Making $500k and not feeling wealthy in NW

[Anonymous]

Anonymous wrote:I really can't fathom how $500k would be hard.

We make a modest $290ish and have a nanny, private school, nw DC house (bought recently not ages ago), etc and I still max our 401k and save about $3,000 a month on top of that.

Shit lady what are you spending money on?

It just depends on who you're comparing yourself too. We make around 750k, which is a lot. But many of our friends and acquaintances make 1 mil +. Their homes, their vacations, the fact that they think nothign of their teenage daughter spending 3k on a handbag...yeah, it makes me feel "poor" relative to them. But I realize we're not actually poor. I'm not an idiot like the PPs

[Anonymous]

There is a school of thought that says if you have to worry about money, you're not rich. That may be what OP is thinking.

[Anonymous]

If you're saving money, you are not struggling! We live paycheck to paycheck. That's struggling.

[Anonymous]

Most people feel rich when they spend, not when they save. You could afford your brother's lifestyle if you saved less. You would also feel richer. Whether that is worth it is another question.

[Anonymous]

The OP said they don't feel "wealthy" which makes 95% of responses off base. Our income has gone up the past few years to a little over 450k and I don't feel "wealthy" either. I feel comfortable and I don't worry much but that isn't feeling wealthy.

[Anonymous]

Anonymous wrote:Not sure why my comment was deleted but my point about the saver above was he is 41 and bey old to start a family. What joy is there of you are solo for so long.

First off, I'm a woman, not a man. I started a family at 35, and have been together with my husband since we were 19. We were always both on the same page that we wanted to use the rat race just long enough to get out of it on our own terms as early as possible. We have had, and continue to have, a great deal of joy - but buying a new Mercedes every other year isn't our thing.

[Anonymous]

Anonymous wrote:^^this sounds utterly unappealing to me. I make nowhere near 500K, but there has to be a balance between enjoying the fruits of ones labors in the present and planning for the future. You could die any day! Mostly it is a matter of being grateful for what you do have. Your expenses can always expand if you let them--but there is certainly a happy medium between living like a miser and retiring at 41 and being broke for retirement.

This is probably why most people don't end up rich.

[Anonymous]

It really amazes me how many people here are claiming these insane;y high incomes, yet can't spell or use basic grammar. Are these SAHMs claiming "we" make the money, or what? And these aren't "using an iPhone" typos, either.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's funny that people think that those making 300K or more are just lazying around.

We are constantly working and because of that we have other expensese that need to be paid because we don't have time to do them.

1) Lawn care
2) Nanny
3) Childcare
4) Cleaning


etc...

Once you add all of those things up the lifestyle at 300k is not that comfortable. Maybe once we get into the 5-600k you start experience more disposable income, but at 300k you have to pay for a bunch of stuff you have to outsource.

On top of that around 300k you lose a lot of tax deductions so you are basically in limbo in terms of wreeping the benefits of making more. The tax benefits you lose at 3-400k are the same ones that you lose at 500k and higher.

Let's see, if you spent $2000 per year on lawn care, $3000 per year on house cleaning, $50K per year on a nanny (why would you need additional childcare if you have a nanny?!?) that's still only about $55K. You're saying that taking those expenses out from $300K plus taxes of say $75K, that you cannot otherwise live on $175K per year net. There are many, many families with HHI under $100K where one or both parents are working 60-80 hours per week just to make ends meet because they have very low salaries. Those workers have many of the same problems you have, they just have to make more economical choices. I'm sorry, but if you choose a high end lifestyle and spend all of your money, that doesn't make you more sympathetic. There are many people who make significantly less than you that have all of the same demands on their time, many of whom have to pick soime of the support that you have and still make ends meet. We make $200K, both work full-time, still provide for our two children, still get housecleaners, still live in a large house and we can still save for retirement, college, yada yada yada. And we find ourselves not onloy very comfortable but very lucky instead of overentitled like you.

Taxes $75K on $875 a year? Not even in the ball park...

[Anonymous]

Anonymous wrote:

Anonymous wrote:^^this sounds utterly unappealing to me. I make nowhere near 500K, but there has to be a balance between enjoying the fruits of ones labors in the present and planning for the future. You could die any day! Mostly it is a matter of being grateful for what you do have. Your expenses can always expand if you let them--but there is certainly a happy medium between living like a miser and retiring at 41 and being broke for retirement.

+1

+ 2 Why would you want to do that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

What single-income minimum wage worker is renting a 2 bedroom and expecting it to cost 1/3 of their income? The only group this picture speaks to is single parents with at least two kids who earn minimum wage and don't have other financial support. Otherwise, if you're renting a 2 bedroom apt, then you probably have at least two income earners. Kind of misleading to plop a picture of the entire US in the middle of the page and then only speak to a situation that makes sense for this very specific group. Most people on minimum wage are not renting a 2 bedroom as a solo breadwinner and they're certainly not expecting it to cost them 1/3 of their income.

Well perhaps people who would like to have enough money leftover to, you know, eat, pay for bus fare, and buy medicine when they or their kids get sick, and keep the heat on. Minimum wage in Texas is 7.25 an hour, so excluding FICA, two working parents working 40 hours a week would make 27K. Even in the cheapest part of Texas, it is not easy to live a decent lifestyle as a single person, not to mention someone with kids.

One person making minimum wage at $7.25/hour working 40 hours a week for 52 weeks of the year would make $15,080 before taxes. Virginia follows the federal minimum wage. Please show me where in Northern Virginia you can find a 1 bedroom apartment or even a studio/efficiency for $418 per month or less, which would be 1/3 of their monthly income. Also keep in mind those calculations are still before taxes.

How does this relate to the thread at all? Start a new thread -- being poor.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's funny that people think that those making 300K or more are just lazying around.

We are constantly working and because of that we have other expensese that need to be paid because we don't have time to do them.

1) Lawn care
2) Nanny
3) Childcare
4) Cleaning


etc...

Once you add all of those things up the lifestyle at 300k is not that comfortable. Maybe once we get into the 5-600k you start experience more disposable income, but at 300k you have to pay for a bunch of stuff you have to outsource.

On top of that around 300k you lose a lot of tax deductions so you are basically in limbo in terms of wreeping the benefits of making more. The tax benefits you lose at 3-400k are the same ones that you lose at 500k and higher.

Let's see, if you spent $2000 per year on lawn care, $3000 per year on house cleaning, $50K per year on a nanny (why would you need additional childcare if you have a nanny?!?) that's still only about $55K. You're saying that taking those expenses out from $300K plus taxes of say $75K, that you cannot otherwise live on $175K per year net. There are many, many families with HHI under $100K where one or both parents are working 60-80 hours per week just to make ends meet because they have very low salaries. Those workers have many of the same problems you have, they just have to make more economical choices. I'm sorry, but if you choose a high end lifestyle and spend all of your money, that doesn't make you more sympathetic. There are many people who make significantly less than you that have all of the same demands on their time, many of whom have to pick soime of the support that you have and still make ends meet. We make $200K, both work full-time, still provide for our two children, still get housecleaners, still live in a large house and we can still save for retirement, college, yada yada yada. And we find ourselves not onloy very comfortable but very lucky instead of overentitled like you.

Taxes $75K on $875 a year? Not even in the ball park...

what idiots. The taxes are almost 50% which sucks ass.

[Anonymous]

Anonymous wrote:

Anonymous wrote:^^this sounds utterly unappealing to me. I make nowhere near 500K, but there has to be a balance between enjoying the fruits of ones labors in the present and planning for the future. You could die any day! Mostly it is a matter of being grateful for what you do have. Your expenses can always expand if you let them--but there is certainly a happy medium between living like a miser and retiring at 41 and being broke for retirement.

This is probably why most people don't end up rich.

Perhaps - so what? Since when is becoming rich (ie leaving millions of dollars behind when one dies) the purpose of life?

I too agree that there is a happy medium between reckless spending and miserly ways of DCUM. I don't care to become yet another lame millionaire next door. I want to responsibly enjoy my life as well.

[Anonymous]

Anonymous wrote:There's an answer, but you might not like it. $500,000 or ordinary income after taxes leaves you with what, maybe, $300k? So, figure you could make some sacrifices and maybe get by spending about, let's say hypothetically, $240k a year to be comfortable in DC. Now, figure that you could enjoy a comparable lifestyle in a lower cost jurisdiction for half that amount - I'm thinking places like Panama City, perhaps Barcelona, Spain, or if you don't care to go that far afield, maybe Omaha, Nebraska. You'll have to search around for a jurisdiction you like, but that's cheaper than DC. Say you can cut your costs down to $120,000 a year, after tax, without sacrificing lifestyle, but yes sacrificing living in DC.

Your next step is to make it your absolute number one priority to build a portfolio that will deliver an after tax yield of $120,000 a year, and that will keep up with inflation. There are plenty of tax-advantaged investments that trade on the New York Stock Exchange and that will pay 6% a year in dividends, and that will grow dividends by over the rate of inflation over time. So, you're talking about a portfolio of maybe $2m - but the net worth of the portfolio is not the main point. The point is YIELD.

Your third step is to become a cheapskate and plow every single penny you can into your portfolio of income producing assets. I assume you own a nice home somewhere in NW. Rent it out, move to a cheaper place in a crummy but not too dangerous part of town, or find the smallest ugliest house you can in a nice part of town. Maybe claim depreciation deductions on your larger house. Pocket the difference between your rental income and whatever you end up paying to subsist like a cheapskate, and plow it into other income producing assets. Look into master limited partnerships, real estate investment trusts and dividend paying stocks. Or, if it works out to rent your house out, take out another mortgage and buy another house or apartment in DC to rent out to someone else. Or maybe diversify a bit - you can buy cheap apartments in Miami and rent them out for a bundle as vacation rentals. Pick up three or four of those, maybe. There are plenty of opportunities to get assets that will pay you cash money each month or quarter, and that will pay you more each year. Do the research, and get comfortable taking calculated risks.

Drop private school, and send the kids to a decent public school. Explain the reason why is to save money and become financially independent. They'll get it. If not, teach them.

Never vacation, or eat in a restaurants. Buy food in bulk, and get free clothes and supplies whenever you can - think freecycle, and thrift shops. Plow every last cent into your investment portfolio.

Earning law firm money is fabulous - if you are obsessed to the point of mental sickness with the idea of saving and investing, you'll hit the $2m mark in a few years - or I should say, you'll be able to build a portfolio that kicks off $120,000 a year after taxes.

Once you finally do have that portfolio in place, quit the rat race, and move somewhere cheap and pleasant. You can pursue other hobbies instead of law - open coffee shop, whatever.

I am not making this up. I slaved for years at two of the largest law firms in NYC, and lived in a room above a nightclub with one window facing the garbage can storage area. I ate all my meals at the firm cafeteria because food was subsidized there. If I found $20 on the street, I'd pick it up and walk up to my brokerage firm, deposit the cash, and invest it in whatever I could invest in that wouldn't cost me commissions and that had a steady and growing income stream associated with it. On average, I lived on roughly $1,525.00 a month, even though I was earning $700,000 a year. I only wanted one thing - get out of working at an office. Especially law firms, which I hated from my second week as a first year associate. It was easy for me to save because I hated the rat race more than I loved eating in restaurants or buying new shoes. I bought stocks and mutual funds virtually every few days - whenever I got my monthly draw, or a dividend check came in. I retired a few years ago at age 41 and have never been happier. I still save a lot, but now I'll eat in a restaurant from time to time (no appetizers or drinks or deserts), and we take vacations whenever our son's school schedule permits (but only to places where the dollar is strong and airfare reasonable).

Getting rich is no picnic, but if you guys are really earning $500k a year, you could be in my position easily if you're willing to live fantastically below your means, take some serious investment risk, and master the art of dividend growth investing.

Hope this helps.

Wow, this is such a sad. I guess the biggest problem is that you couldn't find a job that you would even tolerate, but i dont think that is beey common. I can't imagine wanting to retire at 41.

Besides, this is exact opposite of OPs problem. She doesn't feel rich because she doesn't go to fancy vacations like her brother. So how is going to crappy vacations going to help? If she wants to feel rich, she needs to spend more not less.

[Anonymous]

Anonymous wrote:The OP said they don't feel "wealthy" which makes 95% of responses off base. Our income has gone up the past few years to a little over 450k and I don't feel "wealthy" either. I feel comfortable and I don't worry much but that isn't feeling wealthy.

But OP said they feel "really squeezed". They did not say they feel "comfortable".