I was catching up with a friend about my new job when I disclosed my salary.
“How can you live on that?” she burst out. “I have clients who struggle to pay their bills on that salary.” To which I laughed.
Before I continue, let me rewind.
My friend and I come from very different career backgrounds. She’s been in the finance world her whole career and experienced the monetary luxuries associated with being successful in the banking industry. I, on the other hand, started out my career in entertainment – often making less than $1,000 a month before my second and third jobs. Then I moved into public relations, which at the time felt like a huge spike in my income but on the scale of NYC living provide a paltry sum.
For the first time, I’ll disclose some numbers.
- New York City Year 1: I made less than $20,000 (I survived on Starbucks leftovers and rice)
- New York City Year 2: I earned $37,500 in pretax income from my old job + about $3k for side hustles
- New York City Now: Enough of a hike that it made me feel a little lifestyle inflation
So, when my friend about choked on her oyster after I disclosed my current salary, I had to chuckle.
I can survive living in an expensive city with a salary south of six figures because I don’t have debt. Rent alone costs me $12,000 a year, which used to account for just shy of 50% of my post-tax salary. But oddly enough, I’ve rarely felt financially vulnerable. I usually feel I have enough disposable income to do the activities I want (travel) and still sock away a significant amount into my savings account.
Until my friend’s reaction, I’d never really given much thought to how I managed to survive and save money in an expensive city with a small salary. I simply did.
The next day, I got my answer.
I was driving along I-80 in my rental car (obviously I don’t have a car in New York) experiencing an odd sensation that could only be described as part paralysis from fear that I’d die in a fiery crash after going a year without driving and part getting lulled to sleep by motion of the car.
In an effort to both stay awake and distract myself from visions of getting t-boned by a semi, I turned to my trusty Planet Money podcasts.
The episode (entitled Can An Economy Be Too Good?) discussed economic issues in the European Union with an interesting emphasis: Germany’s success is causing a problem for everyone else.
The reporters to drew an amusing correlation between the EU and St. Elmo’s Fire to illustrate how Germany has it together and therefore “secretly screwing the rest of them.”
In simplest terms: Germany has a trade surplus or an imbalance (lots of exports going out, plenty of money coming in and not much money being spent on goods from other countries in the EU). According to an NPR analyst, no country in history has ever been so successful and so frugal.
He goes on to say, “If every consumer everywhere behaved like the German consumer, then the world would be in an almost permanent recession.”
A winemaker from Italy remarked how Germans have an attitude that you’re cool if you buy something at a reasonable price rather than spending a lot of money. He recalled his childhood friends, who were German, saying Saturday morning was “a day to fix the toys rather than buying new toys.”
An economics editor from a German newspaper seems to confirm this stereotype by summing up the country’s mentality based on a famous ad for an electric appliance. His translation of the ad’s slogan: “a thrifty person is smart, clever and cool.”
Then it hit me. This is how I behave. I’m just in a country where being thrifty isn’t considered smart, clever or cool.
I’m a hoarder of cash (possibly to a fault). I rarely go shopping. I prefer to make my own meals instead of eating out. I still refuse to furnish my apartment outside of the bare essentials (I figure I’ll be moving eventually…) and the only thing I gleefully fork over money for is travel.
My default thrifty habits are the sole reason I’ve financially survived living in New York City. Well, the lack of debt has helped a lot too. Maybe it’s time I go someplace where my mentality is the norm.
Perhaps I should just move to Germany?
I’m not sure about moving there, but you should definitely visit! Also, that’s crazy about rent being about 50% of your salary. Seriously, I would die, but then I’m still getting out of debt!
I don’t know if I could’ve survived here with debt and my rent. Or I wouldn’t live in my current apartment. I’d have been in some tiny rate-infested hole that cost a little less. Glad that didn’t happen!
More power to your German-esque lifestyle!
I think the great part about NYC is it can be as expensive or as cheap as you want. The first year I lived there I earned less than $40k– I survived by sharing a room in a rent controlled apartment (Yes, I paid $400 in Chelsea- Amazeballs!) and ate lots of 2 bros pizza ($1/slice was completely in budget). The best part of that “making it in NYC” period of my life, is living frugally in now just who I am. Although I eat far less pizza now.
If you decide the Deutschland is where you are suppose to be Berlin is an awesome city 🙂
I need some more details on that $400 rent-controlled apartment in Chelsea because that’s basically NYC folk-lore. And trust me, I had quite a few 99 cent slices from “99 cent Pizza” during my Letterman days. Still get a craving for it every now and again!
I’m of German descent, so maybe that’s why I am the way I am! =) Honestly, it would be nice to live somewhere where people weren’t so consumed by their material possessions.
I think you’d love the podcast if you haven’t heard it already. I’m just glad most of my friends aren’t too consumed with material possessions, otherwise I’d be in big trouble!
Ha! SO funny! You know I wasn’t trying to make you feel bad and I was really paying you the highest compliment I could pay anyone, right? 🙂 It’s true, though, that the US is definitely not a place for the frugal-minded and the more frugal-conscious I have become, the more backlash I have gotten from others who are not quite there yet. I really am proud of how well you manage your lifestyle and definitely proud to be a mentor.
I knew it was a compliment! But I didn’t love your reaction 😛 I’m so glad to have you as a mentor.
I had no idea that was the case with Germany. I think more and more people are adopting a frugal lifestyle and it’s becoming the norm, especially after the recession. But then again, I just watched the real housewives of orange country for the first time yesterday and that was vapid materialism and rude behavior at its best. Yes, I know an exaggeration, but I’m sure a lot of that really does exist. I’m happy living in my own little frugal world! 🙂
It really does depend on the community you surround yourself with. What did you think of Real Housewives? Which season?! That show is completely my guilty pleasure because it makes me feel like I have it so together in life.
My family is all German and often wondered if that is why I am the way I am when it comes to money. 😉 I’ve visited there twice, both with fairly long stays, and could not agree more about the overall mentality of the people there. It’s quite refreshing honestly. That said, it’s awesome how you’re doing it when so many would just make excuses.
You and Holly are all about the ancestry! Must be in your blood. I’ve got a touch of German in my blood, but mostly Irish. I think I need to use some credit card churning skills to get to Germany for a visit ASAP.
We’re cheering for Germany too! I love Germany. We seriously considered moving there shortly after we were married but ultimately decided we couldn’t leave our family (and support system) for a few more years. I would also seriously consider Sweden. They also have their shit together haha.
Maybe you could go in retirement for a few years? 😛
And GO GERMANY! (Even though I’ll have to root for the US when we play them.)
Very impressive that you can make it in NYC…though I think those of us who are frugal really can do it. It is tough but doable. As for the theory that If every consumer everywhere behaved like the German consumer, then the world would be in an almost permanent recession…Mr. Money Mustache has an argument that that will not be the case. I’ll have to find his argument in the archives somewhere. In any case, you can’t root for Germany…they’re in the same group as USA! =)
Haha, I know! It’s going to be a tough choice about who to root for, but at least my odds are great at one of them getting out of the death group.
I’d love to see the MMM argument, so share it with me if you can find it.
Found it: http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/
And on a somewhat similar topic:
http://www.mrmoneymustache.com/2013/07/16/a-badass-utopia/
I only read the first one so far. Interesting, but his point about exporting more and importing less is exactly how Germany is screwing things up in the EU per the podcast. It does seem that it would lead to a recession for the short term (as he admits in the post). I highly doubt the entire world would ever turn in this direction, but it would certainly be interesting to watch.
Kudos to you! I was working three jobs and going to grad school when I lived in NYC. I was in debt, but I prevented myself from going any deeper. I had a friend that said no one could make it in NYC with less than a $50k/yr income. I scoffed. I think most people think it’s not possible because THEY can’t do it — but people are doing it. Every.Single.Day. All.Over.The.World.
That is an interesting point about Germany!
I think that $80k would be the lowest level as a single person with no debt where I could really go out and spend money on all the experiences I’d like to here (ie: theatre, fancy dinners, some new clothes). BUT you can completely live comfortably on less than $50k, you just need to avoid rapid consumerism and be single.
I’m super impressed by how well you’ve done living frugally in New York City. Surviving on less than $20K a year is amazing! I think living frugally can be cool if you’re hanging out with the right people. I hang with a lot of creative professionals who always seem to be broke, so my lifestyle doesn’t stick out 🙂
Yeah, we were pretty much all poor in my first year. But I was one of the only ones not taking assistance from my parents, so that was a big point of pride for me. Guess it helps that I don’t like shopping too much!
Germany is in my top places to visit (along with Italy for the food and Spain for the soccer — Steve’s a HUGE Real Madrid fan, and all of Scandinavia — I basically want to go everywhere in Europe). I totally vote you move there and we’ll come visit 🙂
Or we can go on a big backpacking adventure! I get to go to London next month for work and I just can’t wait!
I totally agree with Julie – New York can be expensive, but the sheer volume of, well, everything, keeps prices in check if you’re willing to forego the lavish lifestyle. I too lived on very little in NY (which was a lot easier to do than in San Francisco!).
Personally, I don’t think you should move to Germany because it would be that much harder to visit you when I’m in town ;). Buuut, there is something to be said for living among those of the same mentality. I was constantly teased by my friends in New York for being so frugal – even though being frugal was the only way I could stay there in the first place. Definitely frustrating.
But then you could visit me in Germany!
I’m glad I have a lot of likeminded friends when it comes to money, but they did get a tad annoyed with me in the first year when I was super frugal due to limited disposable income. And my habit of eating Starbucks leftovers grossed them all out.
Sounds good and I know how far similar values can go in a new country. How employable will you be in Germany? Do they have low unemployment? Would you have a language barrier? Would the Audi A6 be cheaper to buy if you live in Germany? (That Car looks Sharp)
The visa issue might be tough, but I know some Americans who went to work there right out of college so there is certainly a market for it. Plus, maybe I could freelance and just live there! It clearly isn’t a well thought out plan. 🙂
One thing that’s interesting is the culture and sub-cultures you see all over the world and even within countries, cities, industries, etc. Most people I work with are middle class or upper-middle class. If you look at investment bankers in NYC (that might not be the area of finance your friend is in, but using it as an exmaple) life is about money and work. It has to be, because the hours are grueling and the payout is what you get in return for sacrificing so much of your time and energy into your career.
It doesn’t really matter what industry you’re in in NYC, work really tends to dominate life. It’s just the general mentality. Not the healthiest, but that’s the way it is. I think it’s part of the reason people tend to “play hard” as they say.
If only moving to Germany was the answer to all our problems! I remember listening to the podcast thinking, I certainly am German I refuse to pay $200 for fancy French/Italian wine!
But you know there are plenty of Americans who will fork over that kind of money for a bottle of wine! I’m not one though — can’t really taste the difference yet. I used to break my Dad’s heart because I thought all red wine tasted like church wine (aka communion wine). Even the good stuff. My palette is slightly more refined now.
You should be proud of the way you are living! If you think about it, most people who are the most successful, wealthy, and happy haven’t always been considered so “smart. clever, or cool.” In order to be different from everyone else, we have to live and ac in different ways. I live quite frugally myself, although not in NYC. If a person can have enough without having to spend outrageous amounts, like our society tends to do, that’s something to be proud of. Great post, keep it up!
Davey Pockets
Thanks very much!
I applaud you for surviving New York without debts, that is an achievement. Our society today tends to tempt people for more, more gadgets, more clothes, more cars and more what nots. We forget the basics sometimes, and it takes people like you to take us right back. Thanks!
Thanks, Dana. I’m fortunate to have been raised in an environment where my parents didn’t embrace consumerism. I grew up without the mentality which certainly has helped in the long run.
Thanks for sharing I love Germany I am a Germany fan
Hope they win on Saturday!
I read somewhere that more Porsches (made in Germany) are sold in Greece than any other European country. Greece isn’t doing so hot. Go figure.
Your thought about moving to Germany is similar to a thought I’ve had many times; it would be awesome to be surrounded with like minded people. It goes beyond personal finance too. I find that I share many other things in common with these folks. People who manage their money well also manage their lives well and have the right set of priorities. I just wish they weren’t so hard to find.
Very much agreed. But, on the flip side it is fun to have a little variety sprinkled in!
I’ve been living on your year 1 to 2 salary for the past six years. Totally doable, though not without some sacrifice. I have to say I’m enjoying a little lifestyle inflation myself (travel of course).
It might have been an easier pill to swallow if I felt I were pursuing a dream. By the time it was done, I was just tired and frustrated. I give you major props for surviving on so little for so long.
I’m of German descent too, so maybe that’s why I dislike wasting money. Don’t get me wrong – I enjoy a good life but I make sure that I spend my money on what matters to me and I hate being wasteful. And I definitely think I’m cool. 🙂 As I’ve said before, I think you’re doing an amazing job and I’m glad you’re helping millennials (and others) change their thinking when it comes to how they use their money.
Thanks, Shannon! It seems a decent amount of PF bloggers can trace some German lineage…hmmm…perhaps FinCon 2015 should be in Berlin?!
Well, German heritage is the most common in the US, even ahead of Irish! SO not that surprising.
Kudos to you for having managed to make do with $20K or less in the first year but I bet you’re happy to be making more at this point. I recently moved to NYC from Montreal to live with my husband so I’m still absorbing the cost differences and man there are quite a few. I know that it would have been stressful for me if I still was saddled with debt!
Thrilled to be making more! It was stressful living on so little. Welcome to NYC though! You’ll have to join our blogger get-together.
As an American working and living in Germany, I can only recommend it. 🙂 I’m lucky to not have any debt and while my personal financial habits could improve, it is awesome living in a country where I’m not bombarded with credit card culture and people always needing bigger and newer things, and among people who are financially and economically saavy. With prudent financial planning, I feel like I won’t have to be scared about a longterm future here (if that comes into play). Then again, maybe the same could be said about prudent planning in the States…
I don’t worry about my long-term future because I’m a big saver, but it would just be nice to be surrounded by more like-minded individuals. Whereabouts in Germany are you living/what took you over as an expat?
Well you certainly serve as motivation to get my act together. 🙂 I live in Aachen, which is about an hour west of Cologne and as far west as one can go in Germany. It’s located on the Belgian-Dutch-German border. I majored in German, but I had an internship at the university here one summer during college and the contacts that I made here at that time resulted in me being offered a non-related job when I happened to graduate. I’ve always had a soft spot for this country and wanted to live here, at least for a while, and as a graduate fresh out of college, I wasn’t going to say no to a job!
I came across this website by incident and very much enjoyed reading this post. I am German and live in Munich, which I definitely recommend to guys for travelling. I think it’s true that we are more frugal than other nations and for some reason saving plays a big role in our culture. Maybe we are more safety-oriented and therefore save more for tough times that might occur in the future. Anyway, it’s this very same mentality which causes also problems as the typical German is overcharged with the current low-interest environment in Europe (0.15% interest base rate) and is expropriated by the policy of the ECB. Worst case scenario could be that German tax payers are held liable for the high state indebtedness of other EURO states. So if you consider that it could well be that the ones who consumed their reserves in the end are better off than the ones who lived frugally and saved their money. It’s a strange world we are living in. That said, the US might not be as frugal as Germany, but at least it has full control of their public finances in the sense that are not held liable for other countries’ problems. As to soccer: Thanks for your support! But your team is not too bad either: You managed to Win against Ghana – we didn’t! 🙂 Good luck for the next matches! 😉
Thanks for coming by and sharing! I’ll obviously have to be rooting for America on Thursday, but at least one of my favorite teams will make it through.
I think it is great that you can live in NYC. I don’t know if I could do it! Great job!
Chicago seems to get pretty expensive too, right?
The great thing about NYC is like the rest of the US consumer goods are cheap. Food, transport, clothing. It’s only rent that’s expensive – I can totally see how you could live there on a small salary. (Leslie Beslie is proof that you can, and have fun with it!)
I don’t know. Food is can be pretty pricy here compared to other places around the US, especially with fruits and veggies. But transit is 100% way cheaper because we don’t need cars! 🙂 Just makes it harder to take a spontaneous adventure because then you have to rent one…
So true! In Germany, getting into debt is a sign of weakness. Statistics have shown they save at least twice as much as Americans. And don’t even try to talk to them about getting a credit card. The idea is bizarre to them. Oh, and they have DELICIOUS food, and beautiful scenery and castles. Maybe I should go back and live there again 🙂
heeeeeeey there, I’m so late to this party but I just happened to be bloghopping and came across this post. As a German I had such a good laugh at this! Yes I do think we are frugal in comparison to the US. When I was an exchange student in Arizona 10 years ago I lived with a family for the first few months who would go to the mall almost every day and I was wondering how the heck they could afford all this expensive stuff with the jobs they had. Well it hasn’t occured to me until very recently that they probably were in a lot of debt.
I can’t think of anyone here who would use their credit cards to buy “fun” stuff or paying for eating out. I do have a credit card but the only reason I do have it is for traveling to the US, as traveller checks are hardly accepted anymore and cashing them has become such a hassle.
Haha, thanks Jenny! Always fun to hear the German perspective and love that you stumbled on this article.