Are you living beyond your means?

[Anonymous]

How common do you think it is for people to live beyong their means? I'm talking about the people who live in gorgeous and huge houses, send their kids to private school, drive the fanciest cars, etc. but have no savings, pay their credit cards in installments, are late on payments for things, etc.

[Anonymous]

I think it's much more common than we all think. I think there are many people who wouldn't classify themselves as this, but that's because they haven't ever sat down to look at the whole picture.

I am not one of these people, but was a bit like that in my 20s.

[Anonymous]

Common but usually for younger families just starting out.

[Anonymous]

I actually think whenever someone lives a bit ostentatiously, everyone assumes they are living beyond their means because they can't accept that some people just have a lot more money. I'm sure some people genuinely do live beyond their means but I don't think it's the norm. I grew up in a very affluent suburb of NYC where many of the families were very showy about their wealth (not mine, and we didn't have it anyway). My parents still live there and I am still in touch with lots of my friends, and I've never known of anyone to lose their home or not be able to pay for college or retirement, or any of the other things that will supposedly happen if you live beyond your means. I just think a lot of people are sour grapes when wealthier people flaunt it.

[Anonymous]

Not uncommon.

[Anonymous]

Anonymous wrote:I actually think whenever someone lives a bit ostentatiously, everyone assumes they are living beyond their means because they can't accept that some people just have a lot more money. I'm sure some people genuinely do live beyond their means but I don't think it's the norm. I grew up in a very affluent suburb of NYC where many of the families were very showy about their wealth (not mine, and we didn't have it anyway). My parents still live there and I am still in touch with lots of my friends, and I've never known of anyone to lose their home or not be able to pay for college or retirement, or any of the other things that will supposedly happen if you live beyond your means. I just think a lot of people are sour grapes when wealthier people flaunt it.

+1

[Anonymous]

I think it's more common in other parts of the country. My observation has been that wealthy people in this area tend to be financially savvy. I can't imagine living as close to the edge as you describe!

[Anonymous]

I think a lot of people don't live beyond their means, but live very very close to the very edge, so that if something happened, like a sickness, they'd have real problems. I.e. no emergency funds. We had a physician friend with four kids (who each had every possession imaginable and were in college w/o financial aid to boot) and when he had a heart attack they almost lost everything. People in this area do seem more savvy though.

[Anonymous]

My cousin and her husband in FL totally do. They make about 200K, which is a lot where the live. They both drive super fancy cars and take lots of vacations. They eat out all the time but they ha d to sell their house because they couldn't swing the mortgage and my uncle had to loan them money to pay off credit card debt. They are sort of "beautiful people" and it is easy to be a bit jealous until you look under the hood.

[Anonymous]

I'm starting to realize that a lot of people in this area actually have a TON of money.

We don't live beyond our means, per se. We save for retirement, put a few k away for college for our young kids, don't have any credit card debt or student loans or anything, but we have two car payments and a heafty mortgage. We could certainly stand to save more. We have a decent HHI but like to spend a lot too.

That said, we've got friends that we always thought were in similar situations as us. We are starting to realize that's not the case. As we've gotten closer to some of our friends, we have learned about trust funds, inheritances, the insane success of seemingly modest businesses, etc.

Kinda makes me feel like we are living beyond our means for the sheer fact that we are even in the same circles as some of our friends

[Anonymous]

We live paycheck to paycheck pretty much, but we are working on doing better. HHI of 150k. We save for retirement and have a kid in daycare. We probably paid too much for our house, and we have 2 car payments.

[Anonymous]

Anonymous wrote:We had a physician friend with four kids (who each had every possession imaginable and were in college w/o financial aid to boot) and when he had a heart attack they almost lost everything.

I heard that the IRS auditors love to go after the doctors because they make a lot of money, but are so bad with their finances and make lots of mistakes on their tax returns.

[Anonymous]

I know of people who make 100k hhi but their parents bought them a 2 million dollar house. kind of weird to think they didn't earn or pay for their home and everyone knows it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We had a physician friend with four kids (who each had every possession imaginable and were in college w/o financial aid to boot) and when he had a heart attack they almost lost everything.

I heard that the IRS auditors love to go after the doctors because they make a lot of money, but are so bad with their finances and make lots of mistakes on their tax returns.

Yup.

[Anonymous]

I've never lived anywhere where an income of $260k both feels average and actually night be. DC is crazy. I love it here but I sometimes wonder if I shouldn't move to Burke where I wouldn't feel like the cheapskate dad by comparison.