Is $250,000 a year rich?

[Phoenix84]

I found this article and it got me thinking. It's about how a hypothetical couple making 250k/year might not be as rich as most would think.

money.msn.com/tax-planning/down-and-out-on-250000-dollars-a-year-fiscal-times.aspx

I don't typically adopt an attitude of "soak the rich." I can certainly see how 250k in certain areas of the country wouldn't go as far as one may think. I also understand that typically high income jobs are likely to be found in high cost of living areas.

On the other hand, 250k, even if they paid 100k in taxes a year, would still be more than twice my gross pay, so I still have a hard time "feeling sorry" for this hypothetical couple. The highest tax burden for the "Jones's" was $78,276 in Huntington NY, that still leaves them with $171,724. 250k/year is a fair amount of money, and as the article states, only 2.9% of the American population achieves that income level.

What do you think, is it possible for someone who lives frugally on 250k/year to struggle and be in the red?

[Deleted]

$250k a year is rich.

[swamp]

I don't think they're rich. Comfortable is probably a better description.

[souldoubt]

Of course it's possible but it all comes down to choices. What you make salary wise doesn't make you rich or wealthy it's what you do with it that does or doesn't.

[Angel!]

Articles like this lose me when they say stuff like:

Some of the expenses incurred by couples like the Joneses may seem lavish -- such as $5,000 on a housecleaner, a $1,200 annual tab for dry cleaning and $4,000 on kids' activities. But when both parents are working, it is impossible for them to maintain the home, care for the children and dress for their professional jobs without a big outlay.

Since many in the country manage to get by without a big outlay, then I really don't think it is impossible to do.

[Gardening Grandma]

We're "comfortable" on 100K/yr. $250K/yr definitely is "rich".

[thyme4change]

Rich isn't as fun as they make it look in the movies.

[zibazinski]

It would be to me!!!!

[alabamagal]

Rich, but not "super rich". Not in the movie star, star athlete category, but those usually blow all their money anyway.

[Sum Dum Gai]

It's definitely working rich. They can't tell their boss to go eff himself and sail away on their yacht to play in the Caribbean for life, but they shouldn't ever be struggling with bills either.

[Wisconsin Beth]

I think one of my siblings makes about this, certainly they do when you add her DH's income into it. I don't think of them as rich. They live in a nice house on a smallish lot and buy new cars and drive them until they die. I know they have student loans to pay, plus kids activities and the usual house bills. They've always juggled their schedules so no day care.

My impression is that they're banking money and setting themselves up for retirement/college for their kids. We're in a MCOLA. They're going to be guardians for our kids, once we get the paperwork done.

[olderburgher]

When answering to make this more relevant state your income too. To the person making $1.5 million a year maybe not but to me yes. We make $60,000.

[Deleted]

coming from me, whose household gross income total is ~$55k/year, yeah. $250k/year is damn rich. we're not struggling, but we're not comfortable either. i can't even imagine how we'd live on $250k/year...

[illinicheme]

Rich but likely not independently wealthy.

(Karma to Dark for "working rich" - I like that term.)

[thyme4change]

I've told my story before, but we make about $200k, but haven't made any large fixed expense changes since we made $75k per year. We bank a lot of the difference, and piddle away a lot of money. I have enough money to know that I should not whine about how much it costs to keep a lawn guy and cleaning lady. But, I also have been known to get a little irritated when my friends say things like "Well, we have to spend the summer in San Diego because it is just too hot here. Besides, the place we found only costs $12,000." Gee, my two cars together aren't worth $12k - and I have to go to work every day in the summer. So, I'm sure these people feel the pull between their friends with more and their friends with less and really honestly, yet naively, believe they are in the middle.

That is the biggest problem with homogeneous suburbs. You completely lose a sense of what the real world is all about.

[Deleted]

The article makes a lot of assumptions about how this hypothetical couple spends its money, including maxing out the 401k and saving substantially for their kids' college.

These are options that those making half their income (or less) may not have. So, yes, the ability to buy nice houses, have fully funded 401k's and college funds, etc. are a lot richer than most of America.

[april47]

Rich compared to me! However, even I would not call them "rich".
The word rich to me implies mansions, yachts and trust funds.
I would call them "well-to-do".

[resolution]

It depends a lot on lifestyle and expenses. I am not sure at what income point I would consider a person rich because my idea of rich is mostly based on net worth and what they keep rather than what they make.

This article was previously posted from another web page and there was some interesting discussion of their expenses here notmsnmoney.proboards.com/index.cgi?action=display&board=finance&thread=3486&page=1 Since they are hypothetical couples it really does look like some of the expenses were exaggerated to make the author's point.

[formerexpat]

If you can save $250k a year, then I'd consider your rich. Otherwise, you just make a decent salary and either have a great opportunity to build a decent amount of net worth or piss away your entire salary each year.

[Opti]

Mar 25, 2011 12:54:36 GMT -5 Sum Dum Gai said:

It's definitely working rich. They can't tell their boss to go eff himself and sail away on their yacht to play in the Caribbean for life, but they shouldn't ever be struggling with bills either.

I agree. IMHO you are not middle class if you make $250K.
I think many people like to define rich as the ultra wealthy but if you do then the "middle class" moniker to me really makes no sense. Middle class
should be IMO maybe a third of the population in between the lower income and higher income groups.

If you can afford to pay someone in your employ the equivalent of FT minimum wage or better you are not middle class.

[formerexpat]

Some of the expenses incurred by couples like the Joneses may seem lavish -- such as $5,000 on a housecleaner, a $1,200 annual tab for dry cleaning and $4,000 on kids' activities. But when both parents are working, it is impossible for them to maintain the home, care for the children and dress for their professional jobs without a big outlay.

Since many in the country manage to get by without a big outlay, then I really don't think it is impossible to do.

I agree except for the $1.2k for dry cleaning. It's pretty easy to spend this if you have to wear a suit to work every day and are a family of two working professionals.

[Savoir Faire-Demogague in NJ]

I believe that article/link is a few months old.

$250,000 combined income, is nothing more than a run of the mill middle class job, held by someone with a college education(accountant/cpa, financial analyst, sales, stock broker, IT field, etc.) Also the cost of living on Long Island and the entire NYC Metro area is insane.

Even someone operating a business in the construction trades(carpenter, general contractor, plumber, electrician, can easily make $150,000.

[Savoir Faire-Demogague in NJ]

I agree except for the $1.2k for dry cleaning. It's pretty easy to spend this if you have to wear a suit to work every day and are a family of two working professionals.

That comes to $100 per month in dry cleaning for two people in professional jobs, likely requiring suits and crisply pressed shirts.
$25 per week for two people is dirt cheap. It costs $1.75 to have a shirt professionally laundered. That would be 10 shirts per week.

[Opti]

Mar 25, 2011 13:40:33 GMT -5 Savoir Faire-Demogague in NJ said:

I believe that article/link is a few months old.

$250,000 combined income, is nothing more than a run of the mill middle class job, held by someone with a college education(accountant/cpa, financial analyst, sales, stock broker, IT field, etc.) Also the cost of living on Long Island and the entire NYC Metro area is insane.

Even someone operating a business in the construction trades(carpenter, general contractor, plumber, electrician, can easily make $150,000.

If it really was run of the mill middle class why have less than 5% of all American couples accomplished it? Living in NYC Metro area and working in wealthy areas has warped your sense of reality. I agree plumbers, locksmiths, etc. in the right area can make than kind of money but again if it were run of the mill, i.e. common wouldn't 10-20% at least of the population be pulling this off?

[Opti]

BMWs, Porsches, Mercedes, etc. are run of the mill cars too.

[HoneyBBQ]

Rich? No. Pretty darn good? Yeah.

We make in that ball park, but we also pay child support. I bought my last car (Honda SUV) used and in cash. My H's car is a 10+ year old Miata. We do not live high on the hog but we do not have to worry about the bills every month.

[comom1]

I actually use an iron, so we don't have the expense of laundering shirts. It's a dying skill, but a handy one. I can do a week's worth of dress shirts for DH in less than an hour. I turn on the music, call a daughter and the time flies. If you're feeling flush, do like DH finally did. He went to Brooks Brothers and ordered beautiful dress shirts in a no-iron fabric. I really didn't believe the salesman, but he was right. As long as I take them out of the dryer right away, they look like they just came from the cleaners. You can also buy them off the rack there and they're quite a bit cheaper that way. DH is just weirdly built and he likes his dress shirts to fit well. I can't wait until I get them all converted!

[thyme4change]

BMWs are run of the mill. It seems like everyone drives one, and they only cost a few thousand more than a Honda - the difference in a monthly payment would be pretty minimal. I don't know what it is like anywhere else - but here, BMWs are a dime a dozen.

[wodehouse]

I iron my own dress shirts too (I iron my corduroy shirts too...inside-out...they turn out great!). I'm at $200K, not $250K and I feel comfortable, not living high off the hog. Hoping to replace my 12 year-old car soon. Mostly I'm concentrating on saving for retirement: 25% of salary goes into retirement savings, maybe 85-90% of bonuses goes there.

[wodehouse]

I don't like BMWs all that much. But I recently rented a new 3 series (was expecting to get a Buick). It drove and rode really nice (great!). But I don't find the interiors (and exteriors) appealing. Last week, I rented a Honda Accord. Maybe $6K difference in MSRP but it was a horrible thing, I was surprised and disappointed. I've driven cheaper cars that were much nicer. Maybe it was the tires they had on there. Enterprise rental, both times.