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April 19, 2011

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7k per year for two cars? Only two cars? Not rich to me. They dont drive different cars in the winter and summer? Where's the summer car? The Porsche, Ferrari, or DB7? 7k per year on two cars is blah average- far from a rich lifestyle.

If they paid cash for two 40k cars (entry level BMW or high end domestic SUV), drove those cars for 4 years, and sold them for half, they would have "spent" 40k over 4 years or 10 k per year.

@Venkat,

I will admit I don't know a thing about Plano, TX. However, you do not appear to be anywhere close to the hypothetical family mentioned in the article. I see you have two cars, but are you married with 2 kids? Does your wife work? Do you live in the part of Plano that has the best school?

You do not have a mortgage, home maintenance, property taxes, etc. You are vegetarian (meat is expensive). You don't appear to spend any money on daycare or education. You don't appear to be saving money for your children's education either.

Your gas expenses are less than half what the hypothetical family in the article spends on gas. I looked up the average commute in Plano (http://www.city-data.com/city/Plano-Texas.html) and it was 27 minutes each way. If that translates to 27 miles each way (I know TX speed limits are high, so you can go pretty far in 27 minutes) at $3.75/gallon (http://www.dallasgasprices.com/Plano/index.aspx) at 20mpg (my estimate), that gives me the $7500 in gas expenses (1656+5844) mentioned in the study. Your commute must be 13 minutes each way using the same assumptions - congratulations on living so close to your employer.

If your loan rate is the same as mine (6.75%), that means each loan was around $6300. I'm surprised you have no maintenance on what sounds likely to be relatively cheap, used cars (or maybe you paid 75% down on each car). My car is a used mini-van for $25K that I drove 150 miles to get because it was cheaper than what I could find close by.

I congratulate you for getting by in an expensive city, but your situation does not seem comparable with what the author discusses.

Greg

@Tyler,

Amen. My only disagreement with you "Maybe our level for calling people rich should be a little higher". True, but I'd add "particularly if we are proposing raising tax rates for those we call rich". That is the point of the article.

@Tyler - they have two young kids. Most people aren't "rich" (what I would term wealthy) until they are older, unless they inherit wealth. Many of those costs will drop away when the kids are older, and at the same time their incomes will rise. If you compare them with the average family that has 1 kid younger than school age, and one kid at school age, they are rich. Their lifestyle is rich. If they wanted to become truly wealthy, they would cut back on some of their lifestyle choices.

They could easily afford to send their kids to private schools, but obviously made the choice to do public, which is why they live in an area that has top-notch public schools. I'm sure they woudl have spent much less on their house if they wanted to do private schools.

Since when did the top 2% become setting the bar low? Now you have to be in the top 0.25% or something to be considered rich?

Everything that you pointed out that they couldn't do, I would say they very easily could do with their projected income when the kids are older.

@Sarah,

The argument the policymakers are using is that this family is rich. They are not qualifying the statement by saying their costs will decrease as their kids get older, or more importantly, by where they live. I would agree with you that a $250K income with older kids MAY be easier, but that is irrelevant. The hypothetical couple DOES have two young kids AND are having a tougher time than most would think making ends meet.

Many (most?) people I know in my neighborhood choose to send their kids to private schools despite living in a neighborhood with good public schools. This is clearly because they feel a private school is better than even the best public school. Why would I want to live in a crappy neighborhood if I had enough money to afford private school? Your logic is backwards.

It's the top 2.9% and no one is saying that SOME of these people shouldn't be considered "rich" - just not those living in these high-cost areas. "Richness" is a relative term (what if we all made $250K and lived in Thailand!). As I quoted Policy Tax Center analyst Roberton Williams, “Whether or not $250,000 represents affluence "depends a great deal upon where you live." Just don't raise my taxes if I live in a high-cost place because you think I can afford it more than the guy that makes $150K in Fargo, ND.

If they save 50k per year at 5% return for the next 25 years they will have a whole $4mm. If I recall, in today's dollars, it takes $7mm before people feel rich. They are $3mm short, after 25 years of 50k per years savings from being rich TODAY.

Furthermore, your assume they will make that amount every year. Most people who make over $200k have volatility of income. How do you know they will make that every year or that their costs will fall off? Illness could crush their savings- they make too much to get any govt support.

The point of the article wasnt that they want to become wealthy. The point was they might not be rich- ie be able to afford a rich lifestyle.

Here- they die in 5 years from cancer. Now everything you claim about the future is wrong.

Greg -

So we should raise taxes one people making over $250k in certain areas, just not in high cost of living areas?

Where you live is a choice. Dealing with a higher cost of living is all part of it.

I don't think anyone is arguing that it isn't more expensive to live in certain places.

I think, in general, people are saying "who cares"? I

If you choose to live there, then don't whine about it being harder to make ends meet. It's not really anyone's predicament but your own.

Also, your comments make it sound like its virtually impossible to earn a lot of money if you don't live in NYC or SF. Seems like everyone in these cities thinks that. But that's simply not the case. My wife and I live in the central U.S. and we are well on our way to making $250k, and we're only 26 and 25 years old. We're not all just complete idiots here who are happy to earn 30 cents per day.

At the risk of being flamed to death I would like to add my voice to this discussion. First, let me be clear that I'm not complaining, whining or taking sides in this debate. I’m merely attempting to show how the cost of living in a big city can make an otherwise large income seem small. While it is true that I and eight million other people choose to live in a very expensive area (New York City) it is also true that many business opportunities can be found in large cities that simply wouldn’t exist elsewhere. That’s why, for example, people who want to work in the movies flock to LA, not Des Moines. Is it possible to work for Hollywood while living in Des Moines rather than LA? Yes. But if you were an actor, film editor, animator or director, in which city would you rather be?
So, while I do live in an expensive area and I make what is considered good money, I do not consider myself wealthy or rich. What’s more relevant to this particular discussion is that although my household falls into the >$250K/year bracket we are firmly in favor of removing the tax cuts on the wealthy. What I can say is that after reading the linked article, FMFs teardown of said article and the subsequent comment war here, I understand and sympathize with nearly all sides of this debate.

With that said however, allow me to point out a few facts about my hometown New York City that may help shed some light on why a high income does not necessarily mean one is “rich”. These facts are brought to us by the 2009 Census Bureau:

Fact 1:
16.7% of New York City HOUSEHOLDS earn >$200,000 (that's about 1 in 6 households)
The MEDIAN household income in NYC is $68,847
That’s a far larger percentage of above $200,000 earners than the 2% bandied about for the country as a whole. Yet, I'd be very surprised if anyone could find ANY survey that draws the conclusion that 1 in 6 NYC households consider themselves wealthy, rich or even well-off. Their earnings may be higher than the US average, but the cost of living and working in NYC is so high that their relative buying power is nearly the same as a middle class household elsewhere.

Fact 2:
24.3% of New York City FAMILIES earn >$200,000 (that's about 1 in 4 families)
The MEDIAN family income in NYC is $81,480
Again, this is a very large percentage of families in NYC who are earning large sums of money. Yet, does anyone reading this actually believe 1 in 4 families in NYC are rich? Or is it more believable that maybe, just maybe, due to the sheer number of families earning so much money in such a confined area, the relative buying power of that money has been lowered to such a degree that $250,000/year COULD be considered middle class? I'm not saying it SHOULD be considered middle class for tax purposes, because obviously there must be some level of income that is considered “rich” and since I don't have any better idea than anyone else of what that number should be, $250,000 seems perfectly reasonable. What I am saying though, is that everything is relative. What seems like a lot of money to one person in one location might not be to another person somewhere else. Think of the people who travel to places like India, Malaysia and Thailand and come back talking of $2 seven-course dinners and $20/night luxury hotels. To the locals EVERY American must seem rich. So I ask you, is every American rich?

Now let’s look at what it must be like for households and families earning the median income in NYC.
Here's two more NYC Census Bureau facts:

Fact #3
>40% of homes/apartments in NYC cost more than $1,000,000
For those of you who do not know about the real estate climate in NYC, let me explain. The average price per square foot of an apartment in NYC is greater than $1,000/sqft. which means that probably about 60% of New Yorkers live in homes less than 1,000 sf in size. A family earning $81,480/year could save for a few years and afford to buy a place for about $400,000, but they certainly wouldn’t be too happy about it, would they? To put it more simply, buying a $400,000 home in most of the country would get you a very nice place large enough for a whole family. In NYC that same $400,000 buys a home roughly 400-500 square feet in size. That 400-500sf includes the kitchen, bedrooms, closets and bathroom. Would your family be comfortable living in that? So, in effect, a family earning over $80,000 a year elsewhere in the country can probably afford a very nice home in an area of their choice. But, in NYC that same family most likely considers themselves to be lower-middle class because they can’t really afford to buy a comfortable family home in the area they want to live.

Again, I’m not complaining here. I’m just pointing out that I believe when comparing incomes you need to take into account that incomes purchasing power in a specific location. The actual value of your income will always be relative to your location.
And, as I noted above, sometimes that location is a necessity.

Fact #4
>40% of New Yorkers who rent pay MORE than $1,500/month in rent
Please keep in mind that though renting in NYC is far, FAR cheaper than buying, it is still VERY expensive. While $18,000/year on rent is much cheaper than trying to buy even an inexpensive home in NYC, it's still about 26% of the median household income, and about 22% of the median family income. And let me be very clear, $1,500/month is CHEAP for an apartment in NYC.

Lastly, to those who will comment back at me to espouse moving in order to lower the cost of living I ask, why limit yourself to living in America? If you moved to India, Thailand or Malaysia you could EASILY live the “rich” life on far less than what it would take to do so ANYWHERE in the U.S. If moving is such a great way to truly save money, then why doesn’t everyone move to foreign countries with a super low cost of living? Somewhere in the world where the dollar is strong and the country is pretty safe and has nearly all the “luxuries” of American life?

I ask you commenters of FMF, if you truly wanted to save money and stretch your dollar, why don’t you move to Belize?

Lastly, here's another fun NYC fact:
77% of New Yorkers do NOT own a car. Not relevant really, but I thought some people here might find that interesting.

NYC Census info
http://1.usa.gov/euwANA

@Bogey,

I apologize for offending you (more explanation at the end of this post). However, I’m not sure where you got most of these ideas. Virtually everything you say is contradictory to what I actually say. I’ve taken the time to lay out exactly what I mean to avoid confusion.

First, you imply that I said “we should raise taxes (on) people making over $250K in certain areas, just not in high cost of living areas”. I found three instances of what I said related to this in my @Jim comment posted at 4:07pm on 4/20. All of them say exactly the opposite of what you said I said.

1) I said: “Does it mean that you think SF and NYC residents who earn $250K+ should have a higher limit ($300K, $400K, etc.?) than the rest of the country before a tax hike kicks in?”

I’m not saying what I THINK here, but rather I’m asking Jim if this is what HE THINKS because he dismissed what I’m saying about San Mateo (near SF) and NYC being even more expensive than the 8 cities mentioned. He claims (1:55pm, 4/20) “Keep in mind we're not really talking about San Francisco or Manhattan…To argue that $250k ain't enough for a family of 4 in a lower cost city is not realistic, its frankly just BS.” But in fact, while the article doesn’t explicitly discuss SF and NYC, the policymakers ARE in fact talking about raising taxes for $250K earners in SF and NYC too. The author has likely chosen to exclude them because everyone knows those cities are very expensive and their point would be muted and dismissed if they just cherry-picked the most expensive places in the country. By showing how $250K doesn’t go as far as one would think in these lower-cost cities makes their point more strongly.

2) I said: “But guess what, I haven’t heard any policymaker mention that the $250K tax rate hike being considered would be indexed to location (can you imagine?).”

Again, here, I’m not saying the rate hike should be indexed to location. I’m saying that policymakers would never consider this – that’s clear from my snide comment “can you imagine?”

3) I said: “The problem is that $250K is not rich in high-cost areas. And unfortunately, I can’t see our government ever indexing tax rates by location-specific cost of living. Thus, my only suggestion is to raise the tax rate for earners that would even be considered wealthy in areas that are high-cost. I don’t know what that number is, but in San Francisco, it’s significantly higher than $250K.”

Here, I specifically say that I can’t see our government indexing tax rates by location-specific cost of living. I do believe the wealthy should pay more taxes because they can afford to and it’s an important part of being a leader in the community (I know others disagree). But why would the government include people that are not actually wealthy (they only earn a high income)? So rather than include people that would have a harder time affording it, I’d say that it’s better to raise the level at which we consider a family wealthy. I don’t know what this income level would be, but it’s certainly significantly higher than $250K in SF and NYC. Let’s say it’s $350K – make that the income level after which taxes are raised.

Second, you say “Where you live is a choice. Dealing with a higher cost of living is all part of it…If you choose to live there, then don't whine about it being harder to make ends meet. It's not really anyone's predicament but your own..” No one on this post, including me, would disagree that living in one of these cities as most often a choice (perhaps not as much if I were born in the Bay Area, but I did choose to move here). In fact, I say I’ve made this choice and must deal with it and not complain 3 times:

• (3:05am, 4/20): “I am not complaining (after all, I chose to live in this area), but merely stating the fact that the high cost of living eats up most of the $250K.”
• (3:26am, 4/20 – first post): “These places are WAY MORE EXPENSIVE to live than where everyone posting here seems to live. I'm not complaining - just stating a fact - it's my choice to live in the Bay Area.”
• (3:26am, 4/20 – second post): “Again, not complaining (I'd make the tradeoff any day), just explaining...”

Stating facts in my defense against the rationale policymakers are using to sway public opinion – that my high income makes me wealthy enough to afford a higher tax rate – is not complaining. I agree that the wealthy should pay more tax. I am simply arguing that I shouldn’t be considered wealthy and providing evidence to support it. Wealth is not income – wealth is relative buying power. Defending myself from being taken advantage of (financially) for being incorrectly labeled as wealthy is not complaining. Complaining would be whining about how it’s unfair that expenses are so high in my city (even when I know my salary is higher as a result) and would be even more objectionable if I did nothing about it. My income is higher because my expenses are higher. But that’s not a reason to tax me more.

You continue “I don't think anyone is arguing that it isn't more expensive to live in certain places. I think, in general, people are saying "who cares"?” First of all, several people ARE arguing HOW expensive it is to live in these high-cost places (though you are correct, they are not arguing that location has no impact on cost-of-living). I would agree that this would be a philosophical discussion about wealth and nobody would really care beyond that, except the government is now using the argument that high income earners in high-cost cities can afford to be taxed more. They are positioning it as a matter of class warfare – the middle class versus the upper class. The problem is that $250K in my city is not even close to upper class. Tyler has pointed out that rich people send their kids to private school (I wish!), buy expensive cars (no BMW for me!) take European vacations (chuckle). I can barely afford a college reunion this summer in the Poconos! I can buy less with my disposable income than a family making $150K in Fargo, ND. This is why I care – why should I pay more tax just because someone thinks I’m “wealthy” because I earn a high income. I am not wealthy, in fact, if I don’t watch my expenses very carefully (far more carefully than someone making $150K in Fargo), I could easily go into debt. I’m not claiming to be on the verge of poverty, just that I probably have less buying power with my disposable income than someone making 60% of what I make in a low-cost location.

Finally (even I’m getting tired of writing this), you say: “Also, your comments make it sound like its virtually impossible to earn a lot of money if you don't live in NYC or SF.” First of all, the entire article is about people making $250K a year in 8 cities outside of NYC or SF – of course it’s possible! But I know that’s not what you mean. So, I found something I wrote to FMR (11:25am, 4/20) specifically contradicting what you said: “No one is arguing you can't make a "good" living in lower cost-of-living areas, and that telecommuting is getting more common. I'm sure you can even make $250K a year, but I'm sure a far higher percentage of families make $250K/year in the Bay Area and New York than the rest of the country.” How is this making it sound like it’s virtually impossible to make $250K somewhere else? All I’m saying is that a far higher percentage of families make $250K/year in the Bay Area and New York than the rest of the country. Re-reading this, I think I misspoke – I’d rephrase it to say a far higher “number” rather than “percentage”. If I made that change, does that help? Or do you disagree that it’s far easier to make $250K/year in SF/NYC than other places? I can tell you my employer has locations all over the country (even in other high-cost areas) and they pay significantly more for the same job to someone in SF than in other areas. Is this even in dispute?

You follow it with: “My wife and I live in the central U.S. and we are well on our way to making $250k, and we're only 26 and 25 years old. We're not all just complete idiots here who are happy to earn 30 cents per day.” First of all, congratulations – I am truly happy for you. Making that much in the central US at such a young age and in such a bad economy is phenomenal. YOU are truly in the top 1% I would imagine!

I apologize for offending you. The only thing I said that I can imagine might have made you feel this way is from my (3:26am, 4/20 – part I) comment “Not to get philosophical, but, one of the primary reasons they are able to make $250K is because they work in a high-cost area; I think the point is that most people want to live near where they work for quality of life - this is not unreasonable, and actually is a key assumption of the study (why not just telecommute from Kansas otherwise!).” Having re-read this, I can see how you might take offense. It should read “One of the primary reasons they are MORE EASILY able to make $250K…” From my previous statement, it’s clear that I believe people all over the country can make $250K, but that it’s easier in high-cost areas. The context of my statement was in response to FMF’s suggestion that the couple’s housing expense was too much and they should just “buy a house they can easily afford”, which would mean moving out of that high-cost area with the top-notch public school. To me, FMF suggesting something that would make the hypothetical family have to move out of the neighborhood they live in is a nonsensical argument in trying to disprove that families living in a particular neighborhood may have trouble making ends meet. I think that’s why my tone was dismissive and I’m sorry if it was offensive to you.

Right on, Geekman. Agree with everything you say except that $250K sounds like a reasonable amount for being considered "rich" for tax purposes (since the argument for raising taxes is around the middle class and the wealthy). If it's as hard to make ends meet on $250K in NYC, why should that be considered rich? As you (and I) both say, wealth is about relative buying power.

If you want to raise taxes on my $250K income, fine, but don't play the class card on me. Rather, do so with the (stone-cold) awareness that you will be pushing families in high-cost areas closer to debt than people outside these high-cost areas could ever imagine. I know we will never adjust taxes based on cost of living (the outrage would be far worse I'm sure), and we need to draw the line in the sand somewhere, but why not draw it at a point where relative buying power is really high enough for EVERYONE on the other side of that line to be considered wealthy? OR, stop making the argument that we should tax the wealthy because they can afford it.

FYI, for the record, I never said $250k in income makes someone rich/wealthy. We all know that income and net worth (wealth) are two different things.

@ Greg

The problem is this:

No matter what income level we choose (you suggest perhaps $350k instead of $250k), there will always be someone just like yourself who will be telling us that that income level is really not that much.

We could make the level $1MM per year, and people would still be coming out to talk about how earning $1MM per year really doesn't make them "rich".

Perhaps the point is that our country really needs to focus on cutting spending.

Of course, then we'll have to hear from the entitlement crowd...

Everybody wants all the all the benefits (entitlements, low taxes, etc.) but nobody wants to pay for it.

@ Greg
I'm not trying to imply that it's hard to make ends meet in NYC when earning >$250,000/year. What I'm saying is that earning $250,000/year is middle class FOR NYC. Bogey has a valid point that no matter what the number might be, someone will always be unhappy.
However, when a household's taxable yearly income is more than what 97% of the the rest of the country can hope to earn in a year, then I do not think it unfair to remove the tax breaks they (and you and I) have enjoyed for a few years. Keep in mind that these taxes are applied ONLY to the amount earned ABOVE $250K, not the whole amount earned. Personally, we have very good accountants who have made it clear that the effective increase in our tax burden would be about 2%. I can't see that as too much of a financial burden for those of us earning so much more money than the other 97% of Americans. Even if we do choose to live in a high cost of living area.

Personally, and this is a little off-topic, I don't understand why America hasn't adopted a national flat tax, or even the so-called Fair Tax, and do away with the horrid tax code we all deal with every year. Yes, there would be problems during the transition years, but I believe any problems during the transition to either new system would be worth the benefits each would produce. And it's not just me... http://www.taxfoundation.org/publications/show/22562.html

@FMF,

No you did not say $250K makes someone wealthy, but you are defending the article that discusses how someone who does so is wealthy and thus should be able to afford to pay more taxes. Like I said, I have no problem paying more taxes, just don't play the class card to justify it.

@Geekman,

I agree with you, it's not "hard" to make ends meet on $250K in NYC, but it is far harder than people think. One person loses their job in this economy and that couple will be forced to move in short order.

I don't like people thinking $250K is SO much money that I'm a moron for not being able to spend as little as they do in some low-cost area they live in. People are questioning the data in the article left and right, but it's pretty damn accurate. I make plenty of sacrifices already - I send my kid to a school where 50% of the kids come from families so poor they get lunch for free (yes, believe it or not, I do NOT live in one of the higher-cost neighborhoods with a top-notch school - my house would have been 10-20% more expensive). I made my choice and I'm fine paying more taxes, but don't turn it into a class war.

If the argument for raising taxes on $250K+ is because "they are rich and can afford it", then that is simply unfair and inaccurate. My relative buying power is far less (tens of thousands) than Bogey's. I can buy far less than he can in my immediate area. I would have to make far more sacrifices than he would in order to make ends meet. Like I said - I'm fine with making these sacrifices and might have to make another choice (let's say to move) if the tax hike is too high (or let's say they take away the mortgage interest deduction!).

Nobody likes it when they make a key life decision based on a set of financial assumptions (taxes, deductions) and then those rules change. But that's life and I'll deal with it - I just don't like it when the reason given for justifying the change is that I'm rich. That simply is not true.

Greg --

Whoa, there! I am NOT in favor of paying more taxes! And I'm not defending the idea in any way.

Let me be clear in what I am saying:

To me, the article says that $250k is not enough income for a family to make it financially in many (most?) cities. I believe that is not true. I believe that $250k is more than enough to be doing quite well in most cities.

@FMF,

You've blown my mind - I truly did not think you were looking at this issue so myopically. Can you imagine why the author would write something focusing on the $250K threshold? Have you heard Obama talk about raising taxes on the wealthy, which he defines as the 2.9% of people earning $250K income and above? Did you actually read the article you wrote about? The first paragraph reads:

"In the ongoing debate over whether to use tax policy to help resolve the nation's massive deficit, a single number has emerged from the crossfire: $250,000. It's the annual income that President Barack Obama and others have used to define what it means to be "rich" in America today. And while the Bush-era tax cuts were temporarily extended to 2012, when their deadline comes around for the second time, $250,000 will be etched in the minds of policymakers and pundits as the number that separates the middle class from the wealthy."

This is what I've been arguing the whole time. You and others on this post have been discussing how this family makes so much more money than everyone else that they should not have trouble making ends meet. You could argue that about ANY middle class family. If my family moved to some area that cost far less and we only made $100K, I'd be in the same situation with respect to trying to make ends meet. There would be different expenses, but I'd still be weighing similar sacrifices.

But this is NOT the issue. I would argue, who cares whether they should have lower medical bills or spend less money on food. The relative cost of living makes every middle class family have to make these decisions and compromises. The issue is that the government is applying a judgment that a $250 INCOME is the same as being RICH, and if you're rich, you should be able to afford more taxes. I can afford more taxes just as easily (or difficultly) as the family in Fargo making $100K (just an example, I don't know the actual numbers). THAT is the issue.

And just in case all of you were wondering. I am a registered Democrat (vote more like an Independent though) AND I AM in favor of raising taxes on $250K income earners. The fact is that our country is in deficit and we need to spend less and tax more to rectify the situation. We enjoy lower tax rates than ever before. Just don't turn it into a class war and feed me BS that I can afford to pay more taxes more easily as the family in Fargo making $100K with the same relative buying power! A rich person is not one pink slip away from having to move out of their 1,500 square foot mansion!

Greg --

Of course I'm aware of it. And in case you didn't notice, I didn't take that angle when I posted.

I'm not commenting again on this post, it's just getting silly at this point IMO.

I agree it is getting silly. I really do enjoy reading your blog and agree with many of your ideas. I turned what was a cost-saving exercise that you could have done with any middle class family's finances into a political discussion, because that was the tack the article took, not you.

However, it would have helped if you had said up-front that this was independent of whether or not these families should be considered wealthy or have their taxes raised, particularly because the article clearly states that in its first paragraph and this issue evokes so much passion (look how many comments are on the original article and yours) and is so politically sensitive (look at the judgments being passed).

That being said, I won't comment any more on this post either.

This article reminds me of Suzie Orman the other night when she declared that a couple could not retire because they did not have enough money. They had savings of 1.3 million and a pension that covered all but $100 of their expenses. They also were through the expensive part of children- including weddings. Come on Suzie!

I am sorry that Greg and Tyler feel that they cannot survive on $250,000 a year. One does not HAVE to live in Naperville or NYC. The point is that they CAN afford it- they choose to try to do it- they love the lifestyle. If they lived in almost any other country they would be paying WAY more in taxes (actually paying- not getting the tax bill and then figuring out how to deduct the family dog).

I think flat tax is the way to go. Let's do it. 10% on everyone- no matter the circumstance.

Honestly, I don't agree with the analysis; there seems way to much emphasis on "one parent should stay home and that way they can save on cleaning costs or car costs" etc. I find that a bit offensive. So if a woman makes 100k a year she should stay home because it will save on cleaning costs and a car? Is this a joke? Why are you assuming that it is the man that is making almost all of the money? Many women these days are earning upwards of six figures.

Brookfield --

You need to read all the post. Here's what was said:

"Day care and after-school activities are $19k per year. These costs are hard to reduce if both parents are working. But they need to make sure that it's worth it for both of them to work. For instance, if each person earns $125,000 a year, then financially, it's good for both to work. But if one earns $200,000 a year and the other earns $50,000, it may not be worth them both working (at least financially.) They might be able to re-coup that $50,000 by eliminating work-related costs (including day care, taxes, etc.) if the parent making the lower amount quit working. For specifics on how to do this, see Real-Life Example of Going from Two Incomes to One and How to Become a One-Income Family."

No one said:

1. If one parent made $100k then they should stay home and it would be a good financial move. In fact, I said the opposite of that.

2. I didn't say the parent that had to stay home was the wife. That's your own bias showing through.

Also, a clean house is not that important to me; I prefer it messy to be honest. When I buy cleaning supplies, $10 worth of it lasts me a year. I clean my house once a month and it takes me an hour and a half and do it on the weekend. There's no need for a house to be spic and span.

Ok, sorry FMF, for misreading... I think the living costs are exaggerated in the original example stating for that $250k is not enough. I am a single female and spend around $130 on groceries MAX and I never eat "bad" food; tons of organic stuff and I only shop at Trader Joe's. Some months I spend less and that's without scrimping.
Needing to clean your house all the time again is excessive. I like my house "lived in" and when I buy cleaning supplies, it lasts me for over a year (I admit I don't clean that much and I don't clean thoroughly) but having a super clean house is not important unless you are some kind of OCD freak. Entertainment I spend barely anything but that's because I'm not sociable and like to stay home on the pc or watch Netflix. My gift budget is $0, lol. I didn't buy Christmas presents for anyone and don't have friends really so no need for that. It depends on how social you are and what kind of lifestyle you have. $4k vacation is also excessive. No one needs to go on a vacation; you can just take some time off and drive to the beach every day...

I make $10 an hour as a co-op engineering student...
Bills are:
$300 rent
$100 average electricity
$33 average Water/trash/sewer
$13 renter's insurance
$41.67 car insurance
$100 food
$120 gas (between running to work & school)
Tracfone
That's $707.67 a month in static expenses.

I am only able to work about 25-30 hours a week, due to the time I have to put towards studying for difficult Honors Engineering classes. I normally have about .225% taxes taken out of my paycheck I've noticed. This means I receive between $775 and $930 per month, leaving $67.33-$222.33 to save per month. I put everything I have back towards school and paying off my student loan debt (around 9k so far). I do not qualify for government grants because I am still considered "dependent" by the state, and my parents make over the threshold for aid. I am not married/veteran/homeless/over the age of 24, so they expect my parents to pay for college. As you might have guessed, I do not currently receive and have never received help from them in regards to finances. I am completely on my own.

Please don't tell me you can't make it on $250,000 a year. I've never even had more than $4,000 in my savings & checking before. I had to start paying rent when I was 17 or I had to get out of the house.

It's almost insulting when I hear about people like your hypothetical couple mentioned above. I read blogs like this in the hopes that one day my hard work will pay off and I will earn a decent paying job. I am already attending professional development courses in hopes of bolstering my resume, and I haven't even graduated! I've managed to keep a 3.5 GPA (good for engineering) while working this much and attending school full-time (3o credit hours a year). To think that people can't make it on that, or can't find other income streams (maybe a second job?) is crap.

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