article: When Earning a Million a year is Not Enough

[W2R]

I know people in Manhattan who own cars. Some of them live in apartments that come with a parking space, or where you can rent a parking space (for a sum equivalent to a monthly rental).


Personally, I do NOT like driving in Manhattan, and make all efforts to avoid it.

I suspect that I would not want to drive there, either! I have not been there since 1954 so I don't really know anything about it first hand.

 

[Texas Proud]

Just a point... they do NOT live in Manhattan.... they live in Brooklyn... close, but not the same..

 

[Dtail]

Just a point... they do NOT live in Manhattan.... they live in Brooklyn... close, but not the same..

Plus one needs a car to get to the Hamptons on the weekend.

 

[WhenIsItTime]

Hard to believe this article is even legit. I especially struggle with the parts written with sympathy.

How can somebody in the Finance business be so irresponsible with money? Their net worth should be a reason to be fired. She shouldn't be trusted with other peoples money. I think most of their stress is trying to spend to live a superficial lifestyle of keeping up with others.

The really sad part is the lesson this is teaching their kids.

 

[daylatedollarshort]

Hard to believe this article is even legit. I especially struggle with the parts written with sympathy.

How can somebody in the Finance business be so irresponsible with money? Their net worth should be a reason to be fired. She shouldn't be trusted with other peoples money. I think most of their stress is trying to spend to live a superficial lifestyle of keeping up with others.

The really sad part is the lesson this is teaching their kids.

I don't know if the specific article is legit, but I've seen enough posts like these on Reddit to believe the basics. One post on Reddit mentioned something along the lines of from the outside looking in we're living the American Dream. Which got a lot of lols because it was on an early retirement forum so nobody interested in FIRE thought working overtime to the point of depression, high overhead and no life outside of work was their idea of the American Dream.

I think it is really cool the number of younger, high income people on Reddit making huge salaries and instead of ramping up the spending like the people in the article they are living well on $100K or so and saving the rest for FIRE.

 

[Starsky]

That this is a 'typical' $1M NYC budget is insane. But it is. This is the Wall Street game of paying people well-enough to sell their souls; and then getting them to spend it all to maintain their high-roller lifestyle and keep up with their peers - some of whom make many times more. (It extends to the kids too.) Not to play the game is a sign of weakness. Wall Street bosses want their employees to burn their boats. It is the key motivator.

Maybe it explains why the super-rich are so aggressive in maintaining their status. It is hard to maintain a $1M+ per year lifestyle, and also to save enough to retire in the same style. They would need $20M+ in savings to do it.

I've read that most of the super rich would rather die than become poor. Once you are used to the lifestyle, it makes it very psychologically difficult to move backwards in status. (How will the Chen's feel when their kids don't get into Yale? - as chances are they won't.)

It all sounds very Wolf of Wall Street. I'd love to see this article updated in 5 years.

 

[Texas Proud]

Hard to believe this article is even legit. I especially struggle with the parts written with sympathy.

How can somebody in the Finance business be so irresponsible with money? Their net worth should be a reason to be fired. She shouldn't be trusted with other peoples money. I think most of their stress is trying to spend to live a superficial lifestyle of keeping up with others.

The really sad part is the lesson this is teaching their kids.

The problem is you think that 'people in the finance business' means they have knowledge of LBYM... that is just plain false...


Many are sells people.... and with the money here she is probably in trading or underwriting... these are mostly fast talking used car sales types that are just really smart and do not have to sell used cars...

 

[Closet_Gamer]

Quintessential examples of lifestyle creep and, I suspect, now loss aversion. They probably can't imagine life without all of the gold trimmings when, in fact, one suspects they would just as happy.

Very different to my approach which for a long time was to keep our expenses essentially flat and bank the majority of income growth. Too each his own, but I would be seeing two shrinks if I thought I had no choice but to keep up the rate race for the next 15 years to maintain a crazy lifestyle.

I've actually let our lifestyle run up a bit as we get closer to FIRE...the financial security vs. mortality trade-off is on my mind. Got to enjoy life a bit...I'm intentionally making myself uncomfortable with spending more on nice things...but this couple would think I was living in destitute poverty. LOL.

The number that struck me is that they only have $3M in life insurance. They must not like their kids much. That's about 5-6 years at their current spending rate. The crash that would come to that family if Mom died (or became very ill) would be awful.

 

[deserat]

I read the article and thought there was quite a lot of 'slosh' in there of "I deserve this because of my stress. Two cars in Manhattan, one of them a Porsche to drive Dad to the country club to play golf...uhhhh...OK...cut that out. $24K budget for clothing....uhhh...OK. that could probably be halved or cut by 25%. Exotic vacations - the costs for those could be managed with the airline points and credit card offers. Private school for kids....hmmm...perhaps a private tutor might be cheaper or Dad could do some home-schooling. Hope to get into Yale so have bought into the "gotta donate to alma mater" guilt trip. The price just to go to Yale is very high, so I wouldn't be adding to that. Eating out like they do and Grub Hub...it would probably be cheaper to hire a 'personal chef' to make a whole lot of meals they could freeze...or Dad could learn to cook while at home and do that himself saving money. Weekends at the Hamptons - minimize those and perhaps use some of the local parks and other amenities of Manhattan - they could even use public transportation ! :-O Going to a therapist for guilt - OK....how about writing 2500 or 500 words a day - you would have your novel in a year or so...a bit of discipline and a sense of accomplishment and contribution (especially if you home school and or cook for the family) and possibly the therapy wouldn't be necessary. Gym memberships, etc., could do other types of exercise that are free (running, buy a set of weights, meetup groups for workouts, etc). Other entertainment - read books, go to free museum days, rent out or checkout movies from library, have a small garden, etc, etc.

They could truly save a lot more and get out of the rat race early as they have a wonderful opportunity to accelerate to FI. And, they could still possibly enable their children to get into Yale or some other such school.....

But, as stated at the beginning, they haven't learned the lesson of satiation....

 

[Scuba]

Certainly this family spends a lot of money and I would think they could fairly easily reduce expenses if necessary. However they are saving much more than just the bottom line labeled “savings”. They’re also putting aside $60K for their kids’ college educations, and are maxing out the 401K and saving $6K in the HSA.

If I were as stressed as they seem to be, I’d make a change, but I realize some people have a really hard time walking away from big bucks and prestige. We decided we wanted to move back to So CA when I had a stressful senior management job on the East Coast, so we took a big hit to our earnings and lifestyle to do it. Really glad we made the change and we were still able to RE, perhaps just a few years later.

 

[Walt34]

I suspect that I would not want to drive there, either! I have not been there since 1954 so I don't really know anything about it first hand.

I can't imagine having to live in NYC. The last time I was there was ~1983 or so driving through NYC with the ex on the way to Boston where most of her family was. I didn't leave anything there so no reason to go back.

DW went to NYC on some tour with a few other girls when she was in college and not being impressed with it, hasn't been back since then either.

But about 8 million people live there so there must be something to it. They're welcome to it, and it's 8 million fewer in West Virginia.

 

[braumeister]

I was born and raised in NYC, and I thought it was a great place to live. I still have childhood friends there that I keep up with, and they can't imagine living anywhere else.

But most people tend to forget that it's not so much a city, but more a large collection of idiosyncratic neighborhoods. I knew plenty of people who never left the borough they were born in, so it can be very parochial.

Where I grew up was a poor, working class neighborhood on the edge of Brooklyn farthest from Manhattan. A world away from the Wall Street crowd.

 

[Texas Proud]

I was born and raised in NYC, and I thought it was a great place to live. I still have childhood friends there that I keep up with, and they can't imagine living anywhere else.

But most people tend to forget that it's not so much a city, but more a large collection of idiosyncratic neighborhoods. I knew plenty of people who never left the borough they were born in, so it can be very parochial.

Where I grew up was a poor, working class neighborhood on the edge of Brooklyn farthest from Manhattan. A world away from the Wall Street crowd.

I will agree... I lived there a few years while working... IIRC it is 11 miles long and at max a couple wide... but if you live on the west side of Central Park you do not go to the East... and if you live downtown you do not go uptown...


I found it very interesting as I had free access to most museums do to the company where I worked...



But, I would hate to have to pay my own way there as it was expensive and I did not have to pay for housing...

 

[braumeister]

IIRC it is 11 miles long and at max a couple wide.

More or less, if you're just looking at Manhattan.

But the whole of NYC is over 300 square miles, just in land area.

 

[MichaelB]

I was born and raised in NYC, and I thought it was a great place to live. I still have childhood friends there that I keep up with, and they can't imagine living anywhere else.

But most people tend to forget that it's not so much a city, but more a large collection of idiosyncratic neighborhoods. I knew plenty of people who never left the borough they were born in, so it can be very parochial.

Where I grew up was a poor, working class neighborhood on the edge of Brooklyn farthest from Manhattan. A world away from the Wall Street crowd.

I always though you had a bit of an accent My best friend lives in Manhattan, and he is like your childhood friends - wouldn't even consider moving. I would live there in a heartbeat - if I had that kind of money.

 

[braumeister]

I always though you had a bit of an accent

Hey! You tawkin' ta ME?

 

[NW-Bound]

I read the article and thought there was quite a lot of 'slosh' in there of "I deserve this because of my stress...

But, as stated at the beginning, they haven't learned the lesson of satiation....

Yes, their spending is high because of peer pressure, and also because of stress. They work hard, and think that they have to reward themselves to justify all that stress. That way, they feel the hard work is "worth it", but it turns out that it is not true.

I am nowhere near their situation, but back when I was still working I spent more than I do now. Since retirement, I have not cared to "blow the dough" on anything much. I have collected enough toys to play with, and I do not need the latest toys. I have time to pursue interests that keep me busy and happy, and these do not have to involve lots of money.

 

[scrabbler1]

While I grew up on Long Island (Nassau County, just east of NYC's Queens County), I went to college at NYU in Greenwich Village in the early 1980s. I lived in a dorm for 4 years, without a car, of course, and used the subway and walking to get around. It was quite a change from living on LI my first 18 years. It was a cultural awakening.


After college, I continued living in the same area when I began my first and only full-time job after graduation. The office was in lower Manhattan, so I had a pretty quick and easy commute, a 15-20 minute ride on the subway. But I didn't like feeling so hemmed in, so I moved back to LI a year later so I could own a car and enjoy some more mobility. No way I could own a car and live in Manhattan.


In the last 30+ years, I have rarely driven in Manhattan. Brooklyn and Queens are enough of a PITA, I often drive my ladyfriend to LaGuardia Airport, about 25-30 minutes away. The last time I drove in Manhattan was in 2005, driving on the Harlem River Drive between the Triboro and George Washington Bridges.


The only thing worse than driving in Manhattan (or Brooklyn or Queens, for that matter), is trying to find a parking spot on the street.

 

[tb001]

I read the article and thought there was quite a lot of 'slosh' in there of "I deserve this because of my stress. Two cars in Manhattan, one of them a Porsche to drive Dad to the country club to play golf...uhhhh...OK...cut that out. $24K budget for clothing....uhhh...OK. that could probably be halved or cut by 25%. Exotic vacations - the costs for those could be managed with the airline points and credit card offers. Private school for kids....hmmm...perhaps a private tutor might be cheaper or Dad could do some home-schooling. Hope to get into Yale so have bought into the "gotta donate to alma mater" guilt trip. The price just to go to Yale is very high, so I wouldn't be adding to that. Eating out like they do and Grub Hub...it would probably be cheaper to hire a 'personal chef' to make a whole lot of meals they could freeze...or Dad could learn to cook while at home and do that himself saving money. Weekends at the Hamptons - minimize those and perhaps use some of the local parks and other amenities of Manhattan - they could even use public transportation ! :-O Going to a therapist for guilt - OK....how about writing 2500 or 500 words a day - you would have your novel in a year or so...a bit of discipline and a sense of accomplishment and contribution (especially if you home school and or cook for the family) and possibly the therapy wouldn't be necessary. Gym memberships, etc., could do other types of exercise that are free (running, buy a set of weights, meetup groups for workouts, etc). Other entertainment - read books, go to free museum days, rent out or checkout movies from library, have a small garden, etc, etc.

They could truly save a lot more and get out of the rat race early as they have a wonderful opportunity to accelerate to FI. And, they could still possibly enable their children to get into Yale or some other such school.....

But, as stated at the beginning, they haven't learned the lesson of satiation....

This is partly why the article didn’t ring true for me. If she’s really in that role for sure they’re vacationing on points. And I don’t understand the 3 vacations plus a Hamptons house for the summer—that’s not what their budget says. One of many holes. No gift budget, 10k/yr for all home expenses, etc... there for sure is stuff missing.

And I don’t think it’s as much about satiation but I do agree she’s adding all these crazy vacations, etc as a way to relax from the stress, but in reality they probably contribute to stress. She’s getting something from that job and it’s not just money...it’s an ego trip and a rush.


An earlier poster suggested the pressure to spend is coming from top down. I’d argue it’s horizontal. Almost every one of my colleagues spends on this scale (right down to the *exact same* Range Rover—it’s like a uniform) and it’s not driven by our boss. He encouraged me to buy a modest house that I could have paid off in a few years and has been very focused on FI for his family, though at this point he’s far beyond that.

We used to live in an area where many of our neighbors spent like this—I remember talking with DH about not understanding how they could all drive Teslas and be vacationing at 5 star resorts all the time when it felt like we were struggling on very good salaries and a minimal mortgage. 7 years later, we’re FI and moved to a more grounded place where the spend isn’t so excessive. We can pull the plug whenever we want and I no longer have that stressful lifestyle. I’m working now on my terms and it’s awesome. I’ll admit that when I do travel for work, I get a little bit of the ‘feeling important’ rush, but it’s short lived when I realize how exhausting the travel is and start missing the kids. All about priorities and perspective in life...

 

[Golden sunsets]

Guys, guys, guys. Sam Dogen (blog- Financial Samauri) published this article the same week that "Crazy Rich Asians" was released several months ago. I don't believe that Rachel and Colin exist. Sam is Asian (Amercican) and I believe that the article was total satire, based on the fictitious ultra rich lives of the wealthy portrayed in the movie. He is a smart MBA guy who retired a number of years ago at a young age after working his tail off in the finance world first in NYC and then San Francisco. He writes very entertaining pieces with a big emphasis the finances of high earners, such as he and his wife. I do like his blog though. He has a good writer's voice and shares his considerable knowledge about the finance world.


Sent from my iPad using Early Retirement Forum

 

[Texas Proud]

More or less, if you're just looking at Manhattan.

But the whole of NYC is over 300 square miles, just in land area.

Yes, but many people keep talking about them living in Manhattan and someone mentioned about it being a bunch of individual areas...


BTW, even at 300 sq miles it is about half of Houston which is just under 600... then again, I do not go to the south part of Houston unless I have to....



WOW.... just looked up the Houston metro area and it is over 10,000 sq miles.... not sure about NYC... I see number in the 6K range up to 13K...

 

[happy2bretired]

I can't imagine having to live in NYC. The last time I was there was ~1983 or so driving through NYC with the ex on the way to Boston where most of her family was. I didn't leave anything there so no reason to go back.

Well, I want to go. I enjoy my city trips. I’ve been through New York City twice, once by car and once by train. Both times I was able to see some landmarks but I was mostly on the other side of Manhattan. I really enjoy seeing and experiencing things that are completely foreign to me.

 

[Walt34]

Well, I want to go. I enjoy my city trips. I’ve been through New York City twice, once by car and once by train.

Oh, don't misunderstand, I wasn't trying to imply that anyone who wants to live in/visit NYC shouldn't. Simply pointing out that I am not one of them.

 

[Retch The Grate]

Plus one needs a car to get to the Hamptons on the weekend.

The train works fine, but getting between your beach house and the markets would be a pain in that case.

edit: Actually I have to add, our next door neighbors for a while would sometimes arrive by helicopter... same trouble getting to and from the markets though...

 

[RobbieB]

I've never worked hard, but then I've never been in the 6 figure club let alone the 7 figure.