Reply to Do you make $400,000 a year but feel broke?

Forum Index » Money and Finances

Reply to "Do you make $400,000 a year but feel broke?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I guess it depends on your definition of burden.  Let's say for the sake of argument that a relatively thrifty family on that HHI saves $120k* per year after tax.  If they have two kids, you're now asking them to put half of their total annual savings towards tuition.  I may be more fiscally conservative than others, but I'd be very cautious about allocating resources that way unless and until there was some long-term wealth behind it from multiple years of saving.

* You can quibble with the $120k amount, but I'd guess that's well over what most families in this income category save given it's probably about $250k of after-tax income. [/quote]

So ridiculous. You are free to allocate your resources however you choose. Just don't whine about it when you make more money in 2 months than most people make all year. It is really gross. [/quote]
What part do you find ridiculous?  That I would be cautious about allocating half of annual savings toward tuition for two kids?

Just to illustrate this further, let's say a family is considering putting two kids into private school at a cost of $60k per year.  For a family on $1M HHI, that's an insignificant cost... almost trivial.  They can afford it and the school should expect significant donations on top of it.  For a family on $65k, the school should cover 90+% of tuition with financial aid.  For the family on $400k, I think a small amount of aid - let's say $5-10k - is very appropriate.  Otherwise you have a system where it's only rational to attend these schools if you are at one extreme or the other.  As someone who values a private school education, I think that schools with sufficient endowments should endeavor to make attending something a rational person would consider.[/quote]

And yet there are plenty of families with kids in private school who make less than $400k/year who are full pay. [/quote]
I don't think that's disputed (though some schools do provide a discount for multiple kids at the same school) - the debate is what's appropriate policy.  Also, in many of those cases, the families are likely to have significant wealth accumulated in addition to the income, whether they come from a wealthy background, or they have had time to accumulate it because the HHI level has been consistent for several years.  For example, let's take a 45yo couple on a $400k HHI.  Example A they have $1.5M of total retirement / savings / home equity.  Example B is $500k because the income level is a recent phenomenon our the couple took out a lot of student debt to invest in their future earnings power.

I would tell the family in Example B that they are insane to pay full freight on two kids with no discount no matter how much they value education or how frugal they may be.

Wealth v. income... two different things.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics