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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

#141

Post by imtringued »

silversconfused wrote: post #136
bluGill wrote: post #122

Earlier quoted context omitted.

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…

3000/m on 500/y is extremely inexpensive. They will not find cheaper for 4 people without driving up transportation costs and killing leisure time. They probably have an affordable car, as compacts tend not to be "luxury" cars with many bells and whistles to maintain. Tuition, well, you pay for what's important to you, and obviously they would rather dump this into the kids than saving. Hardly worth criticizing as ex…

$3000 monthly is less than 10% of the household income so I don't see how that could ever be considered frivolous.

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

#142

Post by imtringued »

jdlyga wrote: post #11

130k supporting a spouse and living in manhattan, and even eating out constantly, is more than enough to save a ton of money per month. 500k and struggling is ridiculous.

They are not struggling. They are increasing their networth faster than you are earning money. It's just a stupid accounting trick.

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

#143

Post by asark »

toasterlovin wrote: post #118
mikestew wrote: post #108

Earlier quoted context omitted.

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.

It doesn't help a bit that you have to buy your kids' way up the class ladder. Well, buy them the opportunity, anyway—not living it at home, they may still not socialize to the "right" tier. Housing's more $/sqft in good school districts, or even more money for prep school if you're quite serious. Activities and sports, more money, especially if they're the "improving" sort where they'll mingle with your social betters. The sky's not the limit on that stuff, but for people working for a living it may as well be, since the ceiling's "summering" in the right places, sailing lessons, shit like that. Down the line those turn into better higher ed opportunities, better (richer, anyway) friends, et c.

You can absolutely resist spending extra on kids that way, but there's always that pang of guilt that they're missing something that might've made their lives a whole lot easier down the road (due to granfalloon-sort stuff, mostly, or knowing the right people). Might they marry into money if you send them to that summer camp? If you send them to a school where it's assumed everyone's doing serious preparation for the SAT and for college applications, might that not bump the school they get into up a notch or two on the name-recognition scale? Most spend at least some on this if they can—a couple moderately-priced activities per year and housing somewhere you wouldn't live if not for the schools, say.

It's all probabilities and chances, but the more you spend the better the worst likely outcome gets, too, and the bottom on that can be quite low indeed—it's not just dirty-ol' middle class envy. It's hard to resist.

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

#144

Post by dagw »

Konnstann wrote: post #114
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 perfec…

especially since they said nothing fancy

Fancy is relative. A lot of people would consider a $1k suit as a cheap baseline suit.

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

#145

Post by atwebb »

MuffinFlavored wrote: post #130
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 st…

In your experience, do people really inflate lifestyles like that? Doesn't 5 years at a high income level less mean "more stuff" and more mean "you can save to never work again".

You need to earn 500k for a handful of years, save vigorously, and you're done. Am I missing something?

I have seen both sides up close so I guess it's more a rhetorical question, but it's not pretty when you didn't save that 300k and approach retirement in a changing job market...

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

#146

Post by jedberg »

deadc0de wrote: post #125
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.

Don't kid yourself. Even here in the Bay Area, $400K a year is still upper middle class. You'd be in the top 3% of earners across the nine bay area counties.

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

#147

Post by p1esk »

deadc0de wrote: post #125
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.

According to [1] average income in SV is $140k, and median house price is $1.2M.

$400k income would put you into upper middle class territory.

[1] https://sf.curbed.com/2019/2/19/18229922/silicon-valley-inde...

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

#148

Post by toasterlovin »

asark wrote: post #143
toasterlovin wrote: post #118

Earlier quoted context omitted.

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

It doesn't help a bit that you have to buy your kids' way up the class ladder. Well, buy them the opportunity, anyway—not living it at home, they may still not socialize to the "right" tier. Housing's more $/sqft in good school districts, or even more money for prep school if you're quite serious. Activities and sports, more money, especially if they're the "improving" sort where they'll mingle with your social bette…

FWIW, most results from behavioral genetics point to the nurture component of nature + nurture being maxed out for the normal range of experiences that kids have in the developed world. In other words, most of where you end up is genetics + chance. I guess you can make the argument that nurture really matters for ascending into the aristocracy, but the aristocracy is out of reach for the vast majority of people, no matter what they do.

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

#149

Post by alphagrep12345 »

deadc0de wrote: post #125
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.

Forget about buying a house part. Say the person can buy a house in texas and retire there. Would you still say it's lower middle class?

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

#150

Post by ralph84 »

bluGill wrote: post #119
ralph84 wrote: post #68

Earlier quoted context omitted.

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…

What does any of what you wrote have to do with whether or not it's savings. You're just saying you think some forms of savings are better than others.
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