$350K salary and has to hand wash dishes...

[Gone4Good]

If a friend who used to make five times my income, showed up on my doorstep complaining about how tough it is to live on three times my income, I'd show him the appropriate amount of sympathy by slapping him only half as hard as he deserves.

[Sesq]

My favorite part of the story is the guy extensively quoted is a marketing guy. If any of these guys should know better than to talk to the press it should be that guy.

I don't live in NYC, but I am in the prime of my career and I understand the dangers of lifestyle creep. My grocery/eating out bill is obscene. But I am saving regularly and growing my net worth.

The jist of the guys quotes about a drop in income when you've built up all these fixed expenses is very real. I wouldn't put that in print, but I'd probably sympathize over a beer if I knew him personally. My job is very ordinary, but my company manages its labor cost by putting huge chunks of our pay into a bonus. I try to get by on the base, but sometimes I am counting down till the bonus.

Then again, I don't talk about my finances with anyone but my wife in real life.

[Andre1969]

Those wall street types aren't the only ones who get thrown for a spin at the slightest drop in pay. I remember a few years back, 2005 or so, a story of a UAW forklift operator in Michigan who was making something like $103,000 per year, but when his overtime got cut, he couldn't make it on "only" $87,000, and had to declare bankruptcy. He had also managed to run up something like $469K in debt.

[ziggy29]

Quote:

Originally Posted by Andre1969 Those wall street types aren't the only ones who get thrown for a spin at the slightest drop in pay. I remember a few years back, 2005 or so, a story of a UAW forklift operator in Michigan who was making something like $103,000 per year, but when his overtime got cut, he couldn't make it on "only" $87,000, and had to declare bankruptcy. He had also managed to run up something like $469K in debt.

In reality, it's not just a matter of how much you make -- it's the false sense of invincibility, the feeling that the gravy train can never be derailed.

$103K is a good living in most areas, but not what one would call filthy rich. Still, that (and even $87K) should be enough to get by reasonably well, even in high-cost areas, if you don't overextend yourself to the point where a small drop in income can bring the house of cards crashing down. That can happen whether you earn $50K or $500K.

[W2R]

Quote:

Originally Posted by ziggy29 $103K is a good living in most areas, but not what one would call filthy rich.

I guess that depends on your perspective and perhaps salary history! It sure sounds filthy rich to me.

I do agree that a high level of regular fixed expenses is hard to overcome. For me, the key to an early retirement was to slash these and keep them at an absolute minimum.

[Major Tom]

Quote:

Originally Posted by ziggy29 In reality, it's not just a matter of how much you make -- it's the false sense of invincibility, the feeling that the gravy train can never be derailed.

Most definitely. I was always motivated by the fear that the good times might one day come to an end, so I saved and invested and when things actually did hit the fan, I was reasonably prepared.

It's that old "hope for the best and plan for the worst" thing, though I think that some (many?) people don't plan for the worst, or just don't plan that much at all.

[Texas Proud]

Interesting response from the guy...


Banker Bonuses: Wall Streeter With $350K Salary Responds To The Outrage Over His Comments | Daily Ticker - Yahoo! Finance

[MichaelB]

The Bloomberg article intended to provoke a negative response. The real issue for the guy in the article was his income is part variable. Bonus income may pay or not, and the earner needs to make sure that 1) fixed expenses are less that guaranteed income, and 2) variables expenses are not incurred until the after tax bonus is in the bank.

Another issue little discussed is most people with high paying jobs are pressured to spend. Not just peer pressure, either. Businesses use money - bonuses, stock options, etc, to motivate and manage, and they want people that need the money. People who earn and save can, and often do, say no thanks, and this can be a hugh problem. Much better the employees that spend everything they make, because they will respond to the stock and carrot much more predictably.

[ls99]

Quote:

Originally Posted by MichaelB Another issue little discussed is most people with high paying jobs are pressured to spend. Not just peer pressure, either. Businesses use money - bonuses, stock options, etc, to motivate and manage, and they want people that need the money. People who earn and save can, and often do, say no thanks, and this can be a hugh problem. Much better the employees that spend everything they make, because they will respond to the stock and carrot much more predictably.

Which is why employers prefer "married with children" over single and footloose.

[ziggy29]

Quote:

Originally Posted by ls99 Which is why employers prefer "married with children" over single and footloose.

At least for men. "Married with children" women are often perceived as mothers first and employees second, unlike the men who are seen as breadwinners first and foremost who must be committed to their job above all else.

[clifp]

Quote:

Originally Posted by Texas Proud Interesting response from the guy... Banker Bonuses: Wall Streeter With $350K Salary Responds To The Outrage Over His Comments | Daily Ticker - Yahoo! Finance

Even after listening to his explanation I can say I am still not sympathic. A couple of things were interesting first of all his brother is the CEO of the company he works for. Second despite what the article says he in no way at the bottom of the Wall St food chain. The janitors who clean his office they are.

I think the larger point about the "middle class" of which he puts himself being squeezed and having it worse than our parents, is pure hogwash and not at all supported by the data.

By pretty much any measure the top 20% much less the top 1% where this Wall St guy 350K salary puts him is doing much better than their parents much less their grandparents. House size, number of cars, amount spent of vacations, eating out, time spent working on household chore etc.

While Michael is right there is pressure to spend and business like to keep their worker hungry. I still expect people who get a lot of compensation in bonus and such to live on their salary and use the bonus for
1. Saving
2. Make big ticket purchase like cars and houses
3 Luxury purchase like vacations, sending kids to a special camp etc.

They should not count on a bonus for normal expenses.

The more their job involves handling money, the more they should understand the volatility of the market and the less sympathy I have for not following these rules.

[Danmar]

Easy to be critical of this guy and that certainly was the point of the article. The 99% always likes to crap on the 1% if they can. My only question is why would the schmuck open up his life to such criticism like this. A marketting guy really should have known better. Then he keeps digging the hole?

[H2ODude]

I found this pretty interesting as I have a daughter and son in law who lived and worked in Manhattan for years, he in finance and she an engineer. I was appalled at what expenses were ($650/month for parking space!) and rents. I don't know what he made, but am pretty sure saving and leaving well within means was a part of the plan; they relocated to London for two years and in 2008 came back to US where he chilled for a year. They're now back in London living in what I'd describe as a nice but cramped (maybe 2000 sf spread on FOUR floors) townhouse that costs close to $9,000 a month. With three kids. Don't have any idea what he makes but they chose to not own a car this time, and it's obvious they don't worry about money. They're both high integrity compassionate people.

My point is that there are good people who make a lot of money, don't live to flaunt it or blow it on frivolities. I'm sure if my SIL lost his job you wouldn't catch him trolling for sympathy; certainly not to a reporter.

[devans0]

If he was creative, the dog walker could help clean his dishes, at least the meaty parts.

[explanade]

Quote:

Originally Posted by Midpack San Francisco, La Jolla, Boston, Nantucket, LA and many other cities in CA, CT, MA are equally hard for me to comprehend. Wonderful places, but why would anyone put up with a COL like that? No answer...

Probably because they're near industries where you can make these big salaries?

I could move from the Bay Area to NV or AZ, with lower housing, taxes and COL. But presumably the job opportunities are not the same.

It would make sense in retirement but unless you like to gamble or golf a lot, those places aren't particularly appealing either.

[explanade]

OTOH, this morning on CNBC, there was some graphic about how well luxury goods are selling. Maybe the wealth effect of the stock market is back.

[Texas Proud]

Talking about the high salaries.... I remember this guy that I had to deal with when I was in NY.... he was the head of a small group and acted as a 'consultant' (I believe he had 5 people reporting to him, never could figure out why he was paid so much)... his overall compensation was close to $500K...

I knew many people back in Houston who knew a lot more than this guy and could run rings around him that were not even making $100K (this was about 10 years ago for reference)....


I heard through the grapevine that the guy was looking to move to the middle of the country as he was tired of NY.... but could not because he found out that even the CEOs of the small to mid sized companies were not making the kind of money he was making....

[Independent]

Quote:

Originally Posted by photoguy For a lot of people they have no choice, it's simply where the jobs are for their (specialized) field.

What I've read about the high income Wall Street people is that they are typically very bright and went to highly selective colleges. They are people who could have been CPAs, engineers, IT gurus, etc. There are many places in the US where you can do those jobs with modest commutes and expenses. Instead, they chose this type of Finance knowing that most of the jobs are in a few, high COL, areas.

So I think they had many more attractive choices than most people, they simply chose this lifestyle.

[Independent]

Quote:

Originally Posted by Texas Proud Interesting response from the guy... Banker Bonuses: Wall Streeter With $350K Salary Responds To The Outrage Over His Comments | Daily Ticker - Yahoo! Finance

Quote:

Second, Schiff says it takes a lot more money to live a "middle class" lifestyle in NYC today than it did when he was growing up there in the 1970s. ... But what Schiff is describing is something that almost all Americans can relate to, assuming they can get by the sticker shock of what it costs to live in NYC: The middle class is getting squeezed and the very definition of "middle class" is changing.

It boggles my mind to that anyone would think $350k makes you "middle class". What does this author think the "old" definition of "middle class" was? and what has it changed to?

The median income for a family of four in the US is somewhere in the $70k-$80k range. That median is just about keeping up with the CPI, not falling behind.

Here's the most charitable thing I can say about the quote. The top 1% have been pulling away from the median. At the same time, the to 0.1% has been pulling away from the top 1%.
If you are in the 1% but not the 0.1%, then you see a gap widening above you. If you're trying to compete for some extremely scarce good (like housing close to Wall Street), then you find the top 0.1% is consistently outbidding you.

In such a situation, people might think things are getting worse for them (because they only look up the pyramid). But, they seem too blind to look down.

[W2R]

Quote:

Originally Posted by Independent ]The median income for a family of four in the US is somewhere in the $70k-$80k range.

Another statistic that is even worse: the U.S. Census Bureau reports the median household income in the U.S. as $51,914. Median household income in New York (state) is $55,603. Median household income in New York City is $50,285.

New York QuickFacts from the US Census Bureau

In addition, median per capita income for the entire U.S. is listed as $27,334. Median per capita income in New York (state) is $30,948. Median per capita income in New York City is $30,498.