I am (finally) in a position to move out of my parents house. I have finished college and just finished a play. I have been polishing my resume and going on monster.com to fill out applications for full-time positions that look interesting (and doable), as well as following up on leads that friends and family point out. My goal is to get a full-time job this month, pay off the rest of my credit card debt, and build up a nest egg. My girlfriend is trying to find a part-time job in San Jose as well, and we will either live in an apartment together, or rent a house with two other roomates.
I have had the opportunity to watch my best friend make some rough mistakes living in an apartment for two years, and am aware of some things to avoid (credit card debt, poor spending habits, roomates not pulling their weight, etc). I’m hoping to have some money saved up so that not only will I be living on my own debt-free, I’ll also have a safety net. I also own my own car, as does my girlfriend.
Any other advice in terms of keeping afloat? I put off moving out for several years in order to ensure that when I did move out I’d have some semblance of financial security by making sure I got an education and became debt free. I would like to ensure that I do everything I can to make that investment worth it.
Well, personally, if I were you (and obviously I’m not), I would save for a downpayment for a small house or condo. If you can live with your parents rent free and get together some $$ you’ll never pay rent - every payment you make is going toward your future financial solivency. Interest rates are low now, so it’s an excellent time to get on the first rung of the property ladder.
That being said, interest rates can rise any time, so make sure you choose a place that’s inexpensive enough that you can afford it even at the higher rates.
That’s good advice, but a small condo or house in San Jose would start at about $600,000. It would take a while to get 10% together for a down payment and he and his girlfriend’s combined income would need to be over $100,000 to qualify, and keep up with the payments.
[ul]Make a budget. Go through your bills, receipts, credit card statements, etc. for the previous three or so months to see where you actually spend your money (instead of where you think you spend your money). Use that as a guideline to set your budget.[/ul]
[ul]Pay off your credit cards first, as those are likely a higher interest rate than you would get saving money up. Include in your budget an amount to pay off that debt; once it’s paid off, channel that money into savings.[/ul]
[ul]You should establish a fund of between 3 and 6 months expenses, so that if you lose your job you’ll have a cushion while you look for another.[/ul]
[ul]Reevaluate your budget every six months or so, to make sure it fits your lifestyle. Do not establish a budget that is so lean that you feel deprived. If something is important to you, like going to plays or concerts, make sure you allocate sufficient funds in your budget for this.[/ul]
[ul]Regarding the house down payment: there’s no reason not to start socking some money away for a down payment. After all, the later you start, the longer it will take you.[/ul]
[ul]Your budget should also include longer-term items (not just a house down payment), like a new car. Your car now is fine, but in some time period, you will likely need either to repair it or to buy a new one. By putting away a little bit now towards that, you can either buy a better car or have a lower loan payment when it comes time to replace your car.[/ul]
[ul]Learn to cook. You’ll save beaucoup bucks if you eat in, rather than relying on fast food. See this website (ignore the cheesy graphics); you can subscribe and, once a week, you are emailed that week’s menu and shopping list. The recipes are basic but easy, and relatively inexpensive. If you don’t already know how to cook, this is a good start.[/ul]
[ul]Establish “house rules” with roommates, including what happens if someone doesn’t pitch in to pay their share of the bills and what your expectations are about group living (i.e., overnight guests, cleaning, parents dropping in).[/ul]
[ul]When you get a job, take the time to understand your benefits. If your company offers a retirement fund, figure out when you can start paying into it. If you don’t understand how it works, ask your co-workers and HR. Also, understand what other fringe benefits you have. Your company may subsidize public transportation (which would decrease wear and tear on your car); it may pay for a gym membership; you may be able to get free or cheap tickets to local events. Explore these things, because if they’re a benefit of your job, you should take advantage of them.[/ul]
My biggest expense after college in moving into an apartment was furniture. I don’t know how you’re set for that, but if you can get other people’s cast-offs, take them. Put a line item for furniture in your budget, and every other month or so, replace some of the old furniture with something new. Congratulations, by the way, on graduating and on taking such a responsible attitude toward your money. I didn’t get there until my thirties, and there were a lot of missed opportunities.
Crank up the spreadsheets and put together a montly budget. Put everything in there: rent, utilities, food, gas, entertainment, an allotment for clothing, an allotment for insurance, contact lenses, hair care, everything. Don’t forget to have a line for monthly savings.
Savings is important because there’s nothing worse than living paycheck to paycheck while managing to cover your bills–and then the damned car breaks down! You need something to cover unexpected emergencies.
It may seem like a lot of expenses and little income at first. Remember that you don’t have to put a lot in your personal savings, but you should do something. Also, remember that your savings is not a fund to play with when you’ve over your budget for entertainment one month!
Finally, be realistic. It’s easy to say “I’m going to live on Ramen noodles every night and never drive when I can walk!” Are you really going to do that?
Do not, under any circumstances, put all the bills under your name only (and certainly not the lease). Ever. If you don’t have the option of putting multiple names on your power, telephone, cable and internet at least don’t take them all on yourself. If the power bill is your name, the telephone is in roommate’s name, etc. It doesn’t matter if you’re living with your girlfriend or your best friend or your brother. Never trust other people to be reasonable.
Thoroughly interview potential roommates. Ask about their expectations of food sharing, bill paying and cleaning. And, from personal experience, how often they might expect to have overnight guests and at what point their guest becomes a tenant who should be paying their share.
When I moved out of my parents home and into my first apartment with my now wife, my older brother took me aside and gave me the following piece of advice.
“Make sure you budget for the condements.”
I went “Huh?”
And he replied: “You know your expenses when you move out. You know what your rent is, you know what your phone and cable will be. You know this and think you are prepared, but there are other things, things so small that you would never in a million years think of them or budget for them.”
“Take ketchup for example. When you do your first grocery shopping in your new apartment you are going to have to buy ketchup. You don’t think of this before hand, but you have to buy it. Then you need mustard, and relish, and steak sauce and … well, condiments.”
“Next thing you know this $75 first grocery shopping trip has become $75 worth of bread and milk and another $75 worth of condements that you had no idea you had to buy, and that $75 has to come from somewhere. So if you don’t plan for it you might now be able to pay the cable or the phone, because no one told you that you needed condements.”
“So here is my advice, budget for the condements.”
Wow, thanks for all the advice! Some things I was already aware of, but other things caught me by surprise. The condiment thing was a great example. I agree it is important for me to establish a budget and track what I spend money on. Creating a detailed budget would also be a great way for me to examine cheaper alternatives to certain things.
Some more mundane questions-
Dishes or paper plates? ‘Paper’ flatware has the advantage of lessening the burden of the washing machine. There is less of a tendency for dishes to pile up in the sink/dishwasher. However they would have to be replaced frequently. I’m wondering if paper plates/cups would be worth the cost if compared to having to wash dishes (just curious about feedback)
This is kind of a hard question, but I’m curious how you find a middle ground between not wasting food and not having spoiled food. My friend has the problem of dining out too often (he knows this, and is working on eating at home more). Part of the justificaiton for dining out is the resource of leftovers- they save any uneaten scrap of food and put it in the refridgerator. The problem is that their refridgerator is a biohazard- half the stuff in there is rotten becasue they save far more food than they eat. I’m curious about practical methods of eliminating waste without having an electrical compost heap (fridge full of decomposing biomatter).
I heard that non-clear cartons of milk stay good longer than the clear ones. Is this true? Something about light/UV light spoiling the milk faster?
The sunday paper is chock full of coupons. My best friend pores over the newspaper collecting coupons for grocery shopping. How much can you save by clipping coupons? Is it worth saving an extra .30 here and there? I can’t help but think many grocery ‘coupons’ are a scam by grocery stores to simply charge a slightly higher base price and fool people into thinking they are saving money
When does a Washer/Dryer pay for itself, when compared to going to a laundromat? My best friend made this transition, but never really figured out the difference in cost. I’m sure having your own is much less expensive in the long run even when you factor energy/water costs, but I’m curious about how much you’d save because the up-front cost of an appliance like that is kind of steep.
What are some of the most practical ways of saving electricity? Sounds stupid, I know…but right now I dont pay the electrical bill, therefore I dont really have a good handle of the fluctuations from one month to the next. Beyond the whole ‘remember to turn off the lights when not in use’ are there any other tricks? I know ways of saving fuel because I buy it all the time, so I always try to consolodate trips, try to cut back on extraneous driving, keep my car in good repair, drive at the speed limit, etc. I’d like to hear some pointers about saving electricity since (for my friend, anyway) it seems like something with the potential to get out of control really easily.
Where I live, a load of laundry at the laundromat will cost you about $3.50 ($1.75 to wash, and $1.50 to $1.75 to dry). Three loads of laundry a week (typicaly for me, I’m a big guy) will therefore run $13-$14, which equals $676-728/year. These costs will quickly add up to well over the cost of a used washer and dryer. The only nice part about laundromats is that I can get all my laundry done in 2 hours as opposed to most of a Saturday doing one load at a time.
Simple ways to save electricity:
Turn off the AC when you’re not home. No sense spending all that energy to cool an apartment that nobody’s occupying. Turn it off again when you go to bed at night (run a fan in your bedroom to circulate the air and help keep you cool while you sleep). Air conditioners are generally one of the biggest hogs of electricity.
Turn off your comptuer when not in use.
If you have a dryer in your house/apartment, you don’t have to dry everything in it. Hang up some of your clothes to air-dry, especially in the winter, as this helps add moisture to the air.
I use real dishes almost exculsively (see if you can inherit some old ones from Mom and Dad or Grandma or whoever, or pick up some from a goodwill-type store. When you’re in your first single-guy apartment, nobody cares if you have matching dishes. Hell, right now most of my glasses plastic beer cups I collected from a football game 15 years ago. Anything that’s single use will quickly end up costing you more then things that can be reused.
Rinse out and save empty plastic food containers (cool-whip containers, etc), as these can be used to store leftovers. And if something starts molding in there, you’re only out a ‘free’ container.
Good luck with the move. As someone who just got dumped by their girlfriend/roommate of 3/2 years respectively, I’ve got some advice:
Being roommates with someone is really, really hard. Being roommates with your girlfriend is even harder. When it works, it’s the best thing in the world, but when it doesn’t, I can think of few things more miserable.
IIRC, you two haven’t been seeing each other for too long. This may be a problem if you plan on staying together, but don’t know each other well enough or a problem if one of you wants something more than the other (i.e. one wants to marry and one just wants to split expenses). Think long and hard if what you want and expect is the same as what she wants and expects. Not just what you say you do, but what you really believe.
That said:
You’re a grownup, use real plates. They’re cheap and you’ll have them forever. If you’re worried about dishes piling up, I read about the “one fork” rule at 43folders: each person gets one each of the following: knife, fork, spoon, bowl, cup, mug, steak knife, glass. It’s up to them to wash them or not be able to eat with them.
Alternately, make a schedule for who has to do what and when. This would have saved a lot of grief in my situation.
Eat what you buy, buy what you eat. Simple.
I have no idea, but this sounds like an urban legend. Check the expiration date.
Get ready for someone to call me a racist: I shop at the local place that the Mexicans shop at. I know that a) they generally have low-paying jobs and b) they tend to have fairly large families. This means they need to stretch their cash as far as it will go. There are also plenty of people that shop at my place that use food stamps. Again, I know they’re looking for the best value.
I also find that the produce is much better than the big chains. It’s a different brand of bananas every week, but who cares? They also seem to have better meat and bakery goods as they buy from local producers rather than big distros.
In general, the prices are much better than the chains. Not on all items, but enough that it makes a difference.
The big factor is convienence. Though I used to work for a laundromat supplier, allow me to pull numbers out of my ass: New washer and dryer combo: $800. 1 load wash and dry at the local laundromat: $2.00. I’ll need to do 400 loads before I break even on the equipment cost and the extra energy/water costs will add to that. We used to do 5 loads every two weeks, so there’s 80 weeks before we would have broke even on the equipment. How long do you plan to live in this place? Do you have $800+ for upfront costs? It took us about 3 hours to do the laundry, but if you have your own, you could obviously do it at your leisure.
In an apartment, it’s relatively constant, unless you’ve got an air conditioner or electric heat.
I know you’re in California and energy costs are fairly high, but what in the world would your friend do to really skew the costs? Leave his computer on all the time? Run a wood shop in the basement? Have a 2000 watt stereo?
Here’s one last trick I’ve used to good success: overestimate the cost of everything. I know electricity doesn’t cost more than $25 in my place, but I say it’s $30 and have to figure that the extra $60/mo is going to stay in my bank account for an emergency. Stuff like that.
Well, good luck and really, really, think if you and your girlfriend are going to get along well enough once you live together.
Paper plates will, in the long run, be significantly more expensive than dishes. Plus you will not impress the chicks.
I found several time-saving tips at flylady.net. Get over the fact that it’s geared toward middle-aged stay-at-home moms. The tips can be quite good (especially the ones about keeping your bathroom clean without ever cleaning it). I would recommend that as a way to learn some things about keeping house.
One thing I learned: doing something generally takes much less time than you think. Take emptying the dishwasher. I always used to put it off, until I timed myself. Now I know that I can empty the dishwasher in about 3 minutes, which means I don’t have an excuse for putting that off.
As for the electricity, invest in lightbulbs that save electricity. They are more expensive initially, but will save you money over the long run. Also, turn off lights in rooms you’re not in. Only use as much light as you need. Keep the coils on your refrigerator lint free (once a week, vacuum the bottom part of the refrigerator door). Turn off the a/c when you’re not home, and try to use it as little as possible. Turn down the heat on your water heater.
Coupons might save you money. You need to compare the cost of the store brand (no coupon) with the name brand less the coupon. It might be cheaper, it might not. You might also discover that you’re willing to pay more for a name brand something (corn flakes, for example – the store brand gets soggy way too fast). As to how not to waste food, it will take experimentation until you find the right balance between what you buy and what you eat.
The benefit to having your own washer and dryer isn’t just cost-savings, it’s time. Get three laundry hampers (whites, mediums, darks). Put your clothes in there at night, instead of dumping them on the floor. When a hamper is full, put a load in as soon as you get home from work. Put it in the dryer before you go to bed. In the morning, run it for a few minutes to get the rest of the wrinkles out (while you’re in the shower, or eating breakfast), then put the clothes away (takes me 5 minutes). That saves you the couple of hours at the laundromat.
I’ll stop now. On preview, what Chairman Pow said. Particularly the part about you never know someone until you live with him/her.
True - but if I may point out the obvious - the light in your fridge isn’t on when the door is closed. If you’re leaving your milk out long enough for light to be a factor, that’s why it’s spoiling.
The trick to coupons (and I am a coupon queen) is to only clip coupons for things you normally buy. If you use a coupon for 50 cents off something that you don’t need, you don’t save money. Spend a few weeks getting to know what you eat, how long stuff lasts, and how much stuff costs. Visit a few stores to see which is the best. Then after you have an idea of what you like to buy, look for coupons on those things. I have a list of groceries that stays the same almost every week, then I add whatever else I need before I go shopping (always shop with a list, by the way. It really makes a difference.) If I don’t care what brand of something I get, I see what is on sale and try to buy with a coupon while there is a sale also.
I use coupons whenever I can, but I admit I probably am able to save more than you could because I buy things that I can stock up on and also some things just have better coupons than others. Things like diapers and baby food and formula you can really save on, but if you are buying staples like bread and potatoes and milk, (which I assume you are more interested in) not so much. You are better off just shopping sales for those. There are a few things like frozen foods, cereal, and toiletries like razors and toothpaste that can have good coupons though, so it is worth a look for things like that. Many stores will total the amount you save with coupons on the receipt, I get a little bit of satisfaction when I see ‘you saved $17.95’ or whatever on there.
I would really think about buying a used washer and dryer if you can. Around here I see sets in the paper for a few hundred bucks. I hated the laundromat, and I just think it is easier to pay for it and be done than try to come up with $5-10 every week.
The freezer is your friend. If you know you aren’t going to be in the mood to cook every day, cook something that makes a lot of servings - like lasagna, or a big pot of vegetable soup. Portion it out into freezer-safe packages, and fill the freezer. Be sure to label with what is in each & the date you froze it. It’ll take a while to build a variety of meals, but it’s worth it - I live off of my freezer, even though I’m not trying to save money. It’s something about knowing that the food is prepared just as I like it - and that I can control what ingredients I use, and be happy with their quality.
It depends what kind of foods you eat. I rarely eat anything processed, so coupons don’t do me much good. I buy my soap, toothpaste, paper products, etc., in bulk at Costco, so coupons are no good there. I spent an hour going through the coupon packages from the paper yesterday, and only found two that I could use. So for me, it’s not worth my time. If you eat a lot of prepared or processed or frozen foods, I think you can save some decent money by using coupons as long as you don’t buy stuff just because you have a coupon. It has to be stuff you’d buy anyway. This can be very difficult to stick to!
I would definitely recommend getting a washer and dryer. I got a brand new middle of the line set from Sears for $450 (including installation and a $25 gift card).
I do three loads a week. If you figure $4.00 a load, that’s $12 a week. You’ve got the thing paid for in 4 months easy. Even faster if you split the cost with your girlfriend.
Buy things like rice and beans and pasta in bulk if you can. They don’t go bad and can really help bulk up a meal if you’re short on budget one week.
I have to disagree with jweb about turning off your AC when you’re not home; it takes more energy to get the temperature back to a reasonable level than it does to maintain it. Raise the thermostat by all means–no sense in keeping the place an ice-box when you’re not there to enjoy it–but do not turn it off completely because any energy you save will be wasted when you have to turn it back on.
Of course, you live in California so this may not be as big an issue for you. (Vs. here in Texas, where the AC runs eight months out of the year or we’d all suffocate.)
Ditto for turning your computer off; if you use it more than once a day, the energy it takes to fire it up again will override any energy savings by turning it off. It’s also not good to turn your computer on and off all the time; computers are designed to run constantly.
The same theory applies to turning lights on and off; if you’re not going to be in the room for awhile, by all means turn the lights off, but you’re not saving any money by constantly switching the same lights on and off because, once again, it takes more energy to turn a light on than it does to leave it on. Leaving a bulb on also increases its life expectancy vs. switching it off and on constantly.
And FilmGeek, is that what laundromats cost in your neck of the woods? Damn! It’s $0.75 cents for the washer and a dollar for the dryer at most laundromats around here; I haven’t been to one in a couple of years but I can’t see that the price has skyrocketed much beyond that. For four bucks a load I would definitely try to incorporate a washer and dryer into the budget; that would add up quickly.
When I was on a student budget, and I went to the grocery store, I would always buy a certain amount of food I liked but didn’t eat very often…boxed pastas, popcorn, frozen burritos, etc…because if you’re like most of us, you’ll spend more money than you think on food and you’ll eat what you like first, and you’ll eat out more than you think you will, and there will be days where that untouched box of pasta (Hamburger Helper is just as good without the hamburger meat) that’s been in your pantry for a month will suddenly look like a life saver because your budget’s been blown til the next payday.
You didn’t mention whether or not you were planning on having roommates, but if you do, be prepared to outline everything thoroughly and also be prepared for the fact that it won’t always work anyway. (If it’s their turn to buy toilet paper and they buy sandpaper, whereas you buy the good stuff, be prepared to suck it up or buy your own anyway. That type of thing.)
