What I’m Doing Right

Over the past two months, I’ve started to work and suddenly I have money deposited to my bank account every two weeks. I’m still trying to figure out how this whole money for time thing happens, but it’s fantastic, I recommend that everyone try it.

I’ve started to track my expenses using Mint.com, and while I these first two months I’ve had to pay for one-time expenses such as dishes, a bed, and deposit on our apartment, I’m starting to see some patterns in my spending habits. I have very low expenses, especially for someone living in Dupont Circle, and I envision myself saving more than I originally expected.

Expenses

I pay about $700 per month for rent, including utilities, and I live with 3 roommates, each with his own room, so cable and Internet are very low, especially with the package we were able to negotiate with Comcast. I take the Metro to work, so I don’t spend any money on car payments or gas, and I pay for the Metro with pre-tax money, so I never see it, which helps because I also don’t notice that it’s missing. I’ve never been one to lift weights, so the exercise I do is with my running outside and basketball at the park, which is nice because around here membership is upwards of $50 a month. In addition, I have 10% of my pay going to a Roth 401(k), and even after that I seem to have more than enough money to play around with.

Of course, I can’t just save the rest of it. But I view my student loans separately, because they have always been that way. To me, it seems different from credit card debt because it was an investment and now I am reaping the rewards, whereas with credit card debt, it accrues interest at a high rate while not giving anything back. I currently have approximately $25,000 in outstanding student loans, at fairly low rates, and by the end of the month, I will have about $24,000 outstanding at a variable 3%. Not terrible, and I think I could pay off a few hundred dollars a month and still have a healthy amount left over to save and possibly invest, but maybe that’s best saved for another post.

Savings

I think people make a big deal out of what their take home pay is and how much they’re spending on benefits. I’ve had the opposite experience. All of these benefits come out of my pay before the money is deposited to my bank account, so I’m learning right off the bat to budget with the money I do have and I don’t worry about anything else. For me, I spend less than 30% of my take home pay on rent, and food and dining have seemed to hover somewhere near 10%. Add in another 10-20% for shopping, movies, entertainment, etc, and I still have 40-50% of my after-tax, after benefits, after retirement savings, take home pay. I think I’m in a great position, and after building up an emergency fund, I’ll have some interesting choices to make.

There are several reasons I am able to save so much of my salary. In addition to paying next to nothing for rent and utilities, I keep kosher, which forces me to bring lunch to work every day. I get asked to lunch frequently, and always having an excuse not to go saves me a bunch of money each week. Of course, I feel like I’m missing out a little, but it’s hard to deny that saving $20-$30 a week (~$150 a month) adds up. Savings is part of my lifestyle and not wasting money is something I try to practice. Still, I allow myself to enjoy life quite a bit, as my new Sabathia jersey can attest and my recent trip to the Yankees-Orioles game.

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