Reader Mail: What We Sock Away

So, I have a question I’d love to put to Billfold readers. The background: Recently, my husband and I applied to rent a $2,300/month 1.5 bedroom apartment in Queens. We have okay credit, and our combined incomes are about 70 times the monthly rent. So this should be a no-brainer, right?

Unfortunately, no. The landlord, as part of the paperwork, asked to see our bank statements. When we sent them over, he said we lacked “substantial liquid assets” and denied us the apartment. His logic was, “If one of you loses your job, I need to know you have plenty in savings so that you can still pay your rent”. The irony is, I actually did have a lot in savings at one point — but we raided it to pay the deposit on our current apartment, and then I became unemployed for five months (which tends to deplete your savings), before getting my new job 6 months ago. We always thought we were pretty responsible, as we still have a few grand set aside, and a few grand in a 401(k) — but he said that wasn’t sufficient for what he’s looking for.

So, my question is: How much do people usually keep in savings? My husband and I are both in our late 20’s, and have lived in NYC for years. We’ve always assumed most people here — especially renters — don’t usually have substantial savings accounts (or worse, are paycheck-to-paycheck). Are we wrong? Or is our once-considered landlord being unfair? — J.M.

My friend Dave was my co-worker before he became my friend. He didn’t work in the same division as I did — I was in editorial, and he worked in programming — but we sat at the lunch table together, me with a homemade sandwich and greek yogurt, and he with a glass tupperware container filled with last night’s leftovers: roasted vegetables, minestrone soup, pasta with homemade tomato sauce. I asked Dave why he didn’t go out to buy lunch with other people in his division, and he said, “probably because of the same reason why you bring your lunch to work: My wife and I are saving money to buy a house and have a baby.”

Dave made twice as much money as I did — I know because we talked about it one night at happy hour and he shook his head at my salary, and wondered how writers are able to earn a comfortable living. “Probably by doing the same thing you do,” I said. “I spend money on the things I need, and I try to save the rest of it.”

Before Dave began earning more than $100,000 a year as an engineer, he was a poor grad student who lived by himself in a bad neighborhood in Southern Brooklyn. Dave says there were drug dealers in his roach-infested building, that residents smoked weed on the stairs, and that he obsessively checked the crime reports in his neighborhood to figure out the places he should avoid, and the times when he should stay in his apartment. When he finished his graduate program and went to work for a bank, Dave went from earning less than $30,000 each year to suddenly earning more than $100,000.

This is the part of the story where the poor grad student who is making big money in banking is supposed to say goodbye to his terrible neighborhood and give himself an upgrade to a better life. But Dave didn’t move — he kept his grimy apartment, and socked away as much money as he could. “It’s easy to expand, when you have the money,” he said, “but it’s harder to contract when the money is no longer there.”

My version of keeping the grimy apartment happened when I went from earning $30,000 a year to switching to a job that paid about $50,000 a year, and instead of making an upgrade, I kept my apartment and roommate in Queens, and socked away as much as I could for a few years as my career — and salary — grew. I saved because I wanted to quit my job and start a website (this one), I saved because I wanted to eventually live comfortably on my own (which I do now).

So, how much do people keep in savings? It can be zero dollars. It can be half of a paycheck. It is a question we answer after the bills are paid, and there is money leftover that isn’t needed to fulfill any financial obligation: Do you save that money, or do you spend it? We set priorities. Most of us spend it because we tell ourselves that life is too short, and we want to spend it on a thing we want to do or own. Some of us seek balance and spend a little, and save a little, and others are content to save it all, and dream about a really big thing they could do with the money in the not-too-distant future.

You can live in New York City and save money, and you can live in New York City and spend all your money — the latter just happens to be more common, because it is the easier thing to do. The hard part is finding the income that allows you to save. The harder part is actually saving once you do find the income.

Unfortunately, the market is not in favor of renters. The market here is highly competitive, and landlords can hold out for the perfect tenant. When I applied for my current apartment, I was competing against six other potential tenants. I had the money and the good credit score, and that edge helped me beat the odds. I felt very fortunate.

You once had plenty of money in savings. Life happens, and that money was used during a rocky time period (which is one of the main reasons the money was there in the first place). It’s disheartening that the landlord you dealt with expected you to have a big savings account. But whether or not you’ll have a big one again is up to you.

See previous advice columns — Questions: mike@thebillfold.com

Photo: Jay Woodworth

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