10 Things About Money Only Indians in USA Will Understand

indians in usa moneyMunna posted his view about living and saving money in USA as a comment the blog post Why Saving Money in USA is Difficult Than You Think (Video)

He had very practical view about expenses and saving money in USA.  I’m promoting his comment as blog post with minor edits.

Enter Munna..

It takes some time to understand the system here in USA –  1 year to 5 years to fully know how we can save more and smartly use our money.

1. Bank Interest Rates

USA is a country of low-interest and profit for Big Banks. They punish people who want to save money as they hardly give 0.5% or 1% interest on your savings account and fixed deposited (called CDs).

On the other hand, they flood you with credit card offers and car offers to take more and more loans.

2. Apartments

Apartment rent in high. 1 bedroom cost atleast 500-600 dollars in Texas to 1500 dollars in California and NJ.

3. Taxes

Tax is very high in USA. We have to deal with Federal tax, State tax, Medicare, Social security deductions.

See Sample tax calculation below.

4. Health Care is Expensive

Healthcare is expensive in USA. Don’t think that you have medical insurance and everything will be fine. After insurance also, you have to pay.

My friend had a good insurance, still he had to pay 10,000 dollars for his appendicitis operation.

Even after insurance, get ready to pay 1000 dollars for MRI scan or tooth root canal treatment.

Eye glasses are very expensive.

5. Utilities

Utilities are expensive. Cable TV cost you 100 dollars per month. Add electricity, water and so on.

Telephone service is most expensive in the world. 50-60 dollars per month.

6. Learn to Cook

Learn cooking if you want to survive in this country. That will save you lot of money.

Eating fatty food outside and rotten Indian restaurant food will make you ill.

7. Transportation

Most of USA do not have any public transportation. Even if they have, it is erratic and you will not be able to reach from point A to point B. Many places, there is no footpaths to walk and they do not allow cyclist on road and with no bus/train system, one is forced to buy car.

That opens up a new source of expenses. Car payment, gasoline, car insurance (car insurance is 50 times more expensive then India), county tax, motor vehicle inspection, car repair.

Car Repair is an experience of life-time here. Very common to get billed 200-300 dollars or even 1000 dollars for car repair.

Last but not the least, tickets/fines for over speeding and parking at wrong place. Every-time you are billed 100 dollars atleast.

8. Saving Money is Still Possible

Having said that, it is possible to save money on 50 K but don’t expect to save anything if you are a Ph.D. student (recipe for Financial disaster) and Post Doc. A post doc typically gets 36K and with all above mentioned expenses get into trouble.

9. Compromise

Biggest compromise a person can do is to share room, cook own food everyday and buy a smart old cheap car.

10. Mindset

We Indians have a different mindset then Americans.

We would like to recover our investment on our studies as well as support our parents/family so savings make more sense.

As wait for Green card is very long, savings become more important as we do not know whether we will live here for rest of our life or not. While returning to India for good, we need some money.
.. So, that was all Munna.

My Comments on Savings

I sure lot many people from other countries have same feeling about personal finance and savings and not just Indian’s living in USA.

Here’s a basic federal tax calculation.

If you make $50,000 per year

  • Standard Deduction – $6,200 (2014)
  • Personal Exemption –  $3,950 (2014)
  • Taxable Income – $39,850
  • Federal Tax  – $5898
  • Plus you pay State Tax ( applicable).

This is rough math for someone who is single.

Let’s say you save $12,000 per year. That’s lot of savings compared to what you can save working in India.

Lot of Entry level Software Engineers in India get paid less than $12,000 per year in India. Considering that savings of $12,000 AWESOME isn’t?

Plus life in USA comes with better quality ( and you have to miss your friends and family as well).

Do you have story to share about expenses and savings? Post it in the comments bellow.

Update 1 – There are many born-and-bred Americans who feel the very same way… (via email after this post was published).

32 Comments

  1. Akash Gupta on February 25, 2018 at 3:04 AM

    I have a offer from Amazon Seattle and travelling from India, on L1B Blanket visa I am being offered 110k$ base with 15k$ relocation and 40k$ RSUs.

    I will be living alone, ready to share apartment and I know to cook.

    How much I can save monthly?

    • Raghuram Sukumar on February 26, 2018 at 3:57 AM

      Your thinking shouldn’t be what can you do to save within $110k or how much you can save, but what can you do to earn 250k or 500k.

    • Robert Junior on September 27, 2018 at 4:15 AM

      You will save $64217 per year on this rate.

  2. Dinesh on December 2, 2017 at 7:54 PM

    What is personal exemption? I only see standard deduction on my tax return. I never had a personal exemption.

  3. Mohamed Gani on February 4, 2016 at 4:14 PM

    T mobile has a good offer. Add $15 and speak to 120 countries for free and rest of countries at cheap rate for unlimited calls. Existing people can make use of it

  4. good tips on February 17, 2014 at 1:17 PM

    Some of the tips are really good especially the cooking part, buying a used car. I wish I had read this article 1st time I went to USA. Now, need h1b sponsership again to work in USA.

  5. cool blue on January 24, 2014 at 2:14 AM

    Think of long term.. today u are being paid 85k per month, being a fresher.. do you think u gonna get good hikes year after year.. if u think yes then u are wrong.. also wen u start with such higher salary u wont able to switch to another company since many companies will not be able to afford such high paying and less experienced professional and it narrows your dream list of companies to apply to..

  6. Shashank on January 23, 2014 at 3:00 PM

    $1000 for MRI scan ? Personally, I had to pay $200 deductible (once a year) to get a MRI scan. I guess it varies from insurance to insurance. I use UHC.

  7. Nibin on January 23, 2014 at 12:07 PM

    Hi,

    Here are some thoughts.

    1. Bank Interest Rates
    As you said, they offer many credits cards and balance transfer offers. We could really make use of that. I remember once commerce bank offered 0 fees 0& BT. I encashed 5K from that, and paying it within 12 months. No risk, no loss. I got 5K back to the bank in india. But beware, you have to pay it in 12 months. Otherwise you will be ripped off.

    5. Utilities
    We are indians!! 🙂 Shop around!! Comcast is offering Internet plus cable for 35 bucks a month. It is for 6 months. After 6 months switch to competitor!! I may say Dish network.
    Telephone rates may be higher for ATT, VERIZON etc. Go with magicjack, or vonage. Latter will give unlimited talk both in US and INDIA(50 hours a month) Magic jack -$24per year, vonage $35 per month

    thanks
    Nibin

    • Raghuram Sukumar on January 23, 2014 at 12:42 PM

      Nibin – I will be publishing your previous comment as a blog post.

    • Raghuram Sukumar on January 23, 2014 at 12:44 PM

      I don’t switch to competitor, instead I ask current provider to lower the rates. Thule have done all the time. Like lowered my ATT cell phone bill by 30 per month for next 3 months.

  8. Anonymous on January 23, 2014 at 12:02 PM

    Thanks for the information on blog. I am about to make decision on my job. I am in my final year of graduation (B. Tech. in Computer Engineering). I’ve got offers from Amazon India (Hyderabad) and Epic Systems, USA. Amazon India will pay me a CTC of around 19 lpa (10.5 lpa is base pay+2 lpa joining bonus for first 2 years) while Epic offering me $90k annually. So, it looks to me that Amazon India (which will give me ~85k/month after all tax deductions) would be a better option. What say, admin?

    • Raghuram Sukumar on January 23, 2014 at 12:08 PM

      Is Epic Systems gonna file our H1B?

      • Anonymous on January 23, 2014 at 12:09 PM

        yes

        • Raghuram Sukumar on January 23, 2014 at 12:42 PM

          Now you have to decide between working in India and USA. What are the chances of getting visa to come to USA in future? Will Amazon give an option later to transfer to USA, if so what if you don’t get selected in H1 lottery?

          I’m leaning towards EPIC. You can get job in amazon after you come here.

          When is the start date for amazon and epic (in India)?

        • Anonymous on January 23, 2014 at 1:17 PM

          I have no issues regarding where to work (with the exception that being a vegetarian I should be able to survive myself). Amazon’s start date is sometime in 3rd week of June. Epic’s is October 6, 2014. Yes, I know that I won’t get H1B visa atleast this year but maybe (based on LUCK) in April, 2015. Also, I don’t think Amazon India will transfer me to the US because they’re hiring a lot for developing amazon.in and I being from a Tier 2 college (NIT) can’t expect Amazon for the same.

          • Raghuram Sukumar on January 23, 2014 at 1:39 PM

            Food will not be a problem.

            This what I would do. Start working for Amazon and apply for h1. If you get visa then quit amazon. What say?



        • Anonymous on January 23, 2014 at 1:44 PM

          But why would I move to US given that the savings are not that much as I once expected immediately after getting the job offer?
          33% of the salary will go towards various taxes only and what will I be left with? What say?

          • Raghuram Sukumar on January 23, 2014 at 2:05 PM

            33% is tax bracket. Which is different from effective tax rate.

            My effective tax I paid was like less than 20% of total income after deductions. Plus with 90k you will save more than what you can save.



    • JK on January 23, 2014 at 1:43 PM

      I work for Amazon, US and have been here for almost 10 years. Trust me you will learn a lot from Amazon. Also.. if you do well you might be able to transfer internally and move to the US.

      • Raghuram Sukumar on January 23, 2014 at 2:02 PM

        I didn’t realize you were following the blog. I asked him the same question. If there is an option to move then it’s good. But looks like his main concern is savings.

        • Anonymous on January 23, 2014 at 2:30 PM

          Okay. Thanks a lot 🙂

          • Raghuram Sukumar on January 23, 2014 at 2:34 PM

            Good luck. Let me know what you decide.



      • Anonymous on January 23, 2014 at 2:22 PM

        Even more confused. Amazon India folks say that work in Amazon India (not Amazon US) is not good. See my question here also and then let me know what you think of.
        https://www.quora.com/Epic-Systems-Corporation/Amazon-India-vs-Epic-Systems-USA

        • Raghuram Sukumar on January 23, 2014 at 2:25 PM

          I’m leaning towards Epic. Even after 2 yeas or more if amazon want to send you but you don’t get visa then you will be stuck. But you can still find job in Amazon after you come here.

        • JP on January 23, 2014 at 10:01 PM

          Simple calculation:

          If your salary is 90K,you will take $5000 take home as a bachelor. You live in a good apartment (individually) and a very high class car and lavish/luxury lifestyle, still you can save $2000 minimum. If you lead a normal life (sharing apartment, normal car, less partying) , you can save upto $2800. It means you can save RS.1.1 L ~ 1.6 L per month.

          In India if you take 85 K home, believe me with rent and petrol (moderate car), 25 K is minimum required for expenses. You will end up saving 40~50% of what you can save in USA.

          Based on my experience as I was in your salary range inUSA and India.

          • Raghuram Sukumar on January 24, 2014 at 12:24 AM

            Good calculation. Thanks.



  9. Naveen on January 23, 2014 at 11:41 AM

    This is really a good article. I do have some points to add.
    1) The mobile phone bill expenses is also significant every month. I personally am not on the contract and end up saving some money and I bought phone and plan separately. Freedom from contract and can switch phone and plan anytime. HSB could write an article on contract and non contract phones. Will be useful.

    2) With car you can save some money if you have the option to share with friends(if lucky). Either you buy a car and share with your friend or the other way round. This may not workout always. Worked well with me for a few months.

    • Raghuram Sukumar on January 23, 2014 at 11:58 AM

      Cell Phones – http://www.happyschoolsblog.com/cell-phones-contracts-usa-free-phones/

      Cars – It’s tough to keep sharing a car after a while. It works out if you have a room mate who works in the same company or on the same way to your office.

      • varghese on January 26, 2014 at 10:41 PM

        I personally think we have to find possibility of reinvesting to get better growth.

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