How we are (more than) making it in a HCOL

View from my previous apartment in Williamsburg, Brooklyn, NY on Christmas Eve[/caption] It’s definitely easier to attain financial independence (FI) faster when you live in a LCOL (low cost of living) with a high income.  Is it out the window when you live in a HCOL (high cost of living) – like Brooklyn, NYC (where I live) or the San Francisco Bay Area? Of course not. But some thing(s) need to give if you want to reach it in a reasonable amount of time. So, how are we able to put away > $80,000 a year towards FI, pay down loans aggressively, be able to afford child care in this expensive city AND still be able to enjoy life? 1. We keep housing costs as low as possible This is probably the largest ticket item for those of us in a HCOL. A modern (meaning it includes a dishwasher and laundry in-unit) 2 bedroom apartment in a great part of Brooklyn will be a minimum of $4,000 for likely < 1,000 sq. ft. Manhattan? Try $5,000 and likely much more for any decent neighborhood. What about buying? Try $1 mill for a tiny 1 bedroom (again, if you’re lucky) and upwards to $2 million+ for a 2+ bedroom apartment. That doesn’t include the monthly maintenance fee. Want a parking spot? Extra.

“If you will live like no one else, later you can live like no one else.” – Dave Ramsey

I am not a huge fan of Dave Ramsey, but his basic mantras will serve most people very well.  M and I live in a tiny apartment (730 sq ft). M owns this apartment and luckily bought in the early 2000s for a whopping down payment of < $20,000. No, there isn’t a missing zero. It is a true two bedroom, one bathroom apartment. We have a dishwasher and our own laundry – which in NYC is a luxury. With the upcoming baby (and our bonus son that we have sporadically during the school year), many have told us that we have to upgrade. Nope. My brother and I attended high school living in a similar apartment (sharing a room). This won’t be “forever” but we are doing our best to stay here until my student loans are paid off by end of 2020 or earlier. We will finish paying off M’s car loan (I drive to work) in the next month or so leaving just the mortgage on his end. We street park (free). Our total housing costs (mortgage + taxes + condo fee) is ~5% of our 2017 annual gross income.

2. We chose a financially like-minded partner 

Aka choose your spouse wisely. OK, so we didn’t exactly do this on purpose, but sorta (at least on my end)? About 1-2 months into dating M, I asked him about his finances. Specifically, I asked him how much money he had in his retirement accounts and what debt(s) he had. I also knew that he wasn’t a big spender. As things became more serious we discussed our shared financial goals for the present and future. We did this before we got engaged.

2. We make savings automatic

My 403(b) and 457(b), and his 403(b) contributions are automatically deducted from our paychecks. We never see the money. Since these are all pre-tax contributions, we don’t really miss it vs. not doing this automatically and seeing if “we can afford to save.” We do our best to fund the Roth IRAs early in the year so we don’t miss it and are not tempted to spend the money instead.

3. We (mostly) stick to a budget

I use YNAB to budget. I haven’t added M’s expenses yet but I am able to track our overall spending in eMoney (web based software we use with our FA). I’ve been using YNAB for over 2 years now. I was a spendaholic and this is my rehab.

4. We don’t buy (much) stuff

We aren’t minimalists, but we both agreed that stuff does not make us happy. We also don’t have room for the stuff anyway (see above).

5.  We have decided on the 1-2 things we really enjoy and don’t hesitate to spend on it

Luckily, we both really enjoy eating out & cooking good food and traveling. Sure, we could nix all vacations and eat rice and beans until loans are paid off  but it’s important to enjoy life now too. We do try to meal plan for the week and we generally bring lunch to work. We budget for all of this.

[caption id="attachment_1137" align="aligncenter" width="402"] Lots of wristbands to get into Panorama 2016[/caption]

Another thing we both really enjoy is attending live concerts of our favorite bands (mainly indie pop/rock/some electronic). Luckily, NYC is almost always a stop on anyone’s tour. Not to mention home of some of the big summer festivals. Confession: I have not paid for a single concert since M & I met. One of the big perks of M’s job is free (and VIP) access to almost any concert we want to go to. We attended Panorama last summer. In the past several months, we have seen the Shins, the xx, Sigur Ros, Frightened Rabbit, M83, Tame Impala, Sia, the 1975s, Mumford and Sons, and Flume to name a few.

Bottom line – we live well below our means.

How are you making it in a HCOL? Comment below.


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