Post-MBA lifestyle in NYC with student debt of $100K

Hey guys,

Just trying to grasp what having a student debt of $100K actually means for your lifestyle.

Assume that you do an MBA at a top 15 school, graduate with $100K in debt and get a finance job in NYC with a salary of $100K per year ~ $8,333 per month. After federal/state/city/SS/Medicare taxes we're at a free cash flow of app. $5,400 per month. Student loan payments are at app. $1,200 per month so taking those into account, you're left with $4,200 per month.

As far as I understand, studios in Hell's Kitchen/Lower East Side/Financial District run at $2,200-$3,500 per month. So unless you're willing to spend more than 50 percent of your disposable income on rent, you will not be afford to live in your own place (i.e. live without roommates), right?

Additionally, you'll have the thought of not having an emergency fund as a sword hanging over your head all the time, right?

And generally you'll have to live super frugally after your MBA to make ends meet?

Not saying that an MBA doesn't give you a super ROI over a 10 year period (I'll be applying to 4-6 U.S. MBA programs this fall!), but just trying to get an idea of what the short term costs will be for your lifestyle immediately after graduation.

Comments (35)

Jul 23, 2014

You'll get a signing bonus most likely, so there's your emergency fund. Spend your salary save your bonuses.

You also don't have to spend 2200-3500 per month on a studio. You could be very aggressive and get a cheaper apartment in a borough or different area, or get a roommates and pay down the student loan debt with the difference.

You'll only have to live as frugally as you make yourself. If you are smart about your money the less frugal you have to live.

Best Response
Jul 23, 2014

*Get roommates
*Don't eat out all the time
*Don't own a car
*avoid cable TV. just pay for internet
*avoid having children
*sock away your bonuses

Just because NYC is expensive doesn't mean your lifestyle need be. The hardest part is taming those housing costs-3 or 4 roommates living in a 500 sq foot place is an ugly sight.

Jul 23, 2014

You don't even need to get roommates. I live in Sunnyside Queens with a 15 minute ride to grand central so I'm very close to Manhattan and only pay 1450 for a 700 sq ft 1 bdr. That's already cutting 1-2k from the OPs budget which would be more than enough to eat and have some fun on right there.

Jul 23, 2014

You have to be smart about money in NYC. But frankly you can survive on $100K in NYC - esp. if you do not have dependants.
You can save money by doing any of the things mentioned in the above comments. My advice would be to determine how much each of these factors matter to you. Once you have that figured out you will know what you do not care about/stuff you can be would be more flexible about. This will elevate your standard of living significantly.

Jul 23, 2014

This is something that's weighing on me heavily since most likely I will have to be in NYC post-MBA given the jobs I'm targeting. My loan burden is way more than $100K, and even under the government's IBR plan, I will still have to fork around $1500/month in loan repayment. Given that I hate having roommates, I would need to fork around $2500/month to get a decent studio in Manhattan. Then there is the city tax and higher cost of living, and I will end up getting raped.

Or I can move to Chicago and live like a king in a luxury highrise in river north or west loop.

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Jul 23, 2014

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Jul 23, 2014

Keep in mind that associates make about 170k after bonus and consultants with an MBA pull in 150k if I'm not mistaken. That being said, its investment banking and consulting which aren't a guarantee to get into. Well done on running the numbers, hence why I've always said it looks like indentured servitude in many cases and why going wherever has the best financial aid among those top programs is key.

Jul 23, 2014

MBB and tier 2 consultancies will pay full relocation, $135-140k salary, $20-40k signing bonus (depending on firm), and you can expect around $30-40k year end bonus (MBB at least). So, if you are aiming for consulting your first post-MBA job, your total first year comp will be in the neighbourhood of between $180kish to $220kish. So, it is doable. That said I have a friend at BCG Dallas who is killing it and living like a king and he took near enough 100% loans at an M7.

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Jul 23, 2014

MBB and banks pay the same salary regardless of office. It sucks that they don't pay NYC people more given the much higher cost of living and taxes, but that's just the way it is. A M7 MBA+MBB bro in any city aside from NYC, SF, LA, would be a god amongst boys.

Jul 23, 2014

MBB and tier 2 consultancies will pay full relocation, $135-140k salary, $20-40k signing bonus (depending on firm), and you can expect around $30-40k year end bonus (MBB at least). So, if you are aiming for consulting your first post-MBA job, your total first year comp will be in the neighbourhood of between $180kish to $220kish. So, it is doable. That said I have a friend at BCG Dallas who is killing it and living like a king and he took near enough 100% loans at an M7.

Jul 23, 2014

I knew they did well, wasn't sure to what extent.

Jul 23, 2014
GlobeTF:

MBB and tier 2 consultancies will pay full relocation, $135-140k salary, $20-40k signing bonus (depending on firm), and you can expect around $30-40k year end bonus (MBB at least). So, if you are aiming for consulting your first post-MBA job, your total first year comp will be in the neighbourhood of between $180kish to $220kish. So, it is doable. That said I have a friend at BCG Dallas who is killing it and living like a king and he took near enough 100% loans at an M7.

From what I hear some Consultancies also comp your 2nd year's tuition.

That said, BCG Dallas is a MUCH better value proposition than doing the same in NYC

Jul 23, 2014

This may be naive on my part but shouldn't you be paid more than $100k post MBA in NYC? If if you're aiming for that salary in NYC you could probably get a similar position in a LOC area.

Jul 23, 2014

Base salary for first year BB IBD and S&T is only $100K with like a $15K signing bonus. Discretionary bonuses are down sharply, and much of the bonus is in deferred stock rather than cash. NYC sell-side is now a very shitty deal.

Jul 23, 2014

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Jul 23, 2014
mbavsmfin:

Base salary for first year BB IBD and S&T is only $100K with like a $15K signing bonus. Discretionary bonuses are down sharply, and much of the bonus is in deferred stock rather than cash. NYC sell-side is now a very shitty deal.

That blows. Maybe finance is in steep decline... I worked in repe out of undergrad in the mid 90's and I think I cleared $100k first year. Almost 20 years ago in SF.

Jul 23, 2014

Starting base is 100k w signing bonus of 50-57.5K. Unfortunately most of us kind of ran down that bonus. You get the check pretty early and it goes into filling shortage from MBA expense estimates, traveling or moving cost (two month rent plus agent fee if you want to get a place). Moving or buying stuff costs money too. In January you get bumped to 125K and also get a stub bonus of 35-40k, which helps adding more cash flow. Also for Federal and most private loans, payments aren't due until at least 6 months of graduation, so you aren't really paying for loans w your 100k base, but 125k base.

Jul 23, 2014

$50-57.5K signing bonus? This is a lot higher than the numbers I have heard here at school. Is this for a particular firm/group or banking in general?

Jul 23, 2014
mbavsmfin:

$50-57.5K signing bonus? This is a lot higher than the numbers I have heard here at school. Is this for a particular firm/group or banking in general?

50K is standard for all BBs, and WF. 7.5K is extra add on for returning interns signing quickly, although one of my friends got it for signing his second year offer quickly. I had a consulting offer with 35K signing and most consulting firms are in 30K-40K range with base in 130K-140K region. Most of us borrowed a lot and no one would follow these paths if the numbers were just stupid.

Jul 23, 2014
abacab:

Starting base is 100k w signing bonus of 50-57.5K. Unfortunately most of us kind of ran down that bonus. You get the check pretty early and it goes into filling shortage from MBA expense estimates, traveling or moving cost (two month rent plus agent fee if you want to get a place). Moving or buying stuff costs money too. In January you get bumped to 125K and also get a stub bonus of 35-40k, which helps adding more cash flow. Also for Federal and most private loans, payments aren't due until at least 6 months of graduation, so you aren't really paying for loans w your 100k base, but 125k base.

How early did you get your bonus? Is the 7.5K extra for signing early standard on the street? What was the gap between your actual and estimated MBA expenses?

Jul 25, 2014
abacab:

Starting base is 100k w signing bonus of 50-57.5K. Unfortunately most of us kind of ran down that bonus. You get the check pretty early and it goes into filling shortage from MBA expense estimates, traveling or moving cost (two month rent plus agent fee if you want to get a place). Moving or buying stuff costs money too. In January you get bumped to 125K and also get a stub bonus of 35-40k, which helps adding more cash flow. Also for Federal and most private loans, payments aren't due until at least 6 months of graduation, so you aren't really paying for loans w your 100k base, but 125k base.

Is there a standard bump for various divisions as you guys understand it or how does that work? Say you're in the finance division starting at 110, would you expect a bump to 120 in January plus stub? IB from 110 to 125 etc?

Jul 23, 2014

The big chunk came around March for most banks. Some waited until about May/June I think. Depends on the bank. 7.5K is pretty standard. No idea what my gap was in expenses vs. estimate. I had some costs that aren't typical of MBA.

Jul 25, 2014

Yeah salary bumps seem to be standard in IB, at least in lower levels. Bonus is variable.

Jul 25, 2014

If you're graduating from an MBA program with six-figure debt, hopefully you're getting a job paying over $100k. You should be able to land a signing bonus, which would pay for your move and either part of your student loans or emergency fund. Also, those bonuses will be VERY welcome at the end of the year. I did this on a small scale after undergrad and you can get by spending 40% of income on your rent pretty easily, especially since you shouldn't have a car payment.

Apr 3, 2016

I hope you are right about this because I would really welcome that.

Want to Lose the body fat, keep the muscles, I can help.

Jul 25, 2014

Looks like banks have finally lost too much talent to MC and are raising base to $125k. Should make things more manageable.

Jul 25, 2014

Is that across all the BBs? Or just at certain places? I always though it varied from the 100-130k range.

Jul 25, 2014

Seems like it would be a much better proposition to do work in a low cost low tax city post MBA, especially if you are trying to pay down debt.

Ceteris Paribus, a guy starting out in Houston IBD will have it much better than a person starting out in NYC IBD. Or am I missing something?

Also, how much does going to a lower COL are B school help with costs? Duke, UVA would be pretty cheap other than tuition right?

Someone help me out here.

Jul 25, 2014
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Jul 26, 2014