American Dream – The term “American Dream” is used in a number of ways, but essentially the American Dream is an idea which suggests that all people can succeed through hard work, and that all people have the potential to live happy, successful lives. But, these days American Dream refers to driving luxury car, financial freedom and home ownership.
We have discussed variety of topics in the blog, but haven’t spent much time about saving money in USA, cost of living and salary or if you can save money at all?
Savings in Wisconsin
I just want to give some information about budgeting the expenses. Many folks in India who read this blog would get an idea about life of a service professional in general in the United States.
I think you can save lot more than 25% of your salary provided you live in mediocre cities like St. Louis, MO., Cleavland, OH, Milwaukee, WI. I am a PhD student and I make lot lees than an average professional on H1B visa could make. But still I can save more than 50% of my earnings.
I do not have any educational loan or credit card loans. I am about to buy a used car from my savings Life in the United states is tempting but the expenses are not insanely bad.
The advantage of living in mid-size cities is that you earn more but you spend very little. In suburban areas an apartment could cost $500-$550 per month.
If somebody on H1B is able to make $5000 per month , imagine how much money he would be able to save. Car is not an issue at all. You can buy a new car with installment plan for as low as $300/ month. But if you live in big cities such as New YOrk City, Chicago, Los Angeles, You have to make a lot of money cause the rent itself would eat 30% of your salary and everything else would be expensive such as food, entertainment.
You have to pay a lot on parking in bigger cities. But you tend to get more pay in bigger cities.($60,000 to $80,000 per anum) But on average its best to live in middle size cities as I mentioned above. This is Ron from the University of Wisconsin.?
Salary in California
Sam – I got an H1B approval. I’m getting a salary offer of 53K-based out of CA. Would like to know whether it will be feasible to survive on the same post taxes(single) and how much I might end up saving.I’m in serious doubt now whether to move or not.
Sateesh – 53K in california is like a dead salary. If you are a bachelor you can survive , but if you are traveling with family it will be futile. imagine rent will be around 1400$ per month+ insurance for car if you buy will come to 120$, groceries will cost 1000$ per month, so it will be basically tight to maintain your savings.
Saving money is completely depended on your spending habits, where you live and salary. If you are single and making 53k in California (Silicon Valley), then after taxes, you will have just enough money for day to day expense. If you share an apartment, you might be able to save little money.
If you are married and earn 53k in California, then it’s going to real hard to save any money or you can very well be underwater.
Savings and Budget
If you have to pay education loan, then you got to come up with a money saving budget. Well, its hard to create a budget and live within means when you just graduated and getting paid in $$.
If you want to live American Dream then you got to plan your lifestyle trying to achieve that dream. Its very easy to get car loan for a luxury car, but only you can decide if you can afforf to make the payments on expensive car.
You might be able to pay $700 per month on car loan for a BMW that costs $35,000 when you are single. If you plan to get married, will you be able to afford to pay $700?
When you make big finance decisions, always play it safe and stay low. Don’t buy something that you cannot afford.
What Would You do?
For example, you recently completed your Masters degree with $30,000 in Education Loan. Your first job pays around $50,000 per year before taxes. You are planning to buy an Luxury 2 Door Sports Car. Your ask your friends for advise about spending $35,000 on a 2 door car.
Friend 1 – You already have to pay $30,000 in loan, it can take 3 to 5 years to pay that loan. Don’t spend another 35k on car. Spend 8k to 10k that you can pay off soon. Since Education Loan interest rate in India is very high.
Friend 2 – This is the time to enjoy the life. Don’t worry about the loan, go for a luxury car.
What would you do? Which advise would you take?