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How to live comfortably in NYC on a $30k per year salary

image credit: Grufnik

Lately, there’ve been a lot of news articles talking about people who have lived comfortably on seemingly small amounts of money such as this journalist’s article on NYC living and this coverage of Mr. Money Mustache’s retirement at age 30.  A lot of people I know have been arguing that the people cited in these articles must live really uncomfortable lives, and I know a lot of entrepreneurs who have a hard time making ends meet even in a small suburb (such as Mountain View) let alone a big city.  Frankly, it’s pretty easy to live comfortably in a big city like NYC on a < $30k per year salary.  Here’s how I did this. 

Background

image credit: chrissam42

I lived in Tokyo (supposedly the most expensive city in the world according to the Economics Intelligence Unit) right after college graduation from 2004-2005 for almost a year.  All numbers in this post are amortized for 1 year of living.  I actually did not optimize for saving or scrimping at ALL and yet accidentally saved a lot of money.  

Breakdown of my expenses (per month)

• $1000 housing + gas/water/electricity
• $600 food + drinks
• $50 cell phone
• $40 one-time furnishings (divided by 12 months in a year)
• $50 toiletries
• $60 vacation (I took one $700 vacation while there)
• $300 misc entertainment (books, cds, day trips)

= $2100 per month or $25,200 per year

Including taxes/medicare/social security, that comes out to a $30k per year salary.  You might have some question marks about these numbers, so let’s dive in.

1) I lived close to work

When I moved to Tokyo, my goal was to optimize for happiness, not savings.  Time and again, studies show that commutes make people miserable.  In some cases, you actually know you’re miserable in your commute, because you are cursing at all the other people around you.  But, at other times, commute-frustration is more subtle.  It manifests itself in the frustration of having wasted 1-2 hours of your day that you don’t realize you could otherwise have.  

image credit: tokyoform

Living close to work is a big part of my own happiness, I’ve found.  So, when I got to Tokyo, I paid $1000 to live in a nice part of the heart of the city (in Meguro).  I would take the train, ride my bike, or walk to work.  (My company covered my train tickets so if I were really optimizing for savings, the right thing to have done would’ve been to live far away in a cheap place and commute in saving even more money)

image credit: GaijinSeb

My apartment was 5 years new and a few minutes walk from the train station.  So why was my apartment so cheap?  Well, it was only 300 sqft -  just slightly bigger than my dorm room in college.  I never threw parties there, but in big cities, people go out to party – why would you stay at home?  When I was deciding on whether to get a bigger place, I knew that in the end I would not be spending most of my time at my apartment, because I would either be at work or out and that getting a bigger place wouldn’t increase my happiness.  I also underestimated how much of a perk a small apartment could be: cleaning and tidying only took ten minutes each week!  

2) I cooked a lot

My food/drink expenditures were really low, because I mostly cooked.  The first month I was in Tokyo, I ate out A LOT.  Every meal.  And then I felt awful.  Those obento boxes actually have a lot of grease.  And even a sushi dinner can make you feel terrible, because many meals don’t have a lot of vegetables.  So, I started to cook out of health reasons, which ended up saving me a lot of money.  I spent about $100-200 per month on groceries and would cook up a storm of veggies and meats each Sunday that I would eat for lunch and dinner on the weekdays.  

image credit: willposh

I went out every Friday and Saturday, and spent about $100 each weekend on eating out, drinking, karaoking.  I had some friends who were bankers who would go out a lot more and spend a lot more money.  I would often join them a bit later – such as after dinner or at the 2nd bar, because spending money on an extra 3 cocktails would not have made me feel happier or better about myself.  

3) I bought furniture from rich ex-pats

image credit: epSos.de

This is a tip that I don’t read about at all on money-focused blogs.  The best way to get good stuff is to buy them slightly used from rich people.  Major cities are great for finding rich ex-pats who are selling stuff for cheap, because they are always trying to get rid of their stuff in a hurry.  Heck, I was at a party at the US embassy once, and they were giving away kimonos worth thousands of dollars!

I used the Tokyo Metropolis to buy my TV, bed, washer/dryer, microwave, rice cooker, utensils – basically everything!  No item cost me more than $50, and many items were free since people were in a hurry to leave.  So I furnished my apartment for well under $500, which comes out to $40 per month.  The nice thing about living in a rich area is that I was often close enough to pick up these items and carry them on the subway or get help with a drop-off.  

I also made my own decorations.  I printed photos of my friends and family and hung those on my walls.  I bought material to make my own curtains for $20, and hung those using lots of paper clips and pins – they looked like real curtains.  

The general tip here is to be resourceful.  Don’t just blindly buy stuff from a department store.

4) My friend built me a bike for free

The other perk about living in a rich area is that rich people would often throw away nice things that were still functional.  My friend Jason often found really nice mountain bikes worth thousands of dollars in people’s trash and would clean them up and add/change out a few parts.  It was nice of him to give me one of his findings, and honestly, that was the best bike that I’m sure I will ever own!  

image credit: Manic Street Preacher (Note: this was not my bike)

Having a bike then made it easy to explore the city.  Every park and event happening anywhere in the city was then easily accessible.  One of the best investments for happiness, exploring, and finding very cool things.  

5) I didn’t have a smart phone or internet at home

This is a bit ironic, since I run an internet company now.  I had meant to get internet installed at my apartment but ended up spending so much time either at work or out in the city that I didn’t have time to wait for someone to install my internet at home!  It turned out that I did not miss being connected for an extra 3 hours per day.  

image credit: James Nash

I also had a dumb phone, and frankly, I would revert back to a dumb phone again today if I didn’t have customers I need to keep up with on the weekends.  When you have no car, you have no need for driving directions.  Personal email can always wait.  And, I that’s about all I use a smart phone for.  

tl;dr – this is how you save a lot of money to live comfortably in big cities

• Cook a lot - healthier and saves A LOT of $$
• Buy used things from rich people.  Ex-pats, in particular, give away lots of free, nice stuff
• Bike everywhere - healthier, makes you feel better about yourself, and saves $$
• Hang out with friends who spend the same amount of money as you and when you hang out with friends who spend more money, join them later
• Get a small apartment in an ideal location

What would a larger salary get me?

By optimizing for my happiness, I ended up spending the equivalent of a $30k salary (post taxes, etc) even though I made more money  than that.  I found that when I went out to eat everyday, in the beginning, it was a special treat.  But, then it became a habit – I wasn’t deriving more happiness from going out to eat more – it was becoming something that I just did.  It was also way more unhealthy.  I also tried to buy cool gadgets while in Japan, and at first, the extra gifts for myself made me feel excited, but after a while, I just got used to them.  It was just more stuff that I had.  I could’ve probably spent more money going on vacation, but I didn’t have enough vacation days to go for more than one trip that year, so I couldn’t have spent more in that category either.  

In the end, there wasn’t anything else that I could’ve bought that would’ve made me feel happier.  To be fair, if I had made $30k per year, I would’ve had 0 savings, and that would’ve been problematic in the long-run.  But if the question is whether you can live comfortably on $30k in a big city without scrimping – definitely.

In the end, I found that what increased my happiness wasn’t actually material: meeting new people, spending time with friends, exploring new places in town, and seeing events and cultural activities.  These are all things that make your life comfortable and happy and that money can’t buy.