Hard to live on 100K per year ?

[Chuckanut]

This sad story is actually rather old. Andrew Tobias wrote a book about it in the 70's:

https://andrewtobias.com/getting-by-on-100000-a-year/

IIRC, one sad chap thought he would date fabulously beautiful women in NY and that these women would be content to wear jeans and a t-shirt while snuggling up with him in front of the TV. In reality, they expected dinner at a fine restaurant, followed by good seats at a hit Broadway production, then drinks at a swanky bar afterwards. Poor fool, he really miscalculated.

 

[Chuckanut]

My two homes together cost less than one tiny home in San Francisco, where I read that it is tough to get anything for less than $1M. Well, there are, but they are in less desirable neighborhoods, and are only 1BR, 1BA.

Yup. I know of a fellow who sold his home in silicon valley, bought a bigger replacement home in Arkansas, and a small 2 bedroom condo somewhere in the Carolina's. He also had about $500,000 left over.

 

[MarieIG]

That won't change, until people choose not to live there. I never have understood it myself.

I can't speak to other people, but I was born here, grew up here, married here, and had my parents here. Parents helped me with the kiddos when they were young, and we helped my parents when they ill (and I would not have left them for anything, in any event). It wasn't until I was older that I fully began to appreciate the financial aspects of living here. Too old at this point and too close to retirement to look for another job out of State. Two of my kiddos have already moved out of State, one is actively looking for a job out of State, and the others are planning to move out of State at an indeterminate time in the future. DH and I plan to high-tail it out of here after retirement.

 

[NW-Bound]

I have a cousin who sold her house in the LA area, and moved with her husband and kids to Texas, the DFW area. I do not know if they owned the LA home outright or not, but they had enough money to pay for a bigger and newer home in cash, and bought also brand-new furniture.

They lasted about two years there. Not fun, according to them. So, they moved back to the LA area, and were fortunate to do that after the housing bubble burst. And so, they were able to get a larger home than the original one. And they have been living happily since.

See how people's definitions of "fun" are different? If you want "fun", and too many people have the same idea, it's gonna cost you.

 

[razztazz]

Haven't we had a couple of posters saying they were having problems making it on $250K per year? All depends on your perspective of what "making it" entails.

Aren't there posters who have said they 100 Grand is their discretionary travel budget?

 

[razztazz]

$100K..less income and FICA taxes...less retirement and college savings...other costs associated with kids. Not as much as you might think. Not saying they aren't spending on things they shouldn't, but $100K working wage is not the same as $100K retirement withdrawals which may be lightly taxed.

Which just goes to show how distorted things really are. The tendency is to say: "He's making the median and therefor he must be doin' OK." Now, we have a case being made that twice the median is not enough.

 

[NW-Bound]

In this story the family doesn't live in CA or NY, both high cost areas. They live in St. Paul, Minnesota.

I found the radio interviews pretty fluffy, in that they didn't ask to many hard questions, even of the family that declared bankruptcy, and moved to MA so her hubby could take a $100K job and they rent an apt.

I finally read the article, and also the radio transcript. No details here. All fluff.

But I can see how they do not have a lot of money left over. $100K is gross income, and after taxes, mortgage, health insurance, kid's expenses, etc..., that is not the same thing as a retiree living on $100K and having Medicare.

My son, an engineer just 5 years out of school, does not make $100K, but is living very well in his own modern 2,600 sq.ft. home, for which he paid $350k. If he had a non-working wife and a couple of kids, he would not feel so flush.

 

[jkern]

The $100k per year standard of living is so dependent on individual parameters and geographical location that it makes the article useless.

I have lived in the SF Bay Area my whole life and I have seen cases where $100k per year is poor. After tax and 15% towards retirement a family might have $50k to $55k left. Depending on age of kids, daycare is about $12k per year per kid. Depending on health insurance employer subsidy, that could be $25k per year per family. Transportation costs are much higher here too. If you had to cross bridges to go to work, that can add up to $3k per year alone. All this is before the 800 lb gorilla in the room HOUSING.

 

[cathy63]

Some of you might be interested in some discussions that are occurring in the Data is Beautiful reddit here: https://www.reddit.com/r/dataisbeautiful/

People from all over the world are using Sankey diagrams to show how their monthly or annual income is spent. It's quite interesting to be able to visualize some of the differences in lifestyle and priorities.

 

[MarieIG]

In this story the family doesn't live in CA or NY, both high cost areas. They live in St. Paul, Minnesota.

I found the radio interviews pretty fluffy, in that they didn't ask to many hard questions, even of the family that declared bankruptcy, and moved to MA so her hubby could take a $100K job and they rent an apt.

Barring uncontrollable issues, such as extreme medical issues/ job losses, typically, if they declared bankruptcy, most likely they were spending too much. (While not necessarily financially savvy, I have figured out it's a bad thing to spend more that you make.)

IMHO, some type of budgeting/ spending control is necessary. It is possible to outspend almost any income. (Example Michael Jackson & Nicholas Cage).

 

[Luck_Club]

With DS in his senior year of high school, wife and I have just been through the child rearing period.

Where we live which is in the Northeast, it isn't easy doing right by your family and for your retirement future. In are neck of the woods a $100K just doesn't carve out much of a standard of living. To keep it in perspective a family of 3 receives around $40K in welfare benefits. So really it is like being a bit under twice the poverty level, when you consider the 30% tax bite.

 

[gayl]

My income was 56k last year & I only afforded 2 long cruises, spring in Belgium, adding 12k to savings in 2017 (a typical year). But then I only have a gardener & a kid who cleans my house every other week, donate around 2k to charity. So my standard of living is low

 

[IMATERP]

Lived in DC for the first 40 years of my life. I worked for a couple of non for profits and enjoyed my work - although I didn't make much money. In 1987 I sold my car and made a commitment to pay off a small one bedroom condo. It took me 10 years to pay it off and complete a Masters Degree. I learned then, it was all about life choices.

Sixteen years later - I'm ready to retire all because I've made prudent financial choices. I also still own a flip phone and drive a 10 year old Honda.

I
(11 days to ER)

 

[Nemo2]

it was all about life choices.

Yup.

 

[karen1972]

When I lived in Chicago burbs I could see that as being a very true statement. you certainly didn't feel rich, everyone else made that same amount too.. which meant everything cost a lot especially day care, after-school care, summer camps.

To me fees/taxes, I easily spent an extra $15K+ in that alone being there. Property tax $10k, parking fees of $25/day, 11.5% sales tax it adds up very quickly, etc

At the end of the day, I couldn't imagine retiring there, and we moved. its just too much money not adding any value to my life. For $8k difference in property tax I could vacation all over the place.

 

[ShokWaveRider]

We can live off $40k in Florida, and would live like kings on $100k.

 

[W2R]

I spend less than half of their $100K spending goal. I purchase whatever I want, and pay for whatever experiences I want. Spending this much, honestly I feel like Queen for a Day (remember that old series? ).

Granted, I live alone but I seriously doubt I could spend more than $50K/year even if I had the income of Bill Gates. I am not that frugal and have thrown LBYM completely out the window in recent years. I know I can't take it with me, but still, there is only so much one person can spend.

I'd say they are full of baloney, especially if "Two can live as cheaply as one" which may or may not be true.

 

[Meadbh]

I spend less than half of their $100K spending goal. I purchase whatever I want, and pay for whatever experiences I want. Spending this much, honestly I feel like Queen for a Day (remember that old series? ).

Granted, I live alone but I seriously doubt I could spend more than $50K/year even if I had the income of Bill Gates. I am not that frugal and have thrown LBYM completely out the window in recent years. I know I can't take it with me, but still, there is only so much one person can spend.

I'd say they are full of baloney, especially if "Two can live as cheaply as one" which may or may not be true.

You may not see yourself as frugal, W2R, but you don’t have expensive hobbies, you don’t drink, you don’t travel, and you are not supporting dependents. So comparing yourself to the people in the article is apples and oranges.

 

[athena53]

I was a single mother in 2002 living on about that much. I was able to max out my 401(k) but that was about it. My mortgage was $250K, property taxes about $7K/year. Kept the same car for 12 years, so no car payments. House needed occasional repairs; one involved digging up some of the patio around the pool to replace leaky pipes. Putting french drains in basement after a couple of inches of water came into the basement after heavy rains: $8K. No remodeling/updating- just necessary repairs. DS had fallen through the cracks in the public school system and NY Military Academy cost $12/year for 4 years of HS. (Worth every penny.) I mowed my own lawn, cleaned my own house. No child care since DS was 12 when I divorced.

That was with one kid, no child care costs and heavily-subsidized employer health insurance. I had an employer-supplied cell phone. DS did not have one. Mortgage and property taxes in HCOL areas (this was Bergen County, NJ) can eat you alive but if you stay in the area for the job opportunities, you pay through the nose for housing in a good school district. And this was 15 years ago.

So, yeah, I can see it being very hard to make it on $100K/year for a two-income family in a HCOL area, especially if they don't have good employer-provided health insurance (high employee contribution, high deductible or both).

 

[Chuckanut]

I

See how people's definitions of "fun" are different? If you want "fun", and too many people have the same idea, it's gonna cost you.

Well, if one's definition of 'fun' includes activities that take place on a ocean beach, in tall piney mountain, and the desert, all while living in a relatively temperate climate, you can't go far wrong with many parts of California.

 

[RobbieB]

Yeah Baby!

My whole goal in life is to have as much fun as possible and as you say CA is quite conducive to accommodating that lifestyle.

 

[Bamaman]

I was needling my sister for her ridiculous cost of living including two $ million+ homes, a personal Learjet 45, a fleet of Lexus automobiles and paying $80k a year for grandchildren private school tuition. Her granddaughter flies in the jet with her friends to rock concerts.

Her answer was, "Some people's sense of reality is just different from others."

And I see too much golf being played, too much alcohol consumed and a number of their best friends are dying at 70 years old. Careless consumption is just not healthy.

 

[NW-Bound]

Well, if one's definition of 'fun' includes activities that take place on a ocean beach, in tall piney mountain, and the desert, all while living in a relatively temperate climate, you can't go far wrong with many parts of California.

I do not deny that California has a lot to offer. Over the years, I have made countless trips there.

But a retiree does not have to live in town to enjoy all that outdoor. A worker has to live in town to be close to his workplace. Actually, many of my relatives and friends that I visit have not been to some places that I have been. They are too busy working, and are too pooped out to go out of town.

The "fun" I was talking about was the allure of living in the city core. For example, my nephew in NYC that I talked about went to concerts all the time. He does not go outside the city much.

Even if I had enough money to live in Manhattan, I would not enjoy enough of what the city has to offer, in order to offset what I consider drawbacks. My definition of "fun" is different. My "fun" activities also cost less.

 

[Sittinginthesun]

Spending this year? A little crazy for us and highest ever.

Total $630,284.99 gross minus income taxes/investing of $456,458.28 leaves $173,826.71 net spending. Some numbers estimated up to Dec 31st.

Includes $13k new furnace/AC, $40k vacation budget (much higher than normal and includes prepaying for a 2018 family trip), $11k in new furniture (way higher than normal), >$15k groceries and alcohol, $22k paying off a vehicle (eliminated 0% loan that bugged me), >$15k in kids activities (camps, horseback riding, rep sports), >$10k in insurance, $15k in property tax, utilities and cable/internet, new washer/dryer etc. etc.

Next year should see similar gross but more in taxes and investing - will estimate $120k net spending.

And we still live beneath our means. No seriously lol. Its all relative. Once kids are gone and I am retired would be very happy with $80-90k after tax spending per year. A few more years of >$200k/year into portfolio and we will be there. Wife already retired.

 

[Bigdawg]

The "fun" I was talking about was the allure of living in the city core. For example, my nephew in NYC that I talked about went to concerts all the time. He does not go outside the city much.

Just checked the local activies calendar for 2017. Over 150 concerts within 80 miles of my house. Goo Goo Dolls, Andy Grammar, Bill Engvall, Boston, Trace Adkins, Rascal Flats, etc... I have lived in metro areas. Irvine CA, Mpls, San Diego, and many others. Oh boy. It's all about choices. There are numerous LCOL areas w/in easy driving distance of large metro areas so a person can enjoy what the city has to offer w/out the high costs. I lived near west point in the late 90's. Sort of low cost area and could get into and out of the city easily. 60 miles from downtown NYC. 3B/2B paid 115K in 1997 and sold in 2000 for 130K. Zillow has that house at 220K today.