Spending in a Bad Economy

As promised, this post will address my monthly expenses.  Reining in my expenses will be key to making a move to a lower paying and/or less stable position.

My biggest single expense is rent.  I live in a 1 BR/1 BA in a fantastic neighborhood.  I can get to work in ten minutes and I have a great view.  I pay $2,400 a month.  Over a year, I pay $28,800 in rent.  Obviously, I could move to a cheaper apartment and save some money.  While I could boost my cash reserve by saving more money, I think I could just as easily move once I decide to make a change and save on future expenses instead.  I am fairly happy with the rate at which I am saving cash right now.  Plus, I can’t sacrifice everything right?

People often suggest I should buy a house or apartment given falling prices, low mortgage rates, and government stimulus.  For me, this is a bad idea.  Even if my mortgage payment was less than rent, I would have to fork over a substantial down payment (like $100K).  This would cut into my cash reserves, making it more difficult to leave my job.  Also, I would have a long-term financial commitment that makes it risky to fail if I were to start a business.  This is unacceptable.  Plus, sellers here are still delusional, often asking more than what others paid at the peak of the housing bubble.  No thanks.  I can wait until I am happily settled in my new life until I buy a house.

Aside from rent, my other significant expenses include: credit card purchases and car insurance.  Fortunately, I do not have any educational debt.  My cell phone bill, gas, food, utilities, etc. are all included in the credit card purchases category.  I pay off my credit card every month.  Balances usually average around $1,200 per month, but sometimes I splurge on things putting the balance closer to (sometimes over) $2,000.  I pay around $1,000 in car insurance each year.

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3 thoughts on “Spending in a Bad Economy

  1. Just wanted to let you know that some of us out there appreciate your writing and insight.

    I’m a prospective law student, getting prepared for the coming 09-10 cycle. Because my dad can pass his vet educational benefits on to a dependent, it appears that I might be able to attend a T35 type school without crushing debt. Perhaps a T14 depending on LSAT scores.

    As someone that is extremely frugal and rather stoic for a kid (like you according to recent post), my ultimate goal is working for a BigLaw type firm for period of years. Unlike the vast majority of attorneys that handcuff themselves to their jobs because of the exorbitant lifestyle, I want to live as cheaply as possible. Save and get out rather early (buy a farm in middle America or something). Do you think this possible in this day and age, considering the horrific state of the legal market? Would you do this process all over again?

    Thanks

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