What My Life Looked Like on a $58K Income in NYC

I started writing this weeks ago, but then I got self-conscious and decided to scrap it. Doubts told me that this story wasn’t worth talking about. Because $58k is an absurd amount of money for a single person with no real responsibilities. Even in New York City. At least to me. And wouldn’t that be kind of insulting to people who make way less?

But then I came across a blog post that said that saving money on a $50k salary required making “serious sacrifices.”

Then I saw another comment about whether or not it’s possible to save in NYC: “You can do it with $85k by eating ramen and living with roommates.”

And then another: “Less than $60k is below the poverty line…”

For real?

So I’ve changed my mind.

I’ve never actually sat down and calculated how much I saved on that first New York income. But maybe I WAS barely scraping by when I made a lot less. Because I live in a place that’s designed to take my money away. I keep a spreadsheet of restaurants I want to try. Housing costs make me want to cry. I’ve spent $20 on a single cocktail. All ways to throw my money down the toilet.

In one of the most expensive cities in the world, is it possible to save on a median-ish income?

There are plenty of posts that talk about spending and saving in big cities, but they don’t show the numbers, and you know, that’s how we do things here.

My first full year living in New York City, I made about $58,000. Considering the industry I work in, I make more money in NYC than I would anywhere else. Using Nerdwallet’s cost of living calculator, that income bought me a lifestyle that cost around the $30-$40k range in most other places.

$58k in NYC =
$38k in Miami, FL
$34k in Allentown, PA
$39k in Chicago, IL
$29k in Tulsa, OK
$34k in Dallas, TX
$47k in Los Angeles, CA

If I adjust for inflation, that’s about $65k in 2018. It’s also important to note that my job was not entry level. I’d been working for a few years already and had some skills to bring to the table.

Adjusting for cost of living is one thing, but then there’s the other question: What qualifies for a “good” salary in NYC? That’s debatable, but as an anecdotal data point, my roommate’s first post-grad offer was $50k for a job title that had the word “junior” in it. I thought that was high, especially as my first salaried job was $33k.

Without further ado, it’s time to get financially NUDE (because I hate the word “naked”).

Income

Let’s take it from the top:

I took home about $3,496 per month or $41,952 annually.

I had to crunch the numbers a couple times, because I was shocked that $16,047 of my income went to taxes and deductions. Almost 30%! But it makes sense, because the $58,000 was cobbled together by multiple jobs: I worked one contract job I got through a staffing agency, and two freelancer jobs. This means no 401k plan to contribute pre-tax dollars to.

Being a contract employee also meant that I didn’t have the benefits that regular salaried workers do: no paid vacation, no sick days, no 401k match or health insurance through work.

I made $4,000 in 15 minutes.

I was offered that contract job for $25 an hour. I would have been happy with $27, so I asked for $30 an hour without giving an explanation for why. They settled at the $27. The worst they could have said was no. And I made myself $4,000 richer. Negotiation guys, DO IT. It’s the easiest money you’ll ever make, so don’t forgo those opportunities when they come your way.

I also did random freelance work for two old companies, adding another $4,000 to my income. It was absolutely mind-numbing work, but I didn’t think my income was high enough to poo-poo side hustle opportunities. It also helped that I was in a long-distance relationship at the time, so I had more nights to myself to spend on freelance projects.

Debt

$5,781 of my money went to student loans.

Paid them off that year, in three lump sums. As soon as my income gave me some breathing room, I paid more than the $169 minimum payments, so I was always ahead of schedule.

I had $0 in credit card debt.

My days of credit card debt were behind me. I charged everything to my credit cards, but paid them off in full every month.

Savings

I saved $14,000 of my take-home pay.

I was well aware about my 401k shortcomings, so I took extra care to actively save on my own.

For 8 months, I saved $1,500 per month, so $12,000 for the year.

Starting in August, I put away an extra $100 per week, adding another $2,000 to savings.

I then transferred $5,000 of those savings to my IRA investment account.

Lifestyle

$10,632 went to rent and utilities.

I couldn’t justify my own place on my income. I paid between $800 and $848 per month, which ended up being 25% of my take-home pay. This was accidentally the ideal income-to-housing ratio, but only because I always tried to find the cheapest housing option without sacrificing things I cared about: proximity to transportation, social activities within walking distance, natural light, wood floors.

I also chose to live in a vibrant neighborhood, so when my roommates got on my nerves there were plenty of cafes to escape to.

I spent $2,808 on actual food…

My grocery bills were really low, about $107 per month, because there were other things I valued more than the experience of eating food. Home-cooked meals were often simple, and I ate a variation of the same thing all the time.

But I bought work lunches a few times a week. I worked in Soho, and well, you can imagine all the food options around there are hard to resist.

Socializing with friends usually meant eating out once or twice per month, so $777 went to restaurants, and a surprisingly low $145 on drinks (happy hours, what?).

And about $500 on fake food.

When I look at my Mint account, there is a scarily high number of transactions from CVS, Rite Aid and Walgreens. I definitely wasn’t buying medical stuff. I was buying processed foods like Kraft mac and cheese, Campbell’s soups, and Ben and Jerry’s ice cream. Rite Aid was right outside my subway stop, so I’d peruse the flyers on the way and stock up on items that were on sale.

I spent almost as much money on clothes as I did on food. $2,905, in fact.

I shopped at more budget-friendly places like Urban Outfitters, Zara and J. Crew. A lot of it was really junky. But the handful of items I got on sale from Bloomingdale’s, Saks and Barneys were not.

Oh yeah, and remember I worked in Soho? I snuck out to quite a few sample sales on my lunch break.

I spent $538 on healthcare.

I spent $30 on a doctor visit, but $401 on eye care, and $107 on fitness.

I had no health insurance.

I spent months researching several health insurance options, asking freelancer friends what kind of insurance they had, but decided against of all them for various reasons. Some just seemed exorbitantly expensive for the benefits you got. I’m very lucky that nothing ever happened to me.

But by asking around, I found a few clinics I could go to and pay based on a sliding scale if I needed to.

Transportation costs were a measly $1,645.

One big advantage of city life is the transportation savings. This includes my monthly subway pass ($104 per month) and $15 sketchy Chinatown bus trips to see friends and family. In a city with excellent public transportation, I took cabs almost never. If I break that down, it was a paltry $137 per month, which is much lower than your standard car payments and insurance costs.

I still had money leftover, so I took two trips.

They weren’t nearly as extravagant as the trips I take now, but I still got out of the country twice: a week in Mexico for $1,011 and $704 on a long weekend in Montreal.

I even found $611 for personal enrichment.

I thought it would be neat to learn how to make my own jewelry at FIT. Little did I know, it would take me all semester to make one small skull pin…I literally chiseled that thing out with a saw!

And lastly, $585 on entertainment.

Deal websites that were all the rage, and I signed up for all of them: ScoutMob, Buy With Me, Ideelist. In NYC, you don’t have to pay much to have fun. I remember back in Boston, I could count on my hand which bars and clubs didn’t charge a cover. But in NYC you could roll up and walk into most places for free. While housing is expensive, there are many things in New York City that are a much better deal than anywhere else.

Zero people accused me of being cheap or frugal.

No one ever called me frugal, and I never said no to activities. On the outside, I was living a normal lifestyle just like most other people. But on the inside, I was doing things a little differently. Just being more intentional about how I spent my money.

How It All Added Up

Here you can see that taxes were my biggest expense.

And here’s how I spent my take-home pay. Even then I didn’t prescribe to the 50-30-20 budget. I spent 37% on needs, 16% on wants, and 47% on savings. Sixteen percent on ‘wants’ seems really low, but what if you truly don’t want for that much?

Key Observations

The $8,000 income increase was KEY. If I didn’t negotiate and find side hustles, I would have only saved about 15% of my take-home pay. I also got lucky with the side hustles and being at a point in my life where I had the energy to actually do them.

Taxes were high. In addition to federal taxes I paid state and city taxes, plus self-employment taxes from those side hustle jobs. And no 401k contributions to reduce my taxable income. Even though I make a lot more money now, it’s crazy that I actually pay about the same amount of taxes…

Opting out of health insurance was royally stupid. The king of bonehead decisions. But the insurance options available to me at the time were terrible. So terrible I thought it might be better to go without insurance than pay for one that hardly covered anything at all. It was a personal decision, and I don’t advocate for people to follow my example in this scenario.

I can’t think of a single thing that I wanted to buy but couldn’t afford, so I don’t think more money would have made me much happier. The student loans cramped my style, but I kept my fixed costs low, so I could still spend on the one or two discretionary categories I cared about.

But I can say that having more money would have helped me reach financial goals much more quickly. The following year I funneled all the extra money I now had from the paid-off student loans right into savings.

The savings seeds were planted. Not everybody can save 50% of their income. But they can try to work their way up to it. If I was debt-free I would have been able to save 47% of my take-home pay. Not too shabby, right? And if I had access to a 401k program, I probably could have gotten over that 50% mark. But those weren’t the circumstances I was dealing with. That was OK, because I knew those circumstances were not permanent. I WOULD find another job. A better one. A few months later, I got a salaried job at a large company that offered great benefits, like 6% 401k matches, 4 weeks of paid vacation and profit shares, to boot!

Maybe some of you think my life was sad. That’s OK. Because I don’t live my life for other people. And for others, the comparison game is a trap. You might see someone saving twice as much as you and feel like that will never happen for you. But remember that that person had to start somewhere, too. Most people don’t start out making six figures right out of school. It can take years and years. So hopefully these numbers help you see how it’s possible to make progress, even if you make less than an “ideal” income.