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

bloomberg.com

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

#121

Post by tqi »

astura wrote: post #15

103,500/year on unexplained "other expenses??" Over $8,500/month?!! Which is almost double their mortgage payments Um.... What the hell? Their biggest line item is completely unexplained yet they are trying to explain where their money goes? I live a fairly indulgent life and I spend less than that on everything in a year. I can't imagine spending six figures on "misc" unless there's a lot of hookers and blow involve…

The Bloomberg article did a pretty poor job summarizing the expenses - the linked article actually has a better breakdown: https://www.cnbc.com/2018/03/06/budget-breakdown-of-a-couple...?

$42k for childcare and $23k for food are two of the biggest items listed as "other".

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

#122

Post by bluGill »

throwaway0516 wrote: post #115

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 an…

Kids school could be zero if you would go to public school. You can eat out less and eat cheaper food at home cutting the grocery bill by a lot. You don't have to travel. Your misc expenses seem high as well, you could buy an older reliable car (some cars are much cheaper to maintain than others). You could probably get a cheaper house.

You don't WANT to do those things - I don't blame you - but that doesn't mean you can't.

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

#123

Post by southphillyman »

michaelmrose wrote: post #101
southphillyman wrote: post #47

Earlier quoted context omitted.

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

Why do you think its OK to import people you can maximally exploit as live in slaves to safeguard the most important things in your life. The minimum wage for NYC is $15 an hour and ultimately if you pay the minimum you get your pick of the worst employees.

I know multiple au pairs living in the tri state area (mostly NYC). They seem to love the arrangement and send a ton of money back home, earn college degrees here, etc. Honestly outside of the fact they need to acquire a visa I'm not sure how this is different from having a nanny (au pair make similar pay this isn't a means to rip someone off from what I know)

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

#124

Post by manfredo »

aantix wrote: post #103
manfredo wrote: post #36

Earlier quoted context omitted.

So after daycare a couple making $0.5M/yr would "only" have $423,000 left to work with. What does rent cost? A 6 bedroom house can be rented for $11,500 a month [1]. So after rent and daycare the family has $285,000 to work with. Still very very far from struggling. 1. https://www.apartments.com/1934-powell-st-san-francisco-ca/e...

Gross 500K, you're probably working with 300K after Fed/CA/SF taxes.. 138K for rent. 76K for childcare if all four (might get a nanny cheaper) Student loans because you both went to an Ivy League Two cars, cell phones, real organic food, savings.. Maybe one big family vacation. It adds up. You won't be flying to Paris every weekend on a private jet.

For married couple you'll still be looking at 320,000 in post-tax income at least - probably more if you have 4 kids. The rent is an over-estimate (6 bedroom house in central SF) and can easily be reduced.

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

#125

Post by deadc0de »

jedberg wrote: post #12

If you're making $500,000 a year anywhere on the planet and struggling you've most likely let your lifestyle get the best of you. Sure, maybe there are a few circumstances where that's not the case: a major medical bill that you're paying off, caring for your parents or other loved ones. But otherwise, there would be lots of places to cut back without a notable change in quality of life.

Not in SV. $400k gets you to the lower middle class. That is you probably have a tiny chance of buying some real estate in your lifetime. House and expenses related to maintaining it is a huge chunk of change.

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

#126

Post by toasterlovin »

michaelmrose wrote: post #101
southphillyman wrote: post #47

Earlier quoted context omitted.

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

Why do you think its OK to import people you can maximally exploit as live in slaves to safeguard the most important things in your life. The minimum wage for NYC is $15 an hour and ultimately if you pay the minimum you get your pick of the worst employees.

Uh, pretty sure the OP is not envisioning enslaving someone. And the compensation for the au pair includes a place to live and (not sure about this) food.

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

#127

Post by MuffinFlavored »

Swizec wrote: post #84
JohnJamesRambo wrote: post #34

I'll share something I learned myself in another Hacker News comment. https://en.wikipedia.org/wiki/The_Millionaire_Next_Door "Their findings, that millionaires are disproportionately clustered in middle-class and blue collar neighborhoods and not in more affluent or white-collar communities, came as a surprise to the authors who anticipated the contrary." It really opened my eyes to the fact that most people I think…

Rich is when you have a high income. Wealthy is when you have a high net worth. I find people often confuse the two and it took me a long time to clear up in my mind. You can be rich, but live paycheck to paycheck. Even be superbly in debt. Lots of upper middle class lives this way. You can also be wealthy but poor. These are folks with cashflow problems and a lot of illiquid wealth (like a house you can’t sell) Shor…

> You can be rich, but live paycheck to paycheck. Even be superbly in debt. Lots of upper middle class lives this way.

Are they actually upper middle class (by definition) if they have a low net worth?

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

#128

Post by dagw »

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…

The caviates here are a finite time horizon, whether or not you ever plan on selling your house and whether or not you care about what sort of inheritance you want to leave. If person #1 and #2 both live in their houses until they die and don't have anybody they want to leave their money to then it depends on how many years there are between #2 pays off his loan and when he dies (since from your perspective all your loans are cancelled when you die)

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

#129

Post by dariusj18 »

akgerber wrote: post #81
dariusj18 wrote: post #72

Earlier quoted context omitted.

Yeah but $10k a month?

$10k a month is $120k a year which is around 20% of the stated income, and a significant proportion of it is paying down principal, which is to say, building wealth. 2 or 3 years of wealthbuilding at that rate is enough to pay for the median American house in cash.

Right, but I'm not referencing the mortgage, I'm referencing the "other expenses" line item that the person I was responding to seemingly though could be accounted for with the expenses of having a home.

But someone else pointed out that the figure reflects other things anyway.

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

#130

Post by MuffinFlavored »

Traster wrote: post #9

This is a surprisingly reasonable article from Bloomberg and it's certainly true that Mortgage and 401k doesn't feel like saving excess money, but it does essentially map to savings. I'm not sure it's really a useful conversation to have though. We live in a world where there are essentially an infinite number of things you cannot have. So feeling rich is pretty much a choice once you're beyond probably double the av…

Making $10k/yr allows you to do very little.

Make $50k/yr allows you to do more, but still not a lot.

Making $100k/yr opens some doors you didn't have access to before.

Making $200k/yr puts you in pretty good comfort overall, but doesn't enable you to go get that supercar/yacht/private jet you wanted

Making $300k/yr-$500k/yr probably puts you in $1m home, $200k supercar territory depending on how badly you want to stretch it.

I think when you look at it as "income + wealth unlock levels", it makes more sense.

I can't really go on lavish vacations, but nobody making $30k/yr is going to feel bad for me.

I can't go reasonably buy $20k jewelry, but somebody making $500k/yr probably could.

Then you get to yacht / private jet level of wealth that I know very little about. :P

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