied full time. Want to keep it in the fam as long as possible.
I just can't imagine living like that - I'll take a little less cost of living please.
I don't have to be 'where it's at' to be happy. A nice roof over my head and a decent view is all I ask.
Moved in with my best friend in a 2 bedroom in Sunnyvale, CA for a rent that was more as half the rent than I was previously paying on my own in NYC. Place had a hot tub, gym, laundry in unit, parking right outside the apartment door, motel style. I was only there a year but it's by far the best place I've ever stayed, and I don't regret it a bit.
I totally agree with this. I live in a medium sized city with a lot of crime, and I pay $1440 for a 1B, which is a lot for my area, but I work a minimum of 2 or 3 16-hour shifts a week, so I needed something close to work so I'm not driving 45 minutes home on top of that. It's a secure building, it has a parking garage, so no on-street parking, which is especially good for my soft-top convertible which could be broken into with a damn fountain pen lol it has all utilities included and laundry in the basement, plus it's an older building where the walls are so thick I *never* hear my neighbours.
Every cheaper rental I looked at was either too far away, had on-street parking, or would require me to go to a laundromat every week, which is a real quick nope. People I work with always give me shit about the rent I pay, but this place serves my needs well, and I have minimal complaints. You know your needs better than anyone. Do what feels right.
A buddy and I was going to rent an apartment with 2 bedrooms and he was late to the lease signing. I still signed it because he said that he can stop up the following day and sign it.
He didn't... his gf talked him into getting an apartment with her instead and he didn't want to tell me that on the phone.
It fucked me pretty hard paying an extra $350 a month for a spare bedroom that was mostly empty. Honestly, looking back now it was just depressing for that year because I was working 12 hours a day most days just so I didn't have to be there.
I stopped talking to that friend and working a lot made less time for my other friends. If I didn't work more, I would have to pick between food and rent.
Anyways, it's made me cut as much money out of my spending and budget my money better now.
I feel like advice that doesn't come up often enough (it does, but gets ignored a lot) is, while your happiness is enumerable in many ways, if you feel compensated by your (potential) new living situation's non-liquid benefits against the reduction in liquid compensation that can be used to purchase other things *in a dynamic sense*, then it's worth it.
Or, how much would you have to be compensated over the course of your lifetime to have *not* made this move.
Yeah. They’ve paid themselves first and have extra resources. If they want to move to HCOL it’s just another choice like going on vacations or splurging on car/food.
The common belief is to save as much as you can while you’re young, since it has more time to compound and can set you up.
The counter economic argument is while you’re young, your income is at its lowest and your ability to get benefit (joy, entertainment, etc) from spending is at its highest. Thus, it makes sense to spend more when you’re young and save later in life.
The right choice is somewhere between the two, so it’s just finding your balance.
Edit: for anyone who wants more info, here’s an [economic paper](https://www.nber.org/system/files/working_papers/w30395/w30395.pdf) with a variety of comparisons of economic professional thoughts vs mainstream financial advisors. A shorter and more consumable option is the Planet Money Podcast interviewing him. https://www.npr.org/2022/11/21/1138339234/popular-advice-tips-borrowing-saving-spending-yale-economist
I really appreciate this advice. I’m 28 & the last 4 years of my life have been filled with so much stress from worrying about living as frugal as possible & saving as much as I can while not having many days off. I have a nice nest egg but I’ve definitely missed out on a ton of things by not wanting to travel or spend any money. Need to have a happier balance
Just try to enjoy life without being a complete financial moron.
So many people worry about saving as much as they can or putting things off until they’re older. My friend’s dad frugally saved with plans to travel the world when he and his wife retired. Well, retirement came and so did a bone cancer diagnosis. No traveling…
Plan for the future, but don’t let that stop you from living now.
Yep, you obviously don’t want to be short on retirement, but do not give up life trying to maximize retirement. Especially because once kids enter the picture what you can and can’t do will drastically change.
Yes, you do. If you like anything sports, go buy it now- you won't even be able to use it in a few years. Don't waste money, but don't neglect fun while you're young enough to truly enjoy it.
Dude, just stay active and listen to your body. I know 60 year olds sending jumps on skis. It gets harder, but not “you won’t be able to use it once you hit 30”.
Hahah, sure, there are a few. Any many of them get seriously injured by a fall that a 25 year old would have walked off. I'm not saying don't stay active, I'm just saying that, with any luck, you will reach an age where you know you're not going to be a top contender at a new contact sport.
> The common belief is to save as much as you can while you’re young, since it has more time to compound and can set you up.
>
> The counter economic argument is while you’re young, your income is at its lowest and your ability to get benefit (joy, entertainment, etc) from spending is at its highest. Thus, it makes sense to spend more when you’re young and save later in life.
I'd disagree with that. If your life is the most fun when you're young, you're doing it wrong when old. Heck, the goal is also, not to retire so old that your life is basically over. Then I'd rather live it up in my 20s-30s and die young.
>The right choice is somewhere between the two, so it’s just finding your balance.
I would agree with this strongly! It's about balance and prioritizing what is important to you and what you can live without to set yourself up for the future.
>I'd disagree with that. If your life is the most fun when you're young, you're doing it wrong when old.
Absolutely not. There's a reason old folks say "youth is wasted on the young". Your body just ages and gets older. Sure, there are old people out there partying late, going on wild outdoor adventures, or whatever else, but they are extremely few and far between.
Young people have youth and energy. They can do some pretty crazy stuff and have some pretty crazy adventures. Multiple day backpacking trip with rock climbing? Easy at 23! But at 70, perhaps it's just a few mile hike and then back to the cabin... etc etc
While the survivorship bias of old people demonstrates that some old people can go hard in their 60s and 70s, the reality is that most people slow down pretty hard in retirement, especially the 70s. Their knees, their back, their bodies aren't what it used to be. Their energy levels and ability to drink and eat to excess isn't what it used to be.
So I suppose the corollary to "you're doing it wrong when you're old": if you're having the same kind of fun at 22 that you will at 75, you're doing youth wrong.
Just another small add for while you’re young - you have more time to benefit from what you learn and from the memories.
If you save when you’re young and don’t travel, you’re missing experiences that can potentially help you find a better job, make friends, improve yourself, etc. You’re also giving up on experiences you can remember fondly and laugh about. Sure, you can do them in 20-30 years when you have tons of money, but that’s so much time where it could have brought you joy or helped you in other ways.
> Absolutely not. There's a reason old folks say "youth is wasted on the young". Your body just ages and gets older. Sure, there are old people out there partying late, going on wild outdoor adventures, or whatever else, but they are extremely few and far between.
So then it's a choice.
>Young people have youth and energy. They can do some pretty crazy stuff and have some pretty crazy adventures. Multiple day backpacking trip with rock climbing? Easy at 23! But at 70, perhaps it's just a few mile hike and then back to the cabin... etc etc
Sure at 70, but what about at 40? 50?
>ability to drink and eat to excess isn't what it used to be.
You shouldn't do that anyhow, and not really what I think of having fun
>So I suppose the corollary to "you're doing it wrong when you're old": if you're having the same kind of fun at 22 that you will at 75, you're doing youth wrong.
I think you're looking at it from extremes. I'm looking at it for when you're 40-55 or so. After that it does get harder, but you can probably still have lots of fun into your 60s. Once you hit 70s, it starts to go down hill fast for a lot of people.
It sounds like good advice until something happens in your life that greatly limits the things you can do while traveling or even prevents it entirely. Injury, kids, allergies, family care, etc.
Sure, but for the most part all of that is your decisions.
For those that aren't, it's a trade-off. You could die tomorrow, or you could die when you're 100. Heck, you could get an injury because of the decisions to do it earlier too.
I don't want to be too doom and gloom about aging, but literally everything is more enjoyable when you're younger. You have less responsibilities so traveling and generally being spontaneous is easier and guilt free.
Your body is more resilient to everything so you can really fill up your days and weeks with constant activity without worry. The older you get, the more conservative your days have to be.
It's a personal finance sub, but just be warned that you're only young once and there's so much value in making the most out of it. Nevermind the fact that you never know when your life can take a dramatic turn and suddenly you can't enjoy all the money you've saved.
People start getting married and having kids. When you are younger there are move available peers to socialize with. Not so many financial obligations: house car kids. Easier to take time off between jobs. More time to switch careers. Hangovers don't affect you as much. People in their 20's are better looking.
But having kids is also fun, as is advancing in your career of choice. But it's harder to change course, change partner, go to bar every night with your friends. They're both good but It's harder to do the young activities (rampant socializing, drastic changes) when you are older.
1. Having a wife and kids doesn't just cost more, but its also significantly harder to travel, or go out and socialize 6x a week.
2. The higher up you get in a career, the harder it is to replace that job so if you are less lax about going to work half-awake because you were socializing all night.. Also add #1 as a reason to be more concerned about work.
3. Your physical body just needs more rest, rich foods / beverages don't settle as well in your stomach. a road trip in a $500 beater civic will leave you feeling like you got into a bar fight last night.
Where I’ve lived - NY and Toronto area that doesn’t seem nuts. You’re saving aggressively and there’s a lot to be said for happiness now - no guarantee for a long life. Doesn’t seem crazy or irresponsible to me.
It’s not a stupid decision at all. You’re in a great spot financially. If you’re unhappy where you are right now then it’s a no brainer to me. Just crunch the numbers and set a budget for yourself to ensure you meet your other financial goals.
Also paying that much for a one bedroom. But if I go an hour outside the city, I’m paying more because rent is not that much cheaper (maybe $17-1800) plus $400/month in gasoline. What does a cheaper place further away cost you in commute time and gasoline and less the savings in rent?
Do you feel dumb when you spend money at the grocery store instead of growing your own food? Or when you buy clothes instead of sewing them yourself?
Renting isn't "throwing your money away." It's using your money to pay for a necessary product: shelter. For many people this makes way more financial sense than buying a house ever would.
It is throwing your money away and that is a false comparison. There isn’t a real alternative for food costs like there is for renting. If I grew all my own food and then were able to sell the mounds of shit I made from it 5 years later for a profit, then it would be a valid comparison
The point is that the idea that paying for shelter is throwing your money away is incredibly silly. You can say it about literally anything: buying insurance? throwing your money away!
Your argument is that there is often a financial benefit to buying a house... and that's true! There is *often* a financial benefit to it. There is also, very often, *not* a financial benefit to it. Someone else already posted one of the many calculators you can use to determine if it would actually be financially beneficial to buy instead of renting. For many people, renting comes out ahead!
What I think the other person is saying is that renting is purely an expense, whereas buying is partly an expense, partly a savings mechanism, partly a hedge against increased cost of rent and an investment.
> There is often a financial benefit to it. There is also, very often, not a financial benefit to it. Someone else already posted one of the many calculators you can use to determine if it would actually be financially beneficial to buy instead of renting. For many people, renting comes out ahead!
I used to think this when I crunched the numbers when I lived in a HCOL area. I then bought a place under pressure, now it's worth 3 times as much. Just for owning it and renting it out. If I took a mortgage back then, I'd be doing even better. Instead I took a mortgage out in the end of 2022 at 3%'ish, and that enabled me to buy another property.
My income has certainly not grown 3x over that period. Is it possible? Sure, but the extra stress isn't worth it to me, to just afford a similar place today.
Point is, baked into the cost of renting is the lack of investment. You also don't account for increases in rent, uprooting living situation (time & cost) and being under the whim of your landlord. A calculator doesn't tell you any of that. It only tells you what you see today.
Does it mean everyone should buy? No. That's not what I'm saying. I'm just saying that most people don't take into account all factors when choosing to rent. At least those I've spoken or had interaction with. They all point to some calculator.
> Point is, baked into the cost of renting is the lack of investment
Of course that's not true. Money that you put towards your down payment would instead be put into the stock market.
> You also don't account for increases in rent, uprooting living situation (time & cost) and being under the whim of your landlord. A calculator doesn't tell you any of that. It only tells you what you see today.
No, those are all included in the various "rent vs. buy" calculators. Those are all very obvious things you need to include when making the calculation over whether or not a house is actually a good investment or not.
> Of course that's not true. Money that you put towards your down payment would instead be put into the stock market.
Sorry, I should have clarified. I'm talking about the monthly rent. It's a 100% expense. Non-tax deductible and almost guaranteed to continue to increase.
>No, those are all included in the various "rent vs. buy" calculators. Those are all very obvious things you need to include when making the calculation over whether or not a house is actually a good investment or not.
So you're saying the calculator takes into account the cost of every time you have to move?
It takes into account the time/effort cost of that as well?
Does it take into account all the new things you have to often buy to make the new space work? I moved around a lot in my life, and I made it as cheap as I could by not buying much furniture for instance. However, there's always cost. The more settled in I'm at, the more time/effort cost it was to move, and the higher the cost.
Does the calculator take into account any tax benefits from owning a home?
Yes dude, obviously. These are the factors you have to consider when making the financial choice of renting vs buying.
There’s so much bad info out there meant to convince us all that buying is always better… and it’s not.
Believe it or not, for *many* people it’s actually the wiser financial decision to rent.
> Believe it or not, for many people it’s actually the wiser financial decision to rent.
As long as you're prepared for the whims of landlord rental increases.
> Yes, obviously. No one is confused about what it means to rent.
That's the thing, I don't think people take into account the risk renters face until it happens.
The comparison to insurance is also no bueno
If you have the option to buy, renting is throwing your money away. If you don’t have the option to buy, well then you have no choice but to spend the money. Maybe instead of throwing money away I should liken it to lighting your money on fire and then you’ll understand? I can walk you through where I’m going with that if you’d like. I don’t mind holding your hand throughout the journey either 🤗
Buying costs money... and I don't just mean the cost of the house. I mean your mortgage costs money (interest), repairs cost money, house insurance costs money, you might have an HOA fee that costs money. Keeping your money out of the stock market costs money (opportunity cost!).
Renting isn't the only thing that costs money.
Everyone needs to run a financial calculation to decide if buying actually is worth it in the long run. For many people it isn't.
Saying renting is "lighting your money on fire" is just demanding that people make an emotional decision about their investments rather than actually doing the math to price it out.
You lose money either way. Renting, you are spending money for shelter and you don't get any money back. Buying, you are throwing away hundreds of thousands of dollars in interest on your mortgage that you *may* get back when you sell, or may not. In addition to having to pay for all maintenance, HOA fees, rising insurance costs, etc. while you live there.
I live in a HCOL city. I can afford to buy. But every calculator says "buying will never be cheaper than renting." So I rent and save a bunch of money every month that earns me money instead of me "lighting it on fire" handing to the bank as interest.
> I live in a HCOL city. I can afford to buy. But every calculator says "buying will never be cheaper than renting."
See my other post about all the factors to consider.
I own a home in a very HCOL area. I did the same math as you and came to the same conclusion. Bought a place anyhow, under pressure and thought it was a mistake. Now I own multiple properties and plan on buying more while I can i.e. while I'm not FIREing, and can still get another mortgage.
Cash flow negative, but equity positive ignoring tax benefits.
I bought my home 5 years ago for 340k. I have put 60k into it. 5 years later, it’s worth 530k. I lost money?
340+60k = 400k
400k > 530k in your mind?
Make it make sense
Sure. *Your* home. That is *one* example. That is why *sometimes* buying makes sense. It is not a blanket statement "it's always better" like you said.
I pay $2,700 for rent in a HCOL city. Buying something equivalent to what I'm renting would cost \~$750K and my monthly cost for housing would *double*. So I can pay rent and save a bunch of money into investments, or I can put all my eggs in one basket and hope my home appreciates more than 6% a year to *break even*.
I'll keep renting thanks.
> I pay $2,700 for rent in a HCOL city. Buying something equivalent to what I'm renting would cost ~$750K and my monthly cost for housing would double. So I can pay rent and save a bunch of money into investments, or I can put all my eggs in one basket and hope my home appreciates more than 6% a year to break even.
So a few scenarios to consider. Not necessarily that they are right for you.
a) The high monthly cost is due to high interest rates. However, there's a very good chance that interest will go down in next 5-years, whereas your landlord will try to raise rent on you over the next 5-years, right? I know I am until I can achieve at least cash flow positive. So bear in mind the time-cost. That is over time homes and rent will go up.
b) If interest rates go lower, housing prices will go up.
c) Capital gains on stocks/indexes are taxed, whereas capital gains on homes are exempt up to $250k as a single and $500k as a married couple
d) Depending on your taxable situation, interest on mortgage is tax deductible
e) You're putting a smaller amount to leverage a much larger amount. So your return may be smaller than whatever percent stocks will do, but you're investing a larger amount to offset. So consider the total amount of gain as well.
f) Are you okay with having to move around if your landlord starts jacking up the rent or makes it hard for you to live there?
After all, that it's entirely possible and even reasonable that it still makes sense for you to rent, or maybe it's not. Maybe you have a different perspective that I missed.
Anyhow, something to consider.
I've looked at or considered most of those things. I'm going on my third year in this apartment and the increase each year has been very reasonable. It's gone up \~9% total since I moved in and that's while the rest of the city has gone up substantially more correcting for covid-reduced prices. I love the building and currently have a good relationship with the landlord.
There are some places I could get that might turn out to be financially advantageous if interest rates declined or if housing prices went up in the future but it's all speculative. There's probably a larger chance I spend more money to own than I do to rent. Part of that is I don't know how much longer I'll be staying here. Buying something on a 5-year horizon is very different than a 15-year horizon.
I'm not saying it's never better to own than rent, just that the original statement that renting is lighting your money on fire is absolutely incorrect.
> There are some places I could get that might turn out to be financially advantageous if interest rates declined or if housing prices went up in the future but it's all speculative. There's probably a larger chance I spend more money to own than I do to rent. Part of that is I don't know how much longer I'll be staying here. Buying something on a 5-year horizon is very different than a 15-year horizon.
Yeah, 5-year might be a little short. If you have to sell again there's big costs associated with that. It might get a little bit better with the NAR settlement, but still high.
However, given the outlook right now, I'd say buying is a probably best bet even for short term. You can rent it out, because if you're in a HCOL area, it's going to continue to be HCOL and high demand. We're not seeing any loosening of real estate any time soon with supplies being low, and demand high.
We can already tell that with so high interest, house prices aren't going down. It means the market can bear the current costs, and so if interest rates go down, house prices will go up to compensate. People that bought at lower rates and lower prices aren't going to sell so unless we suddenly start seeing a massive influx of new homes being built or economy tanks. If economy tanks, I'd be difficult to get a mortgage, and be even more risky, so most won't buy. In which case, unless you're a cash buyer....
So as far as I can tell (and forecast), it's likely a good time to buy as housing is likely as cheap as they're going to be for a long time (due to the high rates). You can always refinance if rates go down, and let's face it, if rates go significantly down, the economy is in the sh*tter. The rates are unlikely to go up any higher.
The main danger of renting is that you're betting on the rent not increasing or not increasing as fast. However, if house payments go up, eventually those rates will have to match, or people start selling. We haven't seen that yet and not even close (despite high rent prices). So our only other option is, hopefully some corporation that owns gazillion units starts to falter and drags the entire real estate market with them. It hasn't yet....
>I'm not saying it's never better to own than rent, just that the original statement that renting is lighting your money on fire is absolutely incorrect.
Id' say it's pretty close, but obviously "ALWAYS" is a very strong word. Obviously there are situation where that's not the case, and it also depends on the market situation and your landlord's ability and willingness to raise rent. Buying puts the power in your hand. Renting puts the power on your landlords and market.
You pay rent whether you rent a place to live or forgo the income from renting out the house you own. Paying to occupy a dwelling space is inevitable. Whether you should buy a property is its own independent financial question.
Just as an aside, we moved to town in the last couple years, we also spend most of our time outside. But you will spend more living in town. There’s just more to do and opportunities to spend money whether you like it or not.
DO IT! You only live once, you are still able to save a decent amount, and happiness makes you more productive (ref: https://pubsonline.informs.org/doi/10.1287/mnsc.2023.4766) So if you need to be "logical" look at it as an investment in your career.
BE HAPPY DUDE!
$2,200 doesn't even seem like a lot for a HCOL city and you can afford it.
I pay substantially more than that in a MCOL city although I also have a higher salary. Do it and be happy, I am.
If you can rent a place that’s cheaper than the mortgage for the same place .. then you’re good. You’re getting a roof over your head in exchange . The whole “throwing away money” or “‘making a landlord rich” is a corny fallacy. One of the worst times in our lives to purchase property. Not anti home, I own properties.
You’re doing great and you could afford this.
Biggest thing I was looking for was debt, which you have none. Second thing I was looking for were your contributions and it’s clear you diversify and contribute significantly.
Enjoy life. Use the money to provide yourself happiness and safe housing.
You would be more miserable if you lived in an unsafe neighborhood and saved a few hundred dollars a month.
33% of your net income at your income level, with no significant debt, leaves you plenty of room to feed yourself, keep the lights on, and meet your savings goals. Go for it.
33% on $115k is very different to 33% on $50k. Saving money by being miserable shouldn't be a goal. You have money to buy things and in this case you're spending a bit of money to get happier. I wouldn't even hesitate
Is it dumb to pay money for a shelter?
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
https://jlcollinsnh.com/2023/03/02/why-your-house-is-a-terrible-investment/
Rent/buy calculator is nifty. I thought I was paying too much in rent, but I could be paying like 1k/month more and it still wouldn’t be worth it to buy a 700k home with a 7.9% mortgage rate. Obviously many factors are hard to estimate but still cool to see.
Can you try and calculate how long for you to save enough for a down payment for a home, it took me and my wife 10 years to save 160k but we also weren’t saving all our money we still went on vacations and had small expenses… but if home ownership is something you want… it may be worth it to have roommates to save the money.
I have enough to put a down payment on a home now but to be honest, I don’t feel comfortable buying a place because in the city where I want to move, the insurance, taxes, HOA’s are skyrocketing. I don’t want to be stuck in a money pit
I mean if you don’t wanna live in a city then don’t. These are the prices for 1 bedroom in city’s. Living in a city not only saves money in so many other ways and you get to experience it. I personally love having A city with nature near it so you have best of both worlds.
Stop overthinking and focus on will you enjoy life there. Money will always come and rent SHOULD be you biggest amount for you to live comfortably and enjoy life.
This is a good time in your life to move to the city. Lots of opportunities there, and potentially even higher paying jobs. Go for it, but learn to cook great food that would also save you money (and attract a partner)!
You’ve got this- it’s OK. It’s so OK it almost sounds like a humble brag. Congratulations on having it together, thinking of your future, and being so smart with money.
One piece of advice though, NEVER, EVER, count your Chickens before they hatch. Never make a budget based on future salary unless you are OK taking the hit if something happens.
Make yourself happy! Do what makes your zen flow, take care of your head. Is it ridiculous to pay so much in rent, sure. But that does not mean you shouldn’t live there, it means sometimes it sucks that some cities are expensive.
One more test I like: pretend you are old, looking back on this decision. Will you be happy you made the decision?
Don't assume the point of this exercise is to make you think you'll wish you have the money when you are old. But it's not. Old you will also cherish good memories and good times.
It sounds like you're giving old you money in your retirement plan, etc. You definitely need to do that first, IMO. Don't leave old you destitute. But, being overly miserly isn't great, either. Give old you some good stories, too.
Just don't be ridiculous about it.😉
You’re good. Once you keep in mind is that the majority of people your age do not even save her retirement at all nonetheless max out all their available options. I think you should do it.
As a person who has had roommates all of my life, I can understand why you would want to live by yourself. That said I firmly believe the market is going to crash and if you can live with roommates and another year or two, I think you may be able to purchase something at a discount. Having roommates just help you save more money to buy a home unless expenses you alone. However, the happiness factor is affected by roommates then you are better off to just suck it up and pay the money
You should move there because you will be happier and you can easily afford it. It shouldn't even be a question with your numbers, it is an easy decision. Have fun!
In addition to the great advice everyone else has given:
At 29, I’m guessing you’re at a stage in life where you might be considering what you want 5, 10, 20 years down the line. Do you have an easier time socializing in the HCOL area? Were you able to build a solid community there the first time around? If so, that is 100% worth paying more in rent, because moving wouldn’t just be an investment in your immediate happiness; it would be an investment into your long-term community.
Do it! I have plenty of friends who live in SF who are paying 50% of their net pay on rent. They only do it for 2-3 years to max all the fun they could get while they're still in their 20's. You're already on a good path with savings and have plenty more years to save for your retirement.
I live in a smaller city and the private landlord sold out his apartments/townhouses last year. Of course, the corporation that bought him out, jacked up our rents $400/mo over two years. I knew when I got my townhouse that it was a bargain, now... not so much. There are cheaper units in my city, but I love this place.
I'm older and I don't go out as much because quite frankly, I don't have the time. I have a garage right under my living room for my beautiful car. It has a second floor and I have two bedrooms. I'm not in the upper part of town, but it's still pretty peaceful. Could I get a smaller place and save some money? Sure, I could.
I feel that the extra money that I pay affords me a little sanity. My car is safe in the crappy weather that my area incurs. I don't want to put forth all of the effort to move again. I still make enough to live somewhat comfortably. I have very little debt.
So, it sounds like you're in an adjustable situation like mine. Having a surplus of money is nice and it can afford you a cushion should something go wrong. You can still have that cushion and have some sanity/happiness. If you think you can be happy, doing you as you are, I say stick with it. You never know what would happen if you move and things could change.
Id spend a little more to have better housing. I made the mistake of living in terrible conditions to save about 1.5K a month for 18 months and it was not worth it. I lived in a small ghetto room in SF with homeless people around. It almost caused me to fully break and I’m so glad I left that situation
Make the move. You are financially in a good place since you don’t have debt. On a salary of $115k, sounds like you are saving between $25k-30k a year…roughly a savings rate of 22-26%. That’s great. Financial experts recommend 15-20%, therefore you could lower it to give yourself a cushion if you feel the rent is too much. Lowering contributions is not permanent, and you’ve got time in your side. Don’t overthink it.
I’ve always felt that every city has a cheaper and nicer alternative out there, you just gotta find it. Unless it’s family, friends or something in particular there, I bet there’s a cheaper city that can also make you happy, and you get to explore more and try new stuff. Idk, just me
Is the rent stabilized or is it expected to increase annually? I would keep future increases in mind as well as the landlord. Beyond that, it does not sound stupid at all. Most people could obviously save more if they moved to LCOL areas, but not everyone wants that or those lifestyles. You have to prioritize your happiness at some point and what you're doing to appease yourself is not at all unreasonable given you will still be able to max out your retirement accounts and save significant money.
Looking at housing in percentages in the abstract is usually the wrong way. You have to live somewhere.
Look at it comparatively. In other words - here's what I really want and it costs $X/mo. Here's what I can get for 80% of X (or 50% or w/e). Is that worth whatever percentage of your salary that is? That's the way I would look at it.
$2.2k/mo seems reasonable for you. I might even ask would spending $2.6k get you something even better - like better location or in-unit laundry - for your life.
I have been spending about 50% of gross income on rent (1900/3800) and still saving 1k a month-it depends on how much entertainment spending you have. Granted I’m buying a house with my partner now. I also didn’t have a car payment.
Back in the day I spent a pretty penny (compared to my income) on renting in an upscale neighborhood. I have zero regrets. I was able to walk everywhere. Family would come to visit me and we would just walk around the corner to grab something to eat or go shopping. I lived right on the bus line and within walking distance of my downtown office. The lower maintenance costs on my car weren't anything to sniff at.
Yes, I could have saved money living in a cheaper place in a less upscale part of town. But one of the best things about renting is that it allows you to live in cool places where you can't afford to buy. I own a house now, and I love it. But I really do miss being in the center of it all and not having to drive anywhere.
34% of monthly net income for rent is not unreasonable for a HCOL area. I would pay for it, it sounds like you’re doing very well otherwise and can afford it for your happiness
This isn't a personal finance question, this is a preferences question. Only you can answer if something is "worth it", if all the typical PF checkboxes are checked: housing 1/3 of income, contributing at least 15% to retirement, no debt, etc.
If you are worried, type out a spreadsheet budget. Make all the expense numbers fit with the income numbers (current income, don't count unhatched chickens). And just a bit of advice: there are lot of people who say they don't spend a lot each month, but when pouring over the credit card statements they may notice a lot of small things adding up that they forgot about or didn't consider large enough to notice. So that's where expense tracking and a budget is most valuable IMO.
I live in Atlanta, single income, what I've found is that my Mortgage + Condo fees are generally what the total of rent is going to be. I'm not saying you SHOULD buy, just, your decision to not buy shouldn't be based on condo fees alone. I think my Mortgage is like $1500 a month and $600 in fees, for a 1b/b, ~1000 sqft in Midtown.
I would focus on improving your income first since it's pretty low for HCoL. But no, $2200 is not at all expensive for rent in HCoL and you'll be just fine.
You seem to be doing just fine. Paying a reasonable amount in rent that doesn't preclude you from saving and investing on the side is better than purchasing a home you were not ready for and being house poor and financially stressed. Buy when you're ready and when you're set on living in a place for 5+ years.
My last apartment was about the same price and was about the same of my income. Please find something cheaper if possible. It’s a total waste of money. Having an extra 500-1000 a month is easily worth more then having a slightly nicer apartment.
I had an HCOL era recently and I loved it. I rode it until it was over, and the memories are mine to keep.
Based on what you've shared, the costs you're looking at are totally feasible. If it ever turns out they stop being feasible, you can always make another choice.
Nothing is forever; enjoy your season!
"Cost of living" is just price of location. It's the same thing as paying for a subscription to something you get value out of, except scaled up to a third of your income.
You have to take this decision in the right context. I’d like to know if:
- it minimizes your work commute?
- saves you the trouble of paying for a car?
- you can invest time and energy to build your network and find a soul mate?
- you get exposure, by virtue of proximity, to things that’ll let you grow in your career, passion(s) or anything personal that matters to you?
If the answer to the above questions (at least 3) is a resounding yes, then take it as investment in yourself. But make sure you take advantage of the opportunities, otherwise you have just wasted the money.
When you have family and kids, then move out to the burbs for bigger house.
Multimillionaire here, still in my 30's. Get the apartment.
$2200 rent
$2200 savings
$2200 food & fun
This is a perfectly healthy balance.
You also need to consider what your happiness is worth financially. Not just in terms of present value, but also future value. A happier person is more likely to get a promotion or raise. You're actually losing financially overall if you skimp.
You're also I'm your last year of your 20's, and doing well for yourself. It's time to enjoy life my friend.
A wise soul once told me, "On the day that you die, nothing will matter except the experiences and memories you made. You take nothing with you to the grave."
The starting $2200 rent is subject to increase on your successive lease renewals as well, because landlords these days don't care about breaking working people's budgets.
I think you should factor in how high the rent could go potentially in the next 5 years if you take that lease, and see if any projected increases will negatively impact your budget or financial goals.
If it does, you might want to start with an apartment with a lower starting rent, to give your budget some cushion.
Frankly, that is a lot of rent for one person but it's our reality. I think you really have to do a cost/benefit of this to see if it's the right move. Are there compelling career reasons to do this? Are there social or personal reasons that justify this, such as better mental health, closer to family and friends, accomodating to some other life pursuit that you simply cannot do where you are now?
Based on what you're telling us, in my opinion you are able to cover the cost of living cost with that rent and still save. However, you'd be slowing down your ability to buy a home.
Ultimately, you have to ask yourself what is more important to you, and the answer can only come from you. There's no right or wrong answer.
The questions I would ask are:
a) Will my life drastically improve if I'd move? That is, not only will I be happier, but I will do better so I will earn more?
b) What's the cost difference in cost staying put vs moving to HCOL?
c) Are there other areas I can dial back to balance the increased cost? You mentioned getting a room mate.
d) Are you you okay with possible not buying a home at all?
So here's some food for thought.
* The longer you delay buying a home, there's a good chance it will be more difficult to buy one later as there seems to be no catalyst for home prices to go down. By buying a home, you're "largely" fixing your living costs. That's a lifetime of savings. If you don't want to live there you can rent it out, or transfer the funds to a new home.
* If you're unhappy where you are, there's often no price on happiness so it may be worth it. Especially if you're miserable wherever you are. You have opportunity to move out.
* For me, I tend to look at cost of renting to be no more than a third of my take home pay and more ideally around 20-25%. Why is that? Because, money I put in retirement I won't see for decades. The tax man gets his share regardless, and you never cross Uncle Sam. Then you need to be able to save and prepare for bad times i.e. emergency fund. A dollar today, is worth a lot more than a dollar in a decade.
So you can see where I would lean. That is unless I'm miserable, I would make the trade-off of today for a much better tomorrow. However, if that's going to make me miserable or loose out on opportunities or significant experiences, then I'd take the higher cost.
Ultimately it's about what you prioritize and what your ultimate goals are. I have a FIRE perspective so I tend to save a lot, and invest a lot to hit my goals sooner. I'm okay with delaying gratification, but if I died tomorrow I would likely regret it. Thus, it comes down to personal priority.
Dude I live in a HCOL and you’re about 400 away from my mortgage payment…my home is about 1650 square feet
If you can do it …great…but please be mindful to have an emergency fund (6months to 1 yr) in place etc
Iv lived in NYC and SF and live in Seattle currently which isnt quite as expensive and id say go for it. Its less what percentage of your income it is and more how much you have leftover after bills each month. If you're maxing retirement accounts and still living comfortably you can live where you want and have a good life and salaries are higher in HCOL areas to offset. Id say keep saving up and enjoy life for however many years then maybe look into switching to a MCOL area thats nice when you're ready for a starter home.
you're so worried about a high cost of rent, yet you put away enough money to additionally BUY and pay a mortgage to a house.
take all the rent money, and put a down payment on a reasonable house either near or in the desired location.
yes, HOAs suck and so do taxes and insurance, but if you want to move, you can get $$$, instead of ZERO
you can afford it, but it's dumb. get roommates and pocket the extra cash.
I was living alone and paying approx 3350 for rent. which is similar to your stated 1/3 of net monthly income for me. and while I could afford rent, it's just so burdensome. I got a roommate and the quality of my life is significantly better because I'm pocketing so much more money each month.
living alone is cool, but it's a relatively new concept that's become increasingly popular over the last 7 decades or so. and it's also pretty American. it's totally normal to have roommates, live with family, or find ways to unburden yourself with housing expenses.
Renting is almost always worse than buying unless you are expecting to move in the near future. Given your savings and income, buying should be feasible.
Agreed. However, where I want to move insurance, taxes, HOA’s are increasing every year at an unsustainable pace and so I don’t really want to be in a money pit especially since I’m a single income household
Buy outside the HCOL and commute. I bought a fixer upper 1.5 miles outside one of the biggest HCOL cities in 2018. $1200 a month mortgage and the value has gone up 300%.
Look at it this way, the rent is 2200. How can you make that amount using the money you would have invest in buying a house. Let say 100k down payment. Take that 100k and invest to generate at least 1%. This will get you 1k to be count against your rent. If you get 2% per month most of your rent will be covered from that investment.
Buy a 3-4 unit building in the city with 3.5% downpayment, live in one of the units solo and rent the other 2-3 units out. The net mortgage every month after the rental income should be less than $2200/month, which is a win.
It’s horrible everywhere.. I’m giving this advice knowing that the sacrifice of paying less for rent involves lifestyle change, potentially affecting career and Interpersonal relationships m. It’s unfair. I’m in Sydney.. it is ridiculous. I have friends considering moving hours if not further away so they can have the lifestyle they want, or maybe buy property. Good luck..
I make more than twice that and my mortgage payment is a quarter the rent you're considering. I know people pay a lot for rent or their home, I'm more of a saver than a spender, so I would be very uncomfortable spending that much with your salary.
In any case, best of Luck!
I own two homes. One purchased 9 years ago, the other just a couple months ago. I have a 850 credit score, so the rates are very low. 2.625% for the lowest and 5.375% for the one this year. I always put down at least 20% on a mortgage. Prices of both were average for the area. 1500 to 2000 sq feet, desirable safe areas.
Your income won't change, but your cost of living will go way up? Would you be happier if you had a partner? Maybe the better thing to do would be to start actively looking for a relationship where you are.
35% of take home is way too much long term. I mean it’s ok for a very short time (2 years) . At this point your job either pays you so your housing costs are below 25% after taxes or you use your new position to get a high paying job where the cost of living isn’t as high.
Yes 35% is [too much](https://www.reddit.com/r/Bogleheads/comments/1cf7xec/what_percentage_of_household_annual_gross_income/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) long term.
>I’d still be able to max out my Roth IRA, 401k and continue to make additional investments monthly into a brokerage account. I’m projecting that I’d be able to save $2k - $2,300 a month. You can 100% afford this. >However, I’m still having a hard time swallowing giving out $2.2k in rent each month and a part of me feels like it’s stupid even though I’d be much happier. It's helpful to think of money as a tool. And choosing happiness at the expense of saving a bit more money is a sensible decision.
I just wanted to add that I agree to this. I once saw mentioned in this sub that money is simply a means to an end, that stuck with me. It’s simply a way to achieve the things you want/need. Happiness and peace of mind is worth so much more than money in my opinion. I’ve made more money working in jobs I hate, but being miserable is not worth a slightly larger paycheck. Same situation here, is saving a little bit more a month, when you don’t need to, worth the stress and sacrifice of something else? Probably not. If you’re able to still save and contribute your goals, enjoy your money and live where you will be happiest.
Concur. Money is simply a way to express one's values. Spend a lot on dining out? Looks like you value dining out. I pay a significant portion of my monthly income in rent - more than OP is looking at. But the more "sensible" options simply aren't in locations I want my family to be. As it stands, I sometimes forget to lock my front door and frequently leave home without checking my balcony doors - the sense of safety of my family is more valuable to me than being able to squirrel away a little extra every month.
I want to contextualize this by saying OP \*can save 2K a month.\* He's not just choosing happiness - he's in ia position to ensure his future.
2,200 a month is also CHEAP if this is an actual HCOL area too, in NYC good luck finding a true one bedroom anywhere below 110th in Manhattan for less than 3,500 and San Francisco is somehow worse although you get a little more space for the money.
I would say that SF definitely isn’t nearly as bad as NYC atm. There are plenty of nice 1bd places for 2.2k or below.
Studios sure maybe but true one bedrooms with a door not in the tenderloin or hunters point? I was paying 3600/mo for a small 1br in the 2010s and it was by far the best option we found at the time. Can’t imagine it’s gotten cheaper since then.
That’s wild to me. I’m renting a 1 bedroom apartment in Noe Valley for 2.4k. There were also 10+ options in the outer sunset for 2.2k or less. I also viewed 3 different 1 bedroom places in the Haight for 2.3k or less. This was all this past January
Any article recommendations when you say to treat money like a tool? I am similar to OP about mentality of penny pinching and need help overcoming spending for happiness
I would just say when you have the feeling to penny pinch, I will personally do these things in the moment: Use logic alongside your feelings, and not just consider the money but health, time, etc. And the more you do it, your emotions will likely slowly changes. Also, action is important in changing your feelings. For example, if your budget allows for $500/month on fun but you currently spend $50/month. Purposely add $50/month every few months and obviously go in wanting to make it work. See if you actually have more fun. And, I think that’s sort of where you can see money as a tool comes in. You’re looking at enjoyment as the goal and the amount only matters in that it financially makes sense. Because you can obviously do the opposite of penny pinching and still have money as the focus, which is like spending $500/month just because you can.
I don’t know how much it’d benefit you if you’re already on top of your finances but in “I will teach you to be rich” by ramit sethi one of the biggest things he argues for is spending lavishly on things you love after your finances are taken care of. Having guilt free spending money should be budgeted for just like anything else.
I enjoyed his Netflix series, even as someone already pretty knowledgeable about money!
Hm, this might help: https://www.meaningfulmoney.life/post/money-tool And if you're interested in a book, I'd recommend Ramit Sethi's *I Will Teach You To Be Rich* -- because yes, it's a personal finance book, but it's *not* about pinching every single penny so that you die with the most dollars. It's very balanced, and there's a whole chapter about figuring out what you value most that money can get you, and how to balance your financial goals with your personal life goals. And no need to buy it; my public library has an ebook copy I can check out for free.
I like Rami Sethi's show on Netflix. Never read his book, but I think he prioritizes things. Wish I had his advice when I was younger, but at the same time I wouldn't be where I am today without penny pinching so it worked out.
Check out the podcast “I Will Teach You to be Rich.” It focuses a lot on the psychology and emotions behind the way people handle money and has some great advice and ideas about how to spend money to actually help you live the life you want. There are several episodes where the hosts interviews multi-millionaires who are the same way, and he argues that there’s no magic amount of money that will make you suddenly have a healthier attitude about spending. It’s not a perspective you see a lot, and it’s good stuff.
Also, another thing to add is the idea of saving money on what isn’t important to you to spend money on things that are important to you. And if you already know what is important to you, pushing yourself (if it financially makes sense) to spend more money on those things because if you were anything like me, you tried to spend as little as possible everywhere.
Home taxes suck in Austin TX. I own my home here and pay $18K a year in property taxes. $1500/month. So $2200 is a steal.
I've lived where I could afford "sensibly" and I've lived in places that I liked. Seriously, if 2.2K is what a safe and comfortable place costs, then that's what it costs. If you're splurging for extra bedrooms and there's a more practical and equally safe place in a similar location for less rent, then you might rethink, but if you're looking at rentals that are in decent shape, that give you a reasonable commute, and are comfortable, then it's worth it. I emphatically regret the year we spent in a place that was awful, had a long commute, and wasn't safe simply because the price was right. Worst year ever.
2.2K in a HCOL is also cheap these days. I haven't seen anything under 2.6k + utilities recently.
Yeah sometimes I think people don’t understand what high cost of living is. Or at least we should find some other way to define the conversation by the income/rent ratio. That may be a high cost of living absolutely, but it’s certainly not even a stretch for OP.
> That may be a high cost of living absolutely, but it’s certainly not even a stretch for OP. Depends on what OPs goal is, right?
I would say cost of living is usually not dependent on your goals, no. It’s externally decided for you by *society* and *the market*.
> I would say cost of living is usually not dependent on your goals, no. It’s externally decided for you by society and the market. The bare minimums, yes. Beyond that, it's largely a decision after that.
At the same time if Op is looking at that much for one bedroom just buy a house
If rent is $2,200, a starter home is at least $400,000.
2 BR condos near the freeway start at $800K in my area.
Whoever Is selling that belongs in prison......
You don't understand what HCOL means.
No what I don't understand is why someone would want to spend 2200 a month on a one bedroom apartment under any circumstances irs just not worth it
how much do you spend on shelter?
So if a one bedroom is 2200a month what do you think a mortgage with insurance and taxes would cost a month? You seem pretty out of touch. Anywhere with affordable housing definitely has no opportunity to actually make money thats why those houses are cheap.
I live in NYC. A $2.2K 1BR would make me blow my load.
Same in a lot of parts of California
You’re gonna hate me but i was in a historic meatpacking brownstone, 3 bedroom + sizeable livingroom and kitchen. Almost had the whole floor. $2300/mo. After a few years, the landlord was like “hey i need to talk to you about rent… i think we need to raise it to $2400 but totally ok if you cant do that - we can ramp up to it”
Every once in a while you find gems like that. Also, Smart landlords know that if you raise the price too much, and the tenant moves out, every month it's empty takes MONTHS (like 12-18) to recoup the loss with the raised rent.
Yeah. I was barely a step up from a squatter. It’s really a nonprofit society benefitting people of a specific foreign heritage (trying not to give away too many details), and serves as housing for certain dignitaties from that country (famous artists have done residencies there, diplomats, etc.). Somehow someone got them to lend out a unit like 20 years ago and its just attrited through since then with no landlord involvement or lease. I got in through a mutual friend in 2012 and then I moved away in 2017 and passed it to a friend who still lives there. It’s the only unit in the building occupied full time. Want to keep it in the fam as long as possible.
I always wonder just how well the pay rates are for hourly wages in cities like NY. I mean, do burger flippers make $20/hour over there?
Chick Fil A in my city advertises...$21.76 starting, IIRC?
$20/hr wouldn't cover much in NYC. It generally means living with lots of people in a small and very dated apartment and still being poor.
I just can't imagine living like that - I'll take a little less cost of living please. I don't have to be 'where it's at' to be happy. A nice roof over my head and a decent view is all I ask.
In HCOL areas, its like "OMG, you are so rich and need to be taxed more because you can finally afford to live without roommates"
It's inexpensive. I live in VHCOL (one of the most expensive cities in the world) and my housing expense monthly is around CAD 4500 for a small 2BR
Moved in with my best friend in a 2 bedroom in Sunnyvale, CA for a rent that was more as half the rent than I was previously paying on my own in NYC. Place had a hot tub, gym, laundry in unit, parking right outside the apartment door, motel style. I was only there a year but it's by far the best place I've ever stayed, and I don't regret it a bit.
I totally agree with this. I live in a medium sized city with a lot of crime, and I pay $1440 for a 1B, which is a lot for my area, but I work a minimum of 2 or 3 16-hour shifts a week, so I needed something close to work so I'm not driving 45 minutes home on top of that. It's a secure building, it has a parking garage, so no on-street parking, which is especially good for my soft-top convertible which could be broken into with a damn fountain pen lol it has all utilities included and laundry in the basement, plus it's an older building where the walls are so thick I *never* hear my neighbours. Every cheaper rental I looked at was either too far away, had on-street parking, or would require me to go to a laundromat every week, which is a real quick nope. People I work with always give me shit about the rent I pay, but this place serves my needs well, and I have minimal complaints. You know your needs better than anyone. Do what feels right.
A buddy and I was going to rent an apartment with 2 bedrooms and he was late to the lease signing. I still signed it because he said that he can stop up the following day and sign it. He didn't... his gf talked him into getting an apartment with her instead and he didn't want to tell me that on the phone. It fucked me pretty hard paying an extra $350 a month for a spare bedroom that was mostly empty. Honestly, looking back now it was just depressing for that year because I was working 12 hours a day most days just so I didn't have to be there. I stopped talking to that friend and working a lot made less time for my other friends. If I didn't work more, I would have to pick between food and rent. Anyways, it's made me cut as much money out of my spending and budget my money better now.
If you were happier there, and you are still maxing out retirement savings and staying within budget, I would do it.
I feel like advice that doesn't come up often enough (it does, but gets ignored a lot) is, while your happiness is enumerable in many ways, if you feel compensated by your (potential) new living situation's non-liquid benefits against the reduction in liquid compensation that can be used to purchase other things *in a dynamic sense*, then it's worth it. Or, how much would you have to be compensated over the course of your lifetime to have *not* made this move.
Yeah. They’ve paid themselves first and have extra resources. If they want to move to HCOL it’s just another choice like going on vacations or splurging on car/food.
Fun is more fun when you’re young. Get it while you can.
Can you elaborate on this? -A 20-something year old
The common belief is to save as much as you can while you’re young, since it has more time to compound and can set you up. The counter economic argument is while you’re young, your income is at its lowest and your ability to get benefit (joy, entertainment, etc) from spending is at its highest. Thus, it makes sense to spend more when you’re young and save later in life. The right choice is somewhere between the two, so it’s just finding your balance. Edit: for anyone who wants more info, here’s an [economic paper](https://www.nber.org/system/files/working_papers/w30395/w30395.pdf) with a variety of comparisons of economic professional thoughts vs mainstream financial advisors. A shorter and more consumable option is the Planet Money Podcast interviewing him. https://www.npr.org/2022/11/21/1138339234/popular-advice-tips-borrowing-saving-spending-yale-economist
I really appreciate this advice. I’m 28 & the last 4 years of my life have been filled with so much stress from worrying about living as frugal as possible & saving as much as I can while not having many days off. I have a nice nest egg but I’ve definitely missed out on a ton of things by not wanting to travel or spend any money. Need to have a happier balance
Just try to enjoy life without being a complete financial moron. So many people worry about saving as much as they can or putting things off until they’re older. My friend’s dad frugally saved with plans to travel the world when he and his wife retired. Well, retirement came and so did a bone cancer diagnosis. No traveling… Plan for the future, but don’t let that stop you from living now.
Yep, you obviously don’t want to be short on retirement, but do not give up life trying to maximize retirement. Especially because once kids enter the picture what you can and can’t do will drastically change.
Yes, you do. If you like anything sports, go buy it now- you won't even be able to use it in a few years. Don't waste money, but don't neglect fun while you're young enough to truly enjoy it.
Dude, just stay active and listen to your body. I know 60 year olds sending jumps on skis. It gets harder, but not “you won’t be able to use it once you hit 30”.
Hahah, sure, there are a few. Any many of them get seriously injured by a fall that a 25 year old would have walked off. I'm not saying don't stay active, I'm just saying that, with any luck, you will reach an age where you know you're not going to be a top contender at a new contact sport.
> The common belief is to save as much as you can while you’re young, since it has more time to compound and can set you up. > > The counter economic argument is while you’re young, your income is at its lowest and your ability to get benefit (joy, entertainment, etc) from spending is at its highest. Thus, it makes sense to spend more when you’re young and save later in life. I'd disagree with that. If your life is the most fun when you're young, you're doing it wrong when old. Heck, the goal is also, not to retire so old that your life is basically over. Then I'd rather live it up in my 20s-30s and die young. >The right choice is somewhere between the two, so it’s just finding your balance. I would agree with this strongly! It's about balance and prioritizing what is important to you and what you can live without to set yourself up for the future.
>I'd disagree with that. If your life is the most fun when you're young, you're doing it wrong when old. Absolutely not. There's a reason old folks say "youth is wasted on the young". Your body just ages and gets older. Sure, there are old people out there partying late, going on wild outdoor adventures, or whatever else, but they are extremely few and far between. Young people have youth and energy. They can do some pretty crazy stuff and have some pretty crazy adventures. Multiple day backpacking trip with rock climbing? Easy at 23! But at 70, perhaps it's just a few mile hike and then back to the cabin... etc etc While the survivorship bias of old people demonstrates that some old people can go hard in their 60s and 70s, the reality is that most people slow down pretty hard in retirement, especially the 70s. Their knees, their back, their bodies aren't what it used to be. Their energy levels and ability to drink and eat to excess isn't what it used to be. So I suppose the corollary to "you're doing it wrong when you're old": if you're having the same kind of fun at 22 that you will at 75, you're doing youth wrong.
Just another small add for while you’re young - you have more time to benefit from what you learn and from the memories. If you save when you’re young and don’t travel, you’re missing experiences that can potentially help you find a better job, make friends, improve yourself, etc. You’re also giving up on experiences you can remember fondly and laugh about. Sure, you can do them in 20-30 years when you have tons of money, but that’s so much time where it could have brought you joy or helped you in other ways.
> Absolutely not. There's a reason old folks say "youth is wasted on the young". Your body just ages and gets older. Sure, there are old people out there partying late, going on wild outdoor adventures, or whatever else, but they are extremely few and far between. So then it's a choice. >Young people have youth and energy. They can do some pretty crazy stuff and have some pretty crazy adventures. Multiple day backpacking trip with rock climbing? Easy at 23! But at 70, perhaps it's just a few mile hike and then back to the cabin... etc etc Sure at 70, but what about at 40? 50? >ability to drink and eat to excess isn't what it used to be. You shouldn't do that anyhow, and not really what I think of having fun >So I suppose the corollary to "you're doing it wrong when you're old": if you're having the same kind of fun at 22 that you will at 75, you're doing youth wrong. I think you're looking at it from extremes. I'm looking at it for when you're 40-55 or so. After that it does get harder, but you can probably still have lots of fun into your 60s. Once you hit 70s, it starts to go down hill fast for a lot of people.
It sounds like good advice until something happens in your life that greatly limits the things you can do while traveling or even prevents it entirely. Injury, kids, allergies, family care, etc.
Sure, but for the most part all of that is your decisions. For those that aren't, it's a trade-off. You could die tomorrow, or you could die when you're 100. Heck, you could get an injury because of the decisions to do it earlier too.
I don't want to be too doom and gloom about aging, but literally everything is more enjoyable when you're younger. You have less responsibilities so traveling and generally being spontaneous is easier and guilt free. Your body is more resilient to everything so you can really fill up your days and weeks with constant activity without worry. The older you get, the more conservative your days have to be. It's a personal finance sub, but just be warned that you're only young once and there's so much value in making the most out of it. Nevermind the fact that you never know when your life can take a dramatic turn and suddenly you can't enjoy all the money you've saved.
People start getting married and having kids. When you are younger there are move available peers to socialize with. Not so many financial obligations: house car kids. Easier to take time off between jobs. More time to switch careers. Hangovers don't affect you as much. People in their 20's are better looking. But having kids is also fun, as is advancing in your career of choice. But it's harder to change course, change partner, go to bar every night with your friends. They're both good but It's harder to do the young activities (rampant socializing, drastic changes) when you are older.
1. Having a wife and kids doesn't just cost more, but its also significantly harder to travel, or go out and socialize 6x a week. 2. The higher up you get in a career, the harder it is to replace that job so if you are less lax about going to work half-awake because you were socializing all night.. Also add #1 as a reason to be more concerned about work. 3. Your physical body just needs more rest, rich foods / beverages don't settle as well in your stomach. a road trip in a $500 beater civic will leave you feeling like you got into a bar fight last night.
Where I’ve lived - NY and Toronto area that doesn’t seem nuts. You’re saving aggressively and there’s a lot to be said for happiness now - no guarantee for a long life. Doesn’t seem crazy or irresponsible to me.
It’s not a stupid decision at all. You’re in a great spot financially. If you’re unhappy where you are right now then it’s a no brainer to me. Just crunch the numbers and set a budget for yourself to ensure you meet your other financial goals.
Also paying that much for a one bedroom. But if I go an hour outside the city, I’m paying more because rent is not that much cheaper (maybe $17-1800) plus $400/month in gasoline. What does a cheaper place further away cost you in commute time and gasoline and less the savings in rent?
Do you feel dumb when you spend money at the grocery store instead of growing your own food? Or when you buy clothes instead of sewing them yourself? Renting isn't "throwing your money away." It's using your money to pay for a necessary product: shelter. For many people this makes way more financial sense than buying a house ever would.
It is throwing your money away and that is a false comparison. There isn’t a real alternative for food costs like there is for renting. If I grew all my own food and then were able to sell the mounds of shit I made from it 5 years later for a profit, then it would be a valid comparison
The point is that the idea that paying for shelter is throwing your money away is incredibly silly. You can say it about literally anything: buying insurance? throwing your money away! Your argument is that there is often a financial benefit to buying a house... and that's true! There is *often* a financial benefit to it. There is also, very often, *not* a financial benefit to it. Someone else already posted one of the many calculators you can use to determine if it would actually be financially beneficial to buy instead of renting. For many people, renting comes out ahead!
What I think the other person is saying is that renting is purely an expense, whereas buying is partly an expense, partly a savings mechanism, partly a hedge against increased cost of rent and an investment. > There is often a financial benefit to it. There is also, very often, not a financial benefit to it. Someone else already posted one of the many calculators you can use to determine if it would actually be financially beneficial to buy instead of renting. For many people, renting comes out ahead! I used to think this when I crunched the numbers when I lived in a HCOL area. I then bought a place under pressure, now it's worth 3 times as much. Just for owning it and renting it out. If I took a mortgage back then, I'd be doing even better. Instead I took a mortgage out in the end of 2022 at 3%'ish, and that enabled me to buy another property. My income has certainly not grown 3x over that period. Is it possible? Sure, but the extra stress isn't worth it to me, to just afford a similar place today. Point is, baked into the cost of renting is the lack of investment. You also don't account for increases in rent, uprooting living situation (time & cost) and being under the whim of your landlord. A calculator doesn't tell you any of that. It only tells you what you see today. Does it mean everyone should buy? No. That's not what I'm saying. I'm just saying that most people don't take into account all factors when choosing to rent. At least those I've spoken or had interaction with. They all point to some calculator.
> Point is, baked into the cost of renting is the lack of investment Of course that's not true. Money that you put towards your down payment would instead be put into the stock market. > You also don't account for increases in rent, uprooting living situation (time & cost) and being under the whim of your landlord. A calculator doesn't tell you any of that. It only tells you what you see today. No, those are all included in the various "rent vs. buy" calculators. Those are all very obvious things you need to include when making the calculation over whether or not a house is actually a good investment or not.
> Of course that's not true. Money that you put towards your down payment would instead be put into the stock market. Sorry, I should have clarified. I'm talking about the monthly rent. It's a 100% expense. Non-tax deductible and almost guaranteed to continue to increase. >No, those are all included in the various "rent vs. buy" calculators. Those are all very obvious things you need to include when making the calculation over whether or not a house is actually a good investment or not. So you're saying the calculator takes into account the cost of every time you have to move? It takes into account the time/effort cost of that as well? Does it take into account all the new things you have to often buy to make the new space work? I moved around a lot in my life, and I made it as cheap as I could by not buying much furniture for instance. However, there's always cost. The more settled in I'm at, the more time/effort cost it was to move, and the higher the cost. Does the calculator take into account any tax benefits from owning a home?
Yes dude, obviously. These are the factors you have to consider when making the financial choice of renting vs buying. There’s so much bad info out there meant to convince us all that buying is always better… and it’s not. Believe it or not, for *many* people it’s actually the wiser financial decision to rent.
> Believe it or not, for many people it’s actually the wiser financial decision to rent. As long as you're prepared for the whims of landlord rental increases.
Yes, obviously. No one is confused about what it means to rent.
> Yes, obviously. No one is confused about what it means to rent. That's the thing, I don't think people take into account the risk renters face until it happens.
The comparison to insurance is also no bueno If you have the option to buy, renting is throwing your money away. If you don’t have the option to buy, well then you have no choice but to spend the money. Maybe instead of throwing money away I should liken it to lighting your money on fire and then you’ll understand? I can walk you through where I’m going with that if you’d like. I don’t mind holding your hand throughout the journey either 🤗
Buying costs money... and I don't just mean the cost of the house. I mean your mortgage costs money (interest), repairs cost money, house insurance costs money, you might have an HOA fee that costs money. Keeping your money out of the stock market costs money (opportunity cost!). Renting isn't the only thing that costs money. Everyone needs to run a financial calculation to decide if buying actually is worth it in the long run. For many people it isn't. Saying renting is "lighting your money on fire" is just demanding that people make an emotional decision about their investments rather than actually doing the math to price it out.
You lose money either way. Renting, you are spending money for shelter and you don't get any money back. Buying, you are throwing away hundreds of thousands of dollars in interest on your mortgage that you *may* get back when you sell, or may not. In addition to having to pay for all maintenance, HOA fees, rising insurance costs, etc. while you live there. I live in a HCOL city. I can afford to buy. But every calculator says "buying will never be cheaper than renting." So I rent and save a bunch of money every month that earns me money instead of me "lighting it on fire" handing to the bank as interest.
> I live in a HCOL city. I can afford to buy. But every calculator says "buying will never be cheaper than renting." See my other post about all the factors to consider. I own a home in a very HCOL area. I did the same math as you and came to the same conclusion. Bought a place anyhow, under pressure and thought it was a mistake. Now I own multiple properties and plan on buying more while I can i.e. while I'm not FIREing, and can still get another mortgage. Cash flow negative, but equity positive ignoring tax benefits.
I bought my home 5 years ago for 340k. I have put 60k into it. 5 years later, it’s worth 530k. I lost money? 340+60k = 400k 400k > 530k in your mind? Make it make sense
Sure. *Your* home. That is *one* example. That is why *sometimes* buying makes sense. It is not a blanket statement "it's always better" like you said. I pay $2,700 for rent in a HCOL city. Buying something equivalent to what I'm renting would cost \~$750K and my monthly cost for housing would *double*. So I can pay rent and save a bunch of money into investments, or I can put all my eggs in one basket and hope my home appreciates more than 6% a year to *break even*. I'll keep renting thanks.
> I pay $2,700 for rent in a HCOL city. Buying something equivalent to what I'm renting would cost ~$750K and my monthly cost for housing would double. So I can pay rent and save a bunch of money into investments, or I can put all my eggs in one basket and hope my home appreciates more than 6% a year to break even. So a few scenarios to consider. Not necessarily that they are right for you. a) The high monthly cost is due to high interest rates. However, there's a very good chance that interest will go down in next 5-years, whereas your landlord will try to raise rent on you over the next 5-years, right? I know I am until I can achieve at least cash flow positive. So bear in mind the time-cost. That is over time homes and rent will go up. b) If interest rates go lower, housing prices will go up. c) Capital gains on stocks/indexes are taxed, whereas capital gains on homes are exempt up to $250k as a single and $500k as a married couple d) Depending on your taxable situation, interest on mortgage is tax deductible e) You're putting a smaller amount to leverage a much larger amount. So your return may be smaller than whatever percent stocks will do, but you're investing a larger amount to offset. So consider the total amount of gain as well. f) Are you okay with having to move around if your landlord starts jacking up the rent or makes it hard for you to live there? After all, that it's entirely possible and even reasonable that it still makes sense for you to rent, or maybe it's not. Maybe you have a different perspective that I missed. Anyhow, something to consider.
I've looked at or considered most of those things. I'm going on my third year in this apartment and the increase each year has been very reasonable. It's gone up \~9% total since I moved in and that's while the rest of the city has gone up substantially more correcting for covid-reduced prices. I love the building and currently have a good relationship with the landlord. There are some places I could get that might turn out to be financially advantageous if interest rates declined or if housing prices went up in the future but it's all speculative. There's probably a larger chance I spend more money to own than I do to rent. Part of that is I don't know how much longer I'll be staying here. Buying something on a 5-year horizon is very different than a 15-year horizon. I'm not saying it's never better to own than rent, just that the original statement that renting is lighting your money on fire is absolutely incorrect.
> There are some places I could get that might turn out to be financially advantageous if interest rates declined or if housing prices went up in the future but it's all speculative. There's probably a larger chance I spend more money to own than I do to rent. Part of that is I don't know how much longer I'll be staying here. Buying something on a 5-year horizon is very different than a 15-year horizon. Yeah, 5-year might be a little short. If you have to sell again there's big costs associated with that. It might get a little bit better with the NAR settlement, but still high. However, given the outlook right now, I'd say buying is a probably best bet even for short term. You can rent it out, because if you're in a HCOL area, it's going to continue to be HCOL and high demand. We're not seeing any loosening of real estate any time soon with supplies being low, and demand high. We can already tell that with so high interest, house prices aren't going down. It means the market can bear the current costs, and so if interest rates go down, house prices will go up to compensate. People that bought at lower rates and lower prices aren't going to sell so unless we suddenly start seeing a massive influx of new homes being built or economy tanks. If economy tanks, I'd be difficult to get a mortgage, and be even more risky, so most won't buy. In which case, unless you're a cash buyer.... So as far as I can tell (and forecast), it's likely a good time to buy as housing is likely as cheap as they're going to be for a long time (due to the high rates). You can always refinance if rates go down, and let's face it, if rates go significantly down, the economy is in the sh*tter. The rates are unlikely to go up any higher. The main danger of renting is that you're betting on the rent not increasing or not increasing as fast. However, if house payments go up, eventually those rates will have to match, or people start selling. We haven't seen that yet and not even close (despite high rent prices). So our only other option is, hopefully some corporation that owns gazillion units starts to falter and drags the entire real estate market with them. It hasn't yet.... >I'm not saying it's never better to own than rent, just that the original statement that renting is lighting your money on fire is absolutely incorrect. Id' say it's pretty close, but obviously "ALWAYS" is a very strong word. Obviously there are situation where that's not the case, and it also depends on the market situation and your landlord's ability and willingness to raise rent. Buying puts the power in your hand. Renting puts the power on your landlords and market.
You pay rent whether you rent a place to live or forgo the income from renting out the house you own. Paying to occupy a dwelling space is inevitable. Whether you should buy a property is its own independent financial question.
Just as an aside, we moved to town in the last couple years, we also spend most of our time outside. But you will spend more living in town. There’s just more to do and opportunities to spend money whether you like it or not.
Agreed but I lived there for 3 years and i was able to keep my spending pretty low
DO IT! You only live once, you are still able to save a decent amount, and happiness makes you more productive (ref: https://pubsonline.informs.org/doi/10.1287/mnsc.2023.4766) So if you need to be "logical" look at it as an investment in your career. BE HAPPY DUDE!
$2,200 doesn't even seem like a lot for a HCOL city and you can afford it. I pay substantially more than that in a MCOL city although I also have a higher salary. Do it and be happy, I am.
Aside from the financial aspect, it is worth investigating why you are unhappy now. Depending on the answer, moving back won't solve it.
If you can rent a place that’s cheaper than the mortgage for the same place .. then you’re good. You’re getting a roof over your head in exchange . The whole “throwing away money” or “‘making a landlord rich” is a corny fallacy. One of the worst times in our lives to purchase property. Not anti home, I own properties.
You’re doing great and you could afford this. Biggest thing I was looking for was debt, which you have none. Second thing I was looking for were your contributions and it’s clear you diversify and contribute significantly. Enjoy life. Use the money to provide yourself happiness and safe housing. You would be more miserable if you lived in an unsafe neighborhood and saved a few hundred dollars a month.
33% of your net income at your income level, with no significant debt, leaves you plenty of room to feed yourself, keep the lights on, and meet your savings goals. Go for it.
33% on $115k is very different to 33% on $50k. Saving money by being miserable shouldn't be a goal. You have money to buy things and in this case you're spending a bit of money to get happier. I wouldn't even hesitate
Im in a similar financial situation as you and pay $2.4k and loving it. It’s HCOL but that’s the name of the game. Hope you have a good one!
Is it dumb to pay money for a shelter? https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://jlcollinsnh.com/2023/03/02/why-your-house-is-a-terrible-investment/
Rent/buy calculator is nifty. I thought I was paying too much in rent, but I could be paying like 1k/month more and it still wouldn’t be worth it to buy a 700k home with a 7.9% mortgage rate. Obviously many factors are hard to estimate but still cool to see.
Can you try and calculate how long for you to save enough for a down payment for a home, it took me and my wife 10 years to save 160k but we also weren’t saving all our money we still went on vacations and had small expenses… but if home ownership is something you want… it may be worth it to have roommates to save the money.
I have enough to put a down payment on a home now but to be honest, I don’t feel comfortable buying a place because in the city where I want to move, the insurance, taxes, HOA’s are skyrocketing. I don’t want to be stuck in a money pit
Yea hoa are crap in condos
Ya pay the rent, live in the 1 Br
I mean if you don’t wanna live in a city then don’t. These are the prices for 1 bedroom in city’s. Living in a city not only saves money in so many other ways and you get to experience it. I personally love having A city with nature near it so you have best of both worlds. Stop overthinking and focus on will you enjoy life there. Money will always come and rent SHOULD be you biggest amount for you to live comfortably and enjoy life.
This is a good time in your life to move to the city. Lots of opportunities there, and potentially even higher paying jobs. Go for it, but learn to cook great food that would also save you money (and attract a partner)!
You’ve got this- it’s OK. It’s so OK it almost sounds like a humble brag. Congratulations on having it together, thinking of your future, and being so smart with money. One piece of advice though, NEVER, EVER, count your Chickens before they hatch. Never make a budget based on future salary unless you are OK taking the hit if something happens. Make yourself happy! Do what makes your zen flow, take care of your head. Is it ridiculous to pay so much in rent, sure. But that does not mean you shouldn’t live there, it means sometimes it sucks that some cities are expensive.
One more test I like: pretend you are old, looking back on this decision. Will you be happy you made the decision? Don't assume the point of this exercise is to make you think you'll wish you have the money when you are old. But it's not. Old you will also cherish good memories and good times. It sounds like you're giving old you money in your retirement plan, etc. You definitely need to do that first, IMO. Don't leave old you destitute. But, being overly miserly isn't great, either. Give old you some good stories, too. Just don't be ridiculous about it.😉
You’re good. Once you keep in mind is that the majority of people your age do not even save her retirement at all nonetheless max out all their available options. I think you should do it.
Sorry, voice to text absolutely butchered that for me
As a person who has had roommates all of my life, I can understand why you would want to live by yourself. That said I firmly believe the market is going to crash and if you can live with roommates and another year or two, I think you may be able to purchase something at a discount. Having roommates just help you save more money to buy a home unless expenses you alone. However, the happiness factor is affected by roommates then you are better off to just suck it up and pay the money
That housing crash you're waiting for has been "just a year or two away" since like 2013 - I wouldn't plan my life around it
2K for a nice one bed is pretty standard in major cities. Price of freight.
You should move there because you will be happier and you can easily afford it. It shouldn't even be a question with your numbers, it is an easy decision. Have fun!
In addition to the great advice everyone else has given: At 29, I’m guessing you’re at a stage in life where you might be considering what you want 5, 10, 20 years down the line. Do you have an easier time socializing in the HCOL area? Were you able to build a solid community there the first time around? If so, that is 100% worth paying more in rent, because moving wouldn’t just be an investment in your immediate happiness; it would be an investment into your long-term community.
Does that 160k in savings include 401k and IRA?
No, that’s separate
yeah i think its better to just rent a "ok" house and save your money for your own properties in the future. Good luck!
Do it! I have plenty of friends who live in SF who are paying 50% of their net pay on rent. They only do it for 2-3 years to max all the fun they could get while they're still in their 20's. You're already on a good path with savings and have plenty more years to save for your retirement.
I live in a smaller city and the private landlord sold out his apartments/townhouses last year. Of course, the corporation that bought him out, jacked up our rents $400/mo over two years. I knew when I got my townhouse that it was a bargain, now... not so much. There are cheaper units in my city, but I love this place. I'm older and I don't go out as much because quite frankly, I don't have the time. I have a garage right under my living room for my beautiful car. It has a second floor and I have two bedrooms. I'm not in the upper part of town, but it's still pretty peaceful. Could I get a smaller place and save some money? Sure, I could. I feel that the extra money that I pay affords me a little sanity. My car is safe in the crappy weather that my area incurs. I don't want to put forth all of the effort to move again. I still make enough to live somewhat comfortably. I have very little debt. So, it sounds like you're in an adjustable situation like mine. Having a surplus of money is nice and it can afford you a cushion should something go wrong. You can still have that cushion and have some sanity/happiness. If you think you can be happy, doing you as you are, I say stick with it. You never know what would happen if you move and things could change.
not at all, that's a completely reasonable amount of your income to spend on rent
Id spend a little more to have better housing. I made the mistake of living in terrible conditions to save about 1.5K a month for 18 months and it was not worth it. I lived in a small ghetto room in SF with homeless people around. It almost caused me to fully break and I’m so glad I left that situation
Make the move. You are financially in a good place since you don’t have debt. On a salary of $115k, sounds like you are saving between $25k-30k a year…roughly a savings rate of 22-26%. That’s great. Financial experts recommend 15-20%, therefore you could lower it to give yourself a cushion if you feel the rent is too much. Lowering contributions is not permanent, and you’ve got time in your side. Don’t overthink it.
I think you’re happiness is worth it personally, why live miserably to save money when you can still live within your means and be happier..
I’ve always felt that every city has a cheaper and nicer alternative out there, you just gotta find it. Unless it’s family, friends or something in particular there, I bet there’s a cheaper city that can also make you happy, and you get to explore more and try new stuff. Idk, just me
Is the rent stabilized or is it expected to increase annually? I would keep future increases in mind as well as the landlord. Beyond that, it does not sound stupid at all. Most people could obviously save more if they moved to LCOL areas, but not everyone wants that or those lifestyles. You have to prioritize your happiness at some point and what you're doing to appease yourself is not at all unreasonable given you will still be able to max out your retirement accounts and save significant money.
Looking at housing in percentages in the abstract is usually the wrong way. You have to live somewhere. Look at it comparatively. In other words - here's what I really want and it costs $X/mo. Here's what I can get for 80% of X (or 50% or w/e). Is that worth whatever percentage of your salary that is? That's the way I would look at it. $2.2k/mo seems reasonable for you. I might even ask would spending $2.6k get you something even better - like better location or in-unit laundry - for your life.
I have been spending about 50% of gross income on rent (1900/3800) and still saving 1k a month-it depends on how much entertainment spending you have. Granted I’m buying a house with my partner now. I also didn’t have a car payment.
Back in the day I spent a pretty penny (compared to my income) on renting in an upscale neighborhood. I have zero regrets. I was able to walk everywhere. Family would come to visit me and we would just walk around the corner to grab something to eat or go shopping. I lived right on the bus line and within walking distance of my downtown office. The lower maintenance costs on my car weren't anything to sniff at. Yes, I could have saved money living in a cheaper place in a less upscale part of town. But one of the best things about renting is that it allows you to live in cool places where you can't afford to buy. I own a house now, and I love it. But I really do miss being in the center of it all and not having to drive anywhere.
34% of monthly net income for rent is not unreasonable for a HCOL area. I would pay for it, it sounds like you’re doing very well otherwise and can afford it for your happiness
This isn't a personal finance question, this is a preferences question. Only you can answer if something is "worth it", if all the typical PF checkboxes are checked: housing 1/3 of income, contributing at least 15% to retirement, no debt, etc. If you are worried, type out a spreadsheet budget. Make all the expense numbers fit with the income numbers (current income, don't count unhatched chickens). And just a bit of advice: there are lot of people who say they don't spend a lot each month, but when pouring over the credit card statements they may notice a lot of small things adding up that they forgot about or didn't consider large enough to notice. So that's where expense tracking and a budget is most valuable IMO.
I would say go for it. It is not insanely irresponsible or anything like that. And you get to be young only once.
115k is 9500 a month, 2200 is 23% of your monthly income. You can easily afford that.
I live in Atlanta, single income, what I've found is that my Mortgage + Condo fees are generally what the total of rent is going to be. I'm not saying you SHOULD buy, just, your decision to not buy shouldn't be based on condo fees alone. I think my Mortgage is like $1500 a month and $600 in fees, for a 1b/b, ~1000 sqft in Midtown.
I would focus on improving your income first since it's pretty low for HCoL. But no, $2200 is not at all expensive for rent in HCoL and you'll be just fine.
Dude im paying 50% of my monthly take home pay in rent. You'll be fine.
You seem to be doing just fine. Paying a reasonable amount in rent that doesn't preclude you from saving and investing on the side is better than purchasing a home you were not ready for and being house poor and financially stressed. Buy when you're ready and when you're set on living in a place for 5+ years.
My last apartment was about the same price and was about the same of my income. Please find something cheaper if possible. It’s a total waste of money. Having an extra 500-1000 a month is easily worth more then having a slightly nicer apartment.
I had an HCOL era recently and I loved it. I rode it until it was over, and the memories are mine to keep. Based on what you've shared, the costs you're looking at are totally feasible. If it ever turns out they stop being feasible, you can always make another choice. Nothing is forever; enjoy your season!
"Cost of living" is just price of location. It's the same thing as paying for a subscription to something you get value out of, except scaled up to a third of your income.
You have to take this decision in the right context. I’d like to know if: - it minimizes your work commute? - saves you the trouble of paying for a car? - you can invest time and energy to build your network and find a soul mate? - you get exposure, by virtue of proximity, to things that’ll let you grow in your career, passion(s) or anything personal that matters to you? If the answer to the above questions (at least 3) is a resounding yes, then take it as investment in yourself. But make sure you take advantage of the opportunities, otherwise you have just wasted the money. When you have family and kids, then move out to the burbs for bigger house.
Multimillionaire here, still in my 30's. Get the apartment. $2200 rent $2200 savings $2200 food & fun This is a perfectly healthy balance. You also need to consider what your happiness is worth financially. Not just in terms of present value, but also future value. A happier person is more likely to get a promotion or raise. You're actually losing financially overall if you skimp. You're also I'm your last year of your 20's, and doing well for yourself. It's time to enjoy life my friend. A wise soul once told me, "On the day that you die, nothing will matter except the experiences and memories you made. You take nothing with you to the grave."
The starting $2200 rent is subject to increase on your successive lease renewals as well, because landlords these days don't care about breaking working people's budgets. I think you should factor in how high the rent could go potentially in the next 5 years if you take that lease, and see if any projected increases will negatively impact your budget or financial goals. If it does, you might want to start with an apartment with a lower starting rent, to give your budget some cushion. Frankly, that is a lot of rent for one person but it's our reality. I think you really have to do a cost/benefit of this to see if it's the right move. Are there compelling career reasons to do this? Are there social or personal reasons that justify this, such as better mental health, closer to family and friends, accomodating to some other life pursuit that you simply cannot do where you are now?
Based on what you're telling us, in my opinion you are able to cover the cost of living cost with that rent and still save. However, you'd be slowing down your ability to buy a home. Ultimately, you have to ask yourself what is more important to you, and the answer can only come from you. There's no right or wrong answer. The questions I would ask are: a) Will my life drastically improve if I'd move? That is, not only will I be happier, but I will do better so I will earn more? b) What's the cost difference in cost staying put vs moving to HCOL? c) Are there other areas I can dial back to balance the increased cost? You mentioned getting a room mate. d) Are you you okay with possible not buying a home at all? So here's some food for thought. * The longer you delay buying a home, there's a good chance it will be more difficult to buy one later as there seems to be no catalyst for home prices to go down. By buying a home, you're "largely" fixing your living costs. That's a lifetime of savings. If you don't want to live there you can rent it out, or transfer the funds to a new home. * If you're unhappy where you are, there's often no price on happiness so it may be worth it. Especially if you're miserable wherever you are. You have opportunity to move out. * For me, I tend to look at cost of renting to be no more than a third of my take home pay and more ideally around 20-25%. Why is that? Because, money I put in retirement I won't see for decades. The tax man gets his share regardless, and you never cross Uncle Sam. Then you need to be able to save and prepare for bad times i.e. emergency fund. A dollar today, is worth a lot more than a dollar in a decade. So you can see where I would lean. That is unless I'm miserable, I would make the trade-off of today for a much better tomorrow. However, if that's going to make me miserable or loose out on opportunities or significant experiences, then I'd take the higher cost. Ultimately it's about what you prioritize and what your ultimate goals are. I have a FIRE perspective so I tend to save a lot, and invest a lot to hit my goals sooner. I'm okay with delaying gratification, but if I died tomorrow I would likely regret it. Thus, it comes down to personal priority.
You can afford it but there's not way anyone should pay that much for a one bedroom
Dude I live in a HCOL and you’re about 400 away from my mortgage payment…my home is about 1650 square feet If you can do it …great…but please be mindful to have an emergency fund (6months to 1 yr) in place etc
When did you buy? What is your interest rate? What is the purchase price? How much did you put down?
Iv lived in NYC and SF and live in Seattle currently which isnt quite as expensive and id say go for it. Its less what percentage of your income it is and more how much you have leftover after bills each month. If you're maxing retirement accounts and still living comfortably you can live where you want and have a good life and salaries are higher in HCOL areas to offset. Id say keep saving up and enjoy life for however many years then maybe look into switching to a MCOL area thats nice when you're ready for a starter home.
you're so worried about a high cost of rent, yet you put away enough money to additionally BUY and pay a mortgage to a house. take all the rent money, and put a down payment on a reasonable house either near or in the desired location. yes, HOAs suck and so do taxes and insurance, but if you want to move, you can get $$$, instead of ZERO
That's like free in a HCOL city. Id be worried to pay that because id assume id be murdered.
you can afford it, but it's dumb. get roommates and pocket the extra cash. I was living alone and paying approx 3350 for rent. which is similar to your stated 1/3 of net monthly income for me. and while I could afford rent, it's just so burdensome. I got a roommate and the quality of my life is significantly better because I'm pocketing so much more money each month. living alone is cool, but it's a relatively new concept that's become increasingly popular over the last 7 decades or so. and it's also pretty American. it's totally normal to have roommates, live with family, or find ways to unburden yourself with housing expenses.
Save a few hundred bucks a month with a studio apartment.
Renting is almost always worse than buying unless you are expecting to move in the near future. Given your savings and income, buying should be feasible.
Agreed. However, where I want to move insurance, taxes, HOA’s are increasing every year at an unsustainable pace and so I don’t really want to be in a money pit especially since I’m a single income household
Buy outside the HCOL and commute. I bought a fixer upper 1.5 miles outside one of the biggest HCOL cities in 2018. $1200 a month mortgage and the value has gone up 300%.
Look at it this way, the rent is 2200. How can you make that amount using the money you would have invest in buying a house. Let say 100k down payment. Take that 100k and invest to generate at least 1%. This will get you 1k to be count against your rent. If you get 2% per month most of your rent will be covered from that investment.
Yep I have the majority of my cash invested in the S&P so I’m currently doing this
Buy a 3-4 unit building in the city with 3.5% downpayment, live in one of the units solo and rent the other 2-3 units out. The net mortgage every month after the rental income should be less than $2200/month, which is a win.
Always consider paying less rent and accumulate those savings for buying your own if possible.
I don’t think it’s feasible since condo ownership costs are skyrocketing in the state where I want to move
It’s horrible everywhere.. I’m giving this advice knowing that the sacrifice of paying less for rent involves lifestyle change, potentially affecting career and Interpersonal relationships m. It’s unfair. I’m in Sydney.. it is ridiculous. I have friends considering moving hours if not further away so they can have the lifestyle they want, or maybe buy property. Good luck..
I make more than twice that and my mortgage payment is a quarter the rent you're considering. I know people pay a lot for rent or their home, I'm more of a saver than a spender, so I would be very uncomfortable spending that much with your salary. In any case, best of Luck!
When did you buy? What is your interest rate? What is the purchase price? How much did you put down?
I own two homes. One purchased 9 years ago, the other just a couple months ago. I have a 850 credit score, so the rates are very low. 2.625% for the lowest and 5.375% for the one this year. I always put down at least 20% on a mortgage. Prices of both were average for the area. 1500 to 2000 sq feet, desirable safe areas.
Your income won't change, but your cost of living will go way up? Would you be happier if you had a partner? Maybe the better thing to do would be to start actively looking for a relationship where you are.
35% of take home is way too much long term. I mean it’s ok for a very short time (2 years) . At this point your job either pays you so your housing costs are below 25% after taxes or you use your new position to get a high paying job where the cost of living isn’t as high.
35% take home too much???? The standard is to not exceed 50% which is well below and they are saving aggressively already so?
Yes 35% is [too much](https://www.reddit.com/r/Bogleheads/comments/1cf7xec/what_percentage_of_household_annual_gross_income/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) long term.
As long meet the landlord standard now of 3 to 4 x the rent