Scraping By on $250K/Year

[LOL!]

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?

 

[photoguy]

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.

 

[Independent]

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.

 

[Katsmeow]

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.

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.

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).

 

[photoguy]

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.

 

[LOL!]

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.

 

[Independent]

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.

 

[photoguy]

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.).

 

[jdw_fire]

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?

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!!!!!!!

 

[ItDontMeanAThing]

if that is the case then why do less than 3% of households in this country make that much?

He gave some reasons

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.

 

[jdw_fire]

He gave some reasons


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.

you made my point, it isnt all that easy and it isnt all dependant on personal decisions. most people just cant do it.

 

[sheehs1]

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?

I don't know. I pay over $5,000 a year for electric (3 heat pumps), water and garbage and that is with turning off the heat pumps ..zoning them ...when I can. My city buys their electricity from Dominion and basically resells it to us. The electric department makes 3 million a year on the deal. City Council attaches it and routes it to the General Fund every year.
Adding water and garbage to the bill and all the surcharges increases it quite a bit. I am lucky if I see months under $400. I often see months over $500.

For 1 landline and 1 cell phone(450 minutes - just reduced it again), Basic and Expanded Basic cable T.V (no movie channels, etc) and cable Internet access..... I am paying roughly $2,400 a year and that is with being diligent about calling for promotions and when that does not work asking for the customer retention department.. (about $100 to the phone company for the land line and cell phone and $100 to the cable company for T.V. and Internet). I could do this a bit cheaper if I bundled all services...but...in my area to do that...I would have to use DSL and Dish or Direct T.V. I've tried DSL and it is horrible here. Dish or Direct T.V. is not any cheaper when I include the 3 T.V.s.
So those buckets in the budget break out in the article...sound more than reasonable to me. No...I don't live anywhere near Arlington Va.

 

[Katsmeow]

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).

I do not think anyone needs iPhones. Well, my firm reimburses me for the monthly cost of mine so they certainly think I need a smartphone. As for the kids, I do not pay the cost of the iPhone. They have chosen to use their money to pay for it which is their choice. I include it as my expense because it is on my husband's account.

Our landline+DSL internet is $30 a month which includes all taxes.

Well our landline + DSL internet is over $60 a month. The landline is a metered service we never use (we don't even have a phone for it) but the internet is cheaper as part of the bundle.

Regardless, you seem to be disagreeing that those expenditures were accurate. Based upon what our expenditures were, when we had that level of income and knowing what the people I worked with spent money on, I think it is accurate. That doesn't mean that I think I "need" those things. I have an iPad now which I enjoy but it is certainly a want and not a need.

Did you pay $420 a month for cleaning? We pay $120 a month today.

Is that clothes or house cleaning? We spent about $125 a month for dry cleaning. If it is house cleaning, when we were earning that income we did our own house cleaning (those adolescents come in handy there). When we listed our house for sale we used a cleaning service. It was $146 a week to clean a 4500 sf house.

We have teen-age drivers, 2 cars and our car insurance is less than half the value quoted.

When our oldest son began driving our auto insurance (3 cars) went up about $1500. Then he had a not very bad accident but it was at fault and our insurance skyrocketed and was about $4500 a year. Our umbrella coverage also went up several hundred dollars. Currently with him not on our policy we pay about $1400 a year (2 cars now).

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.

Probably not. But when you have 3 adolescent children it doesn't seem all that unusual either.

 

[jdw_fire]

Regardless, you seem to be disagreeing that those expenditures were accurate. Based upon what our expenditures were, when we had that level of income and knowing what the people I worked with spent money on, I think it is accurate. That doesn't mean that I think I "need" those things. I have an iPad now which I enjoy but it is certainly a want and not a need.

i think the point that should be made here (and i think it already has been) is that a household with income of $250k or greater is only scraping by because they choose to not live within their means (with the possible exception of someone who has endured large medical bills). and if they are only scraping by they deserve no pity or press since it is their own fault. i think articles like this are an insult to all the households with lesser incomes which is 97% of the households in the US.

 

[Katsmeow]

i think the point that should be made here (and i think it already has been) is that a household with income of $250k or greater is only scraping by because they choose to not live within their means (with the possible exception of someone who has endured large medical bills). and if they are only scraping by they deserve no pity or press since it is their own fault. i think articles like this are an insult to all the households with lesser incomes which is 97% of the households in the US.

Basically I don't disagree with this. We did have a son who attended an expensive therapeutic school and our other kids had some special needs that really did result in some quite large medical bills which really did eat into the income. That said, we did save for retirement and we weren't scraping by so I do agree that with rare exceptions if people spend all of a $250k income without saving anything, for example, that is purely a choice being made. My post was not meant to convey that those expenditures are "necessary" but to say that I think they are not unusual for people with that level of income.

I would think that for some people with that level of income those expenditures would be accurate in some categories but not others.

When we had that income, we spent more in some categories, roughly the same in some, and less in others (for example, we spent probably under $50 a year for parking and much less for after school activities).

 

[sheehs1]

i think the point that should be made here (and i think it already has been) is that a household with income of $250k or greater is only scraping by because they choose to not live within their means (with the possible exception of someone who has endured large medical bills). and if they are only scraping by they deserve no pity or press since it is their own fault. i think articles like this are an insult to all the households with lesser incomes which is 97% of the households in the US.

I don't think this is necessarily what the article showed. If memory serves me correctly $30k went into retirement vehicles. So I don't think they are living "above their means" at all.

An alternative thought to yours...is that the family is simply living "at their means" while paying all their bills and responsibilities ...including planning for retirement. In other words...a lifestyle...they have chosen.
It's an insult I say...Live and Let Live.

Personally I don' like what this rhetoric has done to our country as a whole. Everything..the last few years has been so divisive!!

 

[haha]

Give it a rest people. To say that no one needs more than $250,000 is like saying no one needs sex more than 3x/week. How the hell do you know? Are you omniscient? Truth is, some do, and some don't.

I know some people can get by on less; I do. (Money and sex, unfortunately) But I don't consider it any great virtue, it's just dealing with reality.

These type threads are frequent, and they are among the most annoying ones on the forums.

Ha

 

[Ronstar]

Great post Ha! But i hope you're not saying that income is directly proportional to sex frequency. I'd hate to have to increase work hours.

 

[jdw_fire]

I don't think this is necessarily what the article showed.

with a title of "Down and Out on $250,000 a Year" and statements like "Even with an additional $3,000 in investment income, they end up in the red" what point/impression do you think the author is trying to make? go back and reread what i wrote. in essence i said that at the $250k level of income if you are "scraping by" (maybe i should have said instead "down and out"), you arent living within your means and it is (most likely) your fault. how is that statement incorrect? and if you think i am so wrong about the impression imparted by the author how do you explain all the comments on the article that imply that those readers also thought the article was off base or insulting?

I don't think this is necessarily what the article showed. If memory serves me correctly $30k went into retirement vehicles. So I don't think they are living "above their means" at all. "they" are because after all spending (including retirement vehicles) they are, in 7 of the 8 locations, in the red, which is the definition of living above their means.

An alternative thought to yours...is that the family is simply living "at their means" if this is true why are they "in the red"? while paying all their bills and responsibilities ...including planning for retirement. In other words...a lifestyle...they have chosen which means it is their choice and therefore they are responsible.
It's an insult I say...Live and Let Live. if they want to live like that it is up to them however i dont want to be the 1 bailing them out when they need to be. all i did was make an observation that if their annual cash flow was negative then they have chosen to not live within their means and then point out that in my opinion articles giving the impression that households with $250k of income but have a negative cash flow should be pitied are insulting to people that make less. these articles also make a poor example to everyone not choosing to live within their means, it kind of justifies that behavior, implying that if someone who makes $250K cant live within their means how can anyone making less.

Personally I don' like what this rhetoric has done to our country as a whole. on this i agree Everything..the last few years has been so divisive!!

 

[sheehs1]

with a title of "Down and Out on $250,000 a Year" and statements like "Even with an additional $3,000 in investment income, they end up in the red" what point/impression do you think the author is trying to make? go back and reread what i wrote. in essence i said that at the $250k level of income if you are "scraping by" (maybe i should have said instead "down and out"), you arent living within your means and it is (most likely) your fault. how is that statement incorrect? and if you think i am so wrong about the impression imparted by the author how do you explain all the comments on the article that imply that those readers also thought the article was off base or insulting?

In some ways I was agreeing with you. Yes...the title does say "scraping by. What I was referring to....is that within their budget....there is some "fat" so with a few tweaks...it could be brought back into the black. Any person with deductive reasoning ...would discount the "title"to some degree. Right? I determined the content of the article didn't necessarily support the title. However, the authors point was well taken..in that he/she showed how easy it is to spend the $250K (if you have it).

 

[sheehs1]

Give it a rest people. To say that no one needs more than $250,000 is like saying no one needs sex more than 3x/week. How the hell do you know? Are you omniscient? Truth is, some do, and some don't.

These type threads are frequent, and they are among the most annoying ones on the forums.

Ha

+1

 

[Danmar]

Give it a rest people. To say that no one needs more than $250,000 is like saying no one needs sex more than 3x/week. How the hell do you know? Are you omniscient? Truth is, some do, and some don't.

I know some people can get by on less; I do. (Money and sex, unfortunately) But I don't consider it any great virtue, it's just dealing with reality.

These type threads are frequent, and they are among the most annoying ones on the forums.

Ha

Great post. I totally agree. There have been a few of these wealth/income/expense threads recently and they have brought out the worst in us. Seems like "an opinion for every bias" to me. Different approaches to life cause different perspectives. We should at least try to respect other approaches.

 

[NW-Bound]

Great post Ha! But i hope you're not saying that income is directly proportional to sex frequency. I'd hate to have to increase work hours.

If your DW is like some woman posters here, it does not have to be work outside the home. More than one female poster has said a man doing housechores turns her on.

Unless you are thinking of working extra to finance a mistress ...

 

[Independent]

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.).

Yes, I haven't been plain on whether it's one $250k salary or two at @$125 each. Making it to $250 on a single salary is harder. Are you saying that "almost anybody" can get to $125k purely on hard work, but $250k requires hard work plus lots of good luck?

I'll agree that some engineers, accountants, MBAs, IT professionals, consultants, and possibly nurses can get to $125k. That's well above average for those occupations. (Median annual wages of wage and salary accountants and auditors were $59,430 in May 2008. The middle half of the occupation earned between $45,900 and $78,210. The bottom 10 percent earned less than $36,720, and the top 10 percent earned more than $102,380.Accountants and Auditors) Those that are able to get from $60k to $125k probably work harder than the others, but they probably have other gifts too (eg better people skills).

The important thing to me is that the great majority (like 80%) of HS kids don't have the brainpower to do any of these jobs, certainly not to reach the higher end which is required for the $125k. It's not just a matter of hard work and good decisions, it's also a matter of winning the coin flip on some important things that you can't control.

Regarding firefighters and police officers, I've been looking around the web and I can't find anything about $125k salaries for "typical" or even "somewhat better than average" ff & po. I suppose there must be some people up in the management ranks that get there, but again I think it takes a lot more than just hard work to make it to the top.

 

[photoguy]

I think getting to 125k is not going to be easy for many people, but I believe it is achievable by those with average (to above average) intelligence with lots of hard work, sacrifices, and the right decisions.

Here's what I think are the decisions that need to be made:

(1) The choice of school program. For example, instead of physics enroll in engineering, instead of english take accounting, instead of biology do nursing.

(2) Move to the big city where salaries are higher. I would guess that in silicon valley, salaries might be double what they'd be compared to low cost of living areas like the midwest. Obviously varies by occupation.

(3) Choice of employer. Work for a consulting firm that rewards performance (aka 50-60+ work weeks) instead of a government job. If you have a math degree don't go into teaching but instead work for the man in a corporate job. Be willing to be a road warrior.

Regarding intelligence levels

IQ Ranges of Occupations - Careers - | LearnHub

which I believe is taken from

http://www.ssc.wisc.edu/cde/cdewp/98-07.pdf

suggests that even for highly competitive occupations like MD the range of IQs (105-130) allows for people with average intelligence (median should be 100 with 15 pts for +/- one std dev.). (Note I am unsure of the quality of this paper as I didn't have time to do more than skim it and this is not my field).

With respect to police officers, the base pay in San Jose is 108K and with overtime many hit 125K. I think San Jose pays more than most, but I'm guessing you will get similar salaries at other high cost of living areas. The city publishes salaries at:

Employees Salaries Lookup

As an aside the police chief made $525K in 2010!!! The top police sargent was at 263K, top police officer at 224K. I suspect there's a lot of pension spiking going on, but if you select the Police dept and scroll down a few pages, you can see POs who get most of their pay from base + overtime.

I think we don't see more people at $125K because folks don't want to make these choices. Which is a perfectly reasonable thing to do. I would never recommend to a high school student to take engineering/accounting solely because of the pay.