Blog about high-income households barely making by gets noticed

[explanade]

There seems to be previous threads about Finance Samurai.

I browsed the site and they feature many posts about people "struggling" on incomes of several hundred thousand a year.

Turns out they had a lot of discretionary spending.

I guess the founder is someone who FIRE'd at 34 with $3 million. But he's the one posting about these high-income people only having a couple of thousand left after they spend a lot on childcare, vacations, maxing out 410k and 529 contributions, etc.

Apparently a recent post there went viral:

https://www.theatlantic.com/ideas/archive/2019/10/why-financial-confessionals-viral/600358/

The hypothetical couple were making $350,000 a year and just getting by, their income “barely” qualifying them as middle-class. Their budget, posted in September, showed how they “survived” in a city like San Francisco, spending more than $50,000 a year on child care and preschool, nearly $50,000 a year on their mortgage, and hefty amounts on vacations, entertainment, and a weekly date night—even as they saved for retirement and college in tax-advantaged accounts....

It was just the latest in a long line of budgets to go viral. Perhaps you recall the law professor making $250,000 a year .... Or the marketing intern making it in New York on $25 an hour with hefty subsidies from her parents and grandparents (she was, as she put it, #blessed). Or the two lawyers earning $500,000 a year and “scraping by,” unable to save.

Such financial confessionals ... contain an object lesson about the way inequality has shaped spending and society: The country’s 10 percent really do feel strapped, and really don’t understand how much better they have it than the 90 percent below them.

 

[ncbill]

"More money means more choice means more flexibility means a far easier time getting by."

Yup.

There's a poster on another forum (current income ~$300k, IIRC) weighing a move out of California before they realize capital gains on what would be a 7 figure payday, which would save them more in taxes than they could earn working all next year in their current job.

People like that are NOT "just getting by."

 

[ExFlyBoy5]

I don't know that I would say that it went "viral", instead I think The Atlantic took this post and said, "AH HA!!! This will make GREAT clickbait!!!" I say that when I see that the byline says,

"Financial confessionals reveal that income inequality and geographic inequality have normalized absurd spending patterns."

So...meh.

 

[googily]

If you want to sit back and really enjoy some comments about that Financial Samurai post, this thread on a DC-based web forum should entertain you.

https://www.dcurbanmom.com/jforum/posts/list/827584.page

That site in general is quite a lens into the divide between the many UMC residents of the area and the folks who are a little lower down the ladder. Pop your popcorn.

 

[kgtest]

There seems to be previous threads about Finance Samurai.

I browsed the site and they feature many posts about people "struggling" on incomes of several hundred thousand a year.

Turns out they had a lot of discretionary spending.

I guess the founder is someone who FIRE'd at 34 with $3 million. But he's the one posting about these high-income people only having a couple of thousand left after they spend a lot on childcare, vacations, maxing out 410k and 529 contributions, etc.

Apparently a recent post there went viral:

https://www.theatlantic.com/ideas/archive/2019/10/why-financial-confessionals-viral/600358/

We don't make a "cpl hundred" but we have been "close" to that. Are we struggling, no. I'm struggling to start plowing $ into brokers since we pay $20k+ a year on daycare expense. The light at the end of the tunnel is really April 2021. Walking a tightrope until then with just enough emergency but no plans to use it.

 

[ExFlyBoy5]

If you want to sit back and really enjoy some comments about that Financial Samurai post, this thread on a DC-based web forum should entertain you.

https://www.dcurbanmom.com/jforum/posts/list/827584.page

That site in general is quite a lens into the divide between the many UMC residents of the area and the folks who are a little lower down the ladder. Pop your popcorn.

Thanks for the warning...I think I will stay away from that! Comment sections can be entertaining but also very eye opening (and depressing) into how some folks think.

 

[jimandthom]

Spent many years working for a "lux" retailer, until they went belly up in 2002, after 140 years in biz.

1 wealthy customer was heard to remark---"I don't know how people can live on less than a million a year."

Another was heard to say, "my parents were disappointed to hear that my finance was only a doctor."

When they clamped their wallet shut tho, it was shut tight. And there were the times that spouse would bring back $$$$$ of merchandise.

 

[Andre1969]

Not to throw too much sympathy their way, but often, don't those high-income jobs come with a lot of trappings? For instance, they're usually in very expensive locations, so even a modest home is going to cost a fortune to rent, or buy. Expensive homes also tend to come with high property taxes and insurance rates. In some really high-cost areas, $50K per year might not even get you a house...it could very well be just a condo, and that's going to come with fat condo fees on top of that.

And, unless one highly paid spouse wants to drop out of the workforce, daycare, preschool, etc is almost mandatory. Unless you have family members (retired grandparents, etc) who can step in and help.

Then, when it comes to school, often the public schools are crap, so unless you want your little darling beat up on a regular basis, and graduating with honors thinking 2+2=Nebraska, and the capital of California is 437, then a good private school is pretty much a necessity, as well.

And, those highly paid jobs usually mean more than just your typical 40 hour per week gig, so you could very well be too tired to cook, clean, and so forth, so that's going require hiring help.

Many jobs also require you to look successful. So if you show up to work wearing jeans and a t-shirt, and driving a '76 Volare, you're probably not going to get very far in your career.

 

[ncbill]

Also, don't forget that hypothetical couple is putting nearly $40k/year in their retirement accounts...which should give them a nice nest egg after compounding for 20+ years.

One doesn't necessarily need a lot of after-tax savings (no matter what Financial Samurai says) to be able to retire early.

 

[Music Lover]

spending more than $50,000 a year on child care and preschool

So all someone needs to do is take in 4 kids a year to earn a sweet $200,000

 

[dtbach]

So all someone needs to do is take in 4 kids a year to earn a sweet $200,000

LOL! That seems like a way stressful way to earn big bucks than a 65-70+ hour week and constant deadlines.

 

[Kwirk]

So all someone needs to do is take in 4 kids a year to earn a sweet $200,000

My mother was severely underpaid.

 

[Senator]

It doesn't matter how much people make, it takes discipline to save.

 

[Spanky]

There seems to be previous threads about Finance Samurai.

I browsed the site and they feature many posts about people "struggling" on incomes of several hundred thousand a year.

Turns out they had a lot of discretionary spending.

I guess the founder is someone who FIRE'd at 34 with $3 million. But he's the one posting about these high-income people only having a couple of thousand left after they spend a lot on childcare, vacations, maxing out 410k and 529 contributions, etc.

Apparently a recent post there went viral:

https://www.theatlantic.com/ideas/archive/2019/10/why-financial-confessionals-viral/600358/

This is the same guy who says 50 mil is barely enough:
https://www.financialsamurai.com/wh...-barely-enough-to-retire-early-with-a-family/

 

[Spanky]

I guess the founder is someone who FIRE'd at 34 with $3 million. Apparently a recent post there went viral:

https://www.theatlantic.com/ideas/archive/2019/10/why-financial-confessionals-viral/600358/

Incredible.

He spent 13 years working in investment banking, earned his MBA from UC Berkeley, and retired at age 34 in San Francisco in 2012.

He finished his MBA pretty early! Most business schools prefers or requires at least a couple years of work experience. It appears that investment banks or institutions are overpaying them.

 

[Maenad]

Not to throw too much sympathy their way, but often, don't those high-income jobs come with a lot of trappings?

Yes, but most of those things are still choices. If we as a society are going to tsk-tsk the poor for their poor choices, the wealthy aren't going to get a pass.

I daresay there are plenty of good school districts in the SF area, but when you're part of the aspirational set, "good" isn't enough, you need to provide your children with the Best Opportunities so they can get into the Best Schools for their undergrad degrees. So, you need a snooty private school, tutors, all that. Those are all voluntary, and all part of buying into the same b.s. that you have to spend a lot of money in order to be successful.

Same thing with exotic vacations, expensive cars, fashionable clothes. These are choices. The career that "demands" them is a choice. And a huge percentage of our population doesn't have that choice, so my sympathy for people who unthinkingly follow the herd and spend a ton of money is low.

 

[Winemaker]

Once a year we attend a wine event in Napa with a couple and any number of their friends, then go out to dinner afterward. The rule of thumb, however, is to order whatever you want, and the total bill is divided evenly by the number of people/couples, and everyone knows this upfront and is in agreement. Never had a problem with this arrangement for years, dinner for 2 with copious amounts of food, wine and tip for all runs about $250. Hey, blow that dough!

Two years ago, our first problem in 15 years occurred. A young 30something couple was invited, told of the cost arrangements and they agreed. All during our dinner, they complained of their $4000/month rent, student loan payments, high utility bills, proclaiming their savvy about leasing their 2 Mercedes', and her $300 rhinestone speckled manicure. They gave input for wine choices, but ordered only one meal between them. When reminded about what was expected of them when the check came, they wholehearted agreed for the third time. When the bill did arrive, and every couple put their ~$250 in, they balked and got up and left, without paying a dime.

 

[Spanky]

I have stopped listening to complaints from people living in the Bay Area and LA about not having enough while collecting big pay checks and stock options. Many of them are making almost 2x for the same job elsewhere.

 

[BoodaGazelle]

They obviously never read "The Millionaire Next Door". LBYM.

 

[Chuckanut]

When the bill did arrive, and every couple put their ~$250 in, they balked and got up and left, without paying a dime.

Perhaps you folks should advise the young couple to start attending those free 'investment seminars' where you get a steak dinner and the chance to fill the pockets of a [-]salesman[/-] financial advisor at their expense. They sound like they are the type who can cash in on the free meals.

In the future, Perhaps all couples should be required to ante up before the first glass of water is poured.

 

[CaliKid]

It doesn't matter how much people make, it takes discipline to save.

+1 I have lived this and it's true. No matter how much you make you really need to be disciplined as it's easy to have lifestyle creep. Too easy! I make a lot and spend a lot.

When the bill did arrive, and every couple put their ~$250 in, they balked and got up and left, without paying a dime.

That's embarrassing. There are trashy scumbags in all walks of life. At least you have one less couple to invite next year!

 

[scrabbler1]

To me, the big lifestyle creep became a sprint when they had kids and then tried to live the way they had been living before they had kids.

 

[dg001]

Not to throw too much sympathy their way, but often, don't those high-income jobs come with a lot of trappings?

Thank you! I was wondering at the lack of sympathy in this thread. I know when people make what sounds like a lot of money anything they say other than "I have a fantastic life" sounds like whining. But the fact is - making $250K a year in NYC or one of another 5 cities gives you a very different lifestyle than making that in the rest of the country.

Is it hand to mouth? No. Do you have to be paycheck to paycheck - again no. But it stands to reason that someone who has worked really hard to get to that income level expects to reap the benefits of a "good lifestyle" - and the fact is, expenses being what they are in those geographies, the opportunities for lavish living or saving are limited. Just 3 basic expenses - mortgage, childcare/schools and commuting takes up huge chunks of your income.

Again - see what I mean about sounding like whining? But I can tell you from personal experience - paying $40K/year for mediocre childcare really hurts. Are there cheaper options? Maybe - but not something you want for your child when you have worked so hard to get to a "good place". Add to that the fun of having to leave an important meeting because the daycare place closes at 6, and its going take you an hour or more to get home.

Or even better - buying a house. Making a decision to pay $900K for a dump that has never been updated for its 70 years of existence hurts - and it hurts even more when a multiple bid situation takes the price up to $1M and your agents tells you "You should stop hesitating!" - as if its their money! Your only options if you want a good school district is either the "fixer-upper" or an even longer commute.

Ok, I will stop ranting. The good news is it gets better once kids are not so little any more. The school district you are paying for actually kicks in, you get used to the commute, you actually start saving. But I remember those days and I can say I felt the pain! Yes, some people manage to get by on much less, but the circumstances are different - and just because their pain is bigger does not mean others feel less pain!

I always thought it was unfair that federal taxes focuses on hard dollar amounts with no consideration to cost of living in each zip code.

 

[justlikebike]

Posts like these make me want to swear...
Look, we moved somewhere expensive and now we have less disposable income.
Look, my spouse stopped working and now we have less money.
Look we are living beyond our means and can't afford it.
Feel sorry for me!
If you don't do the research stop whining about the surprises.
I am moving to somewhere. OK, What is the COL? What are the taxes? What is the cost of childcare, medical, local taxes, food, etc.
If you don't know this before a move then piss off. Don't want to hear it.

 

[W2R]

It doesn't matter how much people make, it takes discipline to save.

Well, discipline would help, but.......

I am spending 35% of what FIRECalc says I can spend (with 95% confidence, until age 95). I buy everything, or every experience, that appeals to me.

Yet I have ZERO discipline unless discipline involves a lot of thinking about what I really, really want, and what I don't actually want (but others expect me to buy or have).

At my age I can, and do, pretty much blow off the latter. I don't give a hoot what other people think of my lifestyle and spending choices.

I think the reason why many people seem to have an infinite craving for spending money, is that they want to buy esteem and acceptance from others that way. I believe that acceptance by others of our group is an inborn biological need. Since buying esteem and acceptance by others is impossible, any attempt to do so is a bottomless hole into which money is tossed. You buy a new Cadillac to impress people, and somebody sneers at you because they just bought a Lamborghini. Or whatever.

It's just dumb and a way to drive oneself crazy so I refuse to participate. I stay away from people who provide negativity and are mean to me, instead of thinking, "Well, I'll show them! I'll buy a Tesla that they could only wish they had!" or some such thing.

Oh, and also, there's the psychological trickery of Madison Avenue! I make a distinct effort to expose myself to as little advertising as possible. I'd rather mute when an ad comes on and look away, and perhaps accidentally miss the first few seconds of a show or youtube, than to subject myself to advertising. In my case I think that consciously avoiding ads helps me to avoid those infinite cravings to spend, as well, which can become nearly pathological for some people.