DCUM and Financial Conservatism

[Anonymous]

Anonymous wrote:I'm interested in views about why excessive financial conservatism seems to dominate on DCUM, e.g. consistent advice to professionals with high incomes to buy far below their purchasing power when shopping for home, denigration of anyone considering the purchase of a luxury car, etc.

It seems to run contrary to how most high-income professional families actually behave in the DC metro area, e.g. most families, including ourselves, we know making over $250k a year are driving a an upscale car, or living in a home worth over $800k...but from DCUM it seems this is deemed ridiculous or gauche...sure there are those that are frugal in these income groups, and value/spend on different things, but certainly does not seem the overwhelming majority as this sites seems to make it appear...

why is this thread so acerbically judgmental about how affluent, successful people spend their money?

I don't know, but I do know that in our circle, the average HHI is over $300,000 and we all spend far below our means, other than one couple. The couple that is maxed out on mortgage and private school is suffering marital strain, and has stopped saving for their kids' education. The rest of us think that's no way to live. We make almost $400,000 and live in a $700,000 house (paid for) and our cars, Honda and Toyota, are old but paid for. We are conservative because we have parents who lived through the Great Depression, because my FIL was involuntarily retired at only 57 and because we had children late. Saving feels better than spending, to us. How many people could honestly say that it makes little difference whether they earn $400,000 or $200,000 gross income? It's a nice place to be in life.

[Anonymous]

"Thank you for asking this!!!! I've wondered about this too. The only thing I've been able to come up with is that people are for some reason supposed to be ashamed of themselves if they have money and they're financially successful. For example, you can't show off your 2.5 carat center stone because it's in poor taste, yet you can show off your teeny tiny ring (post it on facebook, etc) and everyone will oooh and ahhh in appreciation, because somehow that's okay, and we should all oooh and ahhh and something that's really not impressive or oooh and ahhh worthy. "

Well, in our case, it's because we're from New England, where our friends and neighbors wouldn't have dreamed of flaunting their wealth, with a big engagement ring or anything else material. It's considered vulgar and in bad taste. Having said that, my engagement ring is over a carat.

[Anonymous]

That sounds sensible pp. I agree that most people who have parents or grandparents who made it through the Depression were probably raised to be frugal with their finances.

OP -- I don't think anyone really cares that much...don't take it personally. Overall in America, more people are saving and using coupons. Saving for a 'rainy-day' is a good mantra that grandma had.

[Anonymous]

Gotta wonder about people who piss away large sums on kid's birthday parties and holidays. In any economy.

[Anonymous]

I agree with all the PPs who say that it's a selection bias problem. In other words, the people who comment on financial questions are more likely to plan their finances carefully, and those same people also want to talk about how careful they are with money. Also, I think there's a tendency to be critical of those more affluent than ourselves, and accuse them of wasting money if they don't live like us.

And finally, the short answer to this question -- "why is this thread so acerbically judgmental about how affluent, successful people spend their money?" -- is that it's DCUM, where people are acerbically judgmental about everything.

[Anonymous]

Anonymous wrote:I agree with all the PPs who say that it's a selection bias problem. In other words, the people who comment on financial questions are more likely to plan their finances carefully, and those same people also want to talk about how careful they are with money. Also, I think there's a tendency to be critical of those more affluent than ourselves, and accuse them of wasting money if they don't live like us.

And finally, the short answer to this question -- "why is this thread so acerbically judgmental about how affluent, successful people spend their money?" -- is that it's DCUM, where people are acerbically judgmental about everything.

This is certainly true, although I don't think there are a lot of judgmental posts about how people who are truly affluent spend their money (leaving aside the posters who think it's just unconscionable to spend more that $37.64 on a birthday party when there are children starving in Africa). There's more judgment on the people who want to live like (read: pretend) they're really affluent with ostentatious displays of wealth, but are in reality on a tight budget - no savings, oppressive mortgage, want financial aid for private school or college, one setback or change in interest rates away from disaister).

[Anonymous]

We make 250 and there is no way we could afford an 800k house.

[Anonymous]

Anonymous wrote:We make 250 and there is no way we could afford an 800k house.

don't know your situation, but if you have a 20% or higher downpayment and an overall stable financial situation,a $250k income can comfortably support an $800k home purchase while staying *below* average housing-income expenditure ratios both nationally and in the DC area.

[Anonymous]

To further this thread- it would be interesting to hear what both frugal and more middle of the road types think how a $12k net/month (around $250k gross) "should" be spent from their perspective. On the following assumptions, only mortgage/car loan debt, two kids (under 10), two-income, mid-thirties ages.

How do you break it down, 401k/retirement, housing, car, extra savings etc.

[Anonymous]

Anonymous wrote:I'm interested in views about why excessive financial conservatism seems to dominate on DCUM, e.g. consistent advice to professionals with high incomes to buy far below their purchasing power when shopping for home, denigration of anyone considering the purchase of a luxury car, etc.

It seems to run contrary to how most high-income professional families actually behave in the DC metro area, e.g. most families, including ourselves, we know making over $250k a year are driving a an upscale car, or living in a home worth over $800k...but from DCUM it seems this is deemed ridiculous or gauche...sure there are those that are frugal in these income groups, and value/spend on different things, but certainly does not seem the overwhelming majority as this sites seems to make it appear...

why is this thread so acerbically judgmental about how affluent, successful people spend their money?

The answer is simple. SO MANY people making $250K and up talk about being financially stressed, that telling them to spend less seems obvious. If you don't believe me, look at the threads related to the plan to raise taxes on people making $250K and up. You will hear nothing but how hard they have it.

[Anonymous]

Anonymous wrote:Because the way people tell others to live is not always reflective of the way they actually live.

This. People think it's good to be frugal so that's how they advise others. But they don't necessarily always live up to their own ideals (and when they don't, they don't like to admit it--even anonymously).

[Anonymous]

I don't understand this thread. What is wrong with people who want to save their money? If something bad happens, they have savings and don't have to depend on family or friends (or credit cards!) to bail them out. Why would people judge someone for making decisions to be more secure and encouraging others to do so?

[Anonymous]

"To further this thread- it would be interesting to hear what both frugal and more middle of the road types think how a $12k net/month (around $250k gross) "should" be spent from their perspective. On the following assumptions, only mortgage/car loan debt, two kids (under 10), two-income, mid-thirties ages.

How do you break it down, 401k/retirement, housing, car, extra savings etc."

Mortgage: $3500
Childcare: $1200
Food: $1,000
Utilities: $1,000
College Savings: $1,000
IRA: $820
Insurance: $750
Clothes: $500
Disposable income for gifts, vacations, etc: $1,830

[Anonymous]

Anonymous wrote:
We make 250 and there is no way we could afford an 800k house.

don't know your situation, but if you have a 20% or higher downpayment and an overall stable financial situation,a $250k income can comfortably support an $800k home purchase while staying *below* average housing-income expenditure ratios both nationally and in the DC area.

Not PP, but we make just abotu $250K and I agree, there is no way we could afford a $800K house. At least, we SHOULDN'T afford that much of a house!! We have two kids in daycare (about $2000 a month), drive newer cars but not luxury (Husband has a 2010 Sonata and I have a 2010 Rav4). We max out our 401K and our IRAs (while we are eligible, anyway) and save for kid's college and vacations. I think money would be extremely tight trying to carry an $800K mortgage!

[Anonymous]

Anonymous wrote:"To further this thread- it would be interesting to hear what both frugal and more middle of the road types think how a $12k net/month (around $250k gross) "should" be spent from their perspective. On the following assumptions, only mortgage/car loan debt, two kids (under 10), two-income, mid-thirties ages.

How do you break it down, 401k/retirement, housing, car, extra savings etc."

Mortgage: $3500
Childcare: $1200
Food: $1,000
Utilities: $1,000
College Savings: $1,000
IRA: $820
Insurance: $750
Clothes: $500
Disposable income for gifts, vacations, etc: $1,830

Saving $10000 a year for retirement? Fail.