Monthly Archives: May 2017

How Much Money Do You Need to Live in Los Angeles?

As the second-largest city in the United States, Los Angeles attracts residents from across the country and around the globe. As the epicenter of the multibillion-dollar entertainment industry, the city is a magnet for aspiring actors, directors and screenwriters. With idyllic weather year-round, beautiful beaches and a diversity of scenery, it is possible, during some months, for an Angeleno to snow ski in the morning and surf in the afternoon.

Los Angeles is a perfect study in how the demand curve works. When demand for something is high, prices rise. There is plenty of demand to live in Los Angeles. As a result, everything including rent, food, gas, and utilities is expensive. When considering a move to LA, the first order of business is understanding how much money it is going to take to pay the bills.

The following information is detailed in averages, but keep in mind Los Angeles is a huge, sprawling city. Prices vary wildly depending on where you plant roots. Rents in Santa Monica are not comparable to rents in South Central LA. By understanding the average cost of rent, utilities, food and transportation in Los Angeles, and then making adjustments based on your unique circumstances, you can narrow down the range of how much money you need to live there.

Average Rent in Los Angeles

As of March 2017, based on figures from, the average cost for a one-bedroom apartment in the city center sits at approximately $1900 per month. If you are looking to get roommates, a three-bedroom apartment averages slightly over $3,420. The good news is that while these averages may seem scary to a new resident, they are skewed upward by the presence of extravagant luxury rentals in the wealthy areas of town. You can find plenty of Los Angeles rentals for under $1,500 per month if you go outside of the city center, though it is advisable when you find something that seems cheap for the area, to investigate the neighborhood and the apartment to ensure it is somewhere you are willing to live.

Average Home Cost in Los Angeles

If you can afford to buy in Los Angeles, prepare yourself for stiff competition and sky-high prices. According to real estate website Trulia, the average price of a home per square feet in Los Angeles is $554 as of March 2017, and current trends indicate this number will soar this year. Currently, the average cost of an LA home is hovering at $699,000. If you’re considering buying in the LA area, it is beneficial to get pre-approved for a mortgage as this will assist you tremendously when closing a deal with the seller. You can research current mortgages available for a home in LA using a tool like a mortgage calculator.

Average Utilities in Los Angeles

Like many parts of California, the Los Angeles region does not have a monolithic climate. Several micro-climates comprise the area. For example, the San Fernando Valley regularly reaches the triple-digits during the summer and can be quite cold for Southern California during the winter. Malibu, by contrast, rarely exceeds 80 degrees and has only dipped into the 30s a handful of times. Your utility bill can vary greatly based on the specific climate in your neighborhood. Citywide, the average utility bill is $133.50 per month for an 85m2 apartment. This figure fluctuates throughout the year and will vary according to the size of your home, but you can use it as a benchmark.

Average Food Costs in Los Angeles

Food in Los Angeles is significantly more expensive than the national average. A gallon of milk costs $3.79, and a loaf of bread costs $2.50. A dozen large eggs is $3.62. For a pound of boneless, skinless chicken breasts, the cost is $4.54. Even a frugal consumer, to be safe, should build $500 into his monthly budget for food costs in Los Angeles.


Save More Money Can Reduce Financial Stress

I’ve long held the position that even though we live in one of the wealthiest, most financially blessed countries ever, as a society, we also live a life of serious financial stress. I often joke that it’s probably less stressful to live in the rainforests of South America, hunting and gathering, than to live in our modern, tech-savvy society, paycheck to paycheck. A lot of this stress stems from the fact that, as a society, we just don’t save money very well. According to a past Marketwatch article, almost 69% of Americans have less than $1000 saved. That is an astonishing amount of us that are basically one paycheck away from homelessness, or at least raiding our retirement funds in case of an emergency.

Why Americans Have a Hard Time Saving Money

There is a plethora of reasons behind our insufficient savings habits, such as a lack of discipline and making bad financial decisions. Maybe, it is simply that good jobs and hourly rates just don’t exist anymore for the lower and middle class (which I would argue as a legitimate factor). We can even rationalize that the value of the dollar doesn’t go as far as it used to, therefore, neither will our paychecks. Regardless of the validity of these arguments, our financial habits have a direct impact on our ability to save and our overall financial well-being, regardless of the inflation rate or our income level.

How to Alleviate Financial Stress

If you find yourself significantly stressed out over money, there are several adjustments that can be made to alleviate that pressure and simplify your life. But it does require discipline and sacrifice, and a willingness to live with less. For example:

  1. Flip the “whip” – Many of us cannot legitimately afford the car parked in our garage; it’s possible we can’t afford the house it’s parked in either. If your car payment exceeds 15% of your monthly net income, not gross (we live off the net), then it’s time to consider downsizing or getting rid of your vehicle. I have done this before myself, and although it’s unpleasant, it’s better than living in stress and worry. Maybe 15% doesn’t sound like much, but if your mortgage or rent is near the recommended limit of 28-30% per month, almost half of your net income is being consumed by rent and a vehicle. The change is worth it. Alternative transportation could be used for the short term if available, such as public transportation, occasional ride-sharing with Uber or Lyft, and even carpooling to work. Assuming your car is not upside-down in value and you are diligent in saving in other areas, it shouldn’t take too long to buy a used, older car outright, completely eliminating a car payment. (For related reading, see: Options for When You Can No Longer Afford Your Car.)
  2. No cable – In my opinion, cable service is one of the biggest wastes of money. In the average household of three to four TVs, cable and internet services can run $200 per month or more. I recommend having only internet and purchasing a streaming device with no recurring monthly cost. These “sticks” allow you to stream movies or purchase programs or apps. I have recently done this myself, and eliminating cable alone is saving me close to $1500 per year. (For related reading, see: Alternatives to Cable TV.)
  3. Gym membership – these can easily cost $600-800 per year, depending upon how swanky the establishment and package that was chosen. With YouTube and DVDs, it’s so easy to get a quality workout at home without having a ton of money worked out of your wallet. Eliminate the membership, not the exercise.
  4. Side hustle – I have always been a huge proponent of a side hustle, or part-time gig. During my transition of leaving corporate America to go independent, I also had a part-time job while I built my practice. Even if you have a stable job or career and feel you could save more, find a good side hustle. Do something you enjoy and make some extra cash while doing it.

If you are feeling the monetary strain, downsizing your car, getting rid of cable and the gym membership, and finding a side hustle can have a dramatic impact on your budget. It takes a bit of courage, but one can transition from living check-to-check to having a net surplus per month, depending upon your situation. If you are having debt and/or budgetary concerns and you want to make some positive changes but are not sure where to start, reach out to a qualified financial advisor. If you change nothing, then nothing changes!


Money-Saving Cruise Ship Tips

Cruise! Just that one little word conjures up images of a luxurious vacation complete with fine dining, exciting nightlife, interesting ports of call, a room of your own – and a single, all-inclusive price. At face value, cruises are tough to beat. But many people, once they step onto the deck, forget how hard they searched for a bargain fare before booking the trip. Suddenly feeling like they have endless credit and bottomless wallets, they flag down every passing waiter to purchase the drink of the day in a souvenir cup, and they buy their suntan lotion on board instead of at a discount store.

Unfortunately, the party ends with a six-page bill tucked under their door at the end of the trip. The all-inclusive bargain has suddenly become very expensive. If you’re looking to save money on your next cruise, here are some tips that will help.

Research and Plan in Advance

On the day you decide that a cruise is in your future, start putting money in the bank to save for the trip. While just about everyone searches the internet to find a bargain vacation, far too many people pay for their trip with a credit card. If you tack 20% interest onto the price of the trip, your trip is no longer a bargain.

One you’ve booked your cruise, do some research on the ports of call before setting sail. Not all of the activities at these places are covered in the cost of a cruise. By doing some preliminary research, you can have a good idea of how to enjoy the local attractions without breaking the bank. Many of the major cruise lines have websites that include prices for the excursions offered at the various ports.

After you have identified the excursions that you think you want to take, do some web research and read the reviews from past visitors. If previous visitors enjoyed the ports of call and the sightseeing options, you probably will too. But be careful that the excursions you pay for aren’t simply activities you can do on your own for cheaper. For example, the cruise line may offer a trip to the beach for $45 per person when you could take a cab to the same beach for $10. Also be careful about paying for sightseeing tours that the cruise line offers. By doing a little upfront research, you can plan your own sightseeing tour for a fraction of the cost of the tour organized by the cruise line.

Set a Budget and Stick to It

If you’ve planned in advance – by buying your suntan lotion and other sundries before departure and knowing which excursions you want to take and how much those trips will cost – you should be able determine an on-board budget and stick to it. Extras to budget in advance for are spa services, food costs, beverages and souvenirs.

Sure the spa may be overpriced, but you’ll be on vacation and, if you know you can’t resist the allure of a massage, plan accordingly. When you go to the spa, be sure to ask about discount rates. Ships often offer special rates on various services at some point during the voyage.

Your extra food costs should be easy to control, since meals are generally included in the price of a cruise. There will be so much free food available on the ship at all hours of the day that it makes no sense at all to buy food at the add-on snack shops and restaurants requiring a fee. Many of those restaurants serve the exact same food you can get in the main dining rooms.

When it comes to beverages, if you just can’t survive on the free beverages – which generally include lemonade, juice, coffee, tea and water – look into the “bottomless” soda option available on most ships. If you like wine with dinner, consider purchasing what you think you might need for the trip on the first night. The wine steward will serve it by the glass and keep it refrigerated overnight.

Avoid the on board internet service or telephones. If you must make a call, wait until you reach a pay phone in the next port. (Keep in mind that you are on vacation. Do you really want to spend your vacation talking on the phone or checking your email?)

Finally, find out about your cruise line’s tipping policy, and plan ahead for the tips. The service staff works hard to give you the perfect vacation, and they don’t deserve to be short-changed because you didn’t budget appropriately.

The output of young family money

Are you parents that struggle month to month to stick to a budget? Are you stressed about being able to pay the bills even though your income is good? Are you wondering if there is a better way? There is and it starts with a philosophy. Here are the five steps to that philosophy of budgeting for young families.

Understand What You Need to Live On

Calculate how much money you need to live on. Your necessities include your utilities, rent or mortgage payment, groceries and gas for your car. For us it also includes diapers for the one-year-old and my wife’s new lighting equipment for her videography business. I think you get the picture. Write down how much you need by looking over your past expenses. Then add these up and see where you are. The total number may be smaller than you think, which will give you a more flexible budget. (For more, see: 10 Common Habits That Can Increase Wealth.)

Treat Savings As a Needed Expense

I encourage you to treat savings as a needed expense in your budget. My wife and I use this thinking and it has helped us make sure we are building up our emergency fund each month. I recommend 10% of your income to start with. And if you can’t do 10% then try 5%. I know it’s hard since you are wondering how you will have a social life, but think about what happens if your car breaks down or your toddler breaks your phone. By having cash on hand for the unexpected, you are able to still afford the necessities of life.

Don’t Forecast Income

If money is not in your account, you don’t have it, so don’t plan on using what you don’t have. It just doesn’t make sense. Something that I have learned recently from YNAB (You Need a Budget) software is that you should be using money that is aged. In other words, using money that you already have. This can be hard to do when starting out, as you may have to cut back on your fun expenses before your money is aged. But once it has, your stress drops significantly because you can be confident you have money for the next month’s expenses already. Saving consistently enough to build up a month’s worth of living expenses allows you to afford things like a new water heater without blocking your cash flow. (For more, see: How to Create an Effective Budget.)

Don’t Fool Yourself

Everyone knows that you may need to save for some house repairs, pay for a children’s museum membership or renew your Amazon subscription. Why not budget for these a little bit each month instead of trying to figure out how to pay for them when they surprisingly come up. This part takes a little bit of work but setting aside $20 bucks a month for Christmas presents starting in January prepares you for Christmas in December. Understanding your annual expenses allows you to do something about them and be proactive when it comes to planning for them.

Your Budget is Liquid Not Frozen

We all know that every month presents different needs financially. For me, one month we may eat out more and buy fewer groceries or my daughters may need new clothes. Because different months present different scenarios, we need to be adaptable within our budget to afford it. Having a flexible budget means finding an area in your budget where you may have wiggle room in one month but are maxed out the next. It is not saying we can splurge a little more. You just end up hurting yourself more if you do that.