How I Saved $3000 as a Recent College Grad in NYC

I moved to New York during the singularly inauspicious year of 2002. The city’s economy was in the dumps, and I was lucky to have a job at all. It was an academic job, and so I made a whopping $28,000 per year.

In a city where the average rent is (today) around $2,553 per month and a renter is usually required to earn 40 times the rent, my salary didn’t go very far.

Here’s how I managed to save $3,000 while getting by.

I used the envelope system ruthlessly.
I budgeted every single penny at the beginning of the month. Because I got paid only once a month, this made it pretty easy to see where all the holes in my budget were.
I paid off my credit card every month in full.
I ate a lot of pasta, bread, tofu, and vegetables – all cheap.
Only once did I call home and ask mom for money.

Last weekend I found one of my old envelopes. I don’t think I want to go back to that system again; it was pretty unforgiving, but it’s a good reminder of how comparatively luxurious my life is now. Here’s a breakdown of my average budget:

$1800 monthly after-tax income
$600 rent (for a 600 square foot apartment split between 4 people)
$300 student loans ($250 minimum payment)
$200 savings
$50 utilities, laundry, etc.
$100 credit card
$150 food
$400 spending money

I had $100 per week to do anything I wanted with. I bought clothes, I went out with friends, and when the money was gone, I stayed home. Sometimes I spent $300 in a week and spent the rest of the month bored. Those months were long, but they taught me to think of my credit card as a lien against future earnings. Whatever I racked up on my credit card I had to pay in full next month. Things happened, of course: sometimes I had to raid the savings account to pay my credit card bill, but I treated my savings account as a bill to be paid over the next couple of months. Any windfalls and interest went into the savings account too.

The only time I called home for money was when I found out that I would have $300 to get me through an entire month before my full paychecks kicked in. Sometimes there's just an impossible situation to budget around.

And the discipline pays off. It keeps a lot of options open because I don’t have to keep chasing the next raise to keep up with bills. So if I have any advice to recent grads, it is this: don't move to an expensive city on a whim, and make a budget you can live with before you get your first paycheck.

Does anyone else remember their post-graduate budget? Or was everyone smarter than me and started out in cheaper cities?