Move to a big city without going broke
Deciding where to live -- and with whom -- can have a huge effect on how much money you have left to enjoy the urban amenities all around you.
A move to a new city, and a major one at that, however, can cost more than one might expect, so one must approach the situation with a savings mentality. Yes, you save money on one-time costs like furniture or moving expenses , but there are bigger ways to save over the long-term. I want to share two major budgeting tips that helped me achieve flexibility, more fun and financial freedom.
Lower your fixed costs
I figured out how much it would cost to live in Manhattan, where I heard that all the action took place. Living in a studio downtown with electricity, gas for the apartment, Internet, cable and a train card, I was already at $2,500 every month.
When I tacked on my student loans and credit card payments, I would have to shell out an additional $600. And that calculation didn’t take into consideration my other bills, such as my gym membership, cellphone and tithing. That was an additional $400. If I wanted to ever eat, hang out with friends around the city or buy new clothes, I figured out that I either needed more income or to cut my expenses.
Since earning more income was not a realistic option, my aunt suggested that I live in Brooklyn. At the time (2002), Brooklyn was considered to be away from all the action, but much cheaper in terms of rent, groceries and the gym. Now, certain parts of Brooklyn are as expensive as Manhattan, but there are still some neighborhoods where you can get a bargain.
Regardless of the city, however, one budgeting tip that will serve you well is to lower your rent amount by living in a less expensive part of town.
In my case, I was farther from work. Here’s the downside -- my 25-minute commute was more like 50 minutes. It was especially tough when I had to go in for early meetings or just wanted to crawl into bed after a hard day at work. But I did get the opportunity to read and sleep on the train. I had to sacrifice convenience because I just could not afford to live in Manhattan. Looking back, this trade-off worked well because it also allowed me to save a lot of money.
Live with roommates
I know -- the whole point of living on your own is to live on your own. But if you can give up a little space to a few roomies, you’ll put yourself in a better financial position. I ended up living with two roommates, both friends from college, and we evenly split a three-bedroom apartment in Park Slope for $3,000. I picked my roommates wisely; I chose friends with values and priorities similar to mine.
Also keep in mind that when you decide to move in with roommates, many landlords will check the credit of all the roommates signing the lease. When we moved into our place, we all had different credit histories. Fortunately, our landlord thought that our credit scores were good enough to rent the apartment to us. Make sure you or your potential roommates look for easy ways to build credit.
Living with roommates, therefore, is a budgeting tip that will not only lower your rent cost, but some other key living expenses as well. For instance, we split several bills -- groceries, electricity, cable and heat. As a result, I put that extra money to getting a great gym membership and exploring new restaurants in the neighborhood. I had way more flexibility because I was not spending all my money on living.
On the downside, there were always people at home when I got there. Usually I did not mind, but sometimes I just wanted to have the whole space to myself. In those moments, I took a walk. I didn’t have to struggle living paycheck to paycheck through my entire time in NYC. And, I still got that New York experience -- working, hanging out, and enjoying that I dreamed about for so long.
If you follow even one of these tips, you can be on your way to flexibility, more fun, and financial freedom in the city of your choice.
More from Credit.com:
- How new grads should manage their credit cards
- New grads: Want a job? Move!
- A financial checklist for new college grads
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