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Look, you’re young. I am, too–or at least I once qualified as “young.” The biggest mistakes I ever made when I first started making the big bucks ($40,000 a year = 40,000 McDoubles a year) was not buying the right things in the right order. It’s easy to get all hopped up about how much an entry-level salary can buy you.
Let’s base this off of the average starting salary for a college graduate. It’s a little over $45,000 dollars a year, which is pretty nice. Also, let’s assume you have a little bit of money saved up that you didn’t blow on spring break every year. I’m not about to do some complex, economic experiment. I’m just assuming you have enough money to buy things, and you have zero possessions (other than a car) of your own that were not purchased by your parents.
These are listed in order of importance. Stick with it, and you’ll never go wrong.
Bed/Mattress
Head on over to your local Mattress Firm and get yourself set up with a nice, $300 queen-sized mattress. A mattress is something you should never buy used. The average mattress contains pounds (POUNDS) of dead skin, dust, and allergens after just one year of use. Rest easy and finance the damn thing if you have to. If you’re not cool with financing, buy a $20 air mattress and save up for a month.
What you should spend: $250-$500
Dresser
Once you get yourself set up with a bed, you might think your next move is to get a TV. Stop right there, buster. You have clothes. You need somewhere to put those clothes other than on your floor or in the hamper. Being organized should be priority numero uno before you start indulging yourself. This is why we have IKEA. Do NOT go buy some crappy wire or plastic storage shelving. It’s time to be a grown-up.
What you should spend: $75-$150
Couch
Alright, now we’ve moved on from the bare necessities and are moving onto the comfort necessities. The worst thing in the world is using your bed for everything. Your bed should only be for sleeping. It’s tempting to just plop down on that thing after a long day, but trust me, a big, comfy couch is something that will keep you sane. Hit up Craigslist and find yourself a nice, gently used couch. No futons.
What you should spend: $150-$300
TV
Alright, now we’re turning this apartment into a home. Nothing says, “I am a grown-up who makes money” like a good, 40-inch flatscreen. In terms of value, go with either Samsung, Sharp, Sony, or Vizio. Stay away from the likes of Westinghouse, LG, Toshiba, and Insignia. Stay away from smart TVs. Buy a cheap Blu-ray player and save yourself a few sheckles.
What you should spend: $250-$450
Crock Pot
This may not qualify as a “big” purchase, but having a crockpot at your disposal is something you’ll thank yourself for later. Wake up 30 minutes early. Toss some protein, veggies, and seasoning in there and come home to delicious, fall-off-the-bone meat and the easiest meal you’ll ever prepare.
What you should spend: $20-$30
Bedstand
Once again, IKEA to the rescue. Match it up with your dresser to look like someone who has his or her shit together. Spare cell phone chargers, condoms, paperwork, books–you name it. They can all go in that sucker.
What you should spend: $50-$100
Secondary Seating
Sometimes a couch just isn’t enough. When you’re in the mood for hosting, a solid chair or a loveseat will do the trick. There’s nothing worse than cramming three people onto a couch to watch the game. Secondary seating: know it, love it. Again, Craigslist. Again, no futons.
What you should spend: $100-$200
Gaming/Entertainment
XBox One, PS4, Wii U. Go for the gold. Pick one (or more). Pick something that preferably comes with a ton of apps. If you’re not a gamer, treat yo self to Apple TV or a high quality sound bar. Going full surround sound is for suckers. Plus, you’re going to lose your deposit after your landlord finds out you drilled several holes in his walls, or you’re going to look like a slob who stapled speaker wires to his or her ceiling.
What you should spend: $100-$400
A New Car
First off, Dave Ramsey says never buy a NEW car. Buying a brand new car is a sucker move. Never buy in the model year. Always buy from the year before. Cash for Clunkers might have ended years ago, but there are still places that pay top dollar for your Honda CRV you’ve been driving since high school. Trade her in and make sure you’ve got at least a few grand saved up for a down payment, at least 10 percent of the value of the car you’re buying. Anything less and you’re going to be paying out the ass in interest and monthly payments well into your thirties.
What you should spend: Whatever you can afford. No more than that.
A House
So, you’re ready to settle down. You want a slice of domestic bliss. You’ve got job security, have good credit, got promoted, are ready to set your roots, and can afford putting 20 percent down on a home. First things first, go see a mortgage broker. Go see lots of mortgage brokers. Don’t even talk to a realtor until you’ve got the bank’s approval for a fair mortgage. Make an offer that’s eight to 10 percent lower than the asking price and hope the process doesn’t go on forever.
What you should spend: Let your broker decide.
A Baby
Ha! Like anyone could afford a baby..
Respond
As a real estate broker (albeit commercial) I’m going to give you one piece of advice – NEVER let your broker decide what you can afford.
I did your job for a while. Don’t know how you can stand it.
It’s painful. Doing it long enough to buy a rental property, then I’ll go find an actual 40 hour a week job and have some supplemental income.
Hey Allcommission, can you explain that a bit more for us? I am starting to get into the market of house hunting and I could use some advice.
Thanks,
Simply put, broker’s are self interested – the higher the sale price, the higher the commission. Same with mortgage brokers. They will push you to go with the highest price property you can possibly afford, which will mean they get paid more, but you have to make sacrifices to make your payments. There’s a lot of good info out there, but my rule of thumb for 1st house is monthly mortgage = 25% of monthly income, max. But it depends per person on other debt obligations, etc.
Thanks for the follow up, Allcommission. That makes a lot of sense.
Thank you allcommission! I was absolutely shocked what my pre-approval amount was. When I looked at the monthly payments it was way more than I wanted to spend.
Also you are absolutely correct about Realtors. When I put my offer in she felt I should offer higher, I told her I wanted to start low and expect a counter offer. Seller ended up accepting my offer (no counter) and I closed 45 days later… With $7,000 less debt!
Smart TVs are sick though
And my 40″ 1080p Westinghouse TV I got for $300 at best buy on sale has been nothing but magnificent thank you.
I have an Insignia and have no regrets. Came down to blowing $500 on a Samsung or $250 on the Insignia. After taking many beer showers in the 3 years I had it in college I made the right decision. Sound is shit but that’s why they invented speakers and receivers.
Don’t listen to this column. Spend $500+ on a mattress and $1K give or take on a full bedroom set.
Same. No regrets.
What are you eating with? Eating off? Slicing things up with? I would have thought a dining set (plates, bowls, knives, forks, etc) would have been before a dresser. Worse comes to worse you can put clothes in a suit case for a month. It isn’t the end of the world. But you need to be able to eat properly.
Otherwise I agree with everything but the mattress and the smart TV. You should spend more on a mattress than that, and smart TVs are awesome. Built in Netflix never goes astray.
Where are you finding a new queensize mattress for $300? I had one of those in college, not a good investment warps becomes uncomfortable, fortunately i was in college and could nap. I’d say spend ~$1000 instead and get a mattress you won’t lie awake on for hours thinking you have anxiety when you really just have a total shit mattress.
I’d love to have your super-duper mattress if it were a gift, but if I am buying, I would sleep much better on a $300 mattress with the other $700 stuffed under my pillow.
Not Trying to be a dick, just honest. Sometimes like this case you get what you pay for, pony up the dough and sleep better.
Check this guy out!
I’ve been using the same queen sized mattress since high school and don’t regret it whatsoever, granted it’s a sleep number, but I’m not trading it in.
As long as you put the cash up front no need to replace.
Sleep Number used to be a client… Fuck Sleep Number
Your sleep number: Whatever dead skin equals out to in a sleep number.
Doesn’t hurt to have a decent BBQ pit. Even a classic Weber will do.