How much money have you saved?

I'm 25, and I feel like I have hardly any money saved. I'm looking at going to b-school soon, and will definitely have to take out loans. I don't think that's surprising, but it just got me thinking about how much is normal to have accumulated at this point in my life.

Also, how are y'all investing your savings?

 

I think he is talking about built up home equity. If you have a home worth 2.5 million and have a million dollars in mortgage debt, you have an equity of 1.5 million dollars. One caveat is that due to the illiquidity of a house and the inability to really sell it (Are you really going to sell your home? You are going to need to rent a place, resulting in higher expenses even if you do.) it is questionable to include it in net worth.

 

Right there with you buddy. $-107K. and that was going to a high ranked State B school. I cant imagine what happens to those poor souls who go to like Emory or Notre Dame on full loans.

 

I wouldn't worry about anything in your 20's. In 20's its more about getting your career and life in order. You should start thinking about savings etc in your 30s. Get it all out of your system in your 20s

Age: 25

Undergrad Loans (from a worthless college): 124,131.4

Paid for my own wedding and paying partially for my wife's education: ~30K

Savings: 10k

 
shootersix66:

I wouldn't worry about anything in your 20's. In 20's its more about getting your career and life in order. You should start thinking about savings etc in your 30s. Get it all out of your system in your 20s

Age: 25

Undergrad Loans (from a worthless college): 124,131.4

Paid for my own wedding and paying partially for my wife's education: ~30K

Savings: 10k

Nice job!

 

500 and the rest is in a high yield savings account. If I overdraw my bank automatically withdraws the required amount from my savings account so I dont suffer from an overdraft fee which is pretty nice.

 

I essentially keep 2k minimum in my account. I treat this as my own personal "zero balance", so that you can monitor spending habits but not risk having overdraft fees.

The rest of my savings is in a savings account with Countrywide. They are offering over 5% for accounts over 50k. Not bad, although this drops to just over 3% when you factor in taxes. I am actually paying a decent chunck in taxes this year, mostly related to interest income. Bleh...

 

I know that this may sound like a really stupid question to some of you, but I was wondering what the difference was between a md and a department head are? Also, what is the difference in te salaries? Thank a lot for you comments.

 

i'll give you a serious answer...though you are heavily dependant on the payouts in the last few years and less so on your rate of return.

if you save 10k/yr as an analyst (conservative) and 100k thereafter, you wind up in the mid 600s by 30. but you can use excel or a calculator that can price annuities to play around with this.

 

If you are frugal you should be able to save your bonus and something from your monthly pay packet (I would say c. 25% of the net figure)

I haven't run the numbers but that should give you a reasonable amount by 30

From the ghetto....

From the ghetto....
 

Never lived in NYC but I would guess your total pre tax comp would be like 150k or so and take home about half of that after taxes and however much you put in your retirement. So call it 75k after tax, then subtract ~25k for rent and however much you spend on other stuff (probably 1-2k per month and dont forget to include any big purchases, so maybe 10-20k? Might be a little low). So saving 25-40k per year sounds reasonable.

 

I would be joining DB this summer in the investment banking group. Training would be in London but moving back to NY after that. In terms of amount. I would barely have enough for cloths and food. Apartment rent including security deposit is about 8000 grand, that savings gone. So credit cards looks like the way, spending as little as possible. My advice, save as much as you can because first month would be an outlay of cash.

 
IBDrake:

I would be joining DB this summer in the investment banking group. Training would be in London but moving back to NY after that. In terms of amount. I would barely have enough for cloths and food. Apartment rent including security deposit is about 8000 grand, that savings gone. So credit cards looks like the way, spending as little as possible. My advice, save as much as you can because first month would be an outlay of cash.

Hey, I start at DB too!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

Better you spend the money you have now during the remaining free time. Visit friends and family or travel to some exotic countries because the next time you'll have three free months is when you switch jobs

 

Let's face it, it's all about how much your parents help(ed), your social life and your bonuses.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

23, 2k or so. Fuck you, student loans and CC debt and industry that underpays all their employees.

Currently: future neurologist, current psychotherapist Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)
 

28 - IBD senior associate

900k net worth. Composition: Personal Brokerage: ~700k 401(k)’s: ~200k

Achieved through diligent saving and investing of min 70% of all after tax income monthly and placing into s&p, high yield, and preferred stock. Same instruments, completely automated, month over month over month since first job.

Market has been strong tailwind on equity portion but portfolio now generates 30k in annual dividend income, also automatically re-invested and continuing to snowball. First million by far hardest, whereas the second million will become significantly easier given income scaling while maintaining even higher savings rate %, dividend income continuing to grow, and increasing 401(k) and profit sharing matches from employer.

 

how do you not have money saved?

if you work in finance and are taking home say $4-5k a month after tax (conservative), spending $1.5k-$2k on rent... where is the rest going that you cant put some away?

 

I work in IBK/M&A, have my MBA, and have taken level 2 CFA (note I said taken 2). CFA is somewhat helpful, but you really benefit from the MBA. People expect you to be able to speak around strategy/valuation/industry, no one expects you to calculate duration by hand as in the CFA.

BB, Associate, Coverage
 

I'm an MBA career changer from engineering who worked at MBB over the summer and going back full time.

My opinion is that if your firm direct promotes (most do) then do not get an MBA. Depending on the consulting firm, most people will never look past the firm. The skill set I see in managers at my firm is exactly the skill set people want to get from an MBA. No need to pay for it if when you can get paid for it.

 

I'm 24 and have about 3k in the bank, 6k in my 401k, and -75k of student loans. These comments definitely make me depressed. It will differ from person-to-person based on their school, amount of family support, cost of living, etc...

I wouldn't compare yourself to others when you are in your 20s. This is the time to really get on the right career path and get all of your fuck-ups out of your system. One of my buddies (23 at the time) from college wanted desperately to get into IB in NYC. All he had was a 2003 honda civic with all of his clothes in it, and a few hundred bucks to live on before having to go back to the midwest to live with his parents. He crashed on our couches for a solid 2 months, eating tuna and ramen and hustling for meetings/interviews, and eventually got into a boutique firm. He sold his car for the rent deposit and is now finally keeping his head above water and on the career path he wants. Point is, your savings account should not be a measure of your right or wrong decision making this early in your life.

 

Wouldn't pay too much attention to this thread. There are people on wso who work in IBD and have their parents pay their student loans. These are the same noobs who get turned down by chicks in West Village and shit on how BO is not prestigious enough.

 

Don't act like living in NYC/Cali is not insanity. 40% of your pay instantly gone in Taxes. Likely closer to 50%. 30% is gone in Rent. 20% is food and other amenities. 10% is income. 10k-15k is the most money you can save off of $150k/Year living in NYC. Are you serious?

Let me hear you say, this shit is bananas, B-A-N-A-N-A-S!
 

After three years, I had saved up about 30 months' worth of living expenses. This included 401ks, emergency savings, etc. Mind you, it was 30 months' living expenses, not 30 months' income.

By the time I went to grad school after five years of work, this had increased to roughly 60 months. However, I entered grad school rich and exited poor. :)

One of my completely made-up and arbitrary personal finance rules for wall street professionals is the 80/20 rule: Try to save 80% of your bonus and 20% of your salary.

One piece of advice for b-school: max out your 401k contribution. Tuition and expenses can be withdrawn from a pre-tax IRA (rolled over from a 401k) penalty-free. Furthermore, if you attend school full-time, it's unlikely that you'll be earning a whole lot of money during the fiscal year that covers your second and third semesters. This puts you into a low tax bracket and is a great time to pull money out of your IRA to pay for school. Perhaps you're in the 25 or 28% or 33% tax bracket right now, but during school, you'll be in the 10 or 15% tax bracket.

Furthermore if you become a resident of a state that does not tax income (IE TX, FL, WA, NV if your parents live there) or if you are a resident of IL which exempts retirement income (EG you attend Booth or Kellogg and choose to deem that your permanent residence), IRA withdrawals can be done state-tax-free. For students attending school, residence is almost a state of mind. Naturally there are a lot of caveats-- you'll need to change your drivers' license, bank statements, car registration, and voting registration to reflect your residency-- and some states have their own rules for trying to claim people as residents (NY has a rule that anyone who spends 183 days in the state and maintains a permanent home with a kitchen, bed, and bathroom is a resident), but if your parents live in an income-tax-free state and you stay in campus housing or if you go to Booth or Kellogg, you may be able to avoid state tax on the withdrawals if you play your cards right.

So basically, maxing out your 401k contribution avoids something on the order of 33-40% state and local taxes right now, and when you pull the money out during your MBA, you may be able to pay as little as 10-15% marginal taxes on the withdrawal.

In other words, if you sock $50K more than you otherwise would into a 401k, invest it in cash (or whatever you'd invest in to pay for grad school) and pull it out during your second and third semesters to pay tuition, you might be able to save something on the order of $10k in taxes. This figure might increase to something on the order of $30K if you can deduct your tuition as a business expense (see IRS Pub. 970). This sometimes applies if you work for a few years prior to your MBA and return to the same industry. IE if you leave IBD as an analyst and return as an associate.

 
IlliniProgrammer:
(NY has a rule that anyone who spends 183 days in the state and maintains a permanent home with a kitchen, bed, and bathroom is a resident)
\

Woah there. Those are high end amenities for NYC apartments, like windows or running water.

Commercial Real Estate Developer
 
CRE:
IlliniProgrammer:

(NY has a rule that anyone who spends 183 days in the state and maintains a permanent home with a kitchen, bed, and bathroom is a resident)

\

Woah there. Those are high end amenities for NYC apartments, like windows or running water.

LOL. I know. Kinda hard to fit everything in there sometimes. And the bed increases the rent by $500/month. ($600/month if it's a long twin, $800/month if it's a queen)

Point being that if you live in the dorms at Columbia, you're not a resident. Especially if they kick you out at the end of the school year. Then it's really hard for the NY Department of Revenue to claim you have a permanent place of abode. Your dorm room probably does not have its own kitchen and may not have its own bathroom. On top of that, you have to move all your stuff out in May.

If you worked in NYC IBD and decide to keep your rent-stabilized apartment while you attend CBS or Stern OTOH, you still have a permanent place of abode and are still therefore a resident.

 
CRE:
IlliniProgrammer:

(NY has a rule that anyone who spends 183 days in the state and maintains a permanent home with a kitchen, bed, and bathroom is a resident)

\

Woah there. Those are high end amenities for NYC apartments, like windows or running water.

http://www.newyorker.com/magazine/2012/03/19/tax-me-if-you-can

I have always loved the first half of this story, about Julian Robertson's quest in 2000 to avoid being taxed as a NY state resident.

MM IB -> Corporate Development -> Strategic Finance
 
renjim:

Does this imply saving 80/20 of after-tax income or pre-tax?

Pre-tax for pre-tax savings (IE 401ks). After-tax-income for after tax savings.

Mix and match the two if you'd like, but don't forget that if you save 10% of your income pre-tax and 10% of your take-home post-tax, you're really only saving 10% + (1-10%)*10%= 19%.

** For the sticklers out there, there are also employer deductions and there's some convexity to the tax schedule. Rather than get bogged down in the details, let's just use a simple system that divides a pretax number by a pretax number, a post-tax number by a post-tax number, and avoids double-counting.

 
explosions09:

What area did you buy the condo? Looking to buy one myself and just started doing some research. Any helpful hints would be appreciated though! Looking in roughly the same price range.

Also a bit curious. I bought in Lakeshore East two years ago.

Here are my hints as a buyer from two years ago. I caught most of these in time, but I missed out on the title insurance finagling:

1.)Find a buyer's agent, and use a discount broker who will rebate their commission

http://lucidrealty.com/real_estate_commission_rebates.php

As you know, sellers pay their realtor a commission to sell a condo. Typically in the Midwest, this fee is 5%. And the seller's agent splits the fee with the buyer's agent. If you choose the right buyer's agent, you can pay them an hourly rate and get the commission kicked back to you in exchange.

I was pretty deliberate in my search-- I only did showings on about 15 condos-- twice on the one I ultimately bought-- but spent only 17 hours of my realtor's time buying a condo. 2.5% of $360K is $9,000. Subtract 20 hours @ $125, and you net $6500 towards closing costs, which are substantial in Chicago.

2.) Talk to the seller before he talks to his lawyer and see if you can get him to use EntitleDirect or Silk Title for the closingThis will save you about $1500 over using Chicago Title. Chicago Title pays a kickback to the seller's lawyer, however. It's great to be thrifty-- just not cheap, and I want everyone (but Chicago Title) to walk away from the transaction a winner. That means you ought to agree to kick in a few hundred bucks to hand over to the seller's lawyer. The seller should do the same (they will save a couple grand using Entitle Direct or Silk), and everyone wins and saves.

3.) Chicago has a real estate sales tax. It works out to 1.25% for the buyer and seller combined. There are also other various fees that condo associations charge to move in and move out.

4.) If your previous owner was a landlord, bank or pied-a-terre, don't forget to apply for the homeowner's exemption This saves you roughly $450 per year in taxes, but you can only take it after you've owned the home for a full calendar year.

5.) You already know about the federal deduction, but the state of IL gives you a 5% credit on property taxes paid Again, this is only deductible in arrears, after a year or so of ownership.

6.) Shop your rate. Look at mtgprofessor.com, boxhomeloans.com, or provident.com.

7.) Fannie Mae/ Freddie Mac have an 80% LTV risk tier and a 75% LTV risk tier on condos. Typically you save a quarter point on your rate by coming up with 25% down vs 20%, so that last 5% of financing is really costing you something like 8 or 9% If you can put 25% down on a condo, do it.

8.) You probably don't qualify, but homeowners earning less than six figures can get a mortgage credit certificate for buying their first home, if their city issues them-- which Chicago does. This gives you a federal tax credit equal to 20% of their mortgage interest at the end of the year.

If you can come up with 25% down (as opposed to paying points), use a discount broker, and avoid Chicago Title, I estimate you'll save about $12500 in closing costs on a $350K transaction. For the slightly more obvious stuff that isn't well-advertised but most finance people ought to know, there's another $750 or so per year in state and local discounts and rebates from owning your primary (not vacation) home.

 

I bought in the West Loop/Fulton Market area, right off of Fulton and Desplaines basically. It's a hot area though so it's tough to find good deals. There are a TON of overpriced places right now.

My #1 tip is that if you have the ability to really wait for the right place to come along, do it. I can't stress that enough. Don't jump into something based on when your lease is up... take your time and find the best deal possible. It took me 17 months of waiting, but it was WELL worth it. I ended up with a 1,150 sqft 1 bed/2 bath that I was able to convert into a 2 bedroom and have a buddy of mine renting the second room from me.

Second tip is based on the first tip IlliniProgrammer gave, below - Find a good buyer's agent. I did my condo searching mainly on RedFin and I think it's a great tool... avoid using their realtors though - I did it because they offered a $2,000 credit on closing costs, but I ended up having to do the vast majority of the leg work with my lawyer and the realtor's lack of timely responses almost made the deal fall through. I'm biased because of my bad experience, but finding a buyer's agent that you trust and that is actually good at their job is huge and worth foregoing the credit in my opinion.

 

Bernie's big on correlating success to cheating. In his mind you had to cheat to be successful. If you're unsuccessful look at your poor habits and skill set, or mind set therein lies the answer. +1 sb for the witty response.

26 Broadway where's your sense of humor?
 

Late 20s, -$6000 (more if you count my student loans, though my parents are paying that). It doesn't help that my previous job made ~$55k and rent in my city is $1.8k for a studio. Getting better now that my job pays more and my rent is lower (girlfriends ftw).

"There's nothing you can do if you're too scared to try." - Nickel Creek
 
N0DuckingWay:

Late 20s, -$6000 (more if you count my student loans, though my parents are paying that). It doesn't help that my previous job made ~$55k and rent in my city is $1.8k for a studio. Getting better now that my job pays more and my rent is lower (girlfriends ftw).

You got a new girlfriend and you think your expenses are going to DECREASE?

Please explain.

 

26 y/o. Had about $10k in cash until I started my first job at 22. Saved none of my first year, about 5% of 2nd year, 10% of 3rd year, 50% of 4th year, currently saving about 60% of my 5th year comp.

My living expenses have not really changed since I started working whilst income has gone up c.140%, so all incremental income goes straight to investments (save from a few one-off treats here and there).

 

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