how to build any future on 115k salary here? (San Francisco: best cities, real estate)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm like most people, troubled by question on how to survive here on 115k salary (take home about 6k). I'm a single male 27, earning 115k pre-tax. I'm trying to save as much as possible (ends up 1000 per month, $500 from each of 2 paycheks/month), but whenever I try to think about my future I just don't see how can it "happen".
I'm working in Palo Alto (IT field obviously) and live in San Mateo, east side, over HWY101, which is considered less desirable area of San Mateo, yet I'm still shelling out 1800 per month for the place. I own a car and pay about 550/month + 175/month insurance. I drive ~30m/day round-trip to work, so it costs me about 50/week for gas (give or take 10).
House prices here are very good. So good, that after small number of calculations, I figured that I'd actually have to save for 130 months or 11 years just to make a 20% down-payment!!! Also I happen to have bad credit from my younger years... just to rent damn place I have to pay first month + deposit of 1 month.
Since I'm 27, I'm also planning to get married sometime in next 1 or 2 and maybe have a kid in 4-5 years.
It just scares me that there is no light at the end of this tunnel. I cannot understand how people can afford here or even plan on building their future here. Do you all make gazillions or something?
Perhaps someone is in the same situation, or have some ideas or thoughts, I'd appreciate if you can share them.
Sounds like you might swing something close to 600k on your income if my calculations are correct.
Finance 585k 30 years @6.25%
mortgage $3600 a month
home insurance $150 a month
Property taxes $600 a month
Total $4350*
*you might have to pay PMI as well
Change in pay after tax treatment (write off mortgage interest and property taxes $36k + $7k = 43k) would increase your take home pay by approx $1240 a month.
I'm like most people, troubled by question on how to survive here on 115k salary (take home about 6k). I'm a single male 27, earning 115k pre-tax. I'm trying to save as much as possible (ends up 1000 per month, $500 from each of 2 paycheks/month), but whenever I try to think about my future I just don't see how can it "happen".
I'm working in Palo Alto (IT field obviously) and live in San Mateo, east side, over HWY101, which is considered less desirable area of San Mateo, yet I'm still shelling out 1800 per month for the place. I own a car and pay about 550/month + 175/month insurance. I drive ~30m/day round-trip to work, so it costs me about 50/week for gas (give or take 10).
House prices here are very good. So good, that after small number of calculations, I figured that I'd actually have to save for 130 months or 11 years just to make a 20% down-payment!!! Also I happen to have bad credit from my younger years... just to rent damn place I have to pay first month + deposit of 1 month.
Since I'm 27, I'm also planning to get married sometime in next 1 or 2 and maybe have a kid in 4-5 years.
It just scares me that there is no light at the end of this tunnel. I cannot understand how people can afford here or even plan on building their future here. Do you all make gazillions or something?
Perhaps someone is in the same situation, or have some ideas or thoughts, I'd appreciate if you can share them.
It's not hard at all.... but! You have to be committed to the process. First -- what kind of car are you driving at 550 a month and 175 insurance? I have a Toyota truck and a Toyota Matrix , live in a higher crime area and my insurance is 135 a month. Live on what you make -- not credit. You need a car -- but you don't need a Mercedes or BMW. By a Toyota or Honda and buy down -- as in buy the Corolla not the Camry. (Actually -- I ADORE my Matrix -- carries tons of stuff, seats fold flat, has lots of cool things in it and it was less than 20K new.)
Don't buy into the consumer society stuff -- keeping up with the Jones only keeps you poor. Take hard looks at what you are buying. Cable. High speed internet. Cell phone plans. Eating out all the time. Expensive clothing.
I'm not saying act like a pauper and you only get to wear ill fitting thrift store cast offs... but be judicious in choosing your clothes.
Look for way to cut costs to save more money. Bundle services (phone/cable/ internet) or see what you don't need at all. Do you need cable if you're never home? Or a land line if you have a cell? (That's a common one -- and I have to admit I'm not comfortable with not having a land line -- 911 doesn't do cell right)
If you have the woman of your dreams picked out -- TALK TO HER ABOUT THIS -- more marriages have sunk on one person being frugal and one person spending money like water... the two of you can come up with more ideas.
Google frugal living and you'll find lots of sites that help you with this. You aren't alone -- in fact 115K is pretty darn good salary (You are putting the max into your 401K, aren't you? In aggressive growth mutual funds? )
Hubby and I are black belt frugaler's... it can be done, but it's a lonelier path, and some people will really think you're weird. Our attitude is yea? we're weird, but we're rich.
I think your question might be better phrased as how can you afford the kind of lifestyle that you would want to find acceptable- aka- the house, the car, the family, etc etc.
First of all, if you're paying $550 a month for a car, then that car must have cost around 40-45k. That's quite a car. I'd consider selling it and getting something else cheaper unless you would stand to lose money on the transaction. Secondly, don't think that just because everyone else is going crazy buying 700k homes and driving exotic cars that you must also do the same. Most Americans are in debt. Many in CA are up to their eyeballs. Why? Because they didn't sit down and commit to some simple mathematics.
So let's say that you buy a 600k home. The mortgage, taxes, and bare-basics will be close to $5,000 a month. Of course this number doesn't include anything else: car payments, car insurance, food, clothes, the occasional vacation, and car repairs. This brings that number up to $6,250. I used very conservative averages for each of those items above so this number would likely be higher. It also does not include the inevitable home repair. If you decide to have kids, add even more to that sum. So even if you pulled the little trick of writing off your interest and everything, you would STILL be paying almost 100% of your income for a house.
Simple answer: Rent and save. This boom is coming unraveled at the ends and within the next few years those prices will be trending downward. So sit tight, save, invest, and watch the show.
lastly, there are indeed many parts of the country that offer incredibly reasonable places to live that cost 1/4th the cost of the Bay Area and more often than not pay almost the same, if not the same as you would get here. Just look up the "best cities" reports. You'd be amazed at just how low on the list SF now sits. Again-Save, save and save!
I read a report somewhere awhile back that stated in Kansas City the average person making the median salary can afford over 80% of the homes in the KC metro area, and the average person on the average salary in the SF Bay could afford less than 5% of the homes.
I am from Des Moines Iowa, and have a friend who is a programmer with about 4 years of experience and he makes over $60,000. Average home there costs less than $200,000.
In Denver you could probably pull in at least $70,000, and could buy a nice home for under $300,000. Plus property taxes in Colorado are extremely cheap.
I don't know about you but I want the best life for my family, and the Bay Area just won't provide that for me. I'm gone in January.
I love California. It's a beautiful state, just not for me.
I think your question might be better phrased as how can you afford the kind of lifestyle that you would want to find acceptable- aka- the house, the car, the family, etc etc.
First of all, if you're paying $550 a month for a car, then that car must have cost around 40-45k. That's quite a car. I'd consider selling it and getting something else cheaper unless you would stand to lose money on the transaction. Secondly, don't think that just because everyone else is going crazy buying 700k homes and driving exotic cars that you must also do the same. Most Americans are in debt. Many in CA are up to their eyeballs. Why? Because they didn't sit down and commit to some simple mathematics.
So let's say that you buy a 600k home. The mortgage, taxes, and bare-basics will be close to $5,000 a month. Of course this number doesn't include anything else: car payments, car insurance, food, clothes, the occasional vacation, and car repairs. This brings that number up to $6,250. I used very conservative averages for each of those items above so this number would likely be higher. It also does not include the inevitable home repair. If you decide to have kids, add even more to that sum. So even if you pulled the little trick of writing off your interest and everything, you would STILL be paying almost 100% of your income for a house.
Simple answer: Rent and save. This boom is coming unraveled at the ends and within the next few years those prices will be trending downward. So sit tight, save, invest, and watch the show.
lastly, there are indeed many parts of the country that offer incredibly reasonable places to live that cost 1/4th the cost of the Bay Area and more often than not pay almost the same, if not the same as you would get here. Just look up the "best cities" reports. You'd be amazed at just how low on the list SF now sits. Again-Save, save and save!
Now -- Sliverbox and I disagree on the house prices coming down. When Brent and I bought in 1987, the market was much the same as our last boom market -- prices skyrocketed in 1988 and came to a halt and prices fell in 1990 -- but not very much at all. And we heard the same things about waiting -- and waiting would have been a very bad idea for us.
I don't expect the prices to come down much more than they have already, in San Mateo it's been about 2%. Prices are harder hit in Contra Costa, and that's from new home builders slashing prices in areas where a lot of building is going on.
But I'm not going to fight this fight again -- the point is this -- don't sit back and expect the market to fall. It might, but it might not. No one has a crystal ball. A market is what you make of it. Housing markets, stock markets, mutual fund investing -- all them have big winners even when everyone else is sitting it out and waiting for a turnaround.
What you have to do is keep your eye on the market, learn about the market, and start looking at neighborhoods and schools where you may want to buy, improve your credit by using your credit cards WISELY and paying them off monthly, check your crediot report for errors and get them fixed, save as much as you can by cutting back as much as you can, get your intended spouse to do the same because you are both working toward a common goal of home ownership, and buy your house when you find it.
I'm a great believer in The Little Engine That Could... and there are a lot of people that just find it easier to throw up their hands and say Nope nope never gonna happen, you just can't do it, it isn't reasonable, it isn't feasable and the market will crash.
You want to put yourself in the position of: who cares? I want my own home.
Now -- Sliverbox and I disagree on the house prices coming down. When Brent and I bought in 1987, the market was much the same as our last boom market -- prices skyrocketed in 1988 and came to a halt and prices fell in 1990 -- but not very much at all. And we heard the same things about waiting -- and waiting would have been a very bad idea for us.
This is one of those chicken and egg conversations: Most homeowners will disagree with me primarily because they've already bought. Since they bought, SURELY prices will never fall.
I can agree that over the long term- 15-20 years, prices will likely be higher than they are today. The question to ask is what prices will do in the intervening time. Put simply, there has never been a housing bubble on scale with the one that has just now started to deflate in world history. It isn't just California, it's the entire country. It isn't just the USA either. The UK, Ireland, South Africa, China, New Zealand, Canada, Poland, Russia, and Australia are just a few of the other countries that have all had the same precise ludicrous price acceleration artificially manipulated via easy money from exotic loan products. Since there has never been a bubble on this grand of an international scale, all comparisons to the last bubble- which was strictly local in nature- are inadequate.
I mentioned Australia last because it has a city that could easily be San Francisco's twin: Sydney. Just like SF, Sydney is in the most desirable area in that country. Just like SF it has a Mediterranean climate by the sea. It is also primarily affluent, educated, smart, and viewed as THE place for aggressive business and trade. It too is a research and development hub. It too is situated within driving distance of glowing vineyards. I could go on and on, but you get my drift. Similarly, Sydney had a massive price appreciation time period, albeit their bubble started a few years earlier than SF. Prices also got way out of line with real wages and economics. Towards the end of their boom- like ours- many companies rolled out exotic loan products to usher in massive amounts of people into homes who really had no business buying.
Guess what happened? It collapsed. Despite being what many people in Australia feel is the "most beautiful" city in their country, the prices have fallen over 10% in a year and as much as 40% in some suburbs. This in spite of having a healthy local economy in a country that has an overall healthy export-based economy. So far their downward prices show no sign of letting up in the near future.Quite simple, Sydney is the poster child city that shows what happens when sound economics are ignored for too long.
So when people say that it " can't happen" in SF, I beg to differ. Yes... I agree that I could very well be wrong. But you can't say that I am wrong anymore than I can say that you are wrong.
I can wait as long as it takes. As long as the financial aspects pertaining to buying a home in this area are so far out of line with true economic fundamentals, I will wait for the time for prices to settle into more reasonable areas, whether that be from years of stagnation and subsequent natural deflation, or via a dramatic crash. If not- well so what. I won't buy and that's that.
and no- I do care, and no, I'm not prepared to spend copious amounts of my hard-earned money on overinflated assets.
Now -- Sliverbox and I disagree on the house prices coming down. When Brent and I bought in 1987, the market was much the same as our last boom market -- prices skyrocketed in 1988 and came to a halt and prices fell in 1990 -- but not very much at all. And we heard the same things about waiting -- and waiting would have been a very bad idea for us.
This is one of those chicken and egg conversations: Most homeowners will disagree with me primarily because they've already bought. Since they bought, SURELY prices will never fall.
I can agree that over the long term- 15-20 years, prices will likely be higher than they are today. The question to ask is what prices will do in the intervening time. Put simply, there has never been a housing bubble on scale with the one that has just now started to deflate in world history. It isn't just California, it's the entire country. It isn't just the USA either. The UK, Ireland, South Africa, China, New Zealand, Canada, Poland, Russia, and Australia are just a few of the other countries that have all had the same precise ludicrous price acceleration artificially manipulated via easy money from exotic loan products. Since there has never been a bubble on this grand of an international scale, all comparisons to the last bubble- which was strictly local in nature- are inadequate.
I mentioned Australia last because it has a city that could easily be San Francisco's twin: Sydney. Just like SF, Sydney is in the most desirable area in that country. Just like SF it has a Mediterranean climate by the sea. It is also primarily affluent, educated, smart, and viewed as THE place for aggressive business and trade. It too is a research and development hub. It too is situated within driving distance of glowing vineyards. I could go on and on, but you get my drift. Similarly, Sydney had a massive price appreciation time period, albeit their bubble started a few years earlier than SF. Prices also got way out of line with real wages and economics. Towards the end of their boom- like ours- many companies rolled out exotic loan products to usher in massive amounts of people into homes who really had no business buying.
Guess what happened? It collapsed. Despite being what many people in Australia feel is the "most beautiful" city in their country, the prices have fallen over 10% in a year and as much as 40% in some suburbs. This in spite of having a healthy local economy in a country that has an overall healthy export-based economy. So far their downward prices show no sign of letting up in the near future.Quite simple, Sydney is the poster child city that shows what happens when sound economics are ignored for too long.
So when people say that it " can't happen" in SF, I beg to differ. Yes... I agree that I could very well be wrong. But you can't say that I am wrong anymore than I can say that you are wrong.
I can wait as long as it takes. As long as the financial aspects pertaining to buying a home in this area are so far out of line with true economic fundamentals, I will wait for the time for prices to settle into more reasonable areas, whether that be from years of stagnation and subsequent natural deflation, or via a dramatic crash. If not- well so what. I won't buy and that's that.
and no- I do care, and no, I'm not prepared to spend copious amounts of my hard-earned money on overinflated assets.
As I said -- Sliverbox and I disagree!
To the OP -- You just need to buckle down on spending, ramp up your savings and save in investments that are appropriate for your timeline. Don't say you want to buy in five years and invest in tech stocks. For that timeline think bond funds. Set a goal, and stick to it.
My husband and I drove old cars and lived in a tiny NorCA house while our kid were young. Our goal was surviving on one income. Yours is different, but I agree with Tallysmom on several points. One, if you have a partner, discuss money. It's crucial. Second, stay focused on your financial goals, not your labels or weekly dinners out. Lastly, I promise you will get used to living more simply in no time. You too will say, "Who cares?"
BTW, our kids are older now and we live in a big house in another state. We have almost no debt. You can do it!!
I remember looking at real estate prices in Oz a few years back and they were WAY high. Perth, New South Wales and elsewhere. Same run up in parts of South America as well. Both the Brazil and Argentina stock markets are in big bull phases and much of the profits are going into real estate down there. You are right, quite global in nature.
As far as the Bay Area, I'm between both positions. I could see perhaps a 5 to 10% decline there. That would be a huge sum of money. That market has always been expensive. People just want to move there. If prices drop, more replacements arrive. Many tech companies have left the Bay because of the costs and difficulty in getting people to relo. Lots of people are in the original posters position. Great salary and still difficult to buy a home.
I live in the eastern suburbs of Sacramento (Folsom) and this local market is again getting tight for supply. We've had some bank repo's but they sell rather quickly. Seems lots of people have taken their homes off the market because of the gloom and doom real estate outlook. Now, the homes that are listed are back to getting multiple offers and quick sales. I don't know if Intel is now hiring here or what. Hard to read what's going on now.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) 
