Can I Afford This?
I am a first year analyst at an EB in New York. I am moving apartments to be closer to my office (Midtown), and I am only able to find apartments in the $1,700 - $1,900 range (closer to the higher end there).
I will add though that these apartments are in very nice buildings, in good neighborhoods, and have units that are nice to come home to.
Can a first year analyst making $85k per year afford around $1850 in rent (including utilities)? Everyone tells me to do the 30%-rule, but I think that is meaningless in a city such as New York where taxes and the cost of living are substantially higher than anywhere else.
Crunching the numbers though, it seems that I can afford it, but I am really trying to figure out if it is worth it or not. I can probably decrease the rent expense to around $1,500, but I would most likely be further away from the office and the building would be of lower quality (from what I have seen).
What do you guys think?
lol yes, most analysts pay in that price range (many even higher than 1900) on a 70k base
Thanks. I forgot to add that I have no savings coming into my job (which just started not that long ago), and I also have $50,000 in student loan debt that I am currently paying down.
Does that change your answer?
Not really. You will still have >1k per month to pay down your debt and still have a bit to save as well. Trust me, I did the math on this to see how much more I'll be making per paycheck once I got the announcement
Dude it's New York, I know people making far less who are forced to pay similar levels in rent for various reasons.
You're busy enough working in IB and are making good money, you don't need to pinch pennies at the expense of being comfortable. You don't have to be extravagant by any means, but paying ~$1900 a month in rent is not something to worry too much about.
Just trying to figure out if it is worth it, when I can clearly decrease this expense by going to more modest means.
I'd say location is most important given your work hours. If you can get other (decent - no need to live in squalor) apartments in very similar locations for cheaper (eg. saving 5 min each way on a commute isn't worth a few hundred dollars a month in rent), getting a cheaper place may not be a bad idea. On the other hand, if you can get a much better location for the same price, that's also probably something to consider. However, if other apartments in the area are similarly priced it just sounds like you may be getting a relatively good deal.
Of course, if you're the kind of person who would love to live in a really nice apartment and enjoy it for the hours that you are there (/use it to impress girls etc) then the additional cost is probably worth it even if you could find something cheaper in the area.
You should also consider what any savings would be used for - eg if your mindset is that you'd pour any savings into more alcohol when you go out etc, the apartment is probably a good idea because extra drinking will only hurt your health and make it much easier to become fat. If you'd use it to pay down your debt, maybe that's worth getting another place.
I dont see anything wrong with that from a budgeting standpoint, and from an "Is it worth it?" standpoint, I think in NYC there will be a pretty big dropoff from $1900/mo to, say $1500/mo, meanwhile the difference in your savings at the end of the year will be pretty marginal. Seems to me that when you are already at a pretty low price point for NYC, squeezing down a few hundred bucks per month to accept a much worse apartment isn't a good tradeoff.
Well, if its the convenience you are looking for, that apartment would be a great choice. You don't have to travel that far to your office plus you said the buildings are good and the neighborhoods. One thing you should consider in renting an apartment is make sure you can afford it which possible for you. Good neighborhood to ensure that you will have no problems in the future. Read the renting policy and inspect the entire apartment for your safety.
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