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$500k a Year yet Struggling? Let's Do a Double Take

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Re: $500k a Year yet Struggling? Let's Do a Double Take

#111

Post by dan-robertson »

bluGill wrote: post #99
koolba wrote: post #65

Earlier quoted context omitted.

At that income level your neighborhood is likely affluent enough that the public school would be very well funded as well.

Not always. Some are well funded. Others the rich kids from the nice neighborhood go to private schools, so the rich parents don't care about public school funding. Often poor parents don't care about school other than a cheap daycare and so they don't fund the public schools well either. Note that school funding and outcome is not well correlated.

> Often poor parents don't care about school other than a cheap daycare and so they don't fund the public schools well either.

I think that’s a bit of an unfair characterisation. Most parents do want their children to have good educations.

Without having any source or data to back up this claim, I would expect that the difficulties faced by poorly funded schools full of poor pupils are not due to parents not caring about the schools or their children.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#112

Post by zulln »

southphillyman wrote: post #47
aantix wrote: post #6

When my wife and I had our first child, we lived in SF. The neighborhood daycare in the Excelsior charged $1600/mo. This is five years ago. We're about to have our fourth child. With the upcoming summer, if we still lived in SF, we'd have four children in daycare. $6,400/mo.

Anyone living in a high COL city with multiple kids should look into importing an au pair. $2k a month would really help the au pair and her family back home and save the family potentially hundreds of dollars a month

> importing an au pair

No idea if this is the right terminology or not, but it makes it sound really weird in a bad way.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#113

Post by RyanCavanaugh »

kangnkodos wrote: post #100

Here is a detailed list of the missing $103.5 K, from another article with more details on this couple: Childcare (Two Children)- $42K Food for four (includes date night every two weeks) - $23K Home Maintenance - $5K Property Insurance $2.5K Gas - $5K Car insurance - $2K Life Insurance ($3 million term) $2.5K Clothes for four people (no fancy bags, shoes or threads) $9.5K Childrens Lessons (sports, piano, violin, aca…

It's instructive to take the "What's left over" amount ($7,300) and add back all the things which are actually savings (401k, ~half of the mortgage, student loans): $47,600. This couple has a national household median income (pre-tax!) worth of money left over after their already ridiculous expenditures.

They should just stick the $7,300 into an "Other savings" line item and proclaim themselves to be living literally paycheck-to-paycheck.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#114

Post by Konnstann »

kangnkodos wrote: post #100

Here is a detailed list of the missing $103.5 K, from another article with more details on this couple: Childcare (Two Children)- $42K Food for four (includes date night every two weeks) - $23K Home Maintenance - $5K Property Insurance $2.5K Gas - $5K Car insurance - $2K Life Insurance ($3 million term) $2.5K Clothes for four people (no fancy bags, shoes or threads) $9.5K Childrens Lessons (sports, piano, violin, aca…

I can't say anything for most of those but clothes for 4 people should not come out to 10k a year, especially since they said nothing fancy. Even buying high-quality name brand clothing, how do you go through enough in a year to need to buy more? All of the >$20 clothes I have have lasted years, and will continue to be usable for the next few. I would be surprised if most of them don't get donated, in close to perfect condition.

I get that they have kids and so must buy new clothes more often, but if you buy designer brands for your kid that's the problem.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#115

Post by throwaway0516 »

We make a little over $500K and I would not say we are struggling day to day, but we won't have so much saved as people expect. We lead a modest life (live in an apt, drive a compact) and live in SV.

Monthly House rent is $3000, Kids schools is $2400, kids activities is $2000, groceries and eating out is $1500, travel expenses averaged is $1000, misc expenses (gas,utils,shopping,car maint) is $2000. We do not have any debt.

We pay over $160k in federal/state income taxes and save $38k in 401k, $15k in 529 accounts annually.

Most of these expenses are regular day to day expenses we can't cut down on to save more.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#116

Post by deadc0de »

bluGill wrote: post #97
jshaqaw wrote: post #87

Earlier quoted context omitted.

Do you have kids? Maybe not 8500 but there is always something from summer camp to orthodontics etc... Life with kids is worth it 200 percent but expensive.

IT doesn't have to be that expensive. Plenty of families have children on $30k/year (one income). Their kids don't get to go to summer camp, nor do anyone get a lot of nice to haves.

There are a lot of nonlinearities. Taxes, healthcare, eligibility for the financial aid when the kids go to college, etc.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#117

Post by goldcd »

I can genuinely see that anybody could 'struggle' anywhere, once you consider living costs and the miscellaneous monthly payments adult life insidiously inflicts upon you. Whilst income gradually rises, your corresponding monthly outgoings seem OK - until the income dries up (I've just watched the excellent NoClip documentary on the implosion of Telltale games in Marin County).

What I never quite grasp is why "Silicon Valley" job is still seen as a premium, rather than a massive risk. The sole benefit I can see is that you can flit between jobs and build up your income - but as your income goes up, so does your expenditure/exposure.

I know there are other 'hubs' emerging that are cheaper - but they always seem to be 'emerging'

Is the issue the 'gambler's-dilemma' or are you on average better off in Silicon Valley or what?

Re: $500k a Year yet Struggling? Let's Do a Double Take

#118

Post by toasterlovin »

mikestew wrote: post #108
jshaqaw wrote: post #87

Earlier quoted context omitted.

Do you have kids? Maybe not 8500 but there is always something from summer camp to orthodontics etc... Life with kids is worth it 200 percent but expensive.

You're saying it's reasonable for kids to eat up twice the median U. S. household income? Yeah, somehow that math doesn't add up to me. There's "expensive", and there's "you've got to be blowing money on stupid shit".

When it comes to kids, people often confuse what they cost with how much they spend on them.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#119

Post by bluGill »

ralph84 wrote: post #68
cableshaft wrote: post #14

"Some of these payments are applied to the principal on their loans, which increases the couple’s net worth by either building their home equity or by reducing their student debt. So that’s also savings." I don't count paying down a debt as "savings". It might be an increase in net worth but not savings. If paying down debt is considered "savings" now, then the entire USA is "saving money". But I think that not only…

It absolutely is savings. Compare two people: Person #1 - Makes $6000/month - Has an interest-only mortgage payment of $1000/month (yes it's still possible to get interest-only mortgages) - All other expenses are $4000/month - Puts $1000/month in a savings account Person #2 - Makes $6000/month - Has a mortgage payment of $1000 interest + $1000 principal = $2000/month - All other expenses are $4000/month Person #1 and…

This isn't right. Over time Person #1 should have more savings. Loan interest rates are very low, person #1 shouldn't be putting the money into a savings account, he should be using a better investment. Person #2 is now forgoing the higher return of stocks to pay off the mortgage.

It gets worse for person #2. The house is probably changing in value. If the house goes up in value person #1 is ahead because that money is all his, on the $10k investment, person #2 has a much larger investment to get the same return. If the house goes down person #1 has at most $10k to lose, while person #2 can lose the entire value he has paid in so far.

Of course eventually person #2 has the house paid off and has $2000 to work with.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#120

Post by gwbas1c »

cableshaft wrote: post #14

"Some of these payments are applied to the principal on their loans, which increases the couple’s net worth by either building their home equity or by reducing their student debt. So that’s also savings." I don't count paying down a debt as "savings". It might be an increase in net worth but not savings. If paying down debt is considered "savings" now, then the entire USA is "saving money". But I think that not only…

It all depends on the interest rates.

If I can invest with a 10% return, and can borrow at 0%, I'm better off borrowing as much as I can to invest.

But if I have to borrow at 10% and can only invest at 0%, paying off debt is better than saving.

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