Sum Dum Gai
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Post by Sum Dum Gai on Mar 25, 2011 17:17:12 GMT -5
For instance, people who have won millions in the lottery have ended up broke and in debt...but are they rich? They were, before they pissed it away. You can't judge based on ultimate outcome. If Bill Gates take a vow of poverty tomorrow and gives away every single cent and worldly possession that doesn't mean he's been poor this whole time. Right now the dude is loaded. If he's a total moron and ends up penniless when he's old that won't change the fact that he spent most of his life rich.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 25, 2011 17:19:25 GMT -5
You really need to get out more That's funny, especially coming from a guy who bases every single financial statement on NYC. News flash, over 94% of the US population doesn't live in or near NYC. Some of us don't even live within a couple thousand miles of it. The couple in the article putting in 60 hours per week at their level of pay is quite normal. The couple in the article isn't even real. The entire thing is a hypothetical. How much do you want to bet that the writer who made it all up doesn't earn anywhere near $250k, and doesn't really know what she's talking about?
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Post by Savoir Faire-Demogague in NJ on Mar 25, 2011 17:23:46 GMT -5
That's funny, especially coming from a guy who bases every single financial statement on NYC. News flash, over 94% of the US population doesn't live in or near NYC. Some of us don't even live within a couple thousand miles of it.
Then NYC metro area is the only real place to live. NYC is a happening place, and is the greatest city in the world. The city is legendary.
Every place else are wanna-bees.
The NYC metro area has high salaries, high taxes, high real estate and HCOL.... the higher salaries do not translate into rich.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 25, 2011 17:29:17 GMT -5
Yeah... that does indeed sound pretty happening. So I can move out there, make more money, which Uncle Sam and his local cronies will take more of, then pay more for everything I buy, so that I actually end up worse off and too broke to even enjoy the city to begin with. Throw in a roach infested shoe box size apartment, high crime, and crappy school system and I'm there.
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Phoenix84
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Post by Phoenix84 on Mar 25, 2011 17:51:42 GMT -5
I don't understand SF's interpretation that 250k/year is a solid middle class income. If less than 3% of the population of the U.S achieves that income, how can that be middle class? Does that mean that someone making 80k is poor? The median family income in the U.S is just under 50k....
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Phoenix84
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Post by Phoenix84 on Mar 25, 2011 17:56:35 GMT -5
"But you are totally correct - I know people who earn $50k, but are millionaires, and people who earn $500k and are broke."
I agree, there is a difference between wealthy and high income. However there's no excuse except for poor decisions why one can't live comfortably and save a hefty amount at 250k/year.
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sil
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Post by sil on Mar 25, 2011 17:57:52 GMT -5
I think I was the one who was assuming that the hypothetical couple was working 60 hour weeks, because that's the kind of hours that the folks making $130k - $180k work around here. They travel a lot and they stay in touch with the office on weekends, on vacation and even during hospital stays (Ive seen it) They are also divorced and/or struggling to keep their families in tact.
If any of the mid-level managers were to ask me if I thought hiring a housekeeper was frivolous, I'd tell them that it's a heck of a lot cheaper than a divorce settlement.
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TheOtherMe
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Post by TheOtherMe on Mar 25, 2011 18:04:05 GMT -5
$250K a year is definitely rich. I've never made close to that and never will. Tax them.
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TD2K
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Post by TD2K on Mar 25, 2011 18:41:39 GMT -5
It depends on your situation of course but $250k would be a lot of money for me. I already bank a good chunk of my salary so it would just translate into more savings. And maybe a Nissan GT-R
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TD2K
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Post by TD2K on Mar 25, 2011 18:47:57 GMT -5
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azphx1972
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Post by azphx1972 on Mar 25, 2011 19:15:37 GMT -5
It also makes you the 107,565th richest person in the world according to the global rich list, but we all know it's what you keep that matters.
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Post by Deleted on Mar 25, 2011 19:38:08 GMT -5
I don't think they're rich. Comfortable is probably a better description. exactly. It also depends on where you live. In NYC, you could maybe afford to purchase a studio or a 1 bedroom outside Manhattan and still struggle. But I don't feel bad for those people - they're willing to pay the price of living close to the city. Move to Jersey and you can at least get a decent house on that salary.
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Post by Deleted on Mar 25, 2011 19:53:04 GMT -5
What do you think, is it possible for someone who lives frugally on 250k/year to struggle and be in the red? Well, put them in a HCOL area with high property taxes and that's a big chunk of your income right there. Then you get stuck with the AMT because you're "rich" so your deductions are worth less. Add a few kids and their food, clothing, extra-curricular lessons, teams and other expenses and a couple of cars to cart them around (plus insurance) and $250K isn't as magnanimous as it looks. And since they're "rich", the kids won't get need-based scholarships so they have to pay for the kids' college, too. Edited to add: OK, I just read the article and realized the article made most of the same points. I guess that means I agree with it! But frankly, I don't know how people in minimum-wage jobs survive on the coasts and other HCOL areas unless they're married to someone with a good income or live in Mom and Dad's basement. I'm so glad DS lives in Des Moines, where on $40K he can actually live decently.
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jkapp
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Post by jkapp on Mar 25, 2011 20:11:51 GMT -5
I think I was the one who was assuming that the hypothetical couple was working 60 hour weeks, because that's the kind of hours that the folks making $130k - $180k work around here. They travel a lot and they stay in touch with the office on weekends, on vacation and even during hospital stays (Ive seen it) They are also divorced and/or struggling to keep their families in tact. If any of the mid-level managers were to ask me if I thought hiring a housekeeper was frivolous, I'd tell them that it's a heck of a lot cheaper than a divorce settlement. But you're also talking to people who probably think CEOs and highly paid individuals only work their 8 hours a day and go home...
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Post by Deleted on Mar 25, 2011 20:31:00 GMT -5
If any of the mid-level managers were to ask me if I thought hiring a housekeeper was frivolous, I'd tell them that it's a heck of a lot cheaper than a divorce settlement. Exactly. One of my cousin makes about 200K on her own and if you add her husband income they are over the 250K. She lives in Long Island, NY and have to travel to her law firm in NYC every day and sometimes need to work 10-12 hours, bring work home, etc. She prefers to bring work home this way she can do it after putting the kids to bed. She pays her mom $500/week to be her nanny (pick up the kids in the morning, drop/pick them up after school, take care of them, etc) and have a cleaning lady come to her house 2X a week. When she comes home at 8-9 PM, all she wants to do is spend time with her husband and boys, not go clean or do the laundry. To her it is worth it and she can afford it. Yes some days she gets to work only 8 hours and come home (add in 2 hours commute on that) but they do not happen everyday.
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Post by Deleted on Mar 25, 2011 21:03:20 GMT -5
I think 250k in the midwest would be rich. On the coasts, in major cities, not so much. Most people I know who earn that type of income put in considerable hours. Like sil and savoir said - once you add in commute, children and housekeeping you are talking about a huge chunk of your day.
DH and I used to pay 7k on property taxes on a 1200 sq ft ranch in a mediocre school district in a HCOL area. Daycare would have been $1200 a month. We fell in to the AMT. These are all considerable costs.
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lurkyloo
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Post by lurkyloo on Mar 25, 2011 23:12:11 GMT -5
As others have said, this is totally dependent on COL. There are many places where 250K a year can be characterized as very well off; in most large cities (where you're more likely to find these high-paying jobs) not so much. I'd also rather call them high earners than rich--high income doesn't necessarily correlate with good wealth-accumulation skills (or common sense!)
Regarding the hours: DH is the higher earner (about 2x what I make) and he typically works 12-16 hours a day M-Th, 8+ on Fri. Weekends he'll mostly take off, except for the odd email or if there's a particularly high-pressure project underway.
We're in coastal CA, and our income makes us quite comfortable and able to save a fair amount--but I consider us far from rich. We have a nice (not ostentatious) house; other than that my personal spending has changed very little from when I earned 18-20K/year as a grad student. If anything I'm more frugal-minded because other costs have gone up while my monthly non-housing spending has remained roughly the same. As a grad student, my share of the rent was around $600-650 so I had maybe $800-1000/mo for everything else; these days I allot myself $1200/mo that covers groceries (for two now), gas (didn't commute then), and pet care (furkid was my graduation present to myself) among other things. Two years ago I bought my first new-to-me car in 7 years: a four year old Ford Focus for $8K. I tried to fit us into the 50%-20%-30% budget, but mortage (14%) + taxes (33%, income & payroll only) already has us over 45%. We do save a fair amount, but it never seems like we're saving enough.
Again, I'm not complaining; we live a comfortable life. But we're not high on the hog either. On our income, I'd say we could do anything we wanted, but not *everything* we wanted--which to me is the line that divides the rich from the upper middle-class. Just my $0.02.
Oh, the other thing about NYC (which has insanely high state and sales tax as well as *city* income tax): the thing that always blows my mind about NY real estate is the ridiculous maintenance/HOA fees. It seems like $1K/mo is typical or at least not unusual.
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Post by Deleted on Mar 26, 2011 8:28:23 GMT -5
If any of the mid-level managers were to ask me if I thought hiring a housekeeper was frivolous, I'd tell them that it's a heck of a lot cheaper than a divorce settlement. Exactly. One of my cousin makes about 200K on her own and if you add her husband income they are over the 250K. She lives in Long Island, NY and have to travel to her law firm in NYC every day and sometimes need to work 10-12 hours, bring work home, etc. She prefers to bring work home this way she can do it after putting the kids to bed. She pays her mom $500/week to be her nanny (pick up the kids in the morning, drop/pick them up after school, take care of them, etc) and have a cleaning lady come to her house 2X a week. When she comes home at 8-9 PM, all she wants to do is spend time with her husband and boys, not go clean or do the laundry. To her it is worth it and she can afford it. Yes some days she gets to work only 8 hours and come home (add in 2 hours commute on that) but they do not happen everyday. Also I do not consider her "rich", financially stable yes but not rich. She cannot tell her boss to shove it and decide to retire fully at the age of 36. But does she have problems paying her bills on time and going on 1-2 vacations a year with her kids, no.
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formerexpat
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Post by formerexpat on Mar 26, 2011 8:52:12 GMT -5
I wouldn't necessarily go that far. London is a better city than NYC, in my opinion and the opinion of a handful of others I know that have actually lived in both cities - yes, I know anecdotal at best. I haven't lived in the city but frequented it in my early 20's and considered moving there a few times in my life.
I think NYC is a great city but not the greatest in the world. I would still like to live and work in the city [want the big 3 on my resume] but I'm not as willing to compromise my standard of living as I may have been before children.
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zibazinski
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Post by zibazinski on Mar 26, 2011 8:57:29 GMT -5
250k is rich to me and I intend to enjoy every minute of it!!!!
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Post by Deleted on Mar 26, 2011 9:00:31 GMT -5
Ok let's split the difference: would upper middle class do?
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Post by Deleted on Mar 26, 2011 11:09:18 GMT -5
I have no issue with taxing the $250K mark as rich. While on the coasts I agree that couple making $250 is working 60-80 hours per week (with commute time) and just struggling to make ends meat, that is a CHOICE.
That same couple could easily come to the Midwest (per salary calculators I would have to earn 65% more to have equal living in NYC), so they would now have a salary of ~$150K. Where I live, that puts you into the "rich" category (if you use your money correctly, you will easily become wealthy).
On average you would work 45-50 hours at your job and have a 10-15 minute commute. ;D
Simply the lower commute times would allow you to do your own laundry/cleaning/etc. Personally, after leaving college and living in Chicago that had a HCOL, I don't understand why anyone wants to live in these places. There is no way anyone would pay me 65% more in NYC to do the job I do in the MCOL area. 90% of careers do not benefit from the access to jobs these HCOL areas market. People are simply willing to pay so much more to live for the "hope" of hitting the lottery and getting one of those top 1% jobs (of which most also exist in MCOL areas).
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lurkyloo
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Post by lurkyloo on Mar 26, 2011 11:40:18 GMT -5
Logic: our jobs are pretty much not available in the Midwest; mine in particular. My industry has been being off-shored and the job market shrinking since before the recession; I look periodically but it'd have to be a damn good situation to make me leave a stable job that I enjoy in this job climate. DH could probably find something in the Midwest, but it would likely be in Minneapolis or Chicago--which still are not cheap areas to live; in fact, one of his grad school colleagues opted to work remotely from Atlanta (his company had a sales office there, he's the only researcher) because he could afford a house there but not in Minneapolis. The irony is, I'd rather like to move back to the midwest, and we will someday. It's not worth being unemployed to me, though. I would make a TERRIBLE housewife. Finally, if you want to tax us like the rich...I'd like my refund now, please You see, the truly rich have tax shielding options that aren't available to us working peons; Warren Buffett famously commented that he pays a lower overall tax rate than his secretary.
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Phoenix84
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Post by Phoenix84 on Mar 26, 2011 12:07:39 GMT -5
"Ok let's split the difference: would upper middle class do?"
I don't think so. The trying to define class easily gets one into a quagmire since it's so difficult. There's just so many factors to consider. The simplist is to simply go by income as a percentage of total income in the United states (i.e. if you make 250,000/year, where does that put in relative to others). But that ignores the vast differences in cost of living around the U.S. Large cities like NYC and Washington DC are on a totally different scale.
So the question is, do you define economic class (aka Rich, middle class, upper middle class) by income, lifestyle, or both? How do you compare duel income households with single income households? How do you compare singles to married couples? Couples without kids to couple with kids, and how do single parents fit into all this?
If going by strictly by income, $250,000 a year puts you at the top 1.5% of earners. The median income of all households in the U.S hover around just under 50k/year. Going strictly by income comparrision, a family who makes $250,000/year is making more than 5x the median income AND more than 98% of the population.
I'm inclined to say that passes the threshold of rich.
If you want to look at income distribution (this is from census data taken in 2006 from 2005)
Bottom 10%: 0-10,500 Bottom 20%: 0-18,500 Bottom 25%: 0-22,500 Middle 33%: 30,000-62,500 (this might be what you consider middle class) Middle 20%: 35,000-55,000 Top 25%: 77,500 an up Top 20%: 92,000 and up Top 5%: 167,000 and up (this may be the threshold for what I'd call rich) Top 1.5%: 250,000 and up Top 1%: 350,000 and up
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 26, 2011 12:08:18 GMT -5
Regarding the hours: DH is the higher earner (about 2x what I make) and he typically works 12-16 hours a day M-Th, 8+ on Fri. Weekends he'll mostly take off, except for the odd email or if there's a particularly high-pressure project underway. Enough people have said this, that I guess it's more true than I thought. Maybe it's just different on the west coast, or in my industry. I really don't know that many people that routinely work 60 hours. I very rarely work more than 40, and usually get comp time or a bonus when I do. My base salary is right at $100k. I've only been doing this for a couple years though. Plenty of the people I work with make around $150k, not in management positions, don't travel, and work pretty standard 9-5 40 hours a week. Some of them have fairly long commutes, but actual work hours wise, they aren't killing themselves putting in 60 hours a week for the money. In a lot of cases the spouse does something completely different, so if they're not paid much these couples wouldn't be over $250k, but some of them do make $100k-150k doing the same job, so the couple is at or near $300k and both have time outside of work. I really don't see the appeal of living someplace crazy expensive if you're going to have to put in 60 hours a week at work for wages that are only mediocre once you factor in COL and taxes. Can somebody explain the rationale behind doing that? If you're going to be middle class either way, why not be middle class in Ohio (or somewhere), where you can hit that on $50k a year, working normal hours, with no commute, one spouse wouldn't even need to work at all, and you can actually afford to buy a house or have kids if you wanted?
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 26, 2011 12:52:06 GMT -5
Are you only counting tax season, or all year? My SIL is a CPA. She works crazy hours during tax season. In the summer she has plenty of 20-30 hour weeks though.
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TheOtherMe
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Post by TheOtherMe on Mar 26, 2011 13:16:47 GMT -5
At the CPA firms I worked for, only the owners got rich. Yes, we only worked 20-30 hrs per week in the summer, but we got paid hourly. One only gave us comp time for all those crazy hours we put in during tax season and wouldn't let us take it right after tax season to make the checks come out to 40 hours. Said it wasn't the way he budgeted.
The other two CPA firms did pay OT during tax season, but income really dropped once it was over.
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lurkyloo
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Post by lurkyloo on Mar 26, 2011 13:40:41 GMT -5
With regard to the hours: DH is one of those driven people who is happiest when he's all-out focused on something. He just seems to have a lot of energy and stamina. He stayed there at a decision crossroads a few years ago because they offered him a chance to get into managing/directing IP, which is relatively rare.
Maybe it's just the company I keep, here's my viewpoint: many of my friends are professors which means you essentially don't get a life outside work--but it's worth it to them because they're following their passion. Having gone through grad school and postdoc myself and viewed this all firsthand, I chose to go into industry instead because I wanted a balance. But, it doesn't seem weird to me for people to work those hours.
I personally don't understand why people work in NYC--too extreme for me--but I think in general people go where the jobs are. We at least have the benefit of year-round perfect weather out here. Also, as I've noted elsewhere, we're trying to accumulate wealth during our high-earning years so we have the freedom to move somewhere less crazy when the opportunity presents itself. (The nice thing about CA politicians constantly pushing the burden farther into the future via pensions is that at least we won't be here to be taxed for it.)
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 26, 2011 14:39:32 GMT -5
Maybe it's just the company I keep, here's my viewpoint: many of my friends are professors which means you essentially don't get a life outside work--but it's worth it to them because they're following their passion. Having gone through grad school and postdoc myself and viewed this all firsthand, I chose to go into industry instead because I wanted a balance. But, it doesn't seem weird to me for people to work those hours. What I'm getting from this thread is that it doesn't seem weird for anyone in big cities on the east coast to work those hours, but at the same time the cost of living is so high that the high wages still don't buy much. So they're working long hours, for essentially mediocre spending power, which seems like a weird trade off to me. It could just be the hippy area of CA I live in though. Companies here pride themselves on providing good work life balance and use it as a recruiting tool. Not that we don't have workaholics out here, or companies that expect people to put in long hours or travel, but they usually make bank for doing so. Actual bank though, as in even factoring in COL and our high taxes they're still doing really well. It's not uncommon to see jobs that pay 50% more than the going rate if it involves a lot of travel or overtime. I haven't seen too many jobs that expect somebody to routinely work long hours and/or travel and only pay average wages for the job.
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lurkyloo
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Post by lurkyloo on Mar 26, 2011 15:12:21 GMT -5
Maybe that's why Wall Street traders burn out so fast? What I was trying to convey is that for the people I know that put in long hours, many of them are highly motivated by and engaged in the actual job. It's not necessarily about the money--if it were no one would ever be a professor. At least in the early years, professor pay probably works out to $10/hour--which is still better than grad student pay. Plus, unless you're at the absolute top of your field, you pretty much get no say with regard to where you wind up--could be anywhere in the country. I worked those hours for about 7 years, in HCOL areas, with crappy pay as a grad student/postdoc. My primary motivators were that I really enjoyed the field, and that there was an implicit guarantee of a good job on the other end. That guarantee is basically gone these days in my field, although maybe still there in others...I did score a good job with normal hours and very decent pay, but my mobility is limited. A lot of recent PhD graduates are left severely overqualified, or with the wrong specialization, for available jobs. Regarding doctors, lawyers, financial-services workers and other high earners: I have minimal insight into those. (Okay, I know one surgeon, but she's a total workaholic personality.) I do know DH struggles to maintain a balance between managing his group, writing proposals and project bids, and still getting do some actual hands-on work. I'm sure there are other motivators. Family? Some people like big-city living?
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