r2i forum

Dear All,

This is a great forum. I am learning a lot about financial management here. A little bit of my background. My wife (27)and I (30) moved to US from India in 2007 October. We live in Washington DC metro area and both are working. We have no children and have no plans for kids for another 6 years nor buy house. Our goal is to maximize savings, but at the same time have good time. (not too extravagant and not too tight). What are the "typical" savings for a double income desi couple ? This will help us in planning our next 6 years here. Our plan is to complete 6 years of H1 in 2013 and r2i. We are very firm on the plan.

Also, if you can share any thoughts on how to maximize savings that would be great. Can anyone share what are the typical monthly expenses in DC area?

does not matter where you live in US, you can save 60% of your earning you
can do good and return to india with your saving, you can live like a king.:emwink:

OP:

Don't get into the "savings mode" if your horizon is 6 years from now. If you're going to be calculated in your approach, you'll be wasting 6 years of your life. The key is to invest what you save. Nobody got rich saving. Its investment at the right age that you can count on in your retirement.

Both of us got our drivers license couple of weeks back and we are in the market for buying cars. Any tips or suggestions? Primarily we are looking for low maintenance with an eye for resale when we leave. We have some family in Florida and North Carolina and we may take two long trips per year

Vidyashankar and his wife,
Welcome to USA!
You guys are going in the right track - thinking about 'next 6 years', consulting the right people in the right forum, clear cut goals, and so on. Wish you be successful in your plans.
Think about what you want to do when you return to India. This would (should) drive your actions now. If you want to (semi)retire when you return you may want to lay the foundation for that starting now. When making calculations, include about 7% as inflation rate in India. If you want to continue working there but at a certain position/title etc., then you would do some additional different things like developing the related skills and so on.
Also think about why you have come to the US and what you wanted to do here.
There are a lot of ways to save and invest. Since your goal is to r2i after 6 years, think about ways to invest in India. Think about the possibilities of generating some passive income stream in the US that you could use when you are living in India (since you have some relatives here, if they are in a position to help you with that, then that would work).
Regarding the car, my suggestion is to buy a used car of about 5 years old. It should last till you r2i. If you plan to buy 2 cars, then buy the 2nd one to be about 3 yrs old so that you don't end up having two cars going for repair. Repair is a cheaper option than monthly payments for a new car and its depreciation rate. Car as you know is a depreciating asset, so it will not add to your goal of saving if you go for a new car. For long-distance travels, you can get a rental car or cheap air tickets - assuming you are not going to make too many such trips in a year.
If you are interested in driving luxury cars, you can always rent them for a week or so.
For buying cars, look at kbb.com where you can search for car prices of used cars in various conditions. It would also give you an idea of which ones have good resale values when you compare the age and the price differences. Typically, cars like Honda and Toyota have good resale values and fewer repairs. You can use carfax.com or a local repair shop for evaluating a used car that you plan to purchase. You can request the seller to come to your place or some common place to show the car and if you are satisfied then to take to the repair shop for checkup. Typically the buyer pays for the checkup.
Inquire from multiple auto-insurance companies about the insurance rates. Go for a higher deductible ($500 or $900) depending on your driving experience. A car with safety features would reduce the premium. Taking a drivers safety classroom-course would reduce the premium.

Search in the internet for apartment rents. Sometimes if you can drive an additional mile or so than your preferred spot you can find apartments with lower rents. Make sure that the lowest one is not a troublesome one.

This will be the most important factor in determining the success of your savings goals: In your payrolls, setup automatic deposits to savings/investments accounts - 'spend' your salary on your savings/investments first.

Watch out on the telephone bills, power and gas bills. Find ways to reduce them without sacrificing the talking time, etc.

Have a basic plan on how often you will make trips to India etc.. Ticket prices vary widely depending on the time of the year and how early you blocked the tickets.

It is extremely cheaper to make food or get from Indian people who sell chapathis etc., than going to the restaurants - having a right balance would save you a hundred or so a month.

Purchase clothes shoes etc,. during sale in Macy's and such. They give 40% to 60% during Sale times when you can get high quality ones for down-to-earth prices. E.g., I recently bought a good $75 leather shoes for $40.

Get membership at places like Sam's Club or such wholesale stores, when you can buy in bulk and save. I don't have statistics on this though. Sometimes I think that we purchased too much and used them just because we have had so much.

These points should help reduce the figures in your budget and channel them to the automatic payments for your savings/investments first.

Again good luck, and enjoy your stay!

Thanks a lot to all the replies. They are very valuable. One of our colleagues is selling his Corolla and we are going to check that out tomorrow.

OP, Don't plan too much. Savings are never enough. Life takes very strange steps so planning for tomorrow at the expense of today never worked for anybody. On the other hand, most people who live well, continue to do well in life.

The gap between living well and living stingily is quite narrow in the US. Major expenses are house rents and travel. You can save a lot by living in cheap apartments (I wouldn't advice it) and less travelling. I don't see any other avenues of saving money for a married monogamous typical Indian couple.

moreqa;68839Get membership at places like Sam's Club or such wholesale stores, when you can buy in bulk and save. I don't have statistics on this though. Sometimes I think that we purchased too much and used them just because we have had so much.
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I had once taken sams club membership but went there just a few times. I mean, who needs to buy a huge bag of apples or potatoes or 24 bars of soap?

There is no point in taking Sams club membership for two people. Also, If I were you I wouldn't put off having kids for six years looking at both of your ages. Maybe 3-4 years at the max.