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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

#81

Post by akgerber »

dariusj18 wrote: post #72
saidajigumi wrote: post #67

Earlier quoted context omitted.

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?

$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.

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

#82

Post by michaelmrose »

Areading314 wrote: post #28
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…

This doesn't make any sense -- paying down debt instead of SPENDING the money increases net worth and is ultimately the same as socking money into a savings account if you're debt-free.

If your car dies and you can't get to work you can use your savings to fix your car so you can keep earning money.

Paying down your debt MAY increase the likelihood that you can borrow again. In the long term not paying interest on it will increase your income over time certainly but in the short term decreased debt and increased savings aren't interchangeable.

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

#83

Post by ivv »

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…

Probably child care / private schooling for the two children. Don't see it itemized in the table.

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

#84

Post by Swizec »

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)

Short term you wanna focus on being rich. High cashflow unlocks many options.

Long term you wanna focus on wealth. Wealth unlocks freedom and peace of mind.

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

#85

Post by easytiger »

ido wrote: post #32
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).

> Berlin (a major world city)

No. In fact not at all. It is one of the only capital cities in europe that is a cash drain on the nation it resides in. It is in no way a "major world city". It is not a business centre, a financial centre or a cultural centre. It is not even the most interesting or beautiful city in Germany,

Europe mostly has a much better school system with predictable outcomes that can't be achieved in much of America. The reasons for which are for another debate

Not that you don't have a point of some kind, but you are certainly ill informed about how the world works, and your place in it.

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

#86

Post by kangnkodos »

mikek wrote: post #2

Mortgage payments: $60,000 $60K / year isn't going to pay for the mortgage on even a small house in Silicon Valley.

From another article with more details on this couple: "$5,000 a month in mortgage expense bought this family a ~$1,500,000, 3/2, 1,700 sqft apartment in Brooklyn a couple years ago."

https://www.financialsamurai.com/scraping-by-on-500000-a-yea...

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

#87

Post by jshaqaw »

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…

Do you have kids? Maybe not 8500 but there is always something from summer camp to orthodontics etc... Life with kids is worth it 200 percent but expensive.

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

#88

Post by nopriorarrests »

dagw wrote: post #77
nopriorarrests wrote: post #59

Earlier quoted context omitted.

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?

With index fund you can at least have stop-loss order in place. It's hard to set stop-loss order for house.

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

#89

Post by Balgair »

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.
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