Unable to Scrape by on 250K+ a Year

[traineeinvestor]

I guess LBYM still matters no matter how much you earn.

I have considerable empathy for a couple which outsources a number of tasks (like house cleaning) and uses daycare for their children so that they can both work demanding jobs with long hours and high stress levels. When we were both working we engaged full time domestic help for exactly that reason and to enable us to spend more time with the children when we are not working. I also have some sympathy with people who will be adversely affected by higher taxes (I will be one of them). But I still struggle to understand how a couple earning US$400K pa can fail to have a decent savings rate.

 

[photoguy]

New York City includes more than just the upper east side.

I don't know where that info comes from, but if you go to the census data, you'll find numbers closer to the ones I posted.

Both sets of numbers ultimately come from the census bureau. The 47K per year is for new york city as a whole (the greater metro area) whereas the 100K per year is for manhattan itself. This is clearer if you go to

http://www.bea.gov/regional/reis/

and input new york (note FIPS code 36061 is manhattan)

Edit: the numbers are still a little different but that may be because the first set is per household and for 1999. The bea numbers are per capita for 2008 which would imply a household income of 90K for NYC and 200K for manhattan

 

[LOL!]

One problem is that one should not count their 401(k) / 403(b) contributions as an expense.

When we were living in NY we paid a young lady to care for our kid in our home. It's a minimum wage job, so not a major expense. I guess if you don't shop around you will always pay more than list price for anything you buy.

 

[photoguy]

If you think earning 5x what your neighbors earn doesn't qualify you as rich, than you're right, we have nothing to say to one another.

A question for you though. If 5x the median isn't rich, does that make the median poor? Or are the modestly rich, maybe, just a little bit out of touch thinking that they are"solidly middle class" when the middle is really 80% beneath them?

If you are defining rich by income then you also need to take into account expenses which can easily be several times higher in certain metro areas. I think the median home price in the US is about 175K (Metropolitan Median Prices) compared to something like 700k in a high priced area like san francisco.

250K is certainly enough to be reasonably well off even in a high priced area, but it probably won't give you much more than a middle class lifestyle.

 

[ziggy29]

250K is certainly enough to be reasonably well off even in a high priced area, but it probably won't give you much more than a middle class lifestyle.

$250K in SF or NYC is generally comfortably upper middle class, but certainly not over the top "rich."

Where I currently live, on the other hand, $250K a year would be rich.

 

[REWahoo]

Where I currently live, on the other hand, $250K a year would be rich.

Naah. You'd squirrel so much of it away your neighbors would think you were just getting by...

 

[ziggy29]

Naah. You'd squirrel so much of it away your neighbors would think you were just getting by...

"The Millionaire Next Door" style, that would be correct...

 

[Leonidas]

If things ever get out of control around here, and we start chopping off the heads of the ill-mannered rich, the Toddster needs to head for the hills before he gets Marie Antoinette'ed. He might be high up on some folks' lists.

But if I'm wearing a Phrygian cap and serving on the Citizens' Committee for Guillotining - I may vote for a group more deserving of the chop. I'm speaking of a few hundred of the current ruling class that hang out in DC (I'm speaking of R's and D's equally - no partisanship here), and maybe a few of their select minions. They created this mess and they are the group least likely to get us out of it.

Anyway, I think Todd would have made more sense if he had just admitted, "Hell yes I am super-rich! But now, that I have to cut back on my wanton spending so I can pay my tax bills, guess what I'm not going to be doing? Buying goods and services from my fellow Chicagoans." Haven't we seen this before? Screw the rich and tax the hell out of them and the only people we really hurt are the working schmucks who make the stuff that the rich buy.

 

[harley]

If you think that making $250k/year in Manhatten makes you rich then I've got nuthin' to say to you.

Put me on Ignore, then. I'm rich (IMHO), but this guy is stoopid rich. With an emphasis on "stoopid". If you can't see that you should probably start your own "stoopid rich" blog.

 

[Emeritus]

The rich don't pay tax myth is just that, a myth.

High income people pay the lions share of all the taxes. The bottom 50 percent of income people pay almost nothing. It is indeed accurate to state that your government is almost entirely funded by high income people.

Also your Manhatten stats on income are way off. Don't confuse the county of New York (that includes Manhatten) with Manhatten.

<from wikipedia>

If you mean only income taxes you have a point, but everyone pays taxes and the overall tax burden is fairly uniform. The rich pay more because they have and get so much more

 

[TooFrugal]

$250K in SF or NYC is generally comfortably upper middle class, but certainly not over the top "rich."

250 - 400K provides a quite comfortable, upper middle class lifestyle even in a place like SF, more so if you live like a Millionaire Next Door.

But it is common sense, at least to me, that if you have 500K in student loans, no matter where you live, maybe you hold off on having 3 kids, or don't buy a million dollar house with right away, or maybe move to a neighborhood with good public schools and avoid the private school expense. With that kind of income I don't know why you would have to be stressed out over money.

 

[Hiredgun]

"The rich pay more because they have and get so much more"


Sorry, but I have to take issue with that comment. The "rich" make more money (if they are like my wife and I) because we work our asses off, employ and pay health insurance, life insurance and disability for several employees, have gone to school for many years to earn a law degree from a prestigious university and took the risks of leaving a cushy law practice to venture out on our own.

We've never been given anything. We earned every last penny we have and I get real tired of the class warfare (i.e. jealousy) that is apparent even on these boards.

I also love the politico speak "a tax cut for the rich". Thanks so much for characterizing letting me keep some of the money I have earned (for which the government hasn't done a damn thing) as a tax break. Jeez, thanks for doing nothing (big Government) and allowing me to keep less than 50% of what my sweat and toil has earned.

We don't "get some much more", we work hard, employ others and earn it. Show me a poor man who creates jobs for others. Good luck,

 

[201Ked]

The Henderson's live in CHICAGO.

I would LOVE to know how much tax dollars goes to his university and her hospital.

If the government did not subsidize student loans the price of higher education for everyone would drop through the floor and with it, his tax payer propped up bloated salary.

 

[scrabbler1]

OFGS the County of NEW YORK is Manhattan

While this is basically true, New York County does include a few things besides the island of Manhattan.

Two islands in the East River, Randall's Island and Roosevelt Island, are part of New York County, as well as the historical Ellis Island and Liberty Island (and a few others). But there is a small part of the U.S. mainland, which contains the Bronx, which is actually part of New York County. The neighborhood of Marble Hill is actually part of New York County because back in the 1890s the Harlem River was rerouted to flow south of Marble Hill instead of north of it.

Marble Hill, Manhattan - Wikipedia, the free encyclopedia

Manhattan - Wikipedia, the free encyclopedia

 

[Texas Proud]

250 - 400K provides a quite comfortable, upper middle class lifestyle even in a place like SF, more so if you live like a Millionaire Next Door.

But it is common sense, at least to me, that if you have 500K in student loans, no matter where you live, maybe you hold off on having 3 kids, or don't buy a million dollar house with right away, or maybe move to a neighborhood with good public schools and avoid the private school expense. With that kind of income I don't know why you would have to be stressed out over money.

Hey, someone else saw the same thing I did... the $500K in student loan debt... that is the killer IMO...


As for Manhattan.... of course someone could live in Jersey and cut expenses... not sure where to go in Chicago....

 

[201Ked]

University of Chicago is tax exempted - no property taxes and all those other tax exempt perks. They are able to issue municipal bonds backed by Illinois tax payers.

They received $97B from the Recovery Act on June 30, 2010.

Mr Henderson is essentially a government employee and should be compensated in kind. A professor would equal a GS12 or GS13. Therefore his pay should be around $95K.

 

[Rambler]

What Hiredgun said.

I don't mind paying my fair share of taxes. But, I really wish the folks who do make more than 250k didn't have to take such a beating. I certainly don't have the issues that the blogger has...I live a much simpler life. But I do work very hard, very long days, employ and pay a lot of people, etc.

Kind of off-topic, but it hurts me when I have to remove workers during a recession. But, the hard decisions like that are the ones that keep the rest of my employees in a job. If the company goes bankrupt because we didn't downsize at the right time, we all lose our jobs, our shareholders lose equity, suppliers lose business and sometimes also go bankrupt, and the community loses tax revenue.

So no, the blogger should not be complaining about not being able to make it on 400k per year, but those of us who do make that much through extreme diligence do not need to be flogged for our success. What's the old saying? "The beating shall continue until morale improves!"

R

 

[photoguy]

Mr Henderson is essentially a government employee and should be compensated in kind. A professor would equal a GS12 or GS13. Therefore his pay should be around $95K.

I think he should be paid the market rate for someone of his skills and qualifications. I'm guessing that would be significantly more than 95K.

Also, he could probably earn much more in private industry and is forgoing salary for intangible benefits of being a professor.

 

[201Ked]

What Hiredgun said.

I don't mind paying my fair share of taxes. But,

the issue for me is OUR taxes are going to pay for his bloated salary and he complains about he pays to much taxes.

Doing quick sniff around the net University of Chicago has received at least $125B - THIS YEAR - from tax payers. This is a $13.9B per month pace. Can they send it back and lower their tuition and cut Mr. Henderson's salary?

 

[201Ked]

I think he should be paid the market rate for someone of his skills and qualifications. I'm guessing that would be significantly more than 95K.

Also, he could probably earn much more in private industry and is forgoing salary for intangible benefits of being a professor.

If universities and colleges did not get tax payer hand outs he would be lucky to get $95K to teach a couple classes over and over again. You will find the college professors are there because they can not hack real corporate life. Which is why he does not even understand that his university is a tax payer subsidized sucking machine.

 

[photoguy]

If universities and colleges did not get tax payer hand outs he would be lucky to get $95K to teach a couple classes over and over again.

Given that starting salaries for new associates can begin at $160K (Law firm - Wikipedia, the free encyclopedia), I find it hard to imagine that the university could attract talented professionals at that salary.

You will find the college professors are there because they can not hack real corporate life.

In my experience with professors in top-tier universities in fields such as engineering and science, this is simply not true. They are typically highly talented individuals who can and do move between industry and academia. Many of them are also highly entrepenurial and are regularly involved with start-ups.

 

[obgyn65]

The whole thing looks very presumptuous to me. Some people egos have no limits.

They pay $100K in state and federal taxes but don't have the money to hire "fancy accountants."

 

[Hiredgun]

I have a very good friend who is a business professor at a private college in New York. The trade-off he has made is a very cushy lifestyle for a lesser salary (than in the business world).

He has an easy class schedule, lots of vacation and just took a 3 month sabbatical. That is the trade-off. Could he hack it in the corporate world? Sure, he just chooses not to.

And I believe his choice is well reasoned and an awfully good one.

 

[TooFrugal]

The whole thing looks very presumptuous to me. Some people egos have no limits.

Quote:
Originally Posted by TooFrugal
They pay $100K in state and federal taxes but don't have the money to hire "fancy accountants."

Those are facts taken from the original blog post. I'm unclear why using a direct quote is presumptuous or has anything to do with anyone's ego.

This is an excerpt from the original blog post -

"The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home."

 

[201Ked]

Given that starting salaries for new associates can begin at $160K (Law firm - Wikipedia, the free encyclopedia), I find it hard to imagine that the university could attract talented professionals at that salary.

Mr Henderson got his degree in 1999, clerked for 2 years and worked at a law firm - corporate tax law for 1 year prior to teaching. 3 years of "experience" makes a talented professional? Sigh. He is teaching from a script. It is not rocket science. Follow the script, throw in some humor, act concerned, kiss a**, collect the check.

Of course, you are completing overlooking the factoid our tax payer dollars are subsidizing his salary.

P.S. Law Students fret because jobs disappear - http://nytimes.com/2009/08/26/students-fret-as-law-jobs-disappear/