The Value of Living in NYC
Hello everyone,
I want to pose a question to all those on the boards about the intrinsic and intangible value of living in New York City as opposed to some place nearby for significantly less money. I'm currently in a situation where I can practically live rent free (couple hundred a month all inclusive besides food). By public transportation, it takes about 35 minutes into the city and about 60 minutes door to door to the office.
However, socially my current situation is far from ideal and as I begin to take advantage of more activities in the city such as professional events and different volunteer activities, I'm beginning to wonder if there is an intangible and unquantifiable value of living in the city itself.
Thus, I pose the question to you all. Do you believe that paying 6.4X your current rent to live in the city during your beginning and early years will have negative impacts down the line? Which is greater, the opportunity cost of actual dollars forgone on rent? Or the opportunity cost of not accessing all that the city could potential offer to an individual willing to reach out and grab it?
Now I've worked out the numbers and am contemplating if watching my checking account rise nicely each month in addition to maxing out my retirement account contributions vs. still maxing out contributions, but operating at close to 0 monthly cash flow is worth it?
I've worked out the numbers and have assigned a hypothetical Future Value compounding scenario annualized on a yearly basis to understand my opportunity cost in dollars, but unfortunately quantifying the later opportunity cost is much more difficult.
Therefore, I turn to you all and welcome your thoughts, considerations, and inputs.
I know many of you in banking and working 100 hour work weeks never had this option as you need to be in close proximity to your office and may have a bit more of a salary cushion to absorb the blow while starting out. However, currently I'm not quite in that position (yet) and I can make the commute work.
My big fear is preventing the classic post written by Edmundo Braverman, "Sell Your Options Dearly: Depreciating Assets" to evade my lifestyle. I understand that even if you can "afford" the lifesytle, elevating your consumption intake on luxury / status items with each increase in pay is No way to exit the rat race for the long term. I tell myself this every day and feel that I have a strong understanding and desire to not succumb to Madison Avenue's psychological marketing wraith. I just hope this is not the first step down that path.
Thank you,
~ K.
If you don't work in IBD, spend one year in an outer borough, Jersey City, or Hoboken. IBD folks need sleep, but everyone else needs to build up an emergency savings fund.
After that, decide what you want to do. I decided to stay in Jersey City. It saves me about $10K net-of-tax per year. Assuming a relatively frugal retirement and a retirement compounding factor of at least 10, every year I spend in JC shaves an extra year off my net retirement age.
It's easier to spend money if you live in Manhattan. Not just on rent and the necessities. If the Met is two blocks away, it's a lot easier to get a $1000/year-level membership rather than show up and pay the $20 once or twice a year.
If you are working 100-hr weeks the last thing you are going to want to do is live an hour from the office. You can get a couple of roommates and live for like 1250 a month and be closer to work.
Plus when you do end up going out, you're going to either pass out on someone's sofa (no comfortable), wait forever for public transportation to get home (not fun), take a cab home (a cab ride to an outer borough will make up for that rent spread really quickly), or not go out. Also, what are you paying monthly for your jersey transit/metro north/LIRR pass? I pay under $100 for an unlimited metrocard. Do you have a car now? You'll be able to ditch that if you move to the city, so take out insurance, maintenance, and fuel. Also, despite what IlliniProgrammer will lead you to believe, you get your MBA and you'll be loaded with debt, no matter how much you save up before. You'll also be making substantially more afterwards to pay off this debt.
-Why can't someone save $50K/year for school over three years? It's definitely possible if you live in Hoboken or Jersey City and live relatively frugally. Don't forget the penalty-free tuition withdrawal feature on a 401k which saves you about $2K/year in taxes for three years due to income shifting. -You don't need a car if you live within walking distance of PATH. In fact, if you work in lower Manhattan, you can ditch the metrocard and pay $54/month for an unlimited ride PATH card. There is a Morton-Williams within two blocks of almost all the high rises at Newport and a ShopRite within five or six blocks of everyone else.
If you're not front office u definitely can't save 50k POST TAX in 3 years unless you get free rent and spend absolutely nothing on entertainment or travel expenses.
Without bonuses and a high base like 70k (not possible for front office) you still only save 1k a month or 36k over 3 years.
Yes you can live like a retard and blow away the best 3 years of your life living in Hoboken and never going out. You'll just regret taking Illinoisprogrammer's advice when you are dying at 80 years old and laughing at how you gave up 3 of your best youthful years of fun and going out just to save an absolutely miniscule amount of money (10k or so).
Or you can realize that you only live once and although your job may suck, going out and having fun and blowing 10k over 3 years is the best thing you ever spent your money on because once you are 30+ making 500k you sure don't want to be like illinoisprogrammer pinching pennies, posting on message boards for kids half his age and still dying a virgin.
These are the best years of your life. Find a way to spend your money so that you have a lot of fun but save money at the same time. A good place to spend it in your 20s is on learning adventure sports.
^^^^^^^^^^^^^^Second that^^^^^^^^^^^^^^^^^
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