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Author Topic: Where does the money go?
Hobbes
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I'm currently a research assistant in my engineering program: this pays for my college itself, and then a monthly stipend on top of that. The stipend is more (as I understand it) than is found in most other departments, but not by a large amount. It totals up to something in the neighborhood of the poverty line for my particular situation. Over the poverty line to be sure, but in that neighborhood. What I've discovered is that I'm pretty much living the life style I want regardless of the cost. I don't go out a lot, but if I particularly want to I do. I buy things I want, nothing I would consider ridiculous (though a case could be made for the digital piano I purchases two or three months ago) but if I feel it would be important to have I get it. I buy nice food, I have a dinner party at least once a month (probably the most expensive single ticket item on my budget) I go on dates, and I pay tithing. Yet I'm still putting money away, and at a rate too, not just a couple dollars. So my question is: where does the money that everyone else seems to be constantly complaining to me about go? What about other's lifestyles is different from mine that at significantly inflated incomes they're always pinched in the pocketbook?

The only thing I can think of is mortgages, but the monthly payments I'm aware of are much smaller than the difference between what I make and what those who actually own houses make (not even including the knock-off of renting costs). The things is, I have no plans to radically alter my lifestyle when I do acquire a significant income. I might be a few nice things I don't have, but that would be more of a one time thing (I've been to transient to pick up, for example, a dining room set). I'll definitely be living alone, assuming I'm not married, but I've done that before too. So where is it going?

[EDIT: The point of this is, as I look at making some kind of life transition upon gainful employment, I have no idea what that would be! What is this part of the world I'm supposed to go out and experience that I have apparently been hiding myself from for frugality's sake?]

Hobbes [Smile]

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Strider
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Here's a short list I came up with:

house
car
concerts
vacations
bars/clubs
electronics
frequent dinners out
clothes
weddings
bachelor parties
kids
stuff

[Smile]

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Amanecer
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I think part of it is that when you hear people's salaries, you don't hear what they actually get. Taxes on non-poverty incomes are much higher than on poverty incomes. Then there's health insurance and 401K contributions. People are probably actually taking home around 70% or less of what their salary says. But even still, I get that that's a lot for a low maintenance life style like it sounds like you have.

I think the biggest issues come from fixed payments you can't escape. Student loans, cars, mortgages, and car/house maintenance make people lose a ton of the flexibility that you currently have.

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scholarette
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Kids should be put in big letters. Also, we spent about $300 a month on medical expenses when on the crappy student insurance (better insurance privately would have cost more then $300 a month more).
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Sean Monahan
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quote:
Originally posted by Hobbes:
(though a case could be made for the digital piano I purchases two or three months ago)

Not to derail, but which digital piano?
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Lyrhawn
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I don't know about anyone else, but anecdotally...my mom gets two paychecks a month. One whole paycheck goes to the mortgage. The other paycheck is split among health insurance, car insurance, car payment, gas, utilities, and groceries, among other miscellaneous costs.

That's not including concerts, vacations, nights out, eating out, clothing, or other random costs. It goes incredibly fast.

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Strider
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Amanecer, depending on how ambitious someone is with their 401k contributions, they may be taking home even less then 70%.

Hobbes, let me give you one relevant example. In the last few years I've had something like 4-5 weddings to go to each year. That's 5 weekends of spending money on a present, on hotel rooms, on food, possibly on a flight if it's far away. That's also another 5 weekends of bachelor parties with hotel rooms, food, and weekend activities. That's A LOT of money, and none of it was really spent on me!

I don't really do the bar/club thing anymore, but years back when I was, I could count on spending at least $100 a weekend, if not more. My friends who live in cities and are still into that social scene spend at least that every weekend.

I don't really go on vacations much(not because of a lack of interest though), but my parents do at least twice a year, and I have friends that vacation a lot. Depending on where you're flying the flight alone could be $1000, plus all the other expenses.

And yes scholarette, I imagine that KIDS are a significant expense. [Smile]

It's actually quite easy to spend all your money, especially if you engage in any extracurricular activities!

[ January 12, 2010, 01:00 AM: Message edited by: Strider ]

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The Rabbit
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Hobbes, please don't be offended but are you really being paid at the poverty line? The poverty line for one person in the US right now is about $900/month. My graduate stipend, twenty years ago, was more than that. There is no way I could get an engineering graduate student in the US to work for me for less than 1 and a half times that today, double would be better. And I worked in places like Montana and Utah where the cost of living is relatively low. If that is really what you are being paid, your being ripped off big time.
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The Rabbit
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quote:
Amanecer, depending on how ambitious someone is with their 401k contributions, they may be taking home even less then 70%.
Social Security and medicare alone take ~ 8%, add in federal, state and local income tax withholding and I'd guess very few people take home as much as 70% of their paycheck. After withholding for medical insurance and retirement, my paychecks typically ran between 50 and 60% of my stated salary.
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Strider
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good point Rabbit, I should have said "significantly less than 70%"
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Hobbes
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quote:
Originally posted by Amanecer:
I think part of it is that when you hear people's salaries, you don't hear what they actually get. Taxes on non-poverty incomes are much higher than on poverty incomes. Then there's health insurance and 401K contributions. People are probably actually taking home around 70% or less of what their salary says. But even still, I get that that's a lot for a low maintenance life style like it sounds like you have.

I think the biggest issues come from fixed payments you can't escape. Student loans, cars, mortgages, and car/house maintenance make people lose a ton of the flexibility that you currently have.

Certainly my biggest advantage over the general populous is that I have very studiously avoided debt of any kind. I am curious though, most of my friends/acquaintances have not done similarly, and thus do make such payments. Their totals may run into the thousands but the difference between what my take-home is and what, say, 60% of the average American income dwarfs it. Well maybe that's an exaggeration, but certainly is much larger.

I guess my question goes back to your phrase: "low maintenance life style". Is it low maintenance because of things I'm not really interested in (clubbing, general drinking, large-scale travel) or ... other things. Not that everyone should know what I'm interested in, but hopefully you get my point.

quote:
Not to derail, but which digital piano?
No worries, I like pianos. [Big Grin] Unfortunately I've never been able to find the exact model online (I got it at Costco, for a decent price and the fact that Coscto is great with returns). It's a Behringer, and I'm not at home but I think it was a CDP1500 ... maybe. So far, I really like it, good value.

quote:
Hobbes, please don't be offended but are you really being paid at the poverty line?
Well I'm not exactly offended, but I did link to the census bureau in an effort to show that I had looked into what that meant. As I said, I am being paid above poverty line, but not by a lot. I can't speak to what you got paid, nor what's happened since. [Dont Know] The exact comparison to poverty line was more a guideline to the type of numbers I'm talking about than a point about the poverty line. The idea being that at the current amount I'm making is more than taking care of my needs, and even providing savings. When my salary does jump (again presuming I can get a job) the difference in take home will be tens of thousands which I can't really envision going anywhere in my life beside the bank. Clearly this isn't a problem, it just makes me very curious where this money is "supposed" to be going.

Hobbes [Smile]

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Hobbes
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In other words, an alternate title of this thread would be: "Am I really this boring?", only mine was more generally inclusive and less depressing. [Big Grin] Debt is a large part, and things add up, so I don't want to sound like I'll just hear a hundred little things and write them all off because they're all little. The point is more: what are these things adding up? Debt is just less interesting to me.

Strider's exuberant persona clearly is more interesting than my rather reserved approach, so that's a great data point as to what I'm asking. I went to one wedding last year, probably my best friend, and that was a big event. Five weekends out of state plus bachelor parties would make a huge difference on my finances.

Hobbes [Smile]

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mr_porteiro_head
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Some major ones are:

*Home (which is far more than mere rent or mortgage)
*Retirement Savings
*Debt
*Lifestyle (Some people travel and go to weddings. Some people are really into their hobbies. Some people raise goats. You don't really have a lifestyle yet. [Wink]
*Healthcare (You're healthy. Be happy.)
*Children

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AvidReader
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Debt is definitely a huge one. Back when my husband and I were making about $40k a year, we thought we could get by ok on that. The few bills we had got paid, and we had money in the savings account.

Then we dropped a transmission. The "nice amount" in savings wasn't nearly enough for that, so it had to go on the credit card. My husband works nights so buses weren't an option. We had to have the car.

So I drew up a plan to get it paid off, and things went along ok. Until we dropped another transmission. We eventually found that the computer that tells the car when to shift was broken, but that didn't give us back the $4,000 we'd had to borrow. Add in some medical bills, a vacation we thought we could afford but really couldn't, assorted weddings (I swear he's got a cousin a year that gets hitched), and sick relatives who need to be visited, and it adds up quick.

In a month, I get to go spend money I don't really have because I'm not comfortable blowing off my grandparents' 60th wedding anniversary. They're both in their 80s, and grandma has health problems. We're to the point where we never know if this is the last big event for them.

The good news is, if nothing else goes wrong, I should be completely out of debt in three years. I should also have six months worth of bill money put away. It wasn't until they started laying off people at my husband's job that I realized a couple months really wasn't going to cut it. In this economy, I'm not sure six months is good advice anymore.

So I hope the amount you have put away is really enough. For me, I'm not sure there is an "enough" when it comes to money. However much we have, it seems like there's always something else that needs some. I like it when it can reduce my stress, but the rest of the time it just seems to add to it.

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SenojRetep
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I recall having similar questions when my wife and I were students and making about $17,000 a year (total) in student jobs.

My experience, as I moved from student income to employee income, was that the major cost increases were:
1) taxes (as you earn more, the tax portion increases progressively; also, IIRC, student stipend incomes have special tax advantages that those paid by for-profit institutions don't)
2) healthcare (as my wife "retired" from her individual student plan and was added to my family plan it significantly increased our total premium)
3) kids (while not as costly as I thought they'd be, they're definitely not free)
4) increased standard of living (somewhat bigger/nicer living space, mortgage vs. rental, marginally nicer furniture, etc.)
5) greater savings/security requirements (being financially responsible for five people vs. just myself means I need to save more, plan for retirement, buy life insurance, etc.)

Most of these costs were mentioned previously. Your post just reminded me of my own incredulity as a student earning enough to cover my needs when others complained of not having enough when they made so much more. FWIW, I'm still astounded when my Dual-Income No Kid friends (and, to a lesser extent, my single friends with professional-level incomes) complain about how hard it is to make ends meet.

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Mucus
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quote:
Originally posted by The Rabbit:
Social Security and medicare alone take ~ 8%, add in federal, state and local income tax withholding and I'd guess very few people take home as much as 70% of their paycheck. After withholding for medical insurance and retirement, my paychecks typically ran between 50 and 60% of my stated salary.

This can be roughly approximated. In Ontario, Canada you can use something like this
http://www.taxtips.ca/calculators/taxcalculator.htm
to figure out that in order to achieve a 30% tax rate (total taxes, clawbacks, CPP/EI divided by taxable income*) you would have to make about $94,000 in salary. People making less would take home more than 70% and people making more would take less.

There should be a US equivalent.

*(before RRSP contributions, the equivalent of a 401K)

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scholarette
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Oh- the house is a major money sucker too. For example, our heater just died (while in the middle of a hard freeze). To hire someone to repair it costs about $500. My brother is talking us through the repairs and that will save a lot (probably $400), but that is still a cost. Other major expenses- new fence after the hurricane, random plumbing stuff (pipe broke on the city's side, they claimed it was on ours, we hired a plumber to show that it was on theirs), regular lawn care (lawn mower, edger, fertilizer), retiling the kitchen floor (not for looks, but the old tiles had been laid wrong, which we did not realize when we bought the house and they cracked and popped off), weatherproofing the deck, repainting the outside (required by hoa), removing dead tree. A lot of those expenses are scattered over the years, but they still add up.

Also, if you have a car, you need to figure in repair and maintenance and insurance (so like a thousand a year for that). And if you live in a city that has NO public transportation at all, a car is a must. (and when I say no, I mean none, not just inconvenient or I don't like buses or whatever- there is nothing- though it is on the list of upcoming city goals). When you get hit with a big bill on that, it is hard. We really want to make it until

For the munchkin, preschool and dance lessons are there in addition to all the other stuff.

Oh, our take home is about 63% of our stated salary.

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Eaquae Legit
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I know for us, we do quite well on modest income, but there are things I would like to have:

Life insurance
Better health insurance
Retirement savings

And I know where are money is going now: student loans payoff.

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scifibum
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Hobbes, for a lot of us, we simply don't pay attention to how we spend our money, use easy credit, and get in a situation where our monthly obligations eventually equal or exceed our income, without necessarily having a lot to show for it. The fact that you're following a budget and spending less than you earn is great, and if you can continue to make that a priority, you'll have a better life than otherwise. Good for you.
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Minerva
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If you send your children to a private school (in our case, a Jewish school), it's about $10,000/child. That's from preschool through high school (a little less for preschool, a little more for elementary through high school).
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katharina
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1. Tithing (10%)
2. Retirement (13%)
3. House
4. Tuition (out of state tuition)
5. Maintenance on house and car (should be less now that I'm done decorating, about)
6. Food (lots of fresh fruit and vegetables = expensive)
7. Travel (I buy a plane ticket about every third month)

If it weren't for tuition, I'd have plenty of money. But, my job is what allows me to pay for everything else on top of tuition. A lot of the extra money goes to travel and, I must admit, fitting out my living space.

My takehome (after tithing) is about 55% of my stated salary, and my housing payment is a solid 30% of my stated salary. That doesn't leave much left over, although the security from retirement savings and the blessings from tithing cannot be overstated.

When it comes from fun, I absolutely love traveling, and when I have any extra money (and I'm not busy decorating), I spend it on that. That adds up to a bunch every year. I go to plays in England, I go to pop culture conferences, I spend a weekend across the country for a friend's wedding, I go home for Christmas every year and totally splurge on my nieces and nephews.

Also, I go to the theatre once a month and that can get pretty spendy, but I have amazing experiences. I saw Cate Blanchett in Streetcar Named Desire in November. Worth every penny.

Oh - I also dye my hair, and I get it redone every other month. That works out to be about $45 a month. Not huge, but not an insignificant cost, either. I couldn't afford it before I had this job.

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Rappin' Ronnie Reagan
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quote:
Originally posted by The Rabbit:
Hobbes, please don't be offended but are you really being paid at the poverty line? The poverty line for one person in the US right now is about $900/month. My graduate stipend, twenty years ago, was more than that. There is no way I could get an engineering graduate student in the US to work for me for less than 1 and a half times that today, double would be better. And I worked in places like Montana and Utah where the cost of living is relatively low. If that is really what you are being paid, your being ripped off big time.

Wow, engineering students must get nice stipends. I'm a graduate teaching assistant in anthropology, and my stipend is quite a bit below $900/month.
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mr_porteiro_head
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Engineering programs generally have money to pay students well.
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Raymond Arnold
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When I was 17, I was working at the supermarket with another 17 year old. Paychecks came on Friday. It was Saturday. The other guy said "man, I really need my next paycheck.

"B'wuh? But it's Saturday. You just got one."

"I know. I spent it already."

"On what!?"

"Um, beer mostly."

And here I had been feeling guilty about spending $15 a week on Magic cards. I can't speak for people with actual family responsibilities, but I suspect among those without said responsibilities yet, the "having plenty of money vs not" has a lot do with how much partying you do.

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Tstorm
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Single guy, renting, with no student loans...

Rent (Don't buy houses in small Kansas towns.)
Insurance (car, renters, health, and life)
Decent quality food.
Savings for the future...retirement, the day I actually do acquire a house, etc.

And, I just picked up a car loan, which fits somewhere between insurance and food in the grand scale of expenses. But, if you live in a rural area, public transit doesn't exist. Riding your bike in-town can save a little bit, but it gets pretty doggone miserable in the winter months. Plus, all my relatives and best friends live at least an hours' drive away; most of the trips I take are a minimum of 2 hours...one way.

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Hobbes
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Scifibum, I hope I'm not coming of as condescending; rereading my posts I kind of think I am, sorry! I don't know if you were reading it that way, but looking at it now I don't blame you if you were. Honestly, though I am frugal by nature, it's at least as much luck as anything that's allowed me this position. In fact my rather apathetic stance towards money is what has me mystified as to how I have any, and is thus the genesis of the thread!

I think a theme I'm seeing (and my life has fortunately not leaned towards) is health issues (heavy insurance or real issues) and general debt. Also hobbies, all of mine are cheap (e.g. cycling). Obviously kids is huge but I figure that if my comparison was to the poverty line (which includes dependents) then my overall analysis was scalable. [Dont Know]

Hobbes [Smile]

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theamazeeaz
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I'm in your boat, Hobbes, as a grad student with a good stipend and very few bills outside of rent. Frugality is about not spending money on things that aren't important to you, so, even if you have and make less money than most people, you can meet every expense that comes up and buy anything you want (because your wants are modest).

Don't regret your frugality if you don't feel things are missing from your life, just keep putting the money away. I figure if I can put aside about $500/month, I'll have $30,000 put away by the time I finish my PhD (5 years), which would be enough for a large move or a down payment on a mortgage or whatever.

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rivka
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quote:
Originally posted by Hobbes:
Obviously kids is huge but I figure that if my comparison was to the poverty line (which includes dependents) then my overall analysis was scalable.

I think this may be the greatest weakness of your model. Kids -- and their expenses -- are not scalable.

Actually, it's the second weakest. Comparing the health expenses of a single, young, healthy male to that of a family (or even to an older single's) is FAR from comparable.

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Hobbes
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I believe it, but having no experience simply trusted the poverty line that was specific to how many parents living in and children. Do you mean that while the poverty line is set for comfortable, if modest living if single, is not so set for single plus one (or whatever the situation), or are you referring to some other interpretation?

Hobbes [Smile]

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scholarette
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I have usually heard the poverty line given for a family of four. So, my assumption would be that a family of four would be in poverty at that rate and then the rate is scaled to the different number of people (I know that on charts, they say add X amount for X additional family members). So, the single guy is not who the original number was calculated for and he does better by this algorithm.
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Hobbes
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I don't think that's how it's done, scholarette. At least not anymore. The numbers I linked above (which I'm pretty sure are the official ones) don't scale quite that way. I don't know though, I might be misunderstanding the numbers, or you, or both.

Even if they aren't done that way I'd certainly believe that it wasn't proportionate, just having had no experience whatsoever raising any number of children my default is to take their word for it.

Hobbes [Smile]

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The Rabbit
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I totally understand where you are coming from Hobbes. When we were graduate students, we were roughly in the same situation you were. Neither of us had debts, we had simple tastes and interests, we saved money and donated to charity and always had more money than our other graduate student friends who were earning the same stipends. The first year we were married, we lived only one stipend and still came out better than many of our friends who lived on one each.

By the time we got real jobs, we'd saved enough for a down payment on a house. The first three years, we put all the extra money (compared to our graduate stipends) into paying off the mortgage. We haven't had any debt since then and have a very substantial savings. Our wants are very simple. We do like to travel, but we mostly do it on bikes. Most people wouldn't be willing to travel the way we do (not just the bikes. Most people wouldn't tolerate the levels of discomfort we find acceptable).

We also enjoy expensive chocolate, but you can't burn through thousands of dollars a year on the kind of chocolate we like.

The thing is, when you've been living comfortably as a grad student for around $10 K a year, and then you jump to a take home income of say $50 K a year as a professional, you can spend $10 K on luxuries you couldn't afford before and still have $30 K left over. Even if we had 2 kids that each cost us an additional $10 K a year, we'd have have money left over on a pretty average single salary. That wouldn't allow us to send our kids to an elite private school or take family vacations of Cancun, but we wouldn't be suffering or struggling to make ends meet.

I know things would be different if we had children, but even our childless colleagues seem to have a lot less money than we do. I've gone through the numbers and just can't figure out how they manage to spend as much as they do. I know we are lucky and don't mean to criticize people who are struggling financially. My only criticism is about those who are very nearly in our same situation (similar income, no kids etc) who are in debt up to their ears.

BTW, cycling is also our hobby. Its sort of funny that you think of it as an inexpensive hobby, because I know people who spend a lot of money on it. We do own a rather large number of bicycles, but we ride them until they disintegrate. (Seriously, the last one we threw out when the frame broke. It was over 20 year old. My husband stripped off all the functional parts and gave them to the bike collective.) We do all our own mechanic work, buy parts cheap on line, buy used or seriously discounted bikes. I roll my eyes at people who drop a couple grand on a high end bike and then rarely actually ride. My husband gets his kicks by passing people on the steep hills who are half his age on bikes that cost twice. All our bikes and bike gear combined, haven't cost us as much as a second car. Despite our bike obsession, we generally spend more annually to insure our one car than on bikes, even with the good driver discount.

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rivka
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The poverty line is most definitely not equal to "comfortable, if modest living".

Even for a single, if you were not a grad student (I'm assuming that means your housing and medical costs are covered by the university), I suspect you'd be far less happy with your income.

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Hobbes
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I appreciate the insights Rabbit, it's also nice to know you transitioned without suddenly finding yourself making more and having less!

Biking can be expensive I know, and I've blown some money on things I later thought useless, or at least overpriced. I'm no good at making my own repairs (besides the everyday type of stuff) so the biggest part of my hobby/biking budget goes to taking it into the shop for tune-ups and fixes. Unfortunately my really nice bike that I loved was stolen from me, being the first and(so far) only real theft I've ever experienced. I'm still kind of depressed about it. I haven't replaced it yet and continue to use my bike that I've put some unrealistic number of commuting miles on and is falling apart. I suppose I'll get a new one at some point but I'm still bummed out about it, even five months later.

quote:
even for a single, if you were not a grad student (I'm assuming that means your housing and medical costs are covered by the university), I suspect you'd be far less happy with your income.
Possible, though my housing isn't covered and the insurance is for crap (which hasn't come up because I haven't gone to see a doctor in years, not bragging, even I recognize that as stupid in several cases).

Hobbes [Smile]

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rivka
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Housing's not included?

Wow, how does the university get away with that!?

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Hobbes
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Subterfuge, they just tell us we can sleep at the lab. [Wink] Honestly, I don't think Purdue offered housing either, which is the only other University I would really know about.

Hobbes [Smile]

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The Rabbit
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quote:
Originally posted by rivka:
Housing's not included?

Wow, how does the university get away with that!?

Well none of the Universities I worked for or with (Utah, Montana, Washington) included housing as part of a grad stipend. Of course housing in those places (at least Utah and Montana) runs at or below the national average unlike SoCal or Boston but People I know who went to grad school at Cal Tech and MIT did not get housing as part of their stipend either, but that was roughly a decade ago, things may have changed.
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The Rabbit
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When I was a grad student, my stipend didn't cover health care but you could buy a fairly cheap plan through the University and visit the student clinic for little or nothing. The situation was the same when I was on the faculty in Utah and Montana except that the student plan cost more and covered less.

Before I was married, my parents were able to carry me on their health care plan, but I only used for the dentist. After we married, we used the free student clinic for minor stuff, let our teeth rot until we got a real job and bought the student plan which would have covered us for anything catastrophic. It worked because we were young and healthy. If we'd had a chronic illness like diabetes, it would have been very difficult.

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theCrowsWife
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quote:
Originally posted by The Rabbit:
I know things would be different if we had children, but even our childless colleagues seem to have a lot less money than we do. I've gone through the numbers and just can't figure out how they manage to spend as much as they do. I know we are lucky and don't mean to criticize people who are struggling financially. My only criticism is about those who are very nearly in our same situation (similar income, no kids etc) who are in debt up to their ears.

I think what you're describing is an illustration of the power (for good or ill) of compound interest. It sounds like you always had enough of a savings cushion to pay cash (or close to it) for every purchase. You didn't have any major emergencies that sent you deep into debt. Imagine that, when you were first starting out and hadn't saved much, you had a big expense that you had to pay: medical, vehicle, whatever. The months that you spend paying that off are months that you can't put away that money into savings for the next emergency. Now imagine that the next emergency occurs before you've built up the savings for it, or even worse, are still paying off the first emergency.

Putting away significant savings at the beginning of your adult life does a lot to mitigate the difficulties you run into. On the other hand, whether through circumstance or bad decisions, you don't put that money aside, you'll be spending more money just to stay afloat. It's like they say with retirement saving: if you don't start when you're young, you'll have to put far more in to build up as much as if you had put a little bit in when you first start working.

--Mel

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rivka
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I've been under the impression that grad student housing was included at Caltech, but I'll have to ask my dad. Maybe I misunderstood.
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scifibum
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quote:
Scifibum, I hope I'm not coming of as condescending; rereading my posts I kind of think I am, sorry!
Not really. In turn, I hope I didn't sound sarcastic, because I was sincere.
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theamazeeaz
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Housing's not included at my school (MIT), but the stipend is very much meant to cover it. I get about 2k/month after taxes, and on-campus rents run anywhere from 725-1100 per per person for single students. My rent is in the 800s range (for 1/3 of an apartment).

Every year, the graduate student council runs a cost-of-living survey that includes average rent, food, dental costs, and transportation, and requests an inflation-based raise according to those numbers. They usually get it.

Maybe, the extra money is from free food-Indian today, folks.

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theresa51282
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Location makes a huge difference in my experience as well. I went to grad school in rural Michigan and felt like on about $1000 a month that I had more than plenty. Since then I have moved to Arlington Va. When we first got here, my husband and I both worked professional jobs and had no kids and a modest student loan debt. We lived in a nice area, had one car, and a small but nice apartment. It was much more of a struggle to save then when on the much smaller income. We managed to put away about 10k the first year but had very few extras. The next year, I got pregnant and left my job. We went through about 9k of the savings that year. The following year, my husband got a raise so we are making about what we did when we were both starting working. We bought a small condo in an ok neighborhood. We are just breaking even this year.

This story got a bit away from me but the point being, if we still lived in rural Michigan we could live well in a nice house for probably about a third of what we are making now. Poverty line simply doesn't account for those differences. It makes a huge difference if rent starts at about 800 for a small 1 bedroom in a decent area compared to about 200 for the same apartment in Michigan. This cost is also passed on in subtle ways. Grocery stores, restaurants, gas stations, retail all have higher costs for their rent and it all gets passed on to the consumer in those areas.

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