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Unable to Scrape by on 250K+ a Year
Old 09-24-2010, 04:05 PM   #1
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Unable to Scrape by on 250K+ a Year

Advice for the Poor Rich: Everybody Hates Todd Henderson

advice-for-the-poor-rich: Personal Finance News from Yahoo! Finance

Any other suggestions for woe-is-me Todd? He is a lawyer, his wife is a doctor and they can't seem to make ends meet. They pay $100K in state and federal taxes but don't have the money to hire "fancy accountants."

Advice from the Wall Street Journal columnist:

"Never, ever, ever again blog about how hard it is to live on $300,000 or $350,000 a year at a time when one middle-aged man in four can't find a full-time job, and one in five can't find any job at all."
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Old 09-24-2010, 04:28 PM   #2
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I don't find this surprising. The delusions maintained by nearly all of the moderately rich (whom I'll describe as folks earning low seven to mid six figures) that I know are legendary. They truly live in an alternate universe completely divorced from any perspective. It is a world where nannies, and gardeners, and private school, and six thousand square foot homes are all necessities, and the norm. No matter how much they make, they find ways to spend it and so don't feel rich.

They all felt tremendously bad for themselves, and terribly victimized, two years ago when proposals were circulating to limit banker pay. "How will I live on $400,000 per year? Don't they know the cost of living in NYC is higher than elsewhere?" To which, I asked, how do you think your secretary does it? Stunned silence. Apparently they never considered that most people live on a tenth of the amount they were complaining over. Nothing has changed.
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Old 09-24-2010, 05:33 PM   #3
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from the guy's blog.

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if our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total.
Wow, I feel kind of bad for piling on, but, wow. Gee, "only" a few hundred dollars!?
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Old 09-24-2010, 05:41 PM   #4
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This has been an amazing debate. It's hard to feel sorry for the guy once you read the blog entry and response by DeLong.

The original post can be read here We are the Super Rich « Truth on the Market

A series of responses were written by Brad DeLong and can be read here Grasping Reality with Both Hands
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Old 09-24-2010, 05:50 PM   #5
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What a hoot of a blog.

He is a freaking law professor. I'm a lawyer married to a doctor and I worked to learn the tax code inside out. He buys a house with a $15,000 annual tax bill but still sends his kids to private schools
If you have massive educational debt you have to defer something. Kids or the big house

Sheesh
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Old 09-24-2010, 06:08 PM   #6
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Advice from the Wall Street Journal columnist:

"Never, ever, ever again blog about how hard it is to live on $300,000 or $350,000 a year at a time when one middle-aged man in four can't find a full-time job, and one in five can't find any job at all."


No kidding.
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Old 09-24-2010, 06:23 PM   #7
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Nothing is new in this world. As in Marie Antoinette and "Let them eat cake".
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Old 09-24-2010, 06:31 PM   #8
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Hmmm...I guess I picked up more on the comments about cutting back on the people they employ to keep their home running while they work (lawn care, cleaning) and services used (cable, cell phone). The trickle down effect that could lead to more unemployment.
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Old 09-24-2010, 06:39 PM   #9
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The way some of you post, you'd confuse a couple of working professionals for billionaires.

Sure they have a little more disposable income, but on the right and left coast they pay very high taxes and housing costs. And someone has to watch the kids while they work. Childcare ain't cheap on the coasts. There just isn't as much left over as you would think after the costs of working are deducted.

So in my book $250k isn't rich by a long shot. Maybe in Peoria that's "the good life". But on the coasts they are still squarely middle class.

For those of you who want to "Tax the Rich" I would say that you are next to be taxed. Be careful what you ask for.
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Old 09-24-2010, 06:50 PM   #10
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Sure they have a little more disposable income, but on the right and left coast they pay very high taxes and housing costs. And someone has to watch the kids while they work. Childcare ain't cheap on the coasts. There just isn't as much left over as you would think after the costs of working are deducted.
Median household income in Manhattan is $47,000. So by "a little more disposable income" you mean $100K or so a year.
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Old 09-24-2010, 06:55 PM   #11
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If you think that making $250k/year in Manhatten makes you rich then I've got nuthin' to say to you.
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Old 09-24-2010, 07:03 PM   #12
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If you think that making $250k/year in Manhatten makes you rich then I've got nuthin' to say to you.
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?
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Old 09-24-2010, 07:06 PM   #13
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Originally Posted by MasterBlaster View Post
The way some of you post, you'd confuse a couple of working professionals for billionaires.

Sure they have a little more disposable income, but on the right and left coast they pay very high taxes and housing costs. And someone has to watch the kids while they work. Childcare ain't cheap on the coasts. There just isn't as much left over as you would think after the costs of working are deducted.

So in my book $250k isn't rich by a long shot. Maybe in Peoria that's "the good life". But on the coasts they are still squarely middle class.

For those of you who want to "Tax the Rich" I would say that you are next to be taxed. Be careful what you ask for.
Wait a minute. Their gross is above $400K and after tax they clear $300K.

The phrase that set off much of the firestorm was
Quote:
Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.
They are not at all like "most working Americans". There's nothing wrong with the incomes they earn - they both chose tough and demanding fields. They appear to have committed themselves to a costly lifestyle – expensive mortgage, high property taxes but private schools for the children. The problem is they are in the top 2% but don’t believe it, and he chose to complain about it publicly.

Quote:
The problem with the president’s plan is that the super rich don’t pay taxes – they hide in the Cayman Islands or use fancy investment vehicles to shelter their income. We aren’t rich enough to afford this – I use Turbo Tax. But we are rich enough to be hurt by the president’s plan. The next time the president comes home to Chicago, he has a standing invitation to come to my house (two blocks from his) and judge for himself whether the Hendersons are as rich as he thinks.
They have a valid point with the "super rich", as Warren Buffet (among others) points out regularly.

Everyone's taxes are going to go up. Some will suffer more than others. People that are living below their means will suffer, but adjust more easily.
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Old 09-24-2010, 07:14 PM   #14
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Originally Posted by Gone4Good View Post
I don't find this surprising. The delusions maintained by nearly all of the moderately rich (whom I'll describe as folks earning low seven to mid six figures) that I know are legendary.
I don't find it surprising either, but the delusions run throughout the economic strata. I work with people making $40-60K/yr, most with working spouses who increase their household income, who consider themselves entitled to much, much more...
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Old 09-24-2010, 07:21 PM   #15
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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>

Quote:
The County of New York is the most densely populated county in the United States, and one of the most densely populated areas in the world, with a 2008 population of 1,634,795[2] living in a land area of 22.96 square miles (59.47 km˛), or 71,201 residents per square mile (27,485/km˛). It is also one of the wealthiest counties in the United States, with a 2005 personal income per capita above $100,000.[3] Manhattan is the third-largest of New York's five boroughs in population.
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Old 09-24-2010, 07:32 PM   #16
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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.
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Old 09-24-2010, 07:45 PM   #17
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New York City includes more than just the upper east side.
Amen, I say AMEN! Hallelujah!

Plenty of immigrants and po' folks scratching out a living in the 5 boros. I should know, having been one of them.

Having said that, I can also say that I find the high ramp in the marginal tax rate over 150k in income to be sufficient disincentive to work hard that I am not exactly bucking for promotion beyond where I am.
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Old 09-24-2010, 07:46 PM   #18
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So in my book $250k isn't rich by a long shot. Maybe in Peoria that's "the good life". But on the coasts they are still squarely middle class.
Some other columnists have estimates that if they pay $100K in state and federal taxes they are probably grossing nearly $400K.

Here is an interesting blog on the same topic -
http://www.samefacts.com/2010/09/eco...ng-of-the-rich
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Old 09-24-2010, 07:58 PM   #19
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Hmmm, his blog did not go off the deep end, but he was not swimming in shallow water either. I've got most of the same expenses that this guy has, but can do it on a 5-figure taxable income. And I use TurboTax as well. But apparently unlike him, I am rich so I can afford my expenses.

There is no hint of where he blows his money. Yardman, maid, private school, day care, extracurricular activities like art, music, sports for the kids, property taxes, and income taxes are not especially onerous expenses. What does he spend his money on?
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Old 09-24-2010, 08:14 PM   #20
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The way some of you post, you'd confuse a couple of working professionals for billionaires.

Sure they have a little more disposable income, but on the right and left coast they pay very high taxes and housing costs. And someone has to watch the kids while they work. Childcare ain't cheap on the coasts. There just isn't as much left over as you would think after the costs of working are deducted.

So in my book $250k isn't rich by a long shot. Maybe in Peoria that's "the good life". But on the coasts they are still squarely middle class.

For those of you who want to "Tax the Rich" I would say that you are next to be taxed. Be careful what you ask for.
The young wife and I have been this couple. When I was at the big NYC law firm, we regularly paid over $100k in federal income tax. But I would never, ever, bitch and moan that we didn't have enough money. When my young first year associates would grumble about their $150k per year starting salary, I would remind them that the lady cleaning our office at night was raising a family of 4 on far less than that.
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