January 11, 2006
New Year's Resolution... Saving
One of my New Year's Resolutions is to save more money. The problem is I have a modest salary, and it takes all of my paycheck to pay my rent and live life in New York. Can you help me think of simple ways to save more money, short of resorting to illegal measures?
According to CNN, New York City is indeed the most expensive city in the U.S. And Salary.com states that "Salaries in New York City are 17% higher than the national average, but the cost of living is 94% higher. This makes NYC possibly the hardest place to get your bank account into the black. "
So, our first piece of advice is: Try not to beat yourself up about having less money saved than your counterparts in other cities. It really is harder in NYC. And we hate it when we read articles about saving money that say stupid things like "Just stop buying designer shoes and cappucinos every day!" because we don't do that in the first place. So, assuming you're free of designer shoes and fancy coffee, how can you actually save some pennies? We suggest that if your job offers you a retirement savings plan (like a 401k or a 403b) that you take advantage of it. Your money gets taken out of your paycheck directly, and you can't touch it (with certain exceptions) so there's no temptation to dip into your savings. Even if you only start off with a small amount, it's better than nothing. If you don't have access to a savings plan through your job, at the very least you should set up a savings account that is linked to your checking account and have a certain amount automatically transferred into the savings account each month. Although you might not be frittering your money away on daily lattes, most of us do have one or two areas where we could cut back on spending a little. Again, even if you start with a small amount, it's still a good start. The interest rate on your savings account is likely to be low, though, so once you have enough saved up for a minimum investment, consider investing some of your savings in an IRA or mutual fund.
For more tips on saving, check out the website Choosetosave.org. They have savings tips, savings calculators, holiday savings tips (although we disagree with "knit a blanket or sweater" as a way to save money on a gift for someone - have you seen the price of yarn lately?!), and all sorts of tools to keep you motivated to spend less than you have and save more.
Need advice? Ask Gothamist! E-mail ask(at)gothamist(dot)com.
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once you have some cash, rather than keeping it in your checking account, open a low-minimum savings account, emigrant and hsbc offer 4% savings accounts, gmac bank gives you 4.3%. interest-checking is a waste in my opinion because those accounts usually pay around 1%.
if you have a little bit more cash around, consider treasury bonds. they pay more than the savings and CD accounts do, but like CDs you have to lock your money in for some time.
btw, not empty advice, this is how i manage my money, among other ways.
I'd suggest looking into an ING savings account. Everything is done online and you can have them take directly every week or month from your checking account. They are constantly increasing their interest rates, which are currently 3-4%. You can also get CDs through them at a high interest rate. This is a conserative way to save if you are scared of playing the stock market.
See if you have a friend that can send you an invitation to ING because you will both get money out of the deal.
http://home.ingdirect.com/
ING does not pay as much, their current rate is 3.8% and if you can get 4%, why not do it?
get rid of cable or reduce your package and just use netflix. it's a way better value--you're only paying for what you want to watch--and cheaper overall, too. switch to the pay-per-call option for your landline if you make less than 200 calls per month. cook a lot on the weekend and freeze it for the week.
dude - where/how are you getting a cable modem at only $35/month? i use time warner (i don't do cable) and my monthly bill is $60. did you get a special deal? package deal? please advise!
One suggestion is avoid eating out. It is cheaper to make food at home and to take food to work.
dude - it totals out to 59.95 or so... probably includes taxes and such. will take a look at my bills and see if i'm getting hosed. it could be that i'm not subscribing in addition to cable TV. thanks, though.
Ladies - try to find the drugstore analog for your department store beauty products. Many drugstores have a return policy if you hate what you buy. I also have gotten very good haircuts from the newer stylists who practice on you at Bumble & Bumble. When I went there last, a cut was free and color was $20.
I was pricing out Verizon DSL vs. TW cable modem service this week. If you don't get cable TV, TW charges $60/month for cable Internet. It's $45/month if you have cable TV.
Verizon charges $22/month for DSL for 4 months, then $30/month after that, with a 1-year contract. With Verizon, you have to get phone service from them as well, but you don't have to get a full package. The cheapest service is $8.61/month for dial tone and you pay 9 cents a call. Verizon also charges you a couple of one-time connection fees. So in this case, DSL works out to be a better deal, at roughly $40/month (assuming taxes and fees). And no one says you have to use the land line if you would rather use your cell phone as your primary phone. I can see the benefit of having the cheapo land line in case of emergencies like the blackout, where cell phone towers didn't work but old phone lines did.
I am calling some BS on the fact that everything is cheaper outside of NYC. I recently moved to NC after ten years in NYC. Yes, I did take exactly a 15% base salary cut but it is not like my expenses are any cheaper. Cell phones, cable and internet all cost the same no matter where you live. We lived in Brooklyn and owned a car. The insurance was more than insuring two cars down here but have you seen the price of gas lately? I spend about $300 a month on gas and have repairs and a car payment. Yes, rent is cheaper but if you want a place to raise a family you are still up there. I don't go out to eat as much but that is because I am now a family man. There is no lack of really nice restaurants and I certainly could spend some serious dinero eating out every day if I wanted. I don't drink as much but that is because I don't want to crash my car.
Towns outside of NYC have gotten a little more 'worldly' in the decade since I left. Things are nicer and cost more. If I was living on my NYC salary I would be saving but the cut in pay puts me at break even.
I swear by this: every day take any loose change from your pocket or purse and put in a jar. Don't dip into it for change or if you do, replace needed change with dollar bills. I save approximately $300 per year doing this.
Most of the problem's regarding savings can be linked to the question "Where does all my money go?" I find that keeping track of every cent I spent helps me not to spend so much. Get a receipt of EVERYTHING you buy including bagels and packs of gum and metrocards. Then record it all in a notebook or in an Excel spreadsheet and categorise it. The categories like "Food" and "Entertainment" are probably the places that can sink your budget the fastest, but categories like "transport" or "business expenses" may be tax deductible or reimbursable from your employer. Another reason to save the receipt.
Once you keep track of everything for a few months, you'll be able to see patterns and then decide where to make the cuts. You can say to yourself "I spent $500 last month on food, this month I want to only spen $450" which is totally reasonable, because thats only about 3 beers and a sandwich. Well, not quite, but you know what I mean.
brinx - sounds nice, but aren't you just spending $300 more a year giving clerks paper money in lieu of change? however, it does make sense that instead of including your change into a tip at a restaurant, effectively rounding-up, that might add up to actual savings...
Great advice on Bumble and bumble! Do you have to go on a special night to get the free cut, or just ask for a stylist in training?
I second the Netflix and the library recommendation. Once you sign up for a library card, you can go to leopac.nypl.org and use the hold system just like Netflix -- you're allowed to request up to 15 items at a time, and you can renew online as well. In fact, when I want the latest book, I check out the reviews on Amazon, then put it on hold at the NYPL; ditto DVDs and CDs. The NYPL usually has the latest art films, but Hollywood films might take a few months to a year, and the latest TV series are hard to get; they are also a bit slow on indie music, but right now I've got M.I.A. and Sufjan Stevens on hold.
JH et al - just call Bumble and find out the mornings they're giving classes (I think that's how they put it). Ditto on the library, though the fines are a b***** if you're not prompt with that kind of thing. You can't toss a DVD in the book drop, which means you have to go during library hours.
A little thing - buying beer at the grocery store is about 1/2 the price of a deli. If you have even a few hours to get it cold before a party or something, you can get a good 6-pack on sale for $5.99 at most places.
I'm c***** as hell about that kind of thing.
yes, as dude was saying, you can get cable internet from earhlink for $41 a month.
it's still over time warner's cables but it's cheaper. but if you are getting cable tv, it might be cheaper to get internet with time warner.
There are three advantages to getting a cable modem through Earthlink:
- you don't have to subscribe to cable tv in order to get the $41 rate
- for a while they've had a promotion where you get the first 6 mos for $30/each (see earthlink.net/cable)
- you don't have to deal with Verizon (you do have to deal with Time Warner, but they aren't quite as bad in my experience)
Earthlink (which run their cable connection on TW) charges about $41 and change after the promotional stuff ($19.99 for 2 months or some such) though if you're not hung up on the download speed numbers Verizon DSL may be a better deal. I also empty out my change every night though I do ferret out the quarters when I need to do my laundry but just from pennies alone I was able to buy a new pair of pants. I really find no need to have a landline at all unless I had a business or someone else was paying for it like an employer. Just using the cell alone is enough for me. Without even getting all my receipts I know my biggest expense is food from breakfast and lunch. I'm sure if I brownbag it every day I'll be able to save a bunch but I'm just way too lazy to make my lunch.
I expect that someone will soon be recommending which dumpsters have the freshest produce.
Good one, Ralph. You made me laugh. Knock off early.
Skip Barnes & Noble and buy newish books for $1-2 at some choice shops around the city:
Alabaster (4th Ave)
Strand
Salvation Army (4th Ave)
Thrift Store (3rd Ave and 28th St), 2nd Ave, etc.
Whee! I find recent/newish books all the time for $1 or less.
I also trade books online at paperbackswap.com and my persona favorite bookcrossing.com (where you can track your books and read future reader's comments about them).
I'm with brinx, saving change adds up to big bucks over the years. My rule of thumb is that any change that makes it back to my apartment goes into a change jar. I use old coffee cans, they stack nicely and the weight of a full can is manageable. If you want to be fancy (or if you find yourself baked with a bunch of wrapping paper on hand) you can spruce up the can so it not such an eyesore.
There are a lot of sites that can help you learn to save money better. My favorite is savingadvice.com because they have journals where you can write what you're doing and read what others are doing. But there are many more. Just do a search for "save money" or "personal finance"
The best bank account for me is PayPal -- they issue you a normal debit Mastercard, give you over 4% interest on your balance (it's currently 4.3%), and give you 1.5% cash back anytime you use your debit card as a credit card (meaning anytime you use it without a pin number -- either any online purchase, or any in-person purchase you make telling the cashier it's credit not debit).
The main drawback is that PayPal is not FDIC insured (and that it can't be a paper checking account). However they're so well-established at this point that I feel fine trusting them with my (not huge) balance and maintaining my old bank account just for easy cashing & writing of paper checks.
PayPal is not good (in my opinion) for accepting credit card pmts from strangers, e.g. if you're selling something from your web site, because they have the right to freeze your account (and not refund the money until 60 days have passed) if anyone tries to scam you with a stolen card.
I highly recommend using it as a bank account, though.
Three words: Pay Yourself First.
Set up a separate bank acct/mutual funds account and stick 10-20% of you paycheck in it every payday. With less cash on hand, you cannot help but spend less. This is a lot easier and more proactive than putting pennies in a jar. Cut up your credit cards and think twice before you buy anything. Period.
I'm not sure which metrics they are using to calculate these percentages, but I'm not sure they are representing the whole picture. Sure, aggregate insurance, housing, electricity and food prices (unless you shop Fresh Direct which has some great prices) are obviously higher. But I agree with others here who note that utilities like cable and telephone are just as expensive in other places. When I moved to Manhattan I sold my car. So I no longer had car payments nor did I have insurance, gas and upkeep to worry about. Gas prices high? Not if you don't have a car. I found taxis to be as good a value as any other metropolitan city (with the added benefit that most NYC cab drivers have at least a clue as to where they are going). And subways don't seem to be much cheaper elsewhere. NYC has bargains everywhere you look: Gray's Papaya hotdogs, cheap cut flowers at every bodega in the City, summer fruit carts, donation-only entrance at the Metropolitan Museum. Sure, some po-dunk town in a red state may have lower cost of living, but (with all due respect to people in the red states) one lives a lot more in New York City.
Real estate is what makes NYC so outrageously expensive - it is really, really hard to buy something (even in the far outerboroughs) and the required down payment is a lot higher than in other places. I'm sure San Francisco/Boston/etc. have the same problem, but the rent/own thing to me seems to be what sets these cities apart from the rest of the country. What is entirely feasible elsewhere is unthinkable for many NYC residents.
i may be in the minority (as i usually am as an asian american) but shopping in chinatown for fish, produce and veggies beats out shopping at any local supermarket or at wholefoods, which is rediculously expensive and so what if it's organic. i cannot afford $5 for a carton of eggs or a bunch of scallion when i'm struggling to make rent. chinatown has the best and freshest veggies and seafood. plus you'll be supporting local farmers and businesses that are still suffering post 9/11.
brewing coffee at home is a good way to save too. if you buy one cup of coffee per day from the bodega or even worst, starbucks, that's anywhere between $1 to $3/day. that's $5 to $15/week. that's $20 to $60/month! imagine if you drink more than one cup per day! if you buy one can of coffee on sale (caribe is usually on sale at the local bodega for $1.50/can and it's good and strong) that can last you up to one month. that's $1.50 for one month!
lastly, i used to work in the skincare/cosmetics industry so i know the kinds of mark up in brand name skincare, haircare and cosmetics. you're paying $10/bottle NOT for the amazing ingredients the product will do for your skin, you're paying for advertising, marketing and packaging. you can get the same ingredients in generic brand skin/hair care products as well as in cosmetics. don't be fooled by the cosmetics giants. the $20 you spend on that last mac eyeliner is going towards paying for the glitzy parties they throw when they launch new products. and you're not even invited to the party.