Anonymous wrote:

Anonymous wrote:Did you look at the chart?

It says only 16% making $200-$300 live that way and only 25% making $100-$200.

How about this…the people making $500k can live like those making $300k…and then they will saving like 50%.

The most difficult spot to live is that 300k-500k spot, as those are not really rich, and you've lost all the subsidies and tax breaks from the government.

Complete BS - you don't need tax breaks at this income level. You need to learn how to control your spending (we are in this level)!

$500k from one earner is MUCH different from 2 earners.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

In this case they mean after maxing out all their retirement accounts and setting aside automated brokerage investments, paying private school tuition, paying the mortgage on heir huge house, and setting aside cash for their next big vacation and reno, they feel like they don't have enough left over to spring for guac.

Not with their kids ordering queso.

I literally lol’d. Nicely done!

Anonymous wrote:Everyone I know that makes that much “feels” like it’s paycheck to paycheck but it’s not. They’re putting the max into their 401ks, each kid gets 10 or 20k a year into their 529s, they automatically put 10k a month into a brokerage fund. It just feels tight but they have tons of savings. They also have nice cars, nice homes and take nice international vacations.

They likely feel that way in part because they always know people with more. If you travel a lot but always fly coach, you always know people getting first class. If you travel first class, you know people who charter private jets. If you charter private jets, you start looking at people who own. And on and on and on.

The new season of Beef touches on this really well. People's perspectives become heavily skewed by proximity to greater wealth. The show dramatizes it, but I've seen it plenty of times IRL.

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

100% this.

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

All while contributing about 30K to retirement via maxing contributions and employermatching.

and, if they are truly paycheck to paycheck. They are idiots.

A finance advisor I follow online recently posted that most of the people she works with fall into two general categories: people with spending problems, and people with income problems.

The 300k+ people saying they live "paycheck to paycheck" have a spending problem. They have a ton of income but the spend too much of it and it gives them the feeling of always barely being able to cover their bills. The fact that they describe it as paycheck-to-paycheck especially indicates that they've simply purchased a lifestyle that is bigger than they can afford (house, schools, cars, vacations) and that these are regular expenses, not one offs. This financial advisor talked about this problem can often be fixed quite quickly. You just go through every budget item and eliminate or downgrade the excess. Some line items might be harder to deal with than others (house and education) but usually she can even make space for these by cutting elsewhere (memberships, dining out and entertainment, and vacations are all easy ways to save money until you can move to a more reasonable house or shift kids to public).

The people below 100k or 50k have income problems, and she points out that this is much harder to fix. I sense that some of her clients even make over 100k or 200k and still have this issue because they are living in very high COL areas like NY or SF. She said that it can take months or even years to address this issue and people in this situation have to follow strict budgeting and debt repayment strategies in the interim (strategies she mentions include short term options like getting a weekend or evening gig or negotiating for a raise, and longer term options like changing jobs or getting additional education or certification to move into a higher paying career path). She was actually very optimistic about these folks because she said that the discipline required to get to a financially solvent place while you find ways to build income then pays dividends when your income goes up and you know how to save and invest wisely.

Anyway, this chart made me think of that. The people making over 300k or 400k who feel like they are living paycheck to paycheck all have easily solvable spending problems. The people making under 50k or 100k have bigger challenges and it will take real discipline and dedication to address them and stop feeling that way. I know where my sympathies lie.

Everyone I know that makes that much “feels” like it’s paycheck to paycheck but it’s not. They’re putting the max into their 401ks, each kid gets 10 or 20k a year into their 529s, they automatically put 10k a month into a brokerage fund. It just feels tight but they have tons of savings. They also have nice cars, nice homes and take nice international vacations.

Anonymous wrote:

Anonymous wrote:Did you look at the chart?

It says only 16% making $200-$300 live that way and only 25% making $100-$200.

How about this…the people making $500k can live like those making $300k…and then they will saving like 50%.

The most difficult spot to live is that 300k-500k spot, as those are not really rich, and you've lost all the subsidies and tax breaks from the government.

Yes, as someone who makes $250k, I’m rolling in government subsidies

I feel rich (or at least borderline rich) at $250k. If you make $400k and feel like you’re in “the most difficult spot to live” it’s a skill issue. Or at least a perspective issue.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

In this case they mean after maxing out all their retirement accounts and setting aside automated brokerage investments, paying private school tuition, paying the mortgage on heir huge house, and setting aside cash for their next big vacation and reno, they feel like they don't have enough left over to spring for guac.

Exactly, we make like 800k and still shop at Aldies because we need to save so much and pay for private college tuition, etc. It's not a glamorous life, everything thinks it is.

Bro! We NEEEEEEED to send our kids to an expensive college and expensive k-12 private so they can major in fine art and be underemployed as a barista afterwards! We can’t retire on less than 15mil or else we won’t be able to keep living in a tier 1 city and be within walking distance to the opera and other exquisite cultural events to stimulate our over educated minds and stave off dementia when we’re old, so we’re forced to save 30% of our 800k HHI and work until 65! My kids need to do travel soccer, swimming lessons, two instruments, and foreign language after school as well or they might have to go to *gasp* state school! If our kid has even 10k in student loans then we’ve failed as parents and their lives will be miserable, there’s no way we’ll allow that to happen. 529’s must be super funded to half a million minimum! Did I mention the biannual business class trips to Europe?

It’s not a glamorous life, but we make do

correct but they are studying engineering and medicine at ivy's which is important with how comeptitive the job market is now a days.

Anonymous wrote:

Anonymous wrote:Did you look at the chart?

It says only 16% making $200-$300 live that way and only 25% making $100-$200.

How about this…the people making $500k can live like those making $300k…and then they will saving like 50%.

The most difficult spot to live is that 300k-500k spot, as those are not really rich, and you've lost all the subsidies and tax breaks from the government.

So, so difficult! My heart breaks for them.

Anonymous wrote:

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

In this case they mean after maxing out all their retirement accounts and setting aside automated brokerage investments, paying private school tuition, paying the mortgage on heir huge house, and setting aside cash for their next big vacation and reno, they feel like they don't have enough left over to spring for guac.

*applause*

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've seen enough of those "we make $500k but money feels tight" articles to know that most people don't actually know what paycheck to paycheck means

In this case they mean after maxing out all their retirement accounts and setting aside automated brokerage investments, paying private school tuition, paying the mortgage on heir huge house, and setting aside cash for their next big vacation and reno, they feel like they don't have enough left over to spring for guac.

Exactly, we make like 800k and still shop at Aldies because we need to save so much and pay for private college tuition, etc. It's not a glamorous life, everything thinks it is.

Bro! We NEEEEEEED to send our kids to an expensive college and expensive k-12 private so they can major in fine art and be underemployed as a barista afterwards! We can’t retire on less than 15mil or else we won’t be able to keep living in a tier 1 city and be within walking distance to the opera and other exquisite cultural events to stimulate our over educated minds and stave off dementia when we’re old, so we’re forced to save 30% of our 800k HHI and work until 65! My kids need to do travel soccer, swimming lessons, two instruments, and foreign language after school as well or they might have to go to *gasp* state school! If our kid has even 10k in student loans then we’ve failed as parents and their lives will be miserable, there’s no way we’ll allow that to happen. 529’s must be super funded to half a million minimum! Did I mention the biannual business class trips to Europe?

It’s not a glamorous life, but we make do

Anonymous wrote:Totally agree, i think 500k is the new middle class

What this chart actually shows that 300k is a threshold income at which point people start spending in ways that cannot always be backed up by their incomes. People under 300k are still budgeting, presumably making housing, education, and disposable income choices that still enable them to save and invest plenty. But at 300k, people start to let loose a bit and that is what creates the "paycheck to paycheck" feeling.

I will take just one line item to show what I'm talking about: private school tuition. Consider two families:

Family 1
295k HHI
SFH with mortgage
Public school
Maxing out savings/investment options as much as they can

Family 2
305 HHI
SFH with mortgage
Private school for two kids to the tune of 60k/yr
No longer maxing out savings/investment options because of money going to private school

Family 2 makes 10k more than Family 1 but feels 50k poorer, plus the money going to private tuition carries an opportunity cost since this is technically a disposable sum (they don't have to do private, public schools are available -- it's a choice) so were they not sending kids to private school they could be investing that money in a way that would get them real financial returns.

Private school, like many choices made for kids, also is an optional choice that becomes very hard to back out of because once your kids have acclimated to a school, made friends, etc., it is very painful to change things up (and no one wants to pull their kids from private because they can't afford it). Private school is also one of those expenses that often carries hidden uncharges -- the pressure to donate to the school fund, the expectation that kids will do more expensive ECs, the keeping-up-with-the-joneses that often comes as a cultural tax on that lifestyle choice.

That's why those people feel like they are living "paycheck to paycheck" on that income. They aren't, it's just they've backed themselves into a corner with a totally optional spending choice that they now don't feel they can easily escape. And it will last a decade or more. Dumb!

Sure if you are paying for 3 kids im Private school and have a big mortgage and are saving for college and/or paying off professional loans I could easily see this.