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.