NYC Living - Live off paycheck?

Seems like a pretty thorough analysis. Food will probably be less since work will be feeding him a lot. Why not look into getting a roommate. Rent will be lower, split utilities, give your friend a little bit more of a cushion.

Depends if you're in S&T or IB

1) IF you're in S&T - the boozing and dining will be paid for but if in IB - no boozing 2) $1000 is a bit aggresive for food etc - assuming $20 for food a day - breakfast and lunch ... that's $600 a month

I think $1000 will cover a good meal once every week / 2 weeks and weekend boozing

That's still a pretty good living tho (if your bonus aint sht)

Notes

1) Why is ur cable $130? jesus ... internet + cable should be about $75 ... unless you get phone, etc all in one 2) Get a personal cell

I never heard of any S&T getting free booz and dinner. In fact, only one division consistently gets free dinner and that is IBD.

You should be able to go most of the way to furnishing your apartment from savings/sign-on bonus, so the cc R can probably be removed.

Yea, a few recommendations. If you can find a roommate, do that. You can get a pretty decent 2BR or Flex 1 for like 2200-2500 which saves a bit (you also can split the furnishing costs). You can also look for shared rooms on craigslist and move in with people because one of their roommates moved out. Again, you dont have to furnish the apartment.

As inassessable said, food will definitely be less than 1k per month. Dinner will be paid for almost every night, so assume $20 per day for lunch, breakfast, snacks and you are looking at about $600 per month. Utilities also shouldn't be $150... in my place (with 3 roommates) we each pay about $125 per month and that includes cable and internet.

does anyone know what the take home pay is? $1750 seems a little low.

also, do most ppl get a personal cell? or do you use your work blackberry for personal calls/emails as well?

I think the analysis by ihatetaxes is dead-on. I have lived in NY for over 20 years. Maybe put aside a little for clothing - provide your own blackberry - then if you leave, all the numbers are loaded in yours.

Make copies of your work for yourself at Kinkos and keep a file at home for safe keeping. After 20 years, you might want to look back at what you did. Yes, cable and internet for Time Warner is that expensive and going up all the time.

Some texts work will pay for, but a couple of the modeling texts you will want to own outright.

Plan for some trips to the Hamptons in the summer.

Thanks for the help. A further update:

Position: Investment Banking Rent - My friend was adamant on living by himself. He actually found a full 1Br/1Bth for $1,595. Electricity - This was including gas and electricity. However, I completely agree with all your opinions. $150 is on the high side (summer with air conditioning running all day). Probably was too conservative. On average, ~$65 is more reasonable. Cable & Internet - Time Warner is the only provider in his area. At TW's website, the bundle package is $100 without DVR and taxes. The bundle package includes Cable, Internet, and Phone. If you only want Cable and Internet it jumps to $112 (weird)!!! The Cable, Internet and Phone rate is only for 12 months, so I'm assuming they will jack the bill after a year. http://www.timewarnercable.com/NYNJ/ Food & Drinks - Includes ~$300-$350 for food/groceries and ~$700-$650 for alcohol. Signing Bonus - He is blowing his way through that. New Bed - $900 (he was told not to skimp on bed, very important to get a good nights sleep), Clothes - $3-$4K, 1st month Rent & Security Deposit - $3190 (don't know if he paid the 15% brokers fee), Accessories - Plates, Towels, Silverware, Bed Covers, Sheets, TV, etc ~$1-2k, But, you have to pay taxes on your Bonus, so he probably won't be able to avoid the credit card interest for furniture.

With reducing Electricity, Net income comes to ~$315. Still cash flow positive!!! Any thoughts? Didn't even account for cell phone bill that could be ~$100 monthly. Is $50 accurate for 2 haircuts/trimmings? Do analysts normally get trimmings at Supercuts or do they have their own barber? Is $180 accurate for monthly dry cleaning/laundering? Tax rate seems a bit low, 33.2% ($178+$400+$1,360/$5,833). WSO comments always talk about an average tax rate closer to 40% for NYC. How do they get this? Does the 40% tax rate include sales tax on shopping (after income tax)?

You realize that your friends apt will be the size of a box and he will spend about 1/3 of his day there MAX. He wont spend that much on groceries and wont have that much time to eat out at expensive places. If he pregames before going out and doesnt split bottles with his buddies he can keep the alcohol expense down as well. Pretty solid analysis though.

Where is your friend's IBR/1Bath ? I'm paying more than that for a Studio.

The booze and food in sales and trading comes from entertaining clients. It's not like he can just walk into any liquor store and use the company card.

Any student loans to pay off? That is killing me right now. Also, is your transportation cost tax deductible? Not that it makes a huge difference in your analysis...

Update to questions:

1Br/1Bth in West/Greenwich Village (2,3 Train). He took ~1 month looking. If you're patient and have friends to crash with, then you can land a sweet gig. Patience is a virtue. Student Loans - Nope. However, I can completely understand that situation. With student loans, an individual might have to make some concessions (i.e. live in a 3 Br/2Bth Flex or New Jersey, relax on the "partying", and watch your wallet carefully) Transportation cost - Yes, tax deductible (may depend on the IB) Also note, 401K is tax deductible. My friend said that once the company starts to match contributions (after 1 yr which is pretty standard), he will max out.

Hope this helps.

I'm pretty sure most BBs match 401k contributions from the get-go

Are student loan payments tax deductible? Mortgage payments are, aren't they? So it follows that student loans probably should be?

You should still be able to deduct student loan repayments for the first year, as you won't start until September, so your total income for that year should fall under 70k.

And OptimusPrime, there is nothing logical about the federal tax system or the deductibility of mortgage interest, it is one of several asinine and populist moves that got us in to this nice little pickle that Washington thinks should be blamed on someone else.

Your transport costs should also reflect a few taxi rides per month, as you won't take the taxi after a certain time and probably won't be expensing it when you go out with friends.

As for haircuts, your price is about right, but do you really need a cut every two weeks? That's pretty frequent.

You can opt to pay taxes based on calendar year - in which case you'll only get taxed on first 5 months of your salary

If full fiscal year ... u'll pay more but ur bonus will hurt u next year

I couldn't agree with drexelalum11 more. The Federal taxation system is "asinine." My parents told me, at one point, car loan interest (nonbusiness use) and credit card interest were tax deductible. Oh, the good old days. I never got to see them. Ronald Regan - Tax Reform Act of 1986

eric809e makes some great points. My friends Net Income comes to ~$315. But when you account for some unforeseeables like cab rides and random shopping, you end up with 0. He runs outside so no need for a gym and his family lives in the NorthEast, got lucky there.

I guess the end result is: Barely survive off paycheck, may need to credit card some things, hold on tight for bonus season, try to replenishment your accounts, and save what you can.

UPDATED: City: NYC

Monthly Income $5,833

Less: Transportation(1) 89 Less: Flex. Account(2) 50 Less: Health Insuran.(3) 170

Less: 401K(4) 85

Taxable Income $5,439

Less: City Tax(5) 178 Less: State Tax(6) 400

Less: Federal Tax(7) 1,360

Gross Income $3,502

Less: Expenses Monthly Rent(8) 1,595 Electricity 65 Cable & Internet(9) 130 Food & Drinks 1,000 Haircut(10) 50 Laundry & Dry Cleaning 180 Credit Card Interest(11) 167 Unforeseeables (12) 315 http://www.nyc.gov/html/dof/html/pdf/interest_rates/pitrates.pdf (6) Over $20K, NY State tax = 6.85% of monthly income, http://swz.salary.com/salarywizard/layouthtmls/swzl_statetaxrate_ny.html (7) Federal Tax bracket = 25% (just a basic estimate of 25% on taxable income, didn't break up income into each bracket) http://www.moneybluebook.com/2010-federal-income-tax-brackets-irs-tax-ra... (8) 1Br/1Bth (looked on Craigslist at similar postings) (9) Time Warner, cable,internet, DVR, and taxes (10) 2 haircuts a month or at least a trimming (11) Interest payments to furnish apartment (12) Includes what you can afford- cab rides, dating, shopping, travel, gym membership

This analysis really shows why having roommates is vital; not just on rent, but on the other expenses that add up so quickly. If we assume your friend lived in a 3BR/2Bth instead, which go for around 3,500, a 50% marginal increase in electric costs from roommates, a 50% marginal increase in furnishing costs from the same, and constant cable/internet prices, you're saving:

Rent: 3,500/3 = 1166 v 1,595) = 429 Electricity: (651.5)/3 = 32.5 v 65 = 32.5 Furnishing interest payments/foregone interest income: (1671.5)/3 = 83.5 v 167 = 83.5

Cable/Internet: 130/3 = 43.3 v 130 = 86.7

Total Savings: 631.7

Also, that doesn't take in to account indirect savings, such as being able to split cab rides when you go out.

In short, you need roommates if you're going to live in NYC on under 100k (and I know guys making way more who still have roommates)

having roomates makes it hard to slay chicks

In other words, being a first year employee in NYC and working 100 hours a week in IBD makes it hard to "slay chicks".

Watch out for that retirement contribution, it can be substantial - as much as 10-12% of pay.

One other tip i forgot to mention. Just before you move into the city - apply for a credit card with a 0% promotion APR for 6 months+. Charge as much as you can to the card, pay off the minimum balance. Should help with cash flow until your tax rebate comes in + christmas presents from mom and dad. Graduation gifts (hopefully cash) also help offset some of the negative initial cash flow.

A couple of helpful tax tips - seriously consider opening a 529 college savings account if you plan to go to business school or have younger siblings. Tax free earnings plus up to $5k NYS tax credit.

If you have worked at all in college (enough to generate a W-2 form) and meet the minimum distance away form NYC - you get to deduct moving expenses to the city.

401(k) is great as long as you get the match. With dollar for dollar matching, it's a lot of free money you're leaving on the table. You can always do a 401(k) loan later on if you really need the cash. The fees and restrictions aren't great, but with the match, it's really hard to go wrong.

Having roommates are key - but fit is key. You gotta get along. Roommates can help you get laid (for those of you obsessed about how it hurts) - wider network of friends = more opportunities. I've had a female roommate before who was in teach for america - needless to say, lots of pretty ladies in my apartment.

Def get roomates - its too easy in this miserable job to just come home fri/sat night and pass out rather than go out and get rowdy.

Regarding living - if you have roomates, and cut your rent back, you can definitley live fine in 70k. Ive been able to live pretty well at least with regards to social life on 70k so far, and have been able to save a modest amount.

Ps - nice analysis and footnotes - my piece of shit MD would be proud

weeds499:

Def get roomates - its too easy in this miserable job to just come home fri/sat night and pass out rather than go out and get rowdy.

Regarding living - if you have roomates, and cut your rent back, you can definitley live fine in 70k. Ive been able to live pretty well at least with regards to social life on 70k so far, and have been able to save a modest amount.

Ps - nice analysis and footnotes - my piece of shit MD would be proud

Hahah. Thanks. Went with 1Br/1Bth in West/Greenwich Village. But would definitely recommend roommates to cut rent/utilies/cable&TV/additional cab ride costs. Probably save an additional $300-$650 monthly.

edit: nvm

Hungry ? lol i have mty own aptment - thanks very much

quite a lot of time and detail spent on analyzing your friend's paycheck...