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Old 03-17-2011, 04:44 PM   #41
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Not necessarily disagreeing with you. But because I do have the science/researcher background as well as an Info Systems background...I like data that makes sense. Data without making sense "means little". It has to pass the reasonability test...right?
I get that there is all sorts of data out there to say those making $250K are in the top 5%. Guess who is providing the data? The government.

When the data...contradicts...my observations of the real world...then in my mind it is questionable. The real world says to me...that those at the $250k range...are doing extremely well....for that one year....but it doesn't make them "Rich".
For me...it still leaves out a critical element..and that is net worth.
Now...say to me...X is making $250K a year and they have a net worth of 1 to several million...and I would agree that is rich.
So...we come back to the income versus net worth argument. I suppose I'd feel better about what our government is doing if they would include a net worth element in the calculation. Why? Because...it prevents those that are striving to get there ....to get there. And that ..cuts into the American Dream.
All in my humble opinion.
There's the "rich" word again. You want to define it based on assets, that's fine with me but the article says nothing about assets. It's talking about $250k income from a working couple and saying their financial life is tough, while ignoring the fact that the great majority of families get by on less than half that.

If you're saying that tax policy should recognize both income and assets, I'd say that's an okay idea. It's very unpopular with the people with assets.

In terms of data quality, I'll go with the gov't before I'll trust anecdotes from one person. In most cases, our personal contacts are skewed by our income levels.
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Old 03-17-2011, 05:04 PM   #42
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uummm... but that is not what I said. I said "about all one can do in life is take personal responsiblity" meaning...for oneself.
And I don't think...the article stated that the couple making $250K was "not getting by". It just showed how it was spent.

But given your ...analogy...it probably is or would be the personal decisions of those making $250K not to make the $1million. Perhaps they are not willing to spend all their time traveling, or go get that masters or PhD, or borrow that seed money to start their own company...or...etc. Are these not personal decisions

Likewise is it not a personal decision if one:
1. Decides to drop out of high school
2. Not to go to college
3. Had 3 children before age 20
4. Decided to do drugs or alcohol
5. Become a criminal

I know we can not control everything and some are dealt really unlucky cards
. Not talking about those situations. Just saying that at a basic level...the cumlative effect of all of our personal decisions...have a bearing on where we end up. No?
I earned more than the SS wage base for 31 years, but I never approached $1 million/year. If I had seen a way to make the million doing these things: "spend all their time traveling, or go get that masters or PhD, or borrow that seed money to start their own company" I would have jumped at the chance. But it takes a lot more than that to earn the million.

These all rate as bad decisions: "1. Decides to drop out of high school, 3. Had 3 children before age 20, 4. Decided to do drugs or alcohol (in excess), 5. Become a criminal". You don't really believe the median income worker in the US does even one of them, do you?

IMO, "Going to college" may be a good or bad decision. It's a good idea for most people in the top quintile of IQ, a bad idea for most people in the bottom three quintiles, and iffy for people in the second.

Certainly we have choices within the hand we're dealt, but we're not all dealt the same hand. I don't think the primary difference between the median and the top 5% is "decisions".
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Old 03-17-2011, 06:14 PM   #43
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IMO, "Going to college" may be a good or bad decision. It's a good idea for most people in the top quintile of IQ, a bad idea for most people in the bottom three quintiles, and iffy for people in the second.
Beavis, she said IQ! Huh!

Ha
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Old 03-17-2011, 07:22 PM   #44
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In terms of data quality, I'll go with the gov't before I'll trust anecdotes from one person. .
If that is the data you choose to use that is up to you. It is certainly the data the government is using. That data came from the IRS and is in my opinion...not reflective of true income in this country. Take for instance...the farmer who lives a $250,000 + lifestyle....but pays little tax since he shows so little "income" on his tax return. That farmer would be in the median column or below in the governments tax table. But ...oh wait....there aren't any shades of grey in this are there?

But since this thread...is specifically about the article...rather than any side tangents...I'll try to keep it article specific.
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Old 03-17-2011, 07:32 PM   #45
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I suspect that your observations reflect a very selective portion of the real world.

If you make $250k/year or more, you very likely live in a neighborhood/town/state/part of the country that has a much higher income (and living cost) than the average.
Those of us in fly-over country are generally stunned by the dollar figures earned and spent on the high-cost coastal areas.
ahhh.....not necessarily Hamlet. Actually live in a fairly rural area...with unemployment higher than the national average....so NO to your suspicion..about "my real world".
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Old 03-17-2011, 07:36 PM   #46
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Certainly we have choices within the hand we're dealt, but we're not all dealt the same hand. I don't think the primary difference between the median and the top 5% is "decisions".
Please don't tell that to all the elementary school age children who are told...."the choices you make will have a bearing on what you become"..or something to that affect.

It may ...or may not be the primary reason. Don't think there has been a study on that...and even if there had been..it probably would not be statistically relevant. Too...subjective. BUT....certainly some uncalculated percentage towards this possibility....is...well....a possibility...is it not?
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Old 03-17-2011, 08:39 PM   #47
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Likewise is it not a personal decision if one:
1. Decides to drop out of high school
2. Not to go to college
3. Had 3 children before age 20
4. Decided to do drugs or alcohol
5. Become a criminal

I know we can not control everything and some are dealt really unlucky cards
. Not talking about those situations. Just saying that at a basic level...the cumlative effect of all of our personal decisions...have a bearing on where we end up. No?
You are assuming that these people actually evaluate the decisions they make and consciously decide on a course of action. The reality is far far different. Most of these people are acting the way human beings have acted forever - they adapt to the environment and home in which they live. The live the expectations set for them. If you raise a child to think that killing and eating babies is ok, they too will kill and eat babies and see no wrong in that.
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Old 03-17-2011, 08:55 PM   #48
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IMO, "Going to college" may be a good or bad decision. It's a good idea for most people in the top quintile of IQ, a bad idea for most people in the bottom three quintiles, and iffy for people in the second.

Certainly we have choices within the hand we're dealt, but we're not all dealt the same hand. I don't think the primary difference between the median and the top 5% is "decisions".
This is so true. Not everyone has the capability to earn $250k a year, let alone $1 million.

I think we do a disservice to young people when we try to tell people that they must go to college to be successful in life. Not everyone is cut out for or even capable of 4 year academic college. Many of those people are perfectly capable of earning a good living and having a happy and successful life as long as people aren't telling them that the only reason not to go to college is because your dumb or lazy.
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Old 03-17-2011, 08:57 PM   #49
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You are assuming that these people actually evaluate the decisions they make and consciously decide on a course of action. The reality is far far different. Most of these people are acting the way human beings have acted forever - they adapt to the environment and home in which they live. The live the expectations set for them. If you raise a child to think that killing and eating babies is ok, they too will kill and eat babies and see no wrong in that.
Not assuming...and I agree with you. We are all a product of our environments, our experiences and our influences. But it seems to me...it is still a personal decision...albeit......either way it goes...to a certain degree.
Wasn't trying to debate that point at all.
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Old 03-18-2011, 02:08 PM   #50
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Please don't tell that to all the elementary school age children who are told...."the choices you make will have a bearing on what you become"..or something to that affect.

It may ...or may not be the primary reason. Don't think there has been a study on that...and even if there had been..it probably would not be statistically relevant. Too...subjective. BUT....certainly some uncalculated percentage towards this possibility....is...well....a possibility...is it not?
Sure, decisions matter. I could give you examples from my own life. That's why I wrote

Quote:
Certainly we have choices within the hand we're dealt,
but it's usually not 100% of one and 0% of the other. That's why I continued

Quote:
but we're not all dealt the same hand. I don't think the primary difference between the median and the top 5% is "decisions".
If I'm raising children, I can't tell them to change the things that they can't control - that's impossible by definition. So I want to concentrate on the things they can control. But that doesn't mean I believe the things they control are the only thing that matter in the economic result.

I see decisions as somewhat non-symmetric. Any of us can get to $0 income entirely through decisions - just stop working. So there really is a 100% decision choice in that direction.

But most of us cannot get to $250k solely by good decisions (including the decision to work hard), virtually none of us can get to $1 million solely by good decisions, and some of us can't get to $45k (the US median) solely by good decisions. On the upside, the further you go the more you're going to rely on things you can't control.
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Old 03-19-2011, 08:06 AM   #51
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The link in the first post of this thread is lifted completely from this early December article:
Down and Out on $250,000 a Year

The link I listed has lots of tables to help one understand the expenses. I'm pretty sure we discussed this before on the forum, but my memory fails me.

... now it comes back ...

The budgets show $4000+ for dental costs. That means at least one person in the family gets a set of braces every year. And since there are $15000 costs for day care and baby sitting, it means the kids get braces while they are in pre-school. Plus they added $8000 a year for college savings. When we paid for daycare, we were not putting money in a college fund. OTOH, maybe they mean college is really a giant day care and baby sitting operation?

I would not be surprised if "Parking fees" were double-counted as well. We pay for long-time parking at the airport when we go on vacation. The folks depicted in the article must park in the short-term lots.

The budget has ridiculous amounts for utilities and phone service (more than 4 times what we pay and we live in comparable location with comparable home size), plus may double count taxes on gasoline and phone.

Food (at home, at work, and eating out) was more than $22,000 a year or about $61 a day. What's up with that?

Someone must've written a serious rebuttal to these numbers and published them. Anyone have a link?
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Old 03-19-2011, 10:32 AM   #52
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I don't think the primary difference between the median and the top 5% is "decisions".
So what do you think about immigrant families that go from lower class minimum wage jobs to professional (doctor/lawyer/engineer/scientist) in one generation and hit the 250k mark.

Decisions in this case would be from both the parent and child, but it's certainly doable by many.
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Old 03-19-2011, 01:07 PM   #53
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So what do you think about immigrant families that go from lower class minimum wage jobs to professional (doctor/lawyer/engineer/scientist) in one generation and hit the 250k mark.

Decisions in this case would be from both the parent and child, but it's certainly doable by many.
Again, there's a difference between one anecdote and a general rule. The kid in that immigrant family was born with an excellent IQ. The parents probably had brains too but couldn't use them back home, the US gave them the opportunity to give their children a chance.

Sure, two kids can be born with the same potential and one is born into a family that really stresses hard work while the other is born into a family that stresses, well, a no-stress approach to life. From the child's perspective, he/she can't decide to be born into the first family, that's uncontrollable.

Maybe the problem is "many". I read that and think you mean "more than 70%". I think it means a couple million individuals (that's "many" by some definitions) in a working population of 150 million. So less than 5% of the population can get to $250k by hard work and good decisions. To me, even though it's millions of individuals, it's "very few" on a percentage basis. 95% don't have a chance at that income.
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Old 03-19-2011, 01:30 PM   #54
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The budgets show $4000+ for dental costs. That means at least one person in the family gets a set of braces every year. And since there are $15000 costs for day care and baby sitting, it means the kids get braces while they are in pre-school.
Could be. On the other hand, I have personally just for me spent over $4000 for dental in a year with no braces (root canal, couple of crowns).

We had costs for child care even when our kids were teenagers. We certainly had to pay for after school care for children in elementary school. We had 3 kids and it was easy to get to that range of costs.




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The budget has ridiculous amounts for utilities and phone service (more than 4 times what we pay and we live in comparable location with comparable home size), plus may double count taxes on gasoline and phone.
Well I looked at the cost in Plano (we live in different area but same state). We pay well over the amount set forth for our electricity, particularly when we had 6 people in the house. Now that we are down to 4 it is less but still above that (4500 sf house).

Phone service includes on the list cable and internet. With 4 of us with iphones and cable and internet we spend well over $200 a month and that is with no landline. We are about to drop the cable TV but would still be over $200 a month.


Quote:
Food (at home, at work, and eating out) was more than $22,000 a year or about $61 a day. What's up with that?
When DH and I were working full time and we had six people living in the house we spent about that, maybe a little less. Now, with 4 of us and DH retired and me ESR, we spend about $12,000 a year ($10,000 groceries, rest eating out).
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Old 03-19-2011, 02:33 PM   #55
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Maybe the problem is "many". I read that and think you mean "more than 70%". I think it means a couple million individuals (that's "many" by some definitions) in a working population of 150 million. So less than 5% of the population can get to $250k by hard work and good decisions. To me, even though it's millions of individuals, it's "very few" on a percentage basis. 95% don't have a chance at that income.
I think I would phrase it a little differently. I would say that 5% made the decisions and hard work to get to a household income that reaches 250k. But I think a much larger percentage could have reached that number if they chose too.

For example, my wife has a higher tested IQ (don't tell her I am admitting that she may be smarter than me ) but chose to go into journalism instead of engineering. As a result my salary is more than double hers but she could have easily gone into a different profession that made more money if she so desired.
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Old 03-19-2011, 06:28 PM   #56
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C'mon Katsmeow ... we discussed your budget previously and I think the consensus was that you were a big overspender. I recall you admitting your home was very energy inefficient. And you are gonna tell me that everybody needs iPhones? LOL! LOL! LOL! A cell phone for the kid is $25 a month ($9.99 extra phone on family plan + $9.99 unlimited texting + taxes). Our landline+DSL internet is $30 a month which includes all taxes. Sure cell phones add to that.

My spouse and I both work, we were the demographic in the article. Our kids were in day care (one starting in Huntington, NY) and did after school until age 11 or so. Nevertheless, the expenses are way way w-a-a-y out of line. Did you pay $420 a month for cleaning? We pay $120 a month today. We have teen-age drivers, 2 cars and our car insurance is less than half the value quoted. The "sales tax" numbers are probably also included in the cost of food, clothing, entertainment, vacations, etc. so are double-counted.

As for dental, sure you can spend $4000 every few years or so, but I doubt one needs to spend $4000 year-in-year-out on dental work.

So while I'm sure a family with $250K could overspend, I think they could also be investing $100K or more per year even in the locales mentioned.

In fact, I think the "accounting" firm was tasked with "Come up with expenses that use up $250K for a family of 4 in these locales." It would be more instructive to see some real budgets and not inflated ones.
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Old 03-19-2011, 07:24 PM   #57
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I think I would phrase it a little differently. I would say that 5% made the decisions and hard work to get to a household income that reaches 250k. But I think a much larger percentage could have reached that number if they chose too.

For example, my wife has a higher tested IQ (don't tell her I am admitting that she may be smarter than me ) but chose to go into journalism instead of engineering. As a result my salary is more than double hers but she could have easily gone into a different profession that made more money if she so desired.
Again, I wish you'd put some numbers on "much larger". It's possible we don't disagree but we're just using different words. Maybe you think 10% of the population could get to $250k, but that still that means 90% can't.

Let's take your wife for example.
1) Maybe her IQ puts her in the top 10%. That could be okay for an ordinary engineering job, but the average engineer doesn't make $250k. Does she have the other talents to get to the next level?
2) Maybe her IQ score is heavily influenced by verbal talents, not by quantitative talents. So even if she's high on average, she isn't in the area that hah the high concentration of top earners.
3) Most important. If she's in the top 10%, there has to be someone in the bottom 10% to balance her out. That person probably can't get up to the $45k level, and can't imagine $250k.
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Old 03-19-2011, 08:03 PM   #58
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I see what's causing the discrepancy. I'm thinking 250k household income or 125k for one half of a couple. Not 1 salary at $250k which is much harder to reach. I think 125K is mark that is hittable by many professions with a BA (e.g., engineers, accountants, business grads, programmers, consultants, nurses), grad degree (e.g., scientists, MBA, doctor, lawyer, dentist) and professions that don't require college degrees (fireman, police officer, self-employed, etc.).

Of course not everybody in those professions will hit 125k, but it is doable especially if you live in a high cost of living area (greater salaries to compensate), have greater work experience, are willing to climb to corporate ladder (put in long hours to move up the pyramid at a partnership, take jobs that are less interesting but with greater remuneration, etc.).
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Old 03-19-2011, 09:38 PM   #59
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I see what's causing the discrepancy. I'm thinking 250k household income or 125k for one half of a couple. Not 1 salary at $250k which is much harder to reach. I think 125K is mark that is hittable by many professions with a BA (e.g., engineers, accountants, business grads, programmers, consultants, nurses), grad degree (e.g., scientists, MBA, doctor, lawyer, dentist) and professions that don't require college degrees (fireman, police officer, self-employed, etc.).

Of course not everybody in those professions will hit 125k, but it is doable especially if you live in a high cost of living area (greater salaries to compensate), have greater work experience, are willing to climb to corporate ladder (put in long hours to move up the pyramid at a partnership, take jobs that are less interesting but with greater remuneration, etc.).
if that is the case then why do less than 3% of households in this country make that much?

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My 2-cents worth: This article represents another futile attempt to convince us that a high income (top 2.9 percent in U.S.) is not that great while more than 97% making less in the U.S. and a lot higher than the rest of the population on other parts of the world -- give me a break!!!!!!!
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Old 03-19-2011, 10:05 PM   #60
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if that is the case then why do less than 3% of households in this country make that much?
He gave some reasons
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Of course not everybody in those professions will hit 125k, but it is doable especially if you live in a high cost of living area (greater salaries to compensate), have greater work experience, are willing to climb to corporate ladder (put in long hours to move up the pyramid at a partnership, take jobs that are less interesting but with greater remuneration, etc.).
And the other reasons are too obvious to mention, but I'll list them anyway. Intelligence, job-related knowledge, creativity, ability to learn quickly, ability to understand the politics of an organization and it's situations, and motivation to put it all to use efficiently and consistently are all human characteristics that have bell shaped curves. One has to fall at the upper end of most, if not all, of these curves in order to get into the top 3% of wage earners.

I spent most of my two careers one step down from the '125 k professionals' discussed here. Didn't understand the politics most of the time, couldn't stomach them when I did. But I knew married couples where both fit the category. They were as middle class as the people they managed.
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