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how well can u live on an intern salary and no loans to pay off?

Discussion in 'Internship' started by p54, Dec 10, 2005.

  1. p54

    p54 Member
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    I don't have any loans and I've never worked a real job so i have no idea how much money 40K is in the real world.

    How well can i live on 40K after taxes?
    My car is paid for, but I would like a new one, proabably in the 25-30K range.
    I don't own a house, i rent. my rent is about 750 per month
    So basically, I would only have living expenses, rent, or house note, and food, entertainment, phone service, etc......

    can u live okay on that salary for 3 years? or will u still have to be really careful on how u spend?
     
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  3. cabinbuilder

    cabinbuilder Urgent Care Physician
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    It really depends on how much credit card debt you owe and how well you like to eat. If you buy the prepackage most expensive food and eat out all the time you will be cutting it close. Of course if you don't have a family to support $40K actually goes a really long way. Not ever haveing worked before it's difficult to know how good of a money manager you are. Before med school I supported myself and 2 kids on $24K/yr so $40K is a HUGE leap for me. My advise? See how your bills pan out the first few months, don't overindulge too much and always have some backup money (my personal number is $1500) in case of emergency like car repairs, etc that you don't anticipate and then you can get a feel of what you can spend and what you need for basic comforts. Just know that you are the minority and are extremely fortunate to not have student loan debt. That is not the norm.
     
  4. Wednesday

    Wednesday Senior Member
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    It really depends on where you live.
     
  5. Poety

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    Cabin: please advise me on how to pay for my family on 40K, if you could do it off 24K you are the MASTER at budgetry!!! PLEASE PLEASE advise! We're practically broke with hubbys 40K and the new baby! (and thats with me taking out massive loans to subsidize his income!)
     
  6. mshheaddoc

    mshheaddoc Howdy
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    As a single person with no debt you can live fine off of it. You can calculate by dividing you net income by 12 and that will give you a monthly budget. if your making 40K (net) as an intern that's over $3K a month. If you can't live off of that ... don't know what to say. If you don't have an overly extravagant lifestyle I'm sure you'd be fine. If not maybe your parents could help you out.
     
  7. ericdopt

    ericdopt Member
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    Yes, I agree. We are living on ~$40K, while my wife stays home with our two little ones. It's very tough,especially with credit card debt (from moving, new furnace, etc.).

    My first job out of undergrad was in the $30K range, man, I thought that was a c*ap load of money, especially if you've never made money before and are single.
     
  8. fuegofrio17

    fuegofrio17 Member
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    As someone else stated, it really depends where you live. The cost of living and local taxation are huge factors. $40,000 in the Midwest or in Texas which has no state or local income taxes will take you a long way. On the West Coast or in the North East you can pay $1300 - $1600 a month in rent for a one bedroom. Parking in a city can be $200-$300 a month. Plus in some locations you have city wage taxes as well as state income taxes. I'm married and live in Center City Philly. I pay $1300 for a 1 BR/ 1 1/2 bath, I pay $200 a month for parking, and the corrupt city government takes 5% of my salary as a city wage tax. From the $40,000 I make, I take home $2000 a month. $1500 goes towards rent and parking leaving $500 for food, utilities, gas, etc. Luckily, my wife also works, thus we can afford to live alright. Granted, I could live in a cheaper place that is less safe or in a suburb further out, but how far your money will take you is very location dependant. A one bedroom in Manhattan will easily run you $1600 a month.
     
  9. Mirror Form

    Mirror Form Thyroid Storm
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    40k per year after taxes is great income for a single person. I make over 50k after taxes, but I have a car loan and student loans to pay off, so we're probably about even (those payments add up to close to 10k per year). I feel like I'm living large c this salary. As far as buying a new car right now, I'd hold off for a little while until after you've gotten settled in to your new budget. That way you'll have a better idea of how much you want to spend.
     
  10. Bobblehead

    Bobblehead Senior Member
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    Before you get your paycheck (and details about how much insurance, etc. will run you) you can estimate the impact of taxes. City, state and federal tax rates are generally available on the web. For city taxes (if they apply to you) you can get those of your local city treasurer's website usually. The state revenue service (or equivalent) will have published rates or tables for state taxes. You can then calculate your withholding based on the interval on which you're getting paid (weekly, bi-weekly, monthly) and the amount of exemptions you're claiming (usually 1 as a single individual). The same goes for the federal tax rates.

    For example here is publication 15 for 2006 which will give you the federal withholding tables depending on your pay period and gives you the formulas to calculate the amount your exemptions are worth: http://www.irs.gov/pub/irs-pdf/p15.pdf

    You should also consider some other things. If this is the first time in your life that you're going to be receiving a "real" paycheck you'll suddenly be confronted with a lot of money. At least in relative terms it'll be a lot of money.

    If you have no student debt, your car is paid for you're well ahead of your peers. How old is your car? Is it still safe and servicable? Your question will be do you need a new car or do you want a new car? If you need a new car do you need one that costs 25k-30k. Bear in mind this sum will be equivalent to the ENTIRE take-home pay that you're going to earn in the first year of your residency. Can you make due with a used car?

    There are other things you should also consider. If you've gone straight through you're probably in your late 20s. That means that if you're debt-free you're in a great position to start saving for retirement. If you think that's a little too far away bear in mind that you currently have the advantage of time. Time for compounding is the most powerful force you can utilize to save for retirement. Investing just $1000 per year for 5 years now will through compounding allow you to end up with more than if you were to invest 5 times that amount for 5 years but do it 20 years later.

    The vehicles for retirement savings vary but you can consider both a 401k/403b through work (likely unmatched, which means your employer will not give you a matching contribution for the amount you're putting in). However, it is pre-tax money, reduces your tax burden right now and allows you to grow your money tax-free until you're ready to take it out (when it will unfortunately be taxed as ordinary income vs. long-term capital gains). You could also consider an IRA, either traditional (tax-deductible) or a Roth IRA (after-tax money but has no requirements for mandatory distributions and all money can be taken out tax-free after you meet age requirements).

    The other thing you'll need to decide on is where to invest the money. If you have no idea the best holding strategy for the moment would likely be a broad-based stock index fund until you decide what you'd like to do.
     
  11. Poety

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    I just wanted to say thanks to everyone for all these informative posts, I'm finding them really useful as I'm sure the OP is too! :)
     
  12. 3dtp

    3dtp Senior Member
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    Living cheaply:

    I cook nearly all my meals in, they're generally healthier than the enormous restaurant portions or the supersizit lardglobules. Food budget/groceries around $150/month (this will change as truckers charge fuel surcharges for $3/gal diesel)

    I live with border $540/month housing plus 150-300 for heating in winter.

    My cars are old. Some would say ancient, and I plan on throwing them away when they breakdown. For 23-30 k you can buy a nice new car, pay $1100/year for insurance, end up having to repair them when they break, and these repairs can be expensive, or you can buy a reasonable car for around $3k, spend another $1k or less getting tires, brakes, detailing, tune up (or save even more by learning to twist a wrench and do it yourself) changing your own oil (oil and filters cost $10, a wrench to do the job is another $10 and it takes less than 15 minutes to do, especially if you wear exam gloves to keep you hands clean). The $3k car is "disposable" so you don't need collision insurance saving $800 or more in insurance, and it'll probably last you 2-3 years, or about 1300/year.

    The new car will last 10 years cost about 500-800/year in repairs and maintenance over its lifetime, so your yearly cost would be 3500, not counting fuel and insurance. If you dump your car every three years, you spend even more, since they lose most of their value in the first three years.

    It can be done, but you have to be clever about it. I have a little vegetable plot in the summer, so all those juicy tomatos, lettuce, green peppers, beans and herbs are free. And I gave up Breyers when they doubled the price and made a half-gallon only 56 oz. My little protest. I also live near the water, and there's nothing like sitting on a pier with a fishing pole, filling the freezer with HDL bearing seafood.

    Now(since you love the smell of jet-fuel), if I could only figure out how to keep gas in the the airplane....I always fly with passengers who help out with the gas, and it's paid for, so all I have to come up with is inspections and insurance, and I pay less for insurance on it than on the ancient cars.
     
  13. PatrickBateman

    PatrickBateman Senior Member
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    I'm a little shocked by this. Do you even try to fix them yourself? What kind of problems generally prompt you to just ditch the car?
     
  14. gwen

    gwen Senior Member
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    wow, no offense but you have it pretty good. most ppl have loans (usually don't pay it off during residency), a dinky car w/ over 100K miles, a family to take care of, and very little to spend in the end. are you looking for a car that costs 25-35K or one w/ that much mileage?! perhaps you are used to that lifestyle so i don't blame you...but most residents buy a one-two year old car under $20K (I bought a 2004 corolla this summer for $14K) and it was the best deal in town. buying a new car at this point in my life made no sense...i'll be an attending in three years after fellowship and then i can spend as much as i want to...the corolla will serve me just fine til then.

    i'd suggest cutting down on some things that you really don't need (like a new $25,000 car or Dish network or road runner or magazine subsriptions, etc). see how your next few months go as far as spending is concerned, and then you can add the 'luxuries' one thing at a time. i'm seriously giving advice as a friend, not trying to offend you. just my two cents...(dang, just wasted two cents)...
     
  15. skypilot

    skypilot 2K Member
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    Exactly. Don't spend your entire year's worth of take home pay on one purchase by buying an expensive new car. You will pay through the nose for theft, collision insurance and excise tax if you buy an expensive car too. Then you will have spend much more than your entire first year's take home pay. Try not to buy a gas hog either. :)
     
  16. 8744

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    Man. I'm not complaining but try living on a resident's salary with three (soon to be four) kids, five dogs, and the usual expenses.

    We don't have any expensive hobbies. No personal watercraft. We never eat out and are staring down both barrels of financial ruin if I don't start moonlighting next year.

    And we're moving next June and will have to eat the real estate fees on the sale of our house or worse if it doesn't sell for what we paid a year ago. nOt ot mention moving expenses.

    If you're single I don't see how you can go wrong on 40K per year, especially as a resident when presumably you won't have time to spend mony.
     
  17. NRAI2001

    NRAI2001 3K Member
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    How are you debt free starting residency? Parents pay for med school? Scholarship?
     
  18. Poety

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    Not a pilot though, skydiver here :) You really are good at saving money, I think my problem is that I really can't live like that, I don't think I know what it is to live like that!~ (sounds very nice though!) - I think Im a spoiled brat after reading all these posts :( I just can't give up cable, and my nice car, and my animals, and all of my daughters cute clothes!
     
  19. NRAI2001

    NRAI2001 3K Member
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    Is your avatar a picture of your daughter ?
     
  20. cytoborg

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    If your rent is only $750 and you don't have dependents then you will likely live like a king, compared to being a poor student.

    My rent on my one-bedroom is $1750 and I can still afford to eat most of my meals out, go to concerts, buy clothes for the first time in years, etc. My salary is more $ than my family of 4 ever had when I was growing up, so it feels like a LOT of money to me - everything is relative I guess. I don't have a car payment or cable so I'm not going nuts, but I don't have to watch the bank account daily like I used to.
     
  21. p54

    p54 Member
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    yes, i am completely debt free
    my parents paid for undergrad and med school and all other expenses up until this point, once i start residency they will stop supporting me of course, which is only right
    yes i know its pretty rare to have no debt coming out of med school and i consider myself very lucky

    about the car, i don't want anything really fancy(lexus, bmw, benz, etc), i want a 4 door full size pick up, probably one of those new f150's, and i'm thinking it would cost about 25K, i would really like new full size nissan titan or toyota tundra, but those would be much more expensive, right now i have a 8 year old car with 110K on it, it still runs well and is a honda so I think it will last me another 70K atleast...and it looks good too, been garaged all these years and i take care of it, and yes i am used to nice things that i don't really need, but i guess i will have to cut back on my expenses once i start having to pay for things myself


    thanks for the input everyone, i appreciate it
     
  22. Doctor Bagel

    Doctor Bagel so cheap and juicy
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    well, you'll definitely be okay, and money will not be tight as a single person on $40k. i agree with the others and would not purchase a $25 - $30k car. you can get a perfectly good, very reliable car new for $15k or so and used for maybe even $10k. i don't know where you live, but i'd also see if you could rent a little cheaper, but if not, $750 a month won't kill you.

    however, while you'll be okay, you can't be extravagant on $40k, so budgeting and saving money is always a good thing. check our resources like the tightwad gazette. my big tips for saving money are eating at home (and eating lots of cheap things like rice, beans, cabbage, pasta etc. (yeah, i'm a vegetarian)) and going cell phone only. if you ditch the landline, you'll realize how superfluous it is if you have a cell phone. ditch cable and get a library card for entertainment.

    the one thing the media trains us to do that you can't do on $40k is buy lots of new clothes unless you get them at places like target or old navy.
     

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