I can't find a studio apartment for under $700 (Denver, Aurora: low income, health insurance)

[Monacles]

It seems you can pick one priority or the other: save for a down payment or take on a roommate. A roommate would vastly reduce your bills, freeing money to save. Yes, it might still mean moving to an uninspiring part of the community. These are the sacrifices people make to save for long term goals.

[davebarnes]

Originally Posted by Westerner92

in the top 10% of earners in their mid 20s.

Skydog wrote "top", not "top 10%".

Originally Posted by Westerner92

I'm one of the top income earners for my age bracket.

Then you make $200K/yr.

[SkyDog77]

Originally Posted by Westerner92

Since you're not willing to talk in hard numbers, I will. An income of over $50K a year puts you in the top 10% of earners in their mid 20s. $50K post tax, health insurance premiums, and maxing out your company 401(k) match will give you a take home of about $3000/month if you're lucky. Say your parents aren't wealthy and didn't give you a car, you buy a modest used Honda Civic. Car payment + car insurance + gas = $250/month. Say you don't care if you live in the suburbs and never go out with friends or have any hobbies aside from going to the gym ($40/month), so you rent a 1 bed in Aurora in one of those generic apartment complexes where your yard is a parking lot. That'll run you $1200 a month including utilities. You never eat out, and you eat cheaply: $200/month. You're on your own cell phone plan with a paid-off phone: $40/month. You don't have TV, but you have the internet because it's effectively a necessity now: $40/month.

Say you never have car troubles, don't have any student debt, have perfect health, never travel, don't have any hobbies, don't have any family emergencies, you never break anything, and you're best friends with the property manager who never raises your rent. That allows you sock back every bit of your leftover income. That nets you $14,760 of savings a year. Your meager pay raises are eaten up by inflation every year btw.

You want a modest townhouse or condo, $250K in 2017 dollars, which puts the down payment at $50K. But since you don't have $50K, it'll take you a few years to save up. Assuming a modest 5%/year home value appreciation, that means that in 5 years, that same condo is $319K, but you'll have enough. Assuming the ~10% appreciation rate the past couple years holds, it'll take you an extra year of unheard of luck, miserable spartan existence, and 90th percentile income to afford it.

The above is obviously just a demonstration, but it should drive home the point that you can't live in today's America without roommates.

And I guess I shouldn't have said "never" in my first post. It's just incredibly dumb and an almost unheard of luxury to live without roommates. There are also financing options beyond the traditional 20% down 30-year mortgage. I'm one of the lucky ones, and I'll be able to afford a home soon, but if I want to avoid being house poor, I will still have to take on roommates. Literally no one I know my age, even business consultants and engineers living in cheap Sunbelt cities, lives alone.

Thanks for this reply. I needed you to quantify what ‘top’ meant to better understand where you where coming from. That was not what i though when you said ‘one of the top earners’.

Top 10% at age 25 is certainly not going to buy a house right away, but you can absolutely can afford to live alone if you want to. Your priorities are in the right place though.

I was also a top 10% earner out of college and had a roommate until I was in my late 20s. I bought my first house when I was 27 and kept a roommate.

I keyed in the ‘never be able to live alone’ which is ridiculous if you stay in the top 10%. At age 40, it currently takes $125,000 to be top 10%. If you’re still making $50K at age 40 you will drop to the 55th percentile.

[emm74]

For some additional comparison as to what a "top earner in their 20s makes" - these are numbers for earnings 10 years after enrolling, so roughly age 28.

Well, at MIT, the median is a cool $91,600 (PayScale says the median for alums with 0 to 5 years of experience is $78,000, including individuals who went on to advanced degrees). At Harvard, it's $87,000 (PayScale pegs it at $62,000 for those with 0-5 years of experience). At Brown, it's a somewhat more modest $57,900 (which pretty much matches PayScale's figure). At first, that doesn't look so great, considering that the Department of Education finds almost 100 traditional four-year institutions for which the median post-collegiate salary is more than $60,000. But again, many of those are medical and engineering programs, whose grads are disproportionately entering high-pay fields.

Still, they're finding plenty of students at these schools making it rain. At the 90th percentile, salaries in this group of schools range between $160,000 and $250,000. At the 75th percentile, grads from 13 of these schools made six figures (Northwestern and Brown are the exceptions). The government's data includes people who have graduate degrees—so these figures include MBAs and lawyers—but only includes individuals who are working and not enrolled in school, so current graduate students are excluded.

Ivy Leaguers in their 20s: They make even more money than you thought!

[Westerner92]

Originally Posted by davebarnes

Skydog wrote "top", not "top 10%".


Then you make $200K/yr.

I was the one who wrote "top", which is vague, and it needed to be clarified. Your definition of "top" vs. mine vs. Skydog's is just as arbitrary.

I guess my point is that I feel the average person should be able to build home equity before their 40s, but given where the jobs are, what the housing is like where said jobs are, and the finances of my peers (like the budget I posted about), it's hard not to feel a bit of dread about the shrinking middle class, which through a combination of hard work and luck I'm not a part of.

We've thoroughly hijacked this thread though, so feel free to DM me if you want to quibble with semantics more and find out what exactly my income is.

[wertzso]

I can't even imagine what finding a studio for $700 is like. I'm getting ready to move to Denver from Charleston, SC and in Charleston any decent studio that isn't in a bad neighborhood will cost you $900-1100+

I feel like eventually I'm going to want to move to a country that has a better quality of life and social nets to ease the burden of inflation and stagnant wages. 50% of income isn't supposed to go to rent.

[whoisjongalt]

You're too late. You should have moved here 6 or 7 years ago. Unless there is another major recession, Denver will never be inexpensive again. Maybe you should consider a place like Kansas City. Even Chicago is cheaper (except for the property taxes). I bought my house 6 years ago and it has doubled. It's crazy.

[ponyupgrl]

Originally Posted by Westerner92

I guess my point is that I feel the average person should be able to build home equity before their 40s, but given where the jobs are, what the housing is like where said jobs are, and the finances of my peers (like the budget I posted about), it's hard not to feel a bit of dread about the shrinking middle class, which through a combination of hard work and luck I'm not a part of.

I'm in my 20s - the way that I see most peers being able to buy a house is by getting married / being in a long term relationship. Dual income + no kids = suddenly you can shovel a lot towards a house down payment. Not saying that's a good reason to settle down, but definitely how a lot of younger people are able to get into homes.

[Monacles]

Originally Posted by whoisjongalt

You're too late. You should have moved here 6 or 7 years ago. Unless there is another major recession, Denver will never be inexpensive again. Maybe you should consider a place like Kansas City. Even Chicago is cheaper (except for the property taxes). I bought my house 6 years ago and it has doubled. It's crazy.

Maybe never inexpensive but it will eventually cool. There is a pretty big change in the nation's landscape towards younger people moving back into major cities in the non-coastal part of the country. Denver was definitely the first to explode but it won't be the only one. As other cities like KC, Nashville, Boise, etc. become increasingly desirable they will ease some of the burden on Denver--at least from future growth.

Originally Posted by ponyupgrl

I'm in my 20s - the way that I see most peers being able to buy a house is by getting married / being in a long term relationship. Dual income + no kids = suddenly you can shovel a lot towards a house down payment. Not saying that's a good reason to settle down, but definitely how a lot of younger people are able to get into homes.

Dual income + no kids is how my wife and I have shoveled a lot towards a down payment. (We're moving to Denver next year.) If we had kids there's zero chance we could have anywhere close to what we have. No way either of us would be able to afford the home we want without two incomes and zero kids.

[wilberry]

There it is, the answer to living in Denver. Dual income no kids , In the future there will be no children in Denver . Way back in the late 70's most apts in Denver proper did not allow children . I see a return to those halcyon days.