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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

#71

Post by moorhosj »

p1esk wrote: post #37
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.

Yes, and those people wouldn't be considered "struggling" or "living paycheck to paycheck", which is the point.

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

#72

Post by dariusj18 »

saidajigumi wrote: post #67
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…

They have mortgage payments: it's trivial for a house to just up and eat $10k of your money, for one example. That's the big differentiator: at this level of income, they can afford to just pay random expenses that many folks would have to just jam onto eternal credit card debt. EDIT: nvm, I misread the parent, and other sibling comments illuminate the actual breakdown of this line item.

Yeah but $10k a month?

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

#73

Post by Permit »

>Just this month, CNBC ran a story entitled “Here’s a budget breakdown of a couple that makes $500,000 a year and still feels average.”

Yes, because they have been running that story monthly since 2017!

https://twitter.com/ejenk/status/1110616128118759424

I don't think CNBC is trying to drive a narrative here, but I do imagine that they're getting ReallyGoodEngagement™ out of articles like this since they tend to inspire immediate outrage and incredulity.

patio11's take on this: https://twitter.com/patio11/status/1110615594561212416

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

#74

Post by RyanCavanaugh »

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…

Income - Spending = Savings. It's an accounting identity.

A common trick people pull in the shitty version of these articles is counting savings as "spending" and then declaring that "At the end of the month, there's $0 left!", because by definition if you count savings as spending, then you never "save" anything.

Let's say I have a $100k mortgage, take in $1000 a month, and spend (in the true sense of the word) $500. Whether I apply the remaining $500 to my mortgage balance or put it in my savings account has no material bearing on my net worth. The unspent money is "saved" whether it goes into cash reserves or debt reduction.

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

#75

Post by dagw »

nopriorarrests wrote: post #31
wilg wrote: post #25

Earlier quoted context omitted.

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.

Let's say that instead of paying down $100 dollars a month on the principal of the loan they'd only paid the interest and stuck the $100 in a savings account. Would you consider that savings? Would you consider it better to have $0 in debt and $0 in your savings account than being $1000 dollars in debt and having $1000 in your savings account.

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

#76

Post by SolaceQuantum »

koolba wrote: post #58
SolaceQuantum wrote: post #40

Earlier quoted context omitted.

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 b…

Unless you’re feeding a small army, it’s not possible for groceries alone to add up to anything like that. Eating out easily could ($200/day x 30 days = $6000!) but not from actual cooking.

Well, yes, individually food alone would be difficult. I listed several items assuming a mixture of all of them could add up to 100k.

Oh, I didn't add hobbyist activities- if my personal passion was vintage first edition signed books I could probably blow thousands and thousands easily.

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

#77

Post by dagw »

nopriorarrests wrote: post #59
lutorm wrote: post #44

Earlier quoted context omitted.

I thought they were referring to principal payments on a house mortgage.

Even in this case, your house value can take a sudden plunge. Savings are savings, they are not going anywhere. It's money that sits in your bank account and you always know how many years without work you can afford.

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

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

#78

Post by war1025 »

lukejduncan wrote: post #66
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…

Isn't this the premise of books like "The Millionaire Next Door"? Edit: Whelp -- not sure how I missed the link.

(The link he posted was for The Millionaire Next Door)

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

#79

Post by deathanatos »

manfredo wrote: post #36
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...

And that's giving each child their own bedroom and saving one for guests! I grew up with me and two siblings all in the same bedroom. (And honestly, it was alright, I'm probably better for it, and we definitely weren't poor by any measure. So, the figures above should be read as "if we spoil the children", IMO.)

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

#80

Post by Thrymr »

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…

Apparently "miscellaneous" is only $10k/year, "other expenses" is separate from that. The single biggest line item outside of taxes!

There is a further breakdown in the linked article: https://www.financialsamurai.com/scraping-by-on-500000-a-yea...

It includes things like food, student loan payments and "children's lessons".

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