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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

#171

Post by sys_64738 »

gwbas1c wrote: post #120
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.

Paying off debt is always better than investing the money. Nothing beats being debt free.

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

#172

Post by resters »

notfromhere wrote: post #107
akgerber wrote: post #55

Earlier quoted context omitted.

The way the United States provides schooling free of charge from age 4 to age 18, and expects families to pay massive tuition bills before and after, does make parenting expensive at times— especially for young families starting out. $500,000 in income is, of course, enough money to pay even expensive bills, being well into the top 1% of family incomes.

People pay for private k-12 because there's a perception of the public schools being awful (and it may be true depending on the area). But if you live in a nice area with a well-funded school district, paying for private school is just ego. You won't get much of a difference in learning outcomes

It depends on where you live. In my case the decision was rational and not due to some desire for status signaling.

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

#173

Post by toasterlovin »

michaelmrose wrote: post #153
toasterlovin wrote: post #126

Earlier quoted context omitted.

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.

He said you ought to import a person like you would import an orange and specifically said it would be ok to pay them a substandard wage as it would still be a good deal to them so they could send money home for their family. One doesn't acquire the services of mexican's to pick your fruit merely because they work hard. You do so because they will work hard for less. Literally the only reason to bring in someone from…

> He said you ought to import a person like you would import an orange

It's awkward phrasing, but you don't know that they meant to compare people to commodities. Lots of people on this site do not speak English as their native language.

> Literally the only reason to bring in someone from out of country which is implicitly a larger effort is because you have implicit leverage over that person and can use that leverage to extract more work for less money.

They don't work for less because you have leverage over them. They work for less because they are not permanent residents of the U.S. and their cost of living is calibrated to their own country, which is typically less developed than the U.S.

But that's if they work for less. The price OP quoted was $2k/month. If you add on $500 in free housing, it works out to the same annual compensation as the $15/hour you cited (assuming 2000 hours/year @ $15/hour). And, FWIW, when I've looked into an au pair in the past, $2k seemed like the lower end of what they cost.

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

#174

Post by nopriorarrests »

imtringued wrote: post #139
dagw wrote: post #77

Earlier quoted context omitted.

So when I put money every month into an index fund, that doesn't count as savings?

Yes it boils down to this. People don't count things that increase your networth as savings (or in other words: nothing counts as savings). Therefore everyone's savings is somewhere around $0.

I differentiate between savings and investments. For example, my own savings give me the ability to modestly live for 1 year without work AND without liquidating my investments.

If I had everything invested and nothing saved in bank account, I might get into situation when I need to liquidate my investments ASAP, which could be very unfortunate, timing-wise.

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

#175

Post by resters »

mikestew wrote: post #50
resters wrote: post #18

Try raising a few kids in a major city and paying private school tuition and child care fees. It easily eats up most of $500K of income.

Holy smokes, with those kinds of expenses, you might have to hang on to that BMW 5 series a few more years before replacing it. I don't know how people are supposed to get by these days.

For the past few years I've driven a car that cost under $1K.

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

#176

Post by resters »

wavefunction wrote: post #62
resters wrote: post #18

Try raising a few kids in a major city and paying private school tuition and child care fees. It easily eats up most of $500K of income.

I mean, this very linked article lays out the finances of some people who are doing just that and it appears to be the result of some very expensive personal choices rather than a fact of life.

My point is that this is not the case. When you take out high Federal and State taxes, high rents, tuition, etc., it's about equivalent to $80K/year income without kids. Seriously.

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

#177

Post by Swizec »

sys_64738 wrote: post #170
Swizec wrote: post #168

Earlier quoted context omitted.

Imho middle class means you work for a living, upper class means you can live on wealth. You might also be surprised to learn that a $166,000/year household income puts you in the top 5% of US households. Definitely upper middle class but still pretty easy to burn your whole paycheck every month. https://en.wikipedia.org/wiki/Upper_middle_class

> Imho middle class means you work for a living I thought that's what working class meant.

I thought that was blue collar?

Would you call a software engineer making $150,000/year working class? What about a lawyer somewhere in midwest scraping by on $50,000/year?

Now what about an independent plumber making $200,000/year? Working class or not?

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

#178

Post by username444 »

Balgair wrote: post #89
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…

Being a millionare and spending a million dollars are exact opposites.

Unless you have sufficient millions to cover those millions of spending.

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

#179

Post by throwaway0516 »

alphagrep12345 wrote: post #151
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…

After your expenses, you still have 28k (post tax $ per month) - 12 (added all your expenses) ~ 16k per month = 192k per annum. 192 - 38 - 15 = 139k still left after taxes, expenses, 401k, and 529. Isn't that a really huge number?

ya..usually $100K-$125K is the range of our savings. I don't it is really a huge amount of savings when earning over $500K.

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

#180

Post by throwaway0516 »

loco5niner wrote: post #160
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 activities is $2000 Woah... My wife is a teacher and grosses $2000/month. This is a crazy thing to spend 2,000 on.

two kids..swimming, dance etc. They all add-up.
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