Is NYC really too expensive?

[bbb11]

Hi all,

New poster here but I've been following the forum for awhile. I love living in different places and am interested in finding the city that most matches my lifestyle. I grew up in the SF Bay Area, went to school in Southern California, and moved to NYC around 5 months ago. I'm 25, make about $70k, and spend about $23k per year. I'm curious whether NYC is actually affordable, as it seems so far, or if I could get an even better bargain for what I'm looking for. I love living here but saving is extremely important to me, so I'm curious on other's thoughts on if certain cities can work better for a frugal person. I'm going to break down my budget using a model I go by, 3+2. That means there are 3 cornerstone needs, shelter, transport, and food. Plus 2 discretionary and more variable expenses, health and entertainment.

To briefly overview my interests, I enjoy being around lots of people and events. At least a fairly large city is a must for me. I don't want to have a car, as I think they're a huge expense that can be avoided (in the right city!) without hurting quality of life. I'm pretty liberal so having a population with that that political tilt is desirable. Space is not particularly important, as I enjoy a minimalist lifestyle.

Budget breakdown:

Housing:
Obviously the one area where NYC will tend to be pricey. Using my reference point of California it's not so bad though. I live in Williamsburg, a super trendy area of Brooklyn, and pay $800 monthly to split a 2 bedroom. I'm one stop from central Manhattan and have a great, walkable, safe environment. Apartment is maybe 700 sq feet. I'd pay $700-800 for a bedroom in the Silicon Valley. I wouldn't really need to upgrade from this neighborhood ever, but if I wanted to live alone or have a family the difference in housing prices compared to a cheaper area would be magnified.

Transport:
NYC shines here. $112 a month for an unlimited metro card accounts for 100% of my transportation costs. Let's compare that to California:

Auto payments: $100 per month (this is with a $10k car amortized over 8 years. This number could easily be tripled)
Insurance: $150
Gas: $200 (conservative)
Maintanence: $50

I think a fairly safe estimate is that I'm saving $400 per month by not having a car. This makes up for a sizeable rent difference in any auto-dependent city.

Food:

NYC is probably a little pricier for staples, but prices are similar for coastal metro areas. Dining runs the gamut, but I rarely eat out and even then you can find good deals due to competition. I currently spend $300 per month for all food and alcohol consumption.

Health:

Not too sure on this one. I assume similar prices to everywhere else? I spend $220 per month for a big health procedure, but only two more payments left and I'm free of this debt. This will knock my total spending down to $20k annually.I'm very healthy in general so I assume this won't be a big concern for the next 20-30 years but you never know.

Entertainment:

It may surprise some, but NYC is much cheaper than other places if you want it to be. Tons of amazing parks and some decent beaches too. Lots of sports teams (I went to a Nets and Mets game for a combined $8), few big time college sports which is unfortunate as they are usually cheap. I'm not a big drinker but there are so many bars that there are cool deals everywhere. Within a mile of my apartment there's an arcade bar, 5 different skee-ball bars, a bar with 5 shots for $10, a couple "beer and shot for $5" bars, and a "free pizza with every beer" bar. There's also enough free live music performances to make your head spin. And of course people are from all over the world so the culture is top-notch. You only spend big money on entertainment here if you want to.


So... what do you think? Are there other cities I'd like that could be cheaper? I think I could knock off a few hundred for rent in Chicago and live car-free. Maybe even get my own place for $800. That's about the only place I can think of where the rent is a lot cheaper, auto-related expenses don't take away most of the rent savings, and there's a big city environment. What am I missing?

 

[2017ish]

Sounds like you have things under control. Yeah, you could undoubtedly find cheaper places, BUT, would they meet your quality of life criteria? AND, would the same level of pay be there? You can't look solely at the expense side.

DS is 26, lives in San Fran, pays more for rent than you and also has no car. He could probably cut his expenses by moving elsewhere, but in his area of engineering the pay cut would make any such savings meaningless (even with CA/SF taxes). The pay is what has allowed him to have higher net worth than his income.

Things would change if you end up with family at some point, but for right now, there is no reason not to enjoy the metropolis while squirreling your monies away for the future.

 

[W2R]

Have you tried cost of living comparison calculators, like this one? Hope this helps.

Cost of Living Calculator | Comparison Tool

 

[braumeister]

I grew up in Brooklyn, but a LONG time ago so my own experience is too outdated to do you any good.

But I have friends who still live in the old neighborhood, own single-family houses, have good sized families, and do just fine on average incomes.
However, as they reach retirement age, they are talking more and more seriously about moving out, mostly to the Jersey shore. I don't know about that.

You sound like you have it together very well, and based on my recent visits back there, I can easily see why you would love living where and how you do. Makes perfect sense to me. One of the most exciting, vibrant cities on the planet, and still livable on an ordinary income (outside Manhattan anyway).

Yes, public transportation in NYC is awesome. Always has been.

 

[ER1970]

NYC is quite affordable until you need to buy real estate, pay higher income and property taxes, and send kids to private schools. Otherwise it is really not much more expensive than most large cities in the US, for young people. Especially when you take into account that no car is needed.
I think the only other city I'd consider moving to, if I were you, would be Hong Kong. Similar in the set up, convenience, and diversity to NYC, but more exciting and surprisingly affordable (also tax advantage too, even for US citizens). But it of course depends on your area of profession, as it's easier to find jobs and you can live more comfortably if you are in finance.

 

[ER1970]

And yes, jobs in NYC tend to pay more than other parts in the country (excluding some areas in the west coast), and jobs are more available here too. NYC is very affordable as young and single if you have a well paid job, but when you have a family it gets harder mainly because of the high prices in housing. A small 2 bedroom apt easily costs $1m+, even in a much less trendy neighborhood than Williamsburg in Brooklyn or Queens.
However, the combination of high wages and high property costs (if you own!) also pay handsome returns in investment, in my opinion. If you can make it in NYC through your prime earning years, you can easily retire early in just about anywhere.

 

[Moemg]

New York is expensive but what a great place to live when you are young & single .

 

[rodi]

I love NYC and had friends who lived there (that I'd visit and crash on their couch) when I lived in Philly. It's a fun city. I agree that if you forgo a car, and share a rental, it can be affordable. Especially if you also forgo living in Manhattan. One friend lived in Brooklyn, the other in Queens, 1 stop from Manhattan. Like you - they had relatively inexpensive rents, used public transit, and took full advantage of everything the city has to offer.

 

[Texas Proud]

Being young is a benefit for you...

I would hate having to share a 700 sf place with someone else... bet you have no real kitchen... just something along the wall... small bath, small living room (where the kitchen is also located) and two small bedrooms... Nope, not for me at my age..

When I was there, I was living in a 1 BR apt of about 900 sf in a high rise paid for by mega... I was told that the place was worth over $1 mill... also the monthly condo fee was greater than your total rent, not just your share... Upper West Side...

Yes, there is some free entertainment if you wish to go out and find it... I would go by Lincoln Center where they would have free concerts... I was also able to get into almost all of the museums with my company card since they gave so much money to the arts.... so I would visit a museum about 3 weekends a month...


Here are some free events at Lincoln... Lincoln Center for the Performing Arts - Find an Event



So yes, NY is a very interesting city to go explore.... and if you are willing to put up with the hassles of have WAY to many people almost everywhere you go... then it is a good place under your circumstances.... but having a family.... not so much.... The other thing that I would say is that the cost of food/staples is much higher than here... maybe 25% more... but as you say, you save a lot not having to have a car so it kinda balances out...

 

[truenorth418]

Sounds like you have a good handle on things. Housing and car expenses are often the biggest pieces, but you're only paying $800 for your apartment and no car. If you can keep the entertainment/restaurant expenses in check you should be in great shape. I live in Manhattan and have spent $40-50k per year on average the last few years not including taxes. Not being married and no kids allows much flexibility.

I have read that the average household income in the city of New York is only about $50k/year, close to the national average. So plenty of people get by just fine on less.


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[kitesurfer2]

700 ft apt for 2 people!

where do you keep your bicycle? your surf board? your motorcycle? your fishing poles? your backpack and camping gear?

I lived in Brooklin for 9 months back in 1979, thank you US NAVY. I TOTALLY ENJOYED the night life, but found the NYC experience was a great visit but not a place to live. wife and kids would not have worked for me there.

 

[photoguy]

Welcome to the board bbb11.

I lived with roommates until I got out of grad school and its a great lifestyle while you are young. And as you've noted, even expensive cities can be affordable as col in the U.S. is really driven by housing. Dining and services are also more expensive but as a renter you won't need to deal with expensive contractors for home maintenance and everything else can be controlled.




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[nash031]

I'll only add that I got tired of roommates right about your age. If you're lucky enough to have great ones, and they stay great, it's a good arrangement. DW and I have had a mix from good to very, very bad. If that ever changes for you, it'll get more expensive.

In addition, at 25 thing things you want and need aren't clear. I suspect your standard of living will go up a bit, but LBYM should still be easily attainable!

Was just in NYC this past weekend. We love visiting! Glad you're enjoying living there!

 

[savory]

You have got your act together. I am really impressed. We just moved to CT from the mid-west. Our daughter/SIL moved from LA. (BTW, they did not have a car there). There is no doubt NYC is more expensive. In fact, our daughter with a gov't job gets a housing/food allowance. It went up, not by much, when moving from LA. There is no doubt in my mind you could save money living in a place like Milwaukee or Minneapolis and for what you described, utilize bicycles & public transport to get around. But no where close to what NYC provides. Unlike NYC, you may need a car but perhaps for 5,000 miles per year but a Zip car might work too depending on your transport needs. I know people who bicycle year around and live without cars. I am fairly confident you will have total savings and given your current entertainment interests, you will not sacrifice much. Having said all this, you will be giving up all the bright lights, cool places and the action that comes with NYC. The restaurant choices, taverns, entertainment do not exist outside of NYC in the same way. My suggestion is to visit places that sound like they could be an alternative and make sure you spend time in the neighborhoods that match your lifestyle. For example, in Milwaukee, I would suggest two areas where I think you could meet your objectives. If you happen to visit/live in different neighborhoods, you would be disappointed, I think

 

[ERD50]

Even at double the rent, I think you are doing fine (assuming your income supports this). Not needing a car is a big savings - figure opportunity cost of $20,000 tied up in a car, that would provide ~ 4% in retirement, that's $800/year, and replacing it in 10 years is maybe another $1500/year budget item, plus gas, maintenance, parking, insurance? It adds up.

I haven't spent any time in New York, but I get the impression that the public transportation is better there than in Chicago. You can certainly get by in Chicago w/o a car, but I think you may be more limited, and taking more taxis than in NY, but I can't say for sure.

PS: 5 months? From Southern California? Wait to see how you handle a winter!

PPS: davef reminded me, Zip cars are becoming more common in Chicago, so that could help in remaining car-less in this area.

-ERD50

 

[fidler4]

Zip cars are becoming more common in Chicago, so that could help in remaining car-less in this area.

-ERD50

I had to google Zip car. I had never heard of it. http://www.zipcar.com/


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[bbb11]

Thanks all for the helpful responses so far! I'll try to respond to everyone.

Have you tried cost of living comparison calculators, like this one? Hope this helps.

Yes I used them a bunch before moving here. They are hard to tailor to my situation though, and don't factor in things like my transportation savings. COL calculators say I pay significantly more in NYC than the Silicon Valley, but the opposite is actually true.

NYC is quite affordable until you need to buy real estate, pay higher income and property taxes, and send kids to private schools.

True. Not sure if I'll have a family at this point, but that would be a consideration. Is it worth it to buy real estate here? I think unless I could find a good deal and decide to be here for a long time, it'd be best to be a long-term renter. Also agreed on Hong Kong be ing a place I would like to try living.

I would hate having to share a 700 sf place with someone else... bet you have no real kitchen... just something along the wall... small bath, small living room (where the kitchen is also located) and two small bedrooms... Nope, not for me at my age..

We have a full kitchen. Living and bathrooms aren't big, but... I am never home really. I don't have cable and rarely do much but sleep at home and occasional Netflix in my room. I've spent maybe 4 hours in my living room in 5 months. There's just so much to do here and so many people to meet with. My biggest consideration in finding a living space was being near work and the places I'd like to go out, and being in a walkable environment.

The other thing that I would say is that the cost of food/staples is much higher than here... maybe 25% more... but as you say, you save a lot not having to have a car so it kinda balances out...

Even at 25% though this is a very small difference. 25% more of a $200 grocery budget is $50 per month. This is dwarfed by a $400 monthly car savings.

where do you keep your bicycle? your surf board? your motorcycle? your fishing poles? your backpack and camping gear.

I don't have/want any of those things. Well I have a backpack under my bed. As I said I'm a minimalist so the less possessions the better, as it's simple, easy to move and travel. I own a bed, clothes, a laptop, and some boardgames.

I'll only add that I got tired of roommates right about your age. If you're lucky enough to have great ones, and they stay great, it's a good arrangement. DW and I have had a mix from good to very, very bad. If that ever changes for you, it'll get more expensive.

In addition, at 25 thing things you want and need aren't clear. I suspect your standard of living will go up a bit, but LBYM should still be easily attainable!

Yep. So far I've enjoyed having roommates, but in 5-10 years this may change. That will amplify the expensive housing costs.

I think I'll always have the LBYM lifestyle, but do intend to slightly increase expenses as my income increases. We're talking $1000-1100 on rent rather than $800 here, not like I am going to go out and blow my budget.

There is no doubt in my mind you could save money living in a place like Milwaukee or Minneapolis and for what you described, utilize bicycles & public transport to get around. But no where close to what NYC provides. Unlike NYC, you may need a car but perhaps for 5,000 miles per year but a Zip car might work too depending on your transport needs. I know people who bicycle year around and live without cars. I am fairly confident you will have total savings and given your current entertainment interests, you will not sacrifice much.

Is it really easy to live without a car in these places? I did a 22 day roadtrip moving out here to check out a bunch of cities as possible future residences, but mostly I think it's not doable. I went through the south and East coast, and really enjoyed cities like Austin and Atlanta, but I think not having a car significantly impairs your social life. It also adds a lot to your commute, though this can be avoided by living along a transit line.

Cities like Boston and DC are doable, but the housing is not that much cheaper. Chicago is the one place I've been so far that I think no car is feasible AND the rent is a lot cheaper. But as another poster mentioned the transit still isn't quite as good as NYC.

BTW, no car in LA? Wow, that takes a special kind of patience!

PS: 5 months? From Southern California? Wait to see how you handle a winter!

Yes we'll see! I'm determined to not hate it though, as Western cities are all auto-dependent outside of SF and I don't want to live in Northern California again.

I had to google Zip car. I had never heard of it.

Yeah Zipcar is great. I plan to use it for all non-Megabus travelling, as I love roadtripping and seeing different cities. Another benefit of NYC and the Northeast in general is that you're close to so many different places. In SF you basically have So-Cal and potentially Vegas as long weekend roadtrips and that's about it.

 

[haha]

I think I'll always have the LBYM lifestyle, but do intend to slightly increase expenses as my income increases. We're talking $1000-1100 on rent rather than $800 here, not like I am going to go out and blow my budget.

I am very curious as to where in NYC you expect to find an apartment for $1100? Where do you live now?

Ha

 

[bbb11]

I am very curious as to where in NYC you expect to find an apartment for $1100? Where do you live now?

Read my OP and you'll find out.

 

[haha]

Read my OP and you'll find out.

So you and roomie are paying $1600/mo in Williamsburg? Good going. It would be very hard to impossible to get a 2 bedroom apt in a reasonably safe central Seattle Neighborhood for that.

I live in a 700 sq ft one bedroom "urban hip" no car needed neighborhood in Seattle, a much less expensive city than yours. When I moved in 3 years ago a couple were paying $1250/mo in the place I bought. These apts are going quite a bit more expensively now.

I don't understand this, but no matter, congratulations on your success.

Ha

 

[gidco]

In a similar boat. I live in Williamsburg in a rent stabilized apartment. My rent is similar to yours. But recognize, that our rent is VERY low compared to most urban professional. I do not know anyone that pays as little as I do (who doesn't live in a really undesirable area). It is very difficult to find an affordable apartment in NYC, but if you put a lot of effort into the search, it is possible. The problem is that the search is so time pressured that people end up giving up and stretching their budgets.

I agree though. If you have low rent and don't get caught up in an expensive NYC lifestyle, you can save a lot of money in NYC. Especially because NYC salaries tend to be hire to account for higher cost of living.

But the way NYC becomes expensive is when people don't think about their spending in social settings. Going to a friend's birthday dinner, grabbing drinks, take out, taking a cab, buying tickets to an event etc. If your social circles revolve around these activities, it is really hard to avoid spending.

My biggest challenge is family planning and education. I don't know how child expenses will impact my early retirement plan. Here is an area where NYC and BK can get unaffordable really fast.

 

[ERD50]

So you and roomie are paying $1600/mo in Williamsburg? Good going. It would be very hard to impossible to get a 2 bedroom apt in a reasonably safe central Seattle Neighborhood for that.

I live in a 700 sq ft one bedroom "urban hip" no car needed neighborhood in Seattle, a much less expensive city than yours. When I moved in 3 years ago a couple were paying $1250/mo in the place I bought. These apts are going quite a bit more expensively now.

I don't understand this, but no matter, congratulations on your success.

Ha

I agree that sounds much cheaper than I would expect. And I was surprised when he said rents in Chicago would me 'much cheaper'. But if that's what he's paying, that's it I guess. I'm just surprised.

-ERD50

 

[Likes_to_Lurk]

bbb,
It sounds like you have your expenses under control and have discovered some inexpensive entertainment. If you are enjoying the city, then stick with it! When it stops working for you, then consider other options.

For 33 years, I lived in a rent stabilized apartment in Brooklyn Heights. Very cheap rent in a nice neighborhood. This allowed me to save a lot. I also didn't get caught up in an extravagant life style, but still enjoyed the city. Three years ago, I bought a co-op in Manhattan. So it is possible to accumulate enough to buy, even with a modest income (by NYC standards).

I have to say that your rent is dirt cheap. I know many young people new to the city who pay WAY more. If you can keep your apartment at a reasonable price for a number of years, you can really increase your nestegg.

 

[FUEGO]

Splitting a 700 sf 2 BR apartment for $800 each sounds crazy expensive compared to what I'm accustomed to (in North Carolina). However that's probably standard rent (or even cheap) for NYC.

I guess you can save by not owning a car and only paying $112/mo for a transit pass. For a single person, it sounds like you might not save a whole lot by moving to a lower COL area.

Although you could probably buy outright a 700 sf 2 BR condo, apartment, or townhome in many southeastern cities for $50-75k if you weren't too picky about neighbors and neighborhood. Get a roommate like you do now and your mortgage would be covered by their rent (= almost free housing).

$300 on food and dining out seems steep, but maybe that's a lot of bar tabs? We average about half that in our household but we have economies of scale (5 of us). We mostly cook at home. Almost never drink alcohol at bars and restaurants (that's why we have a house with big open spaces and a big yard on the lake).

Overall I would guess you could have a similar lifestyle (except own a car) and maybe save $600/mo by living in a lower COL area. Cars can be awesome if you're traveling over a mile or so or need to haul a bunch of stuff. And in the wintertime, it's nice and cozy after a few minutes of warming up. I rarely use my car and walk most places since everything is within a mile or so, but when it's raining or really hot/cold, I don't mind indulging in a little car driving!

 

[daylatedollarshort]

$300 on food and dining out seems steep, but maybe that's a lot of bar tabs? We average about half that in our household but we have economies of scale (5 of us). We mostly cook at home. Almost never drink alcohol at bars and restaurants (that's why we have a house with big open spaces and a big yard on the lake).

You spend $150 a month for food for five? That is impressive as it is only a $1 a day per person for 3 meals. What kind of meals do you make in a day?