$500k a Year yet Struggling? Let's Do a Double Take • Hacker News Board

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

#31

Post by nopriorarrests » Thu, May 16, 2019, 7:59 PM UTC

wilg wrote: post #25

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…

Can you explain in more detail why you don't consider it savings? Maybe it is obvious but I am curious.

If you have used debt to buy a deprecating asset (car or almost anything you can buy with credit card, like iphone) you are not saving. In a long run, your asset will cost 0, and you haven't saved a penny.

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

#32

Post by ido » Thu, May 16, 2019, 7:59 PM UTC

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.

Hi!

My wife & I are raising 2 children in Berlin (a major world city) & earn a lot less than $500k while not struggling at all (in fact I save about 1/3 of my net pay even after deductions for both private and public retirement funds).

Sending your kids to private schools is hardly a must, especially if you live in at least a middle-class neighborhood (which I assume you do on a $500k income).

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

#33

Post by gnaritas » Thu, May 16, 2019, 7:59 PM UTC

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.

> private school tuition and child care fees

Are luxuries for the rich; if you can afford them, you're not having trouble getting by.

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

#34

Post by JohnJamesRambo » Thu, May 16, 2019, 7:59 PM UTC

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 are rich are actually not rich, just extremely completely in debt.

"The authors make a distinction between the 'Balance Sheet Affluent' (those with actual wealth, or high-net-worth) and the 'Income Affluent' (those with a high income, but little actual wealth, or low net-worth)."

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

#35

Post by war1025 » Thu, May 16, 2019, 7:59 PM UTC

6d6b73 wrote: post #20

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.

That's your choice isn't it?

Based on their comment, the choice they made was to no longer live in SF. So yes, it was their choice, and they made it.

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

#36

Post by manfredo » Thu, May 16, 2019, 7:59 PM UTC

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.

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...

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

#37

Post by p1esk » Thu, May 16, 2019, 8:00 PM UTC

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…

Private school for two kids could be that much in NYC.

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

#38

Post by jayd16 » Thu, May 16, 2019, 8:00 PM UTC

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…

Its considered a savings because you're increasing equity in the house, which you can later resell. Its not a general statement about debt.

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

#39

Post by GuiA » Thu, May 16, 2019, 8:00 PM UTC

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…

It’s crazy how accurate the “$100 gas $800 rent $400 food $2000 $impulse_expense please someone help me budget my family is dying” meme is.

At the risk of repeating what gets said every time this topic comes up, basic financial education should be taught in schools.

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

#40

Post by SolaceQuantum » Thu, May 16, 2019, 8:00 PM UTC

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…

Eating all organic, fresh-from-farm food, eating at luxury restaurants, attending internationally acclaimed shows in the best seating, and maybe even investing in a little bit of modern art? Oh, and purchasing all the best in skincare, makup, spas, saunas, cryotherapy, light therapy, etc? Personal trainers, coaches, cleaners, cooks? I could imagine a combination of all of those could be 8,500$ a month.

(EDIT: And I bet it's still feel inadequately uncultured compared to an even wealthier peer who owns several paintings, vintage wines, attends every big show in the best seating + hires a personal stylist!)