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October 08, 2007


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My wife and I were in the boat years ago. Then we moved into spending 100%. Now we are working on bringing that down some more. In the last 3 years, we lost 1/3 of our income when we decided my wife would stay home and not work, though I've doubled my income in the same period of time, so we are ahead income wise.

It's now time to get our spending back down to what it was when we weren't making so much!

I can't imagine spending $100k a year even if I made that much or twice that much for that matter. What the heck do these people buy?

I can prove that it IS what you make, not what you spend.

I make minimum wage and spend every dollar of it, leaving me with nothing.

"Joe" makes 2x minimum wage and spends 1.5x minimum wage. I spend less than "Joe" so if the premise of this thread is correct, I should be better off than he. The math fails and thus so does the premise.

I think you misunderstood the premise, which is simply that if you spend less than you make you'll be ahead of those who spend all or more than they make.

In your example, Joe spends less than he makes while you spend all that you make. That's why Joe is ahead.

Now, perhaps you are arguing that you can't possibly spend less than you make, but that's a different issue.


most people making $100k+ a year are living in $500k+ homes, driving $60k+ cars, vacationing at $10-15k a year, eating out all of the time, etc. etc....

after taxes, 100k is about 70k. mortgage is 25k+, car expenses are 10k, vacation 10k, and the miscellaneous eats up another 25k or so. this is not even extravagant. mortgage on a million dollar house is 50k a year + related expenses. very easy to burn up 100k if you want that lifestyle.

also doable to live on 20k if you dont buy many luxuries. take your pick

Okay, Todd, in that case, it sounds like the premise is misstated. Sounds like it is a function both of what you make and what you spend.

Sometimes I watch Suze Orman for entertainment, and "can I afford it" segment is always funny. Just the premise - how can one not know what one can afford?

Sometimes the callers are people with really large salaries, for example a single man or woman earning $8000 a month after taxes who is in her 40s, has no savings and sometimes has consumer debt. I always want to ask "what does he/she do with all the money?".

Even if their job requires them to wear $1000 suits, how many such suits one needs? Or a trip - one can easily manage a couple of weeks trip to Europe and stay in nice for under $3000. If one earns $8000 after taxes, it seems like one month salary could cover both a fancy suit and a vacation.

Then they say they want to buy something totally ridiculous like a horse or used Ferrari, and you know why they don't have any money.

bryan - I don't know about you, but in my area of the country (St. Louis, MO) a $500k house, a 60k car and vacations that cost $10-15k are "extravagant". OK, I can maybe fathom someone buying a $500k house since hopefully that will hold its value or appreciate.

I have no sympathy for people making this much that can't save money. A $60k car is're paying $20k for the car and $40k for the name on the trunk.


From Long Island New York here (North Shore Nassau for anyone familiar with the area). A $500K house in my neck of the woods will get you a house built in the 1930s with no central area, and less than a quarter acre. You could travel 25 miles to the west of me and hit NYC where $500K MIGHT (as in MAYBE!) buy you a studio apartment, or you could travel 30 miles to the east and get a huge house on plenty of land, but don't go 60 miles cause you'll hit the hamptons and be in worse shape then in the city.

As far as a 60K Car goes - how could you not do it! Your neighbors have it (JOKING!).

I think the main thing to take from these comments - the "people" we are speaking about are not as educated when it comes to personal finance as those making the comments.

Regardless if someone has a law degree working at a huge firm, or making minimum wage, there are enough "things" in the world that someone can buy, but it is up to the individual to take some responsibility.

Over the past year or so we have been paying off debts and converting that amount of our income into savings. So, we still have the same amount of bills (and it feels like we have "no money") -- but a bunch of our "bills" are actually paying ourselves. I love it. It's a great way to live within your means while having that high-on-the-hog, broke-'cause-I'm-spending-more-than-I-make feeling that feels like "normal" in America. ;)

Yes, if I had been more responsible and had never gone to college, I'd (seriously) be wealthy today.

If I'd never gone to college, I'd be making minimum wage today. Hmmm.

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