Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

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btks
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Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 5:35 pm

For those of you who have been self-supporting for years... is my anticipated budget crazy? Can I live on a budget like this when I graduate?

Salary (Before Taxes): $75,000
401k Contributions (6%): $4500
Net Income (After Taxes, Health Insurance, 401k): ~$48,000

Monthly Expenses

Rent & Utilities: $1,300
Food, Gas, Cell Phone, Extra: $800 (this is less than I currently spend, currently $400-500/m :happy)
Auto Insurance: $150

Yearly Expenses

Vehicle Property Taxes: $500 (will be less in 3 years!)
Annual Physicals / Medical Other: $1,200
Travel / Home for Example: $2,000

Total Yearly Expenses: ~$30,700

Total Remaining: $17,300

Remaining Cash

Roth IRA: $5500
Investment Account: $10,000
Savings: $1,800

I will already have at least $75,000 in savings, so I would contribute little to savings and more to investments. I estimated $1,300 for rent and utilities, but I will probably rent a room like I do now, which is much less (right now I am paying $550/m to rent a room in a brand-new home :happy). I put $800/m for food, gas, cell phone, and extras, but right now I am living on all of those items for $400-500/m (according to my grandma, she is surprised at how frugal I live...). I also added an expense for traveling or visiting home, which will likely happen if I were to move across the country and settle down in Seattle. I am very healthy, but nonetheless even healthy people need surgery sometime... I had surgery last year, which ended up costing $1,000. So, I budgeted $1,200 for a physical exam and potentially surgery, for example. Obviously that really depends on your out of pocket maximum and how many times you go to the doctor/hospital. As for the property taxes and auto insurance, I may actually sell my car if I live in the city... which would eliminate expenses for gas, insurance, property taxes, etc. Plus, I put a lot of money down on my car and would get about $10,000 if I sold it. Am I missing anything??

betterfinances
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 5:42 pm

It's been many years snice I rented, but $1300 is tough in Seattle, impossible in downtown, iirc.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 5:44 pm

betterfinances wrote:It's been many years snice I rented, but $1300 is tough in Seattle, impossible in downtown, iirc.
Lets assume I would do something like this then: https://seattle.craigslist.org/est/roo/5441143244.html

Or, https://seattle.craigslist.org/see/roo/5417928342.html if I wanted to live more luxuriously

That's much better!

Of course, I am going to go wherever I get the best offer. It could be on the east coast... but this is just a "rough" budget.

betterfinances
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 5:49 pm

btks wrote:
betterfinances wrote:It's been many years snice I rented, but $1300 is tough in Seattle, impossible in downtown, iirc.
Lets assume I would do something like this then: https://seattle.craigslist.org/est/roo/5441143244.html

Or, https://seattle.craigslist.org/see/roo/5417928342.html if I wanted to live more luxuriously

That's much better!

Of course, I am going to go wherever I get the best offer. It could be on the east coast... but this is just a "rough" budget.
Both of those are roommate situatioms. Doable if you want roommates.

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FiveK
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by FiveK » Mon Feb 15, 2016 5:51 pm

Difficult but not impossible. You might find items of interest to you in http://earlyretirementextreme.com/ or http://www.mrmoneymustache.com/, both of which address minimizing expenses.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 5:51 pm

betterfinances wrote:
btks wrote:
betterfinances wrote:It's been many years snice I rented, but $1300 is tough in Seattle, impossible in downtown, iirc.
Lets assume I would do something like this then: https://seattle.craigslist.org/est/roo/5441143244.html

Or, https://seattle.craigslist.org/see/roo/5417928342.html if I wanted to live more luxuriously

That's much better!

Of course, I am going to go wherever I get the best offer. It could be on the east coast... but this is just a "rough" budget.
Both of those are roommate situatioms. Doable if you want roommates.
It's really the best thing to do if you are single. Then, it is affordable and you aren't lonely. I suspect that the salary would rise rather quickly over the course of three years in Seattle, too. Or, if I can get an internship at one of these big tech companies...

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by BL » Mon Feb 15, 2016 6:01 pm

Health insurance at work is a possibility, with various costs. A High deductible might be cheapest, especially if they kick in something for the HSA deductible. Perhaps you can contribute to that and not spend it unless necessary, then it becomes a retirement health savings vehicle.

Good for you to have some savings to start off with. Just being aware of expenses means you are good.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by Bfwolf » Mon Feb 15, 2016 6:02 pm

Spending $30K a year in your early 20s in a major city like Seattle is doable but difficult. A roommate would probably be a must.

If you already have $75K in cash or similar, then I would recommend contributing more money to your 401k--there's no reason to be putting anything into a taxable investment account if you can avoid it.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 6:10 pm

Bfwolf wrote:Spending $30K a year in your early 20s in a major city like Seattle is doable but difficult. A roommate would probably be a must.

If you already have $75K in cash or similar, then I would recommend contributing more money to your 401k--there's no reason to be putting anything into a taxable investment account if you can avoid it.
I think the reason I was doing that was to have extra money that I could touch before retirement i.e. buying a car if needed. I figured that 6% to 401k, with an employer match (I would look closely at benefits before accepting a position), plus contributions to the Roth, would leave me more than enough for retirement by the time I'm 67 or 70.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by dbr » Mon Feb 15, 2016 6:15 pm

Apparently you are better off than at least 79% of Americans who as one person families have less income than you do. Based on that it is a fact that you can live on that income. Even if you were supporting three other people (wife and two children) you would still be in the middle 50% of American household incomes. In Seattle the median family income is about $70,000 vs about $50,000 nationwide. Still you are already better off than half the families living in Seattle and you will have only yourself to provide for.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by Bfwolf » Mon Feb 15, 2016 6:20 pm

btks wrote:
Bfwolf wrote:Spending $30K a year in your early 20s in a major city like Seattle is doable but difficult. A roommate would probably be a must.

If you already have $75K in cash or similar, then I would recommend contributing more money to your 401k--there's no reason to be putting anything into a taxable investment account if you can avoid it.
I think the reason I was doing that was to have extra money that I could touch before retirement i.e. buying a car if needed. I figured that 6% to 401k, with an employer match (I would look closely at benefits before accepting a position), plus contributions to the Roth, would leave me more than enough for retirement by the time I'm 67 or 70.
Maybe. It depends on lots of things like how much you will spend in retirement. Maybe someday you'll get married? Have kids? Do you think that will change your spending habits? A lot of people here would suggest having a 6 month or 1 year emergency fund. If you're spending $30K a year, then $75K is a 2.5 year emergency fund. So it seems like there's some buffer in there in case you wanted to buy a car. Unless you have plans to buy a house in the near future (and it doesn't sound like you should, nor would I recommend it), it seems like you've got plenty of cash on hand. $75K is a very good starting salary out of college, but believe it or not, you may earn a lot more someday. And if you do, there's a good chance you'll get to the point where you wish you could save more in a 401k but you can't because of IRS limitations. You'll be glad you saved more in a 401k today if that is the case. Once you give up an opportunity for more tax advantaged space, it can be hard to get it back. The advantages of avoiding dividend/capital gains/interest taxes over a 40/50/60 year period of time can be quite significant.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 6:30 pm

Bfwolf wrote:
btks wrote:
Bfwolf wrote:Spending $30K a year in your early 20s in a major city like Seattle is doable but difficult. A roommate would probably be a must.

If you already have $75K in cash or similar, then I would recommend contributing more money to your 401k--there's no reason to be putting anything into a taxable investment account if you can avoid it.
I think the reason I was doing that was to have extra money that I could touch before retirement i.e. buying a car if needed. I figured that 6% to 401k, with an employer match (I would look closely at benefits before accepting a position), plus contributions to the Roth, would leave me more than enough for retirement by the time I'm 67 or 70.
Maybe. It depends on lots of things like how much you will spend in retirement. Maybe someday you'll get married? Have kids? Do you think that will change your spending habits? A lot of people here would suggest having a 6 month or 1 year emergency fund. If you're spending $30K a year, then $75K is a 2.5 year emergency fund. So it seems like there's some buffer in there in case you wanted to buy a car. Unless you have plans to buy a house in the near future (and it doesn't sound like you should, nor would I recommend it), it seems like you've got plenty of cash on hand. $75K is a very good starting salary out of college, but believe it or not, you may earn a lot more someday. And if you do, there's a good chance you'll get to the point where you wish you could save more in a 401k but you can't because of IRS limitations. You'll be glad you saved more in a 401k today if that is the case. Once you give up an opportunity for more tax advantaged space, it can be hard to get it back. The advantages of avoiding dividend/capital gains/interest taxes over a 40/50/60 year period of time can be quite significant.
It's so far away, but I would suspect my spending habits would remain the same - except I would probably own a house by the time I retire. You make a very valid point about income limitations though for 401k, something I didn't think about! This may sound weird, but one of my life goals is to live as frugal as possible and save as much as possible. I want to leave a legacy behind, because people in my family seem to be broke with the exception of my aunt. No plans to ever have kids, and I would need to marry someone who is frugal like I am, because otherwise I could see us arguing over me having to buy something I wouldn't have bought on my own.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by tibbitts » Mon Feb 15, 2016 6:57 pm

This may sound weird, but one of my life goals is to live as frugal as possible and save as much as possible. I want to leave a legacy behind...
It does sound weird. Legacy as in your name on a library or a hospital wing?

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:01 pm

Wait a minute....

You want to live as frugally as possible, but you own a 2015 Mazada as a college student?

You commute for hours and spend tons of gas instead of living on campus or near campus so you can avoid driving and owning a new car?

I'm not sure that the choices that you are making today are fitting of someone who wants to live as frugally as possible.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by quantAndHold » Mon Feb 15, 2016 7:04 pm

In Seattle, no not possible. Rents are a lot higher than that. If those craigslist postings are legit (I'm suspecting they're not, they're just too cheap), they are for places where the rent is going to ratchet up by at least 20% the second the lease runs out. People have been having trouble with 20+% per year rent increases. Parking for your car is going to be $300/month in that downtown apartment. You might ask a question about the current state of the rental market on /r/seattle, and see what they say. There are plenty of young SDE's on that subreddit (also plenty of people trying to live on $30k/year).

That said, freshly minted SDE 1's in Seattle make more like $100-125k, depending on what company you're at.

It makes no sense to save $10k per year in a taxable account when you're not maxing out your 401k. Maybe for the first year until you have an emergency fund built up, but not after that. Other than that, I see no problem with your budget other than the housing cost being unrealistic.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:08 pm

betterfinances wrote:Wait a minute....

You want to live as frugally as possible, but you own a 2015 Mazada as a college student?

You commute for hours and spend tons of gas instead of living on campus or near campus so you can avoid driving and owning a new car?

I'm not sure that the choices that you are making today are fitting of someone who wants to live as frugally as possible.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:10 pm

btks wrote: The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:11 pm

quantAndHold wrote:In Seattle, no not possible. Rents are a lot higher than that. If those craigslist postings are legit (I'm suspecting they're not, they're just too cheap), they are for places where the rent is going to ratchet up by at least 20% the second the lease runs out. People have been having trouble with 20+% per year rent increases. Parking for your car is going to be $300/month in that downtown apartment. You might ask a question about the current state of the rental market on /r/seattle, and see what they say. There are plenty of young SDE's on that subreddit (also plenty of people trying to live on $30k/year).

That said, freshly minted SDE 1's in Seattle make more like $100-125k, depending on what company you're at.

It makes no sense to save $10k per year in a taxable account when you're not maxing out your 401k. Maybe for the first year until you have an emergency fund built up, but not after that. Other than that, I see no problem with your budget other than the housing cost being unrealistic.
If rents are higher and software engineer 1's are making $100-125K, then upping the amount that goes toward rent seems plausible. It might even leave more to save.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:13 pm

betterfinances wrote:
btks wrote: The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Last edited by btks on Mon Feb 15, 2016 7:15 pm, edited 1 time in total.

betterfinances
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:14 pm

I don't think software engineers are making 105k just out of college. Salary.com shows the average salary at 100k, which would mean that fresh out of college would be less and with experience they would be more. I'm in a different type of engineering so perhaps not as familiar as others though.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:17 pm

btks wrote:
betterfinances wrote:
btks wrote: The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Your post on February 13, 2016 says

viewtopic.php?f=2&t=184574&p=2800034&hi ... s#p2800034
I already spend about 3-4 hours a day in the car... I've gotten accustomed to being in the car a lot.
That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:19 pm

betterfinances wrote:
btks wrote:
betterfinances wrote:
btks wrote: The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Your post on February 13, 2016 says
I already spend about 3-4 hours a day in the car... I've gotten accustomed to being in the car a lot.
That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! He is not allowed to drive for six months after collapsing three times. I am being nice and generous to give up my time, because he would otherwise have to pay a taxi $50 each way, per day.
Last edited by btks on Mon Feb 15, 2016 7:20 pm, edited 1 time in total.

whomever
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by whomever » Mon Feb 15, 2016 7:19 pm

I don't think it's crazy at all. My wife and I lived on that in Seattle from age 30 to 58, excluding health care (covered at work) and housing (before too long we had a paid off house). So we didn't have rent, but did have property taxes and house expenses, and of course there were two of us, so two cars, two families back east to visit and so on.

My advice is to come as close as you can; early savings is the best savings. For example, if Adam saves $12K per year from age 25 to 45 and then stops saving, while Bob saves the same $12K each year from 45 to 65, and they both get 5% real, Adam has well over twice as much at 65 as Bob does, even though they both saved exactly the same amount.

betterfinances
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:21 pm

btks wrote:
betterfinances wrote:
btks wrote:
betterfinances wrote:
btks wrote: The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! Currently, my car is mostly sitting. Anyhow, I live ten minutes away from school, three minutes from work, and my car gets 30 city/38 highway. Now, I have a new car, because the plan was to drive this car until it doesn't run. Not to buy a car that barely runs and has problems. I already made that mistake, and I ended up having to put new tires, breaks, rotors, and an alternator on that car... so I sold it. Plus, I needed something reliable to get me to/from school and work.
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Your post on February 13, 2016 says
I already spend about 3-4 hours a day in the car... I've gotten accustomed to being in the car a lot.
That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! He is not allowed to drive for six months after collapsing three times. I am being nice and generous, because he would otherwise have to pay a taxi $50 each way, per day.
[OT comment removed by admin LadyGeek] The point is that spending 3 to 4 hours in the car is not being frugal. You are putting wear and tear on your car from depreciation, from wear on tires, and general wear as well, so even if he pays for gas, you're still taking a financial hit. All I'm saying is that is not frugal living.

Frugal living would be to sell your car, live close to campus, take the bus in, ride your bike or walk. 3-4 hours a day in a 2015 Mazada driving people around is not frugal.

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btks
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:24 pm

betterfinances wrote:
btks wrote:
betterfinances wrote:
btks wrote:
betterfinances wrote:
You can try to justify it however you like, but a long commute (while in college) and a new car is not living as frugally as possible.
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Your post on February 13, 2016 says
I already spend about 3-4 hours a day in the car... I've gotten accustomed to being in the car a lot.
That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! He is not allowed to drive for six months after collapsing three times. I am being nice and generous, because he would otherwise have to pay a taxi $50 each way, per day.
[OT comment removed by admin LadyGeek] The point is that spending 3 to 4 hours in the car is not being frugal. You are putting wear and tear on your car from depreciation, from wear on tires, and general wear as well, so even if he pays for gas, you're still taking a financial hit. All I'm saying is that is not frugal living.

Frugal living would be to sell your car, live close to campus, take the bus in, ride your bike or walk. 3-4 hours a day in a 2015 Mazada driving people around is not frugal.
I am driving HIS car.

Richmond, VA has poor public transportation, so no access to the GRTC. It's cheaper for me to live off-campus, or I wouldn't be living off-campus.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Mon Feb 15, 2016 7:26 pm

btks wrote:
betterfinances wrote:
btks wrote:
betterfinances wrote:
btks wrote:
My commute is not long? I guess I grew up in an area where my high school was 25 minutes away... and the closest stores were 15-20 minutes. So, a long commute for me is an hour.

3 minutes to work... 10 minutes to school. What's the problem? One way or another... I either live closer to school and pay more, or closer to work, and pay less. It's the same distance.

Soon, I'll be moving in with my boss, who has offered me his home for free.
Your post on February 13, 2016 says
I already spend about 3-4 hours a day in the car... I've gotten accustomed to being in the car a lot.
That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! He is not allowed to drive for six months after collapsing three times. I am being nice and generous, because he would otherwise have to pay a taxi $50 each way, per day.
[OT comment removed by admin LadyGeek] The point is that spending 3 to 4 hours in the car is not being frugal. You are putting wear and tear on your car from depreciation, from wear on tires, and general wear as well, so even if he pays for gas, you're still taking a financial hit. All I'm saying is that is not frugal living.

Frugal living would be to sell your car, live close to campus, take the bus in, ride your bike or walk. 3-4 hours a day in a 2015 Mazada driving people around is not frugal.
I am driving HIS car.

Richmond, VA has poor public transportation, so no access to the GRTC. It's cheaper for me to live off-campus, or I wouldn't be living off-campus.
OK, my mistake there. didn't see you were driving his car.

Point about a 2015 Mazada3 not being a frugal car is still valid.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by quantAndHold » Mon Feb 15, 2016 7:26 pm

betterfinances wrote:I don't think software engineers are making 105k just out of college. Salary.com shows the average salary at 100k, which would mean that fresh out of college would be less and with experience they would be more. I'm in a different type of engineering so perhaps not as familiar as others though.
SDE salaries are *very* location dependent. $100k is a doable number for Seattle, assuming he can get a SDE (not web dev) job with one of the better companies. That's part of why rents are so high. Lots of young people with high salaries an nothing else to spend it on.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:30 pm

quantAndHold wrote:
betterfinances wrote:I don't think software engineers are making 105k just out of college. Salary.com shows the average salary at 100k, which would mean that fresh out of college would be less and with experience they would be more. I'm in a different type of engineering so perhaps not as familiar as others though.
SDE salaries are *very* location dependent. $100k is a doable number for Seattle, assuming he can get a SDE (not web dev) job with one of the better companies. That's part of why rents are so high. Lots of young people with high salaries an nothing else to spend it on.
Correct me if I'm wrong, but aren't rents high because of foreign investors buying up properties in cities like SF, Seattle, etc.?

Nvm, I missed where you said that high salaries for young people is part of why rents are so high. There are probably many reasons.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 7:36 pm

betterfinances wrote:
btks wrote:
betterfinances wrote:
btks wrote:
betterfinances wrote:
Your post on February 13, 2016 says



That information doesn't jive with what you said above. You're either making up stories as you go, or something has changed in 3 days to cause you to drive a lot less.
The reason I commute so many hours a day is because I am driving my roommate to/from work in his car and he pays for the gas - he works on the other side of the city! He is not allowed to drive for six months after collapsing three times. I am being nice and generous, because he would otherwise have to pay a taxi $50 each way, per day.
[OT comment removed by admin LadyGeek] The point is that spending 3 to 4 hours in the car is not being frugal. You are putting wear and tear on your car from depreciation, from wear on tires, and general wear as well, so even if he pays for gas, you're still taking a financial hit. All I'm saying is that is not frugal living.

Frugal living would be to sell your car, live close to campus, take the bus in, ride your bike or walk. 3-4 hours a day in a 2015 Mazada driving people around is not frugal.
I am driving HIS car.

Richmond, VA has poor public transportation, so no access to the GRTC. It's cheaper for me to live off-campus, or I wouldn't be living off-campus.
OK, my mistake there. didn't see you were driving his car.

Point about a 2015 Mazada3 not being a frugal car is still valid.
Okay. Well, my previous car, a 2003 Pontiac Vibe, which I paid $4500 for, lasted me six months before it needed a bunch of work. So, I don't regret my purchase and I also bought the base model. Payments are small and it will be paid off rather quickly.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by randomguy » Mon Feb 15, 2016 7:38 pm

btks wrote:For those of you who have been self-supporting for years... is my anticipated budget crazy? Can I live on a budget like this when I graduate?
You are wasting your time with these hypotheticals. Seriously spend the time working, studying or partying. When you get a job, make a budget. Why plan on 1300 in rent when you might end up in an area with 600 is reasonable or 2k? Why go with a 75k salary when you might get 60k or 100k? What if you leave VA and your car tax goes from 500 to 25 dollars? And so on.

If your frugal, you don't even need a budget. Every time when you go to spend a buck just think do you need it (answer is probably no) and if you need it is this the cheapest option. Just save all that money you are not spending. Makes life simple as all of your money questions are pretty much answered. When you decide to start inflating your life, you can come up with a budget that tells you how much inflation is ok.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by livesoft » Mon Feb 15, 2016 7:39 pm

Of course, you can live on $75K gross income a year and also put $18K into a 401(k) and $5500 into a Roth IRA at the same time. And you can do it in Seattle.

You don't need a car, but you can have roommates. I never ever lived alone in my life. I always had roommates or a spouse. I lived in cities and suburbs where folks said that one could not survive without a car. Guess what? I had a bike. I didn't buy a house nor a car until I was in my late 30's and already had a kid.
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by quantAndHold » Mon Feb 15, 2016 7:56 pm

btks wrote:
quantAndHold wrote:
betterfinances wrote:I don't think software engineers are making 105k just out of college. Salary.com shows the average salary at 100k, which would mean that fresh out of college would be less and with experience they would be more. I'm in a different type of engineering so perhaps not as familiar as others though.
SDE salaries are *very* location dependent. $100k is a doable number for Seattle, assuming he can get a SDE (not web dev) job with one of the better companies. That's part of why rents are so high. Lots of young people with high salaries an nothing else to spend it on.
Correct me if I'm wrong, but aren't rents high because of foreign investors buying up properties in cities like SF, Seattle, etc.?

Nvm, I missed where you said that high salaries for young people is part of why rents are so high. There are probably many reasons.
You're not wrong about foreign investors buying places up, but in the context of this discussion, OP is mostly competing in the rental market with other people just like him. Foreign investors are mostly buying places.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 8:14 pm

Bfwolf wrote:
btks wrote:
Bfwolf wrote:Spending $30K a year in your early 20s in a major city like Seattle is doable but difficult. A roommate would probably be a must.

If you already have $75K in cash or similar, then I would recommend contributing more money to your 401k--there's no reason to be putting anything into a taxable investment account if you can avoid it.
I think the reason I was doing that was to have extra money that I could touch before retirement i.e. buying a car if needed. I figured that 6% to 401k, with an employer match (I would look closely at benefits before accepting a position), plus contributions to the Roth, would leave me more than enough for retirement by the time I'm 67 or 70.
Maybe. It depends on lots of things like how much you will spend in retirement. Maybe someday you'll get married? Have kids? Do you think that will change your spending habits? A lot of people here would suggest having a 6 month or 1 year emergency fund. If you're spending $30K a year, then $75K is a 2.5 year emergency fund. So it seems like there's some buffer in there in case you wanted to buy a car. Unless you have plans to buy a house in the near future (and it doesn't sound like you should, nor would I recommend it), it seems like you've got plenty of cash on hand. $75K is a very good starting salary out of college, but believe it or not, you may earn a lot more someday. And if you do, there's a good chance you'll get to the point where you wish you could save more in a 401k but you can't because of IRS limitations. You'll be glad you saved more in a 401k today if that is the case. Once you give up an opportunity for more tax advantaged space, it can be hard to get it back. The advantages of avoiding dividend/capital gains/interest taxes over a 40/50/60 year period of time can be quite significant.
I thought about this some more... wouldn't you be in a higher tax bracket and thus, pay more taxes on the money you withdraw from the 401k once you reach retirement age? [if you are maxing out your 401k] Of course, past age (70?) you are forced to withdraw a % of your balance. Let's say your account balance is $4,000,000 at age 70, wouldn't you have to withdraw at least $150,000 or more to satisfy the IRS? If you were at a $75,000 salary all of your life, and began withdrawing $150,000 plus SS, then you'd be at a slightly higher tax bracket. Perhaps it may be better to contribute to a Roth 401(k) if available.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by celia » Mon Feb 15, 2016 8:37 pm

I think you're asking what you're forgetting:

car insurance (goes up after you file any claim)
entertainment (with friends) or dating
laundry/dry cleaning/haircuts
clothing (a different climate may require seasonal stuff)
hobby or whatever you do with your free time
sports?
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 8:42 pm

celia wrote:I think you're asking what you're forgetting:

car insurance (goes up after you file any claim)
entertainment (with friends) or dating
laundry/dry cleaning/haircuts
clothing (a different climate may require seasonal stuff)
hobby or whatever you do with your free time
sports?
I'm a pretty boring person. My entertainment comes from programming and sitting behind a computer screen :D I am not into sports. Clothing, yes, but once I start buying my own clothes, I will probably have to shift away from American Eagle. I'm still wearing my clothes from freshman year and they are all American Eagle. I think Kohl's might be a good place to buy clothes.. my grandma got me a bunch of dress shirts / pants from there for a very good price!

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by celia » Mon Feb 15, 2016 8:45 pm

btks wrote:I'm a pretty boring person. My entertainment comes from programming and sitting behind a computer screen :D
I think you might need to diversify your interests so you can talk to people about things other than programming and investing. And it is not healthy to sit all day. You need some physical movement throughout the day, more when work is done for the day. :beer

Why not turn off your computer, for starts? I am going to do that now. :D
Last edited by celia on Mon Feb 15, 2016 8:49 pm, edited 1 time in total.
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by livesoft » Mon Feb 15, 2016 8:47 pm

btks wrote:I think Kohl's might be a good place to buy clothes.. my grandma got me a bunch of dress shirts / pants from there for a very good price!
I'm still wearing klothes from Kohl's bought more than 10 years ago.
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by petiejoe » Mon Feb 15, 2016 9:07 pm

$100k for a first-year software development engineer in Seattle is totally reasonable, assuming you get a job with one of the big companies (check out glassdoor) as an SDE (not web dev, systems engineer, support engineer, QA engineer, etc). I'm going to make a few very broad statements that don't necessarily apply to all new hires, but most of the first year engineers I've worked with tend to live in the city, many of them don't have a car, and they pay out the nose for rent to live close to work. If you're serious about wanting to save money, you'll live away from downtown and you'll use the bus to commute. I can't say much for Redmond, but Downtown Seattle rents have been skyrocketing over the past few years. If you're interested in roommates, your second apartment listing looks realistic ($2600/month for a 2 bedroom in pioneer square is roughly in-line with what my co-workers are talking about).

In general, I would definitely recommend focusing on getting an offer or two before planning out your budget too closely. A degree in CS doesn't guarantee that you'll land a great paying job, but if you're in the top of your class (by how well you're doing on projects, not by GPA), you have a shot at making decent money. If you really plan to live like a frugal college student, you'll be able to save a lot of money. Lots of people _say_ that they'll live as cheaply as a college student when they graduate, but the temptation to have lifestyle inflation is very real. Spending $20 for lunch or $50 for dinner might seem unnecessarily extravagant now, but when your co-workers invite you to events and you just got a paycheck for $6000, it's easy to say yes.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by psystal » Mon Feb 15, 2016 9:11 pm

btks wrote:
Okay. Well, my previous car, a 2003 Pontiac Vibe, which I paid $4500 for, lasted me six months before it needed a bunch of work. So, I don't regret my purchase and I also bought the base model. Payments are small and it will be paid off rather quickly.
You'll find a lot of opinions about cars from Bogleheads. Almost none of us buy new, however, and those that do recognize that they're doing it because they enjoy a new vehicle, not because it's a wise investment.

You don't want a money pit in a vehicle, and having a bad first experience sucks. However, the type of car you buy is far more important than its age or even mileage. Pontiacs have terrible repair records. Mazdas are a much better vehicle, but they're still more flashy than reliable, and probably middling in bang-for-buck. They're also a wee bit more expensive to repair than average - not BMW or Audi territory, but not Ford either.

My family cycled through a lot of cars before settling on Hondas. We've owned 5 Civics and 4 Accords, and had only one major, non-scheduled repair. All but the current Civic (92,000) and Accord (20,000) were driven in excess of 150,000 miles, with one that my sister bought at 7 years old exceeding 200,000. She had to replace the radiator at 165,000 miles. We primarily buy certified used from dealers, but pay a slight premium for it. For us, it's worth the added guarantee at this point in our lives. If you don't mind shopping around, you can often find one with less than 20,000 miles (which is basically new) at a price that's $4-5k off the original sticker. Then drive it for 10-12 years, maintain it well, and sell it to some college kid in need of reliable transportation for $2-3,000.

We also had a Toyota Camry that performed similarly well with repairs, but my parents didn't like the way it handled.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 9:25 pm

psystal wrote:
btks wrote:
Okay. Well, my previous car, a 2003 Pontiac Vibe, which I paid $4500 for, lasted me six months before it needed a bunch of work. So, I don't regret my purchase and I also bought the base model. Payments are small and it will be paid off rather quickly.
You'll find a lot of opinions about cars from Bogleheads. Almost none of us buy new, however, and those that do recognize that they're doing it because they enjoy a new vehicle, not because it's a wise investment.

You don't want a money pit in a vehicle, and having a bad first experience sucks. However, the type of car you buy is far more important than its age or even mileage. Pontiacs have terrible repair records. Mazdas are a much better vehicle, but they're still more flashy than reliable, and probably middling in bang-for-buck. They're also a wee bit more expensive to repair than average - not BMW or Audi territory, but not Ford either.

My family cycled through a lot of cars before settling on Hondas. We've owned 5 Civics and 4 Accords, and had only one major, non-scheduled repair. All but the current Civic (92,000) and Accord (20,000) were driven in excess of 150,000 miles, with one that my sister bought at 7 years old exceeding 200,000. She had to replace the radiator at 165,000 miles. We primarily buy certified used from dealers, but pay a slight premium for it. For us, it's worth the added guarantee at this point in our lives. If you don't mind shopping around, you can often find one with less than 20,000 miles (which is basically new) at a price that's $4-5k off the original sticker. Then drive it for 10-12 years, maintain it well, and sell it to some college kid in need of reliable transportation for $2-3,000.

We also had a Toyota Camry that performed similarly well with repairs, but my parents didn't like the way it handled.
I looked at a Honda Civic, Toyota Corolla, and Mazda Mazda3. Ultimately, I decided on the Mazda, because I liked how it drove and handled the most. The new Civics and Corollas have the CVT transmission, and I don't like that type of transmission... it is just continuous!

Now, I do love cars - and I am a car person - but I can't fathom the thought of dropping $30K, $40K, $50K, ..., $200K on a car. I've probably driven my friend's BMW M5 about 100 times, but I hear him complaining about it ALL the time. $10K for this, $3K for that... and not to mention the price tag of the vehicle. I see so many people driving around in brand-new BMWs, Audis, Mercedes, etc., but I instantly think "I wonder how much they're paying a month!" For example, my neighbor across the street had a 7 series BMW and then traded it in and got an X5... she must easily be paying $1,000 or more a month, and that's just the payment. Add in the cost for premium fuel, auto insurance, and she is literally devoting a large portion of her income to a depreciating vehicle. She's a physical therapist and her husband is a manager at big lots, but I don't understand how they can afford two kids, two (new) luxury vehicles, the biggest house in the neighborhood, the nicest lawn (irrigation system), people mowing their grass, a nanny during the day, etc... paycheck to paycheck, I suspect.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by Toons » Mon Feb 15, 2016 10:25 pm

Living on that budget is very attainabie :happy :happy
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by randomguy » Mon Feb 15, 2016 10:37 pm

psystal wrote:
btks wrote:
Okay. Well, my previous car, a 2003 Pontiac Vibe, which I paid $4500 for, lasted me six months before it needed a bunch of work. So, I don't regret my purchase and I also bought the base model. Payments are small and it will be paid off rather quickly.
You'll find a lot of opinions about cars from Bogleheads. Almost none of us buy new, however, and those that do recognize that they're doing it because they enjoy a new vehicle, not because it's a wise investment. .
No the frugal people on bogleheads don't buy new. That isn't remotely the whole community. And very few cars are investments. Most are expenses:)

FWIW I bought new last time. Why? Because the math suggested the odds of it being cheaper than buying used. Used hondas get fricken insane money while dealers routinely blow out last years models at low prices. And since I can do grade school math, I don't have to depend on rules of thumb. Granted 2 dollar gas is eating up some my supposed profit (i.e. not getting the benfit of 7% higher mpg) but I was break even without that. And it helped living in a state were registration was like 30 bucks/yr and not based on the value of car.

The one before was used. For the exact same reason that I bought new.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Mon Feb 15, 2016 10:44 pm

randomguy wrote:
psystal wrote:
btks wrote:
Okay. Well, my previous car, a 2003 Pontiac Vibe, which I paid $4500 for, lasted me six months before it needed a bunch of work. So, I don't regret my purchase and I also bought the base model. Payments are small and it will be paid off rather quickly.
You'll find a lot of opinions about cars from Bogleheads. Almost none of us buy new, however, and those that do recognize that they're doing it because they enjoy a new vehicle, not because it's a wise investment. .
No the frugal people on bogleheads don't buy new. That isn't remotely the whole community. And very few cars are investments. Most are expenses:)

FWIW I bought new last time. Why? Because the math suggested the odds of it being cheaper than buying used. Used hondas get fricken insane money while dealers routinely blow out last years models at low prices. And since I can do grade school math, I don't have to depend on rules of thumb. Granted 2 dollar gas is eating up some my supposed profit (i.e. not getting the benfit of 7% higher mpg) but I was break even without that. And it helped living in a state were registration was like 30 bucks/yr and not based on the value of car.

The one before was used. For the exact same reason that I bought new.
I bought mine at the end of January 2015 and I got a great deal (which is why I ultimately bought it) - $3,500 less than all of the other 2015s on the lot. The reason being that the car already had 500 miles - the dealership used it for something. If it had been the same asking/retail price as the others, there's no way I would have considered it. Too much.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by whomever » Mon Feb 15, 2016 10:58 pm

"No the frugal people on bogleheads don't buy new."

I dunno. I'm so frugal I buy used kilts :-), and I usually buy new cars.

My reasoning is:
-I keep them until I sell them on craigslist for $500, or pay to have them hauled away (AKA 'donated to charity')
-I do all my own maintenance. This means buying the factory manuals (very $$$$$ lately) and I want to amortize that over as many years as possible. Also, once I learn the procedure for, say, changing the timing belt, I want to amortize that over as many years as possible.
-When I buy a car, I also buy 4 rims+winter tires, tire chains, take the time to mount a fire extinguisher, etc. I want to amortize those investments over a long period.
-I drive gently and take immaculate care of the car where it matters - for example, changing the ATF as soon or sooner than specified.

I don't have objections to used cars per se - if someone I knew offered me one that had been taken care of, etc, I'm not going to turn my nose up. But there are base costs for a new car, and I consider how long I'll have to amortize those.

There are exceptions. For example, let's say I want a pickup for occasional trips to pick up building materials. I might consider a high mileage used truck on the theory I won't put many miles on it, will just get by with a Chilton's manual, and will skip the winter rims by just leaving it parked when the roads aren't clear.

In general, though, my sense is that new cars, carefully maintained, and run almost forever, give me the lowest overall costs, including my time for maintenance. YMMV!

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by itstoomuch » Tue Feb 16, 2016 12:50 am

Doable.
DS (30) did this after his postgrad interships. Seattle 2009-2014, with 6 other housemates. He bought a Seattle townhouse in 2014 after heavy savings and taxable investing, minimal to $0 contributions to 401k. He also bought a 2015 Mazda 3i. Great milage, $17500, new, 4 year, 0% interest, also discounted. Mazda replaced a 96 Camry that finally succumed to a worn clutch.
He also had a like nestegg on arrival in Seattle.

Your salary seems reasonable compared to DS's with MS (CS and ME). Seattle.

The housing situation is fluid depending of where you live and how you live. DS did craigslist and posted all vacancies in the house.
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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by betterfinances » Tue Feb 16, 2016 3:29 am

OP,

You've started a lot of threads and shared a lot about your personal situation. I'd like to suggest that perhaps your situation is not typical of most 20 year olds, and that your experience in the future may be different than it is today.

[OT comments removed by admin LadyGeek]

I'll say that this is quite a different universe than when I went to college.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by Vilgan » Tue Feb 16, 2016 3:08 pm

30k/year is certainly doable in Seattle although if single you'll likely need a roommate (which is fine).

I live in a great location in Seattle and my total expenses are around 25k normally and 30k in years where I do lots of traveling or have high one off optional expenses/gifts.

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Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Tue Feb 16, 2016 5:48 pm

betterfinances wrote:OP,

You've started a lot of threads and shared a lot about your personal situation. I'd like to suggest that perhaps your situation is not typical of most 20 year olds, and that your experience in the future may be different than it is today.

What I've observed is:

[OT comments removed by admin LadyGeek]

I'll say that this is quite a different universe than when I went to college.
My grandparents cover my health insurance (about $30/m for me to be on the work plan) and they cover the property taxes and auto insurance for my car, but they also "technically" own the car (it is in their name, I just make the payments). I provide most of my other things. Most of the support goes to my brother, who is taking 21 credits and doesn't have time to work, apparently. And, who constantly engages in luxuries like fine dining, movies, and more...

On a side note, my dad made $26,000 in 2014 and my brother's EFC for 2015-2016 was 1500! My dad can't even support himself and live on his own, let alone give my brother $1,500. My dad also has $80,000 in student loans that he will never repay. My mom has even more, and she hasn't even worked since 2005 - and she will probably never work again (her husband pays for everything).

My grandmother hasn't bought me clothes since freshman year of high school (with the exception of work clothes when I graduated high school early and had a gap year...). Where I grew up, people bought new clothes and shoes weekly... new iPhone each year, etc.

I get pizza at dominos, which is $5.99/pizza when you buy two. Two pizzas is enough to last me 3-4 days. I am very small, 110 lbs, and I do not eat that often. One of the reasons is I am so overwhelmed with school, work, other obligations, I just don't take the time to eat. And, that honestly, is why she tells me to get pizza (basically a reminder to eat...) I've dropped 15 lbs since I began college...

My EFC has actually only been 0 one year and that was freshman year. $12,000 prevents you from having a 0 EFC. As did my assets from the sale of my previous car (until I bought a new car, I was driving my grandfather's car but then he needed it back...).

My boss is a friend of the family; that's why I have this job. Since my salary is being bumped up, I will probably lose all of my financial aid in my senior year, but I'll use the money I make working to pay for that.

That, of course, depends if I keep this job. Honestly, I'm so overwhelmed with school, work, having a poor diet, lack of sleep, no time for myself... I really don't know how much more I can handle of this. This is not healthy, but my semester is so crazy...
Last edited by btks on Tue Feb 16, 2016 6:22 pm, edited 5 times in total.

Bfwolf
Posts: 1967
Joined: Thu Oct 14, 2010 11:19 am

Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by Bfwolf » Tue Feb 16, 2016 5:53 pm

btks wrote:I thought about this some more... wouldn't you be in a higher tax bracket and thus, pay more taxes on the money you withdraw from the 401k once you reach retirement age? [if you are maxing out your 401k] Of course, past age (70?) you are forced to withdraw a % of your balance. Let's say your account balance is $4,000,000 at age 70, wouldn't you have to withdraw at least $150,000 or more to satisfy the IRS? If you were at a $75,000 salary all of your life, and began withdrawing $150,000 plus SS, then you'd be at a slightly higher tax bracket. Perhaps it may be better to contribute to a Roth 401(k) if available.
Could be. At $75K you'd be in the 25% federal tax bracket. Will you be in a higher or lower bracket in retirement? It's hard to say. Plenty of Bogleheads find themselves in the 15% bracket in retirement though they may have smaller nest eggs than you are planning on. The other consideration is state tax. If you do end up living in Washington, there's no state income tax there. That would certainly be in favor of a Roth 401k option. If you end up working in a state with a high state tax, a tax deferred 401k will be more attractive...you may end up retiring in a state with low or no state income tax.

This is all stuff you'll be able to judge when you actually graduate and start a new job. But assuming you have both tax-deferred and Roth 401k options, you'll have the choice to go whichever way you think will maximize your after-tax return. And both choices have the advantage of avoiding capital gains, dividend, and interest taxes versus a taxable investment account.

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btks
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Joined: Thu Aug 27, 2015 8:19 pm

Re: Is it crazy for me to anticipate living on a budget like this when I graduate? Is it even possible?

Post by btks » Tue Feb 16, 2016 8:28 pm

As of this evening, I have resigned from my job to a) focus on school and (hopefully) continue to get As and b) I need time for myself. Let's hope that things go smoothly from here on out. I am hoping that my decision to not work now will bring greater rewards in the future i.e. when I graduate, as I will dedicate more time to my studies.

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