article: When Earning a Million a year is Not Enough

[MrsHaloFIRE]

https://www.financialsamurai.com/when-earning-one-million-a-year-is-not-enough/

pulled this from reddit.

 

[braumeister]

What surprises me is the property tax rate. Mine is twice that and I'm in an ordinary home in flyover country. I guess I expected the rate in NYC to be much higher.

 

[audreyh1]

Please give a summary or quote and not just the link.

 

[Chuckanut]

Please give a summary or quote and not just the link.

+1

A few relevant quotes from the article will give us an idea of what it is about and if it is worth reading

 

[Texas Proud]

Just living a life expected of someone making $1 mill...


There are plenty of expenses that can be cut out completely if needed...


AND, putting money away for retirement, health savings and kids college is NOT an expense...

 

[aaronc879]

I don't understand the point. The family is living a life of luxury and still has $54K/yr left over for after tax savings. How is it not enough?

 

[MichaelB]

Please give a summary or quote and not just the link.

+1


From the intro

In this post, I’d like to explore the lifestyle of a typical $1 million income-earning household living in New York City. They’ve anonymously shared with me their expenses, and I’ve done my best to tell their story without sharing their exact details.

From the ending

They recognize they are extremely fortunate, and for the most part, they are happy. The Chens just wonder whether the grind is worth it, especially when they see friends from high school leading happy lives on much less.

The only way to live a freer life is to drastically reduce expenses, change their lifestyle completely, or accumulate at least 20X their annual expenses in net worth. At their current $500,000 annual burn rate, Rachel will truly need to work another 15 years to finally experience the joys of financial freedom.

 

[scrabbler1]

What surprises me is the property tax rate. Mine is twice that and I'm in an ordinary home in flyover country. I guess I expected the rate in NYC to be much higher.

Property taxes in NYC are lower than you would expect because NYC has a pretty hefty resident income tax.

 

[Dtail]

I think it was an interesting article. There are many examples in NYC like them with earning even more money and much keeping up with the Joneses.

 

[flintnational]

Yes, apparently it is possible to spend $1M per year. Someone should buy this couple a copy of The Millionaire Next Door. Somehow I suspect they could find a way to spend $2M. They probably wish they had enough money to send their kids to the $200K per year private school.

 

[scrabbler1]

Two cars in Manhattan? That, and 2 kids in private school, 3 vacations a year, and their food+enterntainment expenses are what blow my mind. I guess the subway is beneath them (literally and figuratively!).

 

[mystang52]

I was floored by the 24,000/year spent on clothing. Frankly I don't believe it, even for this couple.

 

[W2R]

Two cars in Manhattan? That, and 2 kids in private school, 3 vacations a year, and their food+enterntainment expenses are what blow my mind. I guess the subway is beneath them (literally and figuratively!).

+1

It ALL blows my mind. $18K fees for the country club PLUS $15K on sports, fitness, music lessons, etc?

$2167/month in car payments, plus $267/month for gas? I thought they lived in Manhattan where everything is nearby and nobody drives. I mean, from what I understand, that's the whole point of living in Manhattan. I just live in a suburb, and so far this year (driving everywhere I could possibly want to go), I have spend an average of $30/month on gas. It was about the same when I was still working.

And they spent $24K for clothes? Prada? Gucci? What are they trying to prove, why, and to whom? That screams of junior high school level insecurity to me.

They have taken "Blow that Dough" to a new level. I thought I'd look at their budget and maybe get some ideas (since I have some excess to spend), but I just don't see anything there for me.

 

[tb001]

+1

And they spent $24K for clothes? Prada? Gucci? What are they trying to prove, why, and to whom? That screams of junior high school level insecurity to me.

.

Yeah, they're making me feel waayyyy better about our budget. I can take out a few of their big expenses (private school tuition, mortgage, etc...) that don't apply to us and get to our annual number pretty easily--I think I may be over padding things pretty significantly certainly don't have those entertainment/travel expenses in our number. The travel budget looks pretty nice--I'd love that! Though I'm surprised they're traveling economy. Seems like there are some things missing though. I don't see a line for incidentals/home goods, services, etc... Anything else people see that doesn't look covered? Healthcare obviously goes up...

In response to the bolded though, in her defense, I work in her industry and this is her 'work uniform.' At least that's how I think about it. She has to project a certain measure of financial success and this is an easy way to do it. It's more important than you think and has very little to do with insecurity. She's just in a very different workplace atmosphere.

 

[scrabbler1]

+1

It ALL blows my mind. $18K fees for the country club PLUS $15K on sports, fitness, music lessons, etc?

$2167/month in car payments, plus $267/month for gas? I thought they lived in Manhattan where everything is nearby and nobody drives. I mean, from what I understand, that's the whole point of living in Manhattan. I just live in a suburb, and so far this year (driving everywhere I could possibly want to go), I have spend an average of $30/month on gas. It was about the same when I was still working.

And they spent $24K for clothes? Prada? Gucci? What are they trying to prove, why, and to whom? That screams of junior high school level insecurity to me.

They have taken "Blow that Dough" to a new level. I thought I'd look at their budget and maybe get some ideas (since I have some excess to spend), but I just don't see anything there for me.

Yes, the total blows my mind; I was just picking out the really BIG ones LOL!

They spend $180k on their kids (first 4 lines in the linked article's chart) in ONE year! And that doesn't include kid expenses embedded in other expense items.

The only item I somewhat envy is their health insurance. They pay only $12k a year (subsidized) for 4 people. I paid $7k for one person.

 

[iloveyoga]

It's a whole different world that what I live in. Very interesting, but I am not envious of that lifestyle.

 

[Dtail]

There are many Wall Street folks who earn more than 1mm yearly and spend much more.
I do believe their numbers and have seen this type of spending.

 

[MichaelB]

I am reminded of Tom Wolfe’s novel “Bonfire of the Vanities”.

In many professions the senior ranks exert (and suffer) extreme peer pressure to spend and consume. Partners and Senior VPs want peers that spend it faster than they make it, as these are people that must work hard to generate new business in order to maintain their lifestyle.

The professional that doesn’t need the money can’t be relied on to do whatever it takes to drum up new business or make the quarterly corporate targets, and has no place among the senior management of US business.

 

[marko]

The professional that doesn’t need the money can’t be relied on to do whatever it takes to drum up new business or make the quarterly corporate targets, and has no place among the senior management of US business.

That mindset goes beyond those who have a job!

(see another thread re: finding another job after age 50)
I was part of the 'redundant team' when my company was acquired and received a fairly public and obscenely generous severance.

During one of my very few interviews the guy told me "I just don't know how I'd be able to motivate a guy like you...everyone knows you don't need the money". The assumption was that all I wanted to do was play golf with clients and little else for the next 10 years.

 

[socca]

My budget is constructed differently than the Chen's budget ("income statement"):
• for the Chens, savings are what is left over after all expenses are subtracted from gross income. Not for me: savings are an expense item (currently 25% of gross income).
• the Chen's expenses fail to differentiate between discretionary and non-discretionary. Admittedly, for some expenses this classification is difficult; nevertheless, I think it's important.

My gross income is not (and has never been) anywhere near $1M/year, yet I consider my personal profit and loss statement and balance sheet to be in better condition than the Chen's. Who would have thought?

 

[daylatedollarshort]

From the article - "But as we are all well aware, the desire for money and prestige tends to corrode lives after a certain point. Once you make over $200,000 as an individual or $350,000 as a family, there is no additional happiness that accrues from making more money. Instead, lifestyle tends to deteriorate due to longer hours at the office, more stress, poorer physical health, and less family time."

There are one percenters in our area who sent their kids to the public schools. Our kids had some friends from school and sports that were from really rich families. I would tend to agree about the certain point concept. Once you have enough money to not have to worry about money or basic needs and some frills, I don't think having tennis courts and a riding stable in your backyard or a house like the Clampetts really adds that much happiness to life compared to other factors like number of friends, family relationships, leisure time, good health, enjoyable hobbies, etc.

I enjoy living in an area with wealthy households and taking advantage of the leftovers of their excess consumerism - like seat filler tickets for the theater and wine tasting events, Freecycle and thrift market donations, and clearance organic and gourmet groceries at the outlet stores. And the sales tax revenue from the expensive stores and luxury car dealers help fund all the public parks, libraries and senior services.

 

[Ronstar]

Made a million. Saved $54k +401k. Rachel needs to cut her spending - a lot.

 

[MarieIG]

What surprises me is the property tax rate. Mine is twice that and I'm in an ordinary home in flyover country. I guess I expected the rate in NYC to be much higher.

NYC has a large number of highly assessed commercial properties, as well as an income tax, which keeps the property taxes on homes lower than one might expect.

Go to the neighboring suburbs of Westchester and Nassau County for the property tax on a home of that value, and it will be in multiples.

 

[NW-Bound]

I glanced through the article. Yes, lots of expenses. And near the end:

On paper, everything looks great for the Chens. Yet, Rachel tells me she doesn’t know if it’s worth working 65 hours a week for the next 15 years. Even the finest lobster at Le Bernardin or the most picturesque luxury villa off the Almalfi Coast gets old after a while.

Rachel sees a therapist every other week to help her manage the constant pressure she feels to provide for her family, outperform her peers, and outperform the markets. The market takes no prisoners and every month she starts with incredible anxiety. This type of pressure has begun to pulverize what little peace and quiet she has left inside. She’s also recently begun to develop heart palpitations, which has her worried.

Colin also sees a therapist once a month to help him get through his feelings of unworthiness for being a stay at home father. Although he’s truly a great dad, he often feels gutted to have given up his career. None of his friends, who all work, understand what he’s going through. He feels isolated and occasionally depressed. Sometimes he gets jealous of Rachel’s success, which leads to fights.

What a miserable life! Yet, at this point they probably feel stuck. That's the only life they have known. They probably don't know how else to make a living, other than the jobs they have had at Wall St.

 

[MarieIG]

+1

It ALL blows my mind. $18K fees for the country club PLUS $15K on sports, fitness, music lessons, etc?

$2167/month in car payments, plus $267/month for gas? I thought they lived in Manhattan where everything is nearby and nobody drives. I mean, from what I understand, that's the whole point of living in Manhattan. I just live in a suburb, and so far this year (driving everywhere I could possibly want to go), I have spend an average of $30/month on gas. It was about the same when I was still working.

And they spent $24K for clothes? Prada? Gucci? What are they trying to prove, why, and to whom? That screams of junior high school level insecurity to me.

They have taken "Blow that Dough" to a new level. I thought I'd look at their budget and maybe get some ideas (since I have some excess to spend), but I just don't see anything there for me.

I know people in Manhattan who own cars. Some of them live in apartments that come with a parking space, or where you can rent a parking space (for a sum equivalent to a monthly rental).


Personally, I do NOT like driving in Manhattan, and make all efforts to avoid it.