$100,000 in credit card debt. What to do?

In My Humble Opinion
81

Caitlin and I live off of less than 100k per year, take multiple trips every year, until now paid 2800 a month roughly on housing expenses, raise a child and still go out to eat, have cable, etc... We'll be cutting our expenses by at least 600 a month by moving to Manhattan. :wink: This is at a time when I am about to increase my earnings potential by a significant margin. In 2009 I project that we will break 100k. If someone has trouble with that, either they are dropping 50-100 on food and drinks nearly every night, or have an apartment they can’t afford.

Living in San Francisco is like living in Downtown Manhattan. There have to be cheaper neighborhoods that are a little farther from the main drag. The culture in New York has been to move out into the boroughs. I imagine there are some analogs to this in Oakland or something. I have a hard time believing she can’t cut her rent expenses in San Francisco. If I can find a three bedroom apartment in Manhattan for 2000 a month, there has to be something in San Fran for cheaper than 2300 for a single person.

I understand that standards of living are relative to expected income, but at a certain point you can learn to live cheaply. Living off of 300 a week for general day to day stuff is enough to eat reasonably well, and even go out from time to time. Even in New York or San Fran. I have known people in NYC who make 300 a week as their total take home. It’s not comfortable but it can be done.

BTW, that means that apartment we signed on is in Ft. Tryon in case you hadn’t heard.

82

I know - my dad and stepmom both work there. And yet they choose to live in Queens, precisely because the cost of housing in Manhattan is completely insane. Two experienced professionals (one attorney, one engineer with an MBA), both of whom work long hours, and to them the most fiscally responsible thing to do was have a somewhat longer commute and not have tons of debt.

I have a hard time believing that a single person with an income of $100k can’t find some way to live within her means, even in the Bay Area. Especially when I know a childhood friend of mine is living in SF, and she and her husband are supporting 2 kids on less than that, and still managing to save a down payment for a house. I’ve been to their place, and they aren’t exactly deprived, either.

83

I agree with everything you’re saying here. You can live a decent life on 100k. The only thing is, from where I sit, I wouldn’t exactly call it awesome.

If I had over $100k in credit card debt, I’d be living with four other guys in a LIC shithole to get my life straightened out.

I made about that much at my first job after college. It was no picnic, as I am sure you remember. You were there. :slight_smile:

When are you going to be up in the neighborhood? A fantastic cafe/wine bar opened up overlooking the park about two blocks from me. There is a bottle or two with our names on it.

84

I don’t think anyone was saying that, least of all me. Just that a salary of 100k p/y is not exactly living large in a place like the Bay Area or Manhattan. This does not mean that it is impossible to live within one’s means. It is just not a huge financial achievement. That’s all, really.

85

I have to agree. And I lived in Manhattan for three years making less than 100k and paying close to $2000 in rent. AND I was unemployed for six months!

And what sometimes happens is that people start earning $100k+ a year (say they take that new job with an investment bank or law firm) and they think it’s all the money in the world. They buy a whole bunch of crap or spend a ton of money going out every night and next thing you know, they have a huge credit card bill that they will pay off “as soon as they get their bonus”.

Or if you do buy a place and now have to pay a $5000 mortage, it’s easy to wind up in debt.

Well…unless you live in Manhattan where the median price for a studio is $490,000..

When you account for stuff like repairs, maintenance fees, and the opportunity costs of the difference between renting and owning, it may actually make more economic sense to rent.

Or you could move out to Weekhawken, NJ or someplace, but then you need a car.

86

Oh, I know that. It’s just that sometimes I am boggled by the lack of perspective of people who make well over 6 figures right out of school. One friend of mine in NYC, for example, is a Managing Director now at a big-name investment banking firm in NYC. He has absolutely no idea what the minimum wage is, and probably can’t contemplate having to think twice about, say, taking a cab home from work every night. But at least he can actually afford it.

(Not saying that you’re one of those people, of course - just boggled at how single people who earn $100k can end up with no nest egg. And yeah, having lived in Manhattan as a poor college student, I can’t contemplate wanting to live there unless I were really filthy rich.)

87

I hear you. I was a mostly poor college student and a quite poor grad student in Manhattan. I didn’t make fantastic money straight out of school, and now, I am somewhat closer to mediocre than Managing Director. I’m no great shakes, but on my salary I own an apartment in Manhattan and have no credit card debt. My apartment is not exactly in the West Village, though I am gratified to see that the NY Times dignifies my hood in msmith’s linked article with several honorable mentions. I live in Inwood, spitting distance from the Bronx.

88

It’s not bad if you can walk to work, don’t have to have bars on all the windows and don’t have to smell stale urine all the time. A poster here (unless they are a resident of SF) can’t just “search” for living quarters.

That being said, she can likely shave off some. But the market there has little to do with reality.

Rickjay- I make around $80K and have no plans at all to become “house poor”. Instead of “equity” I have maxed out my 401K and even have an annuity. Mt rent is ridiculously low and I’d have to pay 4X my rent to find a small condo with the same space- although likely nicer amenitys and such true. Why?

89

As you make more money, you start to take things for granted. I remember when I first moved to NYC, I had to pay attention to what I spent each month. I would walk 15 blocks to avoid spending money on cabs. Several years later I don’t think twice about spending $200 on a night out or on work clothes. But I still pay attention to how much I spend and I always pay off my credit card bill each month. But I know a lot of guys making six figures who overextend themselves buying all kinds of crap or dropping money on bottle service at bars or strip clubs.

90

This is pretty much irrelevant to the discussion, though. Sure, if you had a 100K income and were living in the Dubai Hilton, you’d be downright poverty-stricken.

And hell, you might be the poorest person at the Yacht Club.

The fact is, one of the luxuries 100K buys you is the luxury of living in one of the most expensive cities on the planet. Perhaps the message is that if you’re young and trying to save money for a home and a retirement, you need to seriously consider the commute, because it makes better financial sense. Or go looking for a job in a cheaper city.

The hard fact is that $100,000 puts you in the top 7% of the population for personal income. That’s a hell of a lot of money for a single young person. That income can buy you a life in an expensive city, but you’ll have to cut some corners. Or it can buy you an extremely comfortable life in a cheaper city. The decision is yours. But if you choose the expensive city, then complaining that your after-rent income isn’t very high is kind of like bitching at the yacht club that after the yacht payment is made, $100K just doesn’t go very far.

Now obviously there are careers that take you to expensive places, and you just have to suck it up. I buy that argument for the guys working the oil sands, who pay $2000/mo for a half of a basement suite in Ft. MacMurray. They get no benefit from the location - they’d rather be elsewhere. So it’s truly a work expense to live there.

But if I’m living in the City on the Bay, and it’s my favorite city in the world, but it’s hella expensive, then you’ve got to consider that your location is what you chose to spend your money on, rather than saving.

In any event, we’ve shown that even with the rent she’s paying she should be able to save some money. After all, she’s able to pay off the $120,000, which will be harder to do than saving it would have been. So time to learn to save.

91

Shodan currently lists a location of the Milky Way Galaxy. $100,000 is, in fact, quite a bit over the median income for the galaxy taken as a whole, but that’s partially because of very low compensation rates around Deneb and Rigel.

It seems to me that your cousin was pursuing the right strategy, i.e., blind optimism, but just didn’t stick with it long enough. All this call for sacrifice and ascetic living is going to look pretty silly if tomorrow she meets and marries a billionaire with a weak concept of pre-nupts. Or she could go into work tomorrow and see a cool half million dollar bonus on her pay stub. Why should she suffer trying to save money until she is sure she has to?

92

Brilliant!

Tokyo is similar to the Bay Area in that there are well-paying jobs, high rents and excellent food and expensive bars. I know many a person who has burned through ridiculous amounts of money. It can seem that money is easy to get, but also easy to go, for those who don’t watch it.

As others have said, it is possible to save money. It may hurt to give up the expensive apartment and move in with someone else, to not eat out as much and to stop ordering wine, but it can be done.

For the question of saving a $1,000 vs. paying back the loan quicker, I’d go with both. Make lifestyle cuts which hurt enough to let her pay back more than the minimum, and still put and extra $50 a month into savings. I wouldn’t try to save the $1,000 all at once by only making minimum payments, because I suspect that she wouldn’t see the necessity of really cutting back the expenses.

Of course, I tend to save first, then spend, so YMMV.

Or, she could just expect that something good will happen.

93

Sam Stone The likelihood that you’ll be making as much money in a cheaper city is lower significantly. Chicago is probably the best deal in terms of earnings potential, culture, and cost of living in the entire country. Outside of that you’re going to be highly unlikely to make 100k.

When I was 22 without any college I was making $ 40k per year +insurance, dental and 401k. This was in 2001. I decided to move to Albuquerque and ended up making about 16k +benefits. So I cut my income to about 2/5 of what it was, and then by the time I bought a car and factored in rent, utilities and gas, my income/cost ratio was roughly the same. So, moving to a cheaper city doesn’t necessarily make any difference at all. Yes Albuquerque is cheaper, but part of the savings comes out of your salary. I find it unfathomably easier to make money in NYC than I did in Albuquerque. Not to mention the notion of ‘lifestyle job seeking’, which is nearly unheard of in most of the country. In the middle-states you say, “I want to be a manager in some kind of corporation.”, or “I want to do IT.” In New York you can even pick the industry you want to do the job in. “I want to do IT.”, becomes, “I want to do IT for a hip web design firm.”

Unless you’re one of the unfortunates who doesn’t know how to maximize New York’s utility, it’s really not any more expensive than anywhere else in terms of proportion.

That being said, if you’re single and making $ 100k a year and you’re not able to do shots off the hot bartender’s stomach, your apartment is too expensive. If I had been making that kind of money I would’ve been blowing 10k wads organizing raves. I’d live in a fancy loft with a clubworthy soundsystem and playing Halo on a projector drinking Maker’s Mark while having a quarter ounce of Purple Haze delivered to my door. I would be taking my time off and flying to Thailand on my vacation time, and skipping out to Atlantic City or even Vegas on my weekends.

100k as a twenty-something single person is a lot of money even in Manhattan, unless you catch the disease that tells you that only a two-bedroom apartment in the Village or Midtown is acceptable. Brooklyn is much cheaper, and Brooklyn is where the party’s at.

94

Maeglin I was up there last night actually. I went up to measure the dimensions of the rooms only to remember that we had one set of keys and they were in Caitlin’s purse in Brooklyn. Tried to get the super to open it, but found out the keys we have were the only ones he had too. I hung out with Jon and crashed there.

We’ll be up periodically throughout the month. We have both apartments for August. In September we’ll be up there for real and that’ll probably be when we can go claim our bottles of wine.

95

Well, no, apartments are worth what they’re worth. It’s a large city with a very limited amount of land, in a place where high rises aren’t easily built because of building codes. But you can get a nice place for a lot less than $2300 - I wasn’t looking at “Roome 4 rent” ads on Craigslist.

Now, if it happens that you have a ridiculously sweet deal on rent, by all means save your bux and pour the extra clams into tax-sheltered index funds. You’ll make out like a bandit if you’re socking it all away, and if a house was in your future you could put money into a down payment fund, too. But a $2300 apartment in SF isn’t a sweet deal.

96

Yes, since we know she lives there, and we know her field, she likely can’t make that income anywhere else- except perhaps NYC. Commuting is sometime an option, but If you’re working the old 60 hour week, then spending 3 hours a day commuting just is not possible. There are lots of jobs in SF that pay double what a similar job pays two hours away. But it won’t be the same job- it’ll be a bank ass’t mgr as opposed to a AVP at the same large bank with HQ in SF- same experience mind you same degree, but higher jobs lurk in the banking HQ of the West.

RickJay- honestly, you’d can’t get stuff off Craiglist unless you know SF very well. Within a mile you go from nice to shithole. Even I don’t know it well enough to do that. At most she’s paying $300 over norm.

97

or you’re just too ugly. :frowning:
Another thing that hasn’t been mentioned. If you are commuting to New York from New Jersey, Westchester or Connecticut, you probably aren’t saving much. You’ll need a car, insurance, gas, maintenance, parking and a monthly Metro North or NJ Transit ticket. Basically you are just trading commute time for space.

98

And that’s how people making six figure salaries find themselves in debt.

99

Yeah but you can shave 30% by going to Brooklyn and 40-50% in Queens or go uptown in Manhattan. An extra 15 minutes on your commute will save you $ 1000 a month.

Also, I’ve seen plenty of ugly guys with hot chicks.
Quote:
Originally Posted by mswas
That being said, if you’re single and making $ 100k a year and you’re not able to do shots off the hot bartender’s stomach, your apartment is too expensive. If I had been making that kind of money I would’ve been blowing 10k wads organizing raves. I’d live in a fancy loft with a clubworthy soundsystem and playing Halo on a projector drinking Maker’s Mark while having a quarter ounce of Purple Haze delivered to my door. I would be taking my time off and flying to Thailand on my vacation time, and skipping out to Atlantic City or even Vegas on my weekends.

Only if they charge it. A soundsystem is a fungible resource, if it’s good it can be resold rather quickly. As are many of those amenities. It can also be used as an alternative source of income.

I’ve lived a scaled down version of that life on less than 20k a year. It just always amazes me how people can’t see how much can be done with 100k.

I have absolutely no consumer debt, by design. Of course, my credit ain’t great because of that.

100

Dude, hush, willya? My neighborhood has already gotten too expensive for me, and I desperately need to upgrade to a 1 BR.

Sigh. :frowning:
ETA: more on-topic, I just paid off all my credit cards, tho!