When I started working in software I made way more money right out of school than my family ever made. And I developed a lot of bad spending habits as a result. After a few years I got my head on straight. Paid off all my debt, got disciplined about saving, and cut out unnecessary expenses.
It’s not that hard to live very comfortably on 100k. But you aren’t going to be eating out all the time, driving new cars, living in a gigantic mcmansion, etc.
Edit: My youngest sibling was born in 93. 30k in 93 is like 50k today. HALF of what the people in this article are living on. Give me a break! These people don’t need a raise or a hand out, they need a realistic budget.
When your father was working and you were growing up, $30k was worth more (perhaps much more, depending on how old you are) than it is now. His job probably had benefits and protections modern jobs don't have. What used to work for people increasingly doesn't work, in large part because benefits are disappearing, government programs and subsidies are being cut, and what's considered a "fair wage" hasn't tracked at all with how much things actually cost, especially on the coast.
I was able to turn my situation around, not by getting tax cuts or help from the government, but by changing my lifestyle and my idea of what I needed. That house that you think you can afford that sets you back 20% of your gross pay? You don't need it. Cut your residence costs to something reasonable like 10% of of gross pay and boom, you magically have a surplus of ~$800 / month. That $400 - $500 / month car payment? You don't need that either. Stash away four months of the savings we just got on our residence and buy a used clunker for $3200, drive that into the ground, and by the time that dies, you will have saved up enough money to buy a perfectly fine used car for cash.
I have an artist friend who lives in NYC on ~$30k / year. She even has a car, which is an expense that a lot of people in NYC do without. Even in this situation she has been able to consistently put money away into savings and investments because she manages her money well. It's not about how much you make. Your choices have far more to do with it than most people are willing to admit.
The other person is making $100k in a very high cost of living area. He's living as you do- frugal, paying down debt, and living within his means. He does raise a good point though- $100k does not feel like the fortune and there is still quite a bit of inequity.
Of course the billionaires like it this way. They are destroying the middle class, but they keep the fighting at the lower ranks.
It's not the 1% that are the problem, it's the .01%.
If you're in the US, how are your parents faring for retirement? Are you and your siblings helping out?
It saddened me to read that snippet. Growing up on the west coast, I was aware of some ideological/cultural differences between urban metros and the Middle America, but I was not aware of that sense of classism.
A take-away I had from Trump's election was that there still is a lot of economic struggle in the interior of the US. Nobody seems to be interested in improving the situation, and very few of these communities have the means and/or the willingness to move towards greener pastures. Is there anything that can be done to improve the situation?
I work in a typical liberal as hell company in a very expensive city. The level of hate/class superiority towards the unwashed masses from my co-workers is absolutely mind blowing. It is casual hate that shows up everywhere, every day in a unrelated conversations. If one was to do s/<who they talk about>/gay|minority/g they would be terminated on the spot. It goes all the way up the corporate latter. All of them are card carrying progressives.
Went into tech and only interacted with other white collar workers.
Of course I don't agree with Trumps demonization of "other" but I do see how he easily tapped into their resentment. People don't seem to realize how many Trump voters in middle America voted for Obama in 2008 and 2012.
Plnty of us are interested. But people with enough money to pay for their own media, and their own politicans and party, they are really not interested.
If you wanted to build complexes to stimulate the economy, you'd probably need on the order of... $100M in buildings, and another $100M in endowments for operating expenses/grants/risky loans.
So 200M is a lot, but it's also only the retirement wealth of 100-200 upper-middle class families, of which there will be thousands per major metro (and perhaps a million or so across the US).
I think it's mostly a logistics problem -- in those million families, there are probably 10,000 that are interested in resettling to the middle of the country and would be willing to move half of their wealth into local investments on a generational scale (while keeping the other half in say, the market).
That means we could do 250-500 self-sustaining mixed-use complexes backed by endowments for operations costs, which is probably enough to target 50-100 towns.
The question becomes the organizational aspects of those people finding each other, building trust (between each other and with the involved communities), and finding the appropriate legal instrument to manage the money on that scale.
These are all much harder problems than finding money or media attention.
Yes, but it's all the things that "coastal elites" don't want to hear. The first two topics of conversation would likely be about trade and immigration policy. But it's hard to talk about either without being shouted down as xenophobic or racist. It's worth noting that Obama ran on a platform to renegotiate NAFTA during his first primary.
I hope he succeeds. The more we share jobs/experiences/wealth/etc. the more we'll understand each other.
In Germany, for example, a two-income couple making 84,000 Euro ($100,000) in Bavaria nets 57% of their income: https://www.icalculator.info/germany.html. In Maryland, a relatively high-tax state, they net 76% of their income. And that doesn't adjust for the additional upper middle class tax benefits like the mortgage interest deduction, which don't exist in Germany, which would take the net income over 80% on a typical house.
A couple earning 840,000 Euro ($1 million), in contrast, net 55% of their income, barely different from the previous example. In Maryland, they net 54%, less than in Germany! In contrast, actual corporate tax rates in Germany are about 15.5%, versus 18.5% in the U.S. (and Germany is quite high compared to say Canada, at 8.5% or France, at 11.2%).
I live on the east coast, but about an hour east of D.C. Around here, you can live very comfortably on $100,000/year. Certainly, more comfortably (at least, materially) than you typical middle class German family. The only reason the situation gets worse as you get closer to D.C. is expensive housing and worse schools, which are problems that are entirely inflicted by the middle class on itself (through anti-development and pro-segregation policies).
* $18,000/year 401k contribution (similar to pension, but I take on the market risk)
* $5,500/year IRA contribution (similar to pension, but I take on the market risk)
* $200,000 total in tuition per child at my alma mater.
* Health insurance costs. This can easily be $12,000/year or more for a family.
None of these are included in the tax amounts that we pay.
This is also not considering that German cities are much cheaper than equivalently walkable American cities.
Tax breaks are at best a very short term proposition, and if the numbers are to be believed, the current tax plan only serves to widen the gap over time.
Unfortunately, many Americans have been convinced to vote against their best interests since in many places, D means Devil. Having a strong stance on hot button issues like abortion is more important than whether you will gut a union or make a fair tax code.
If it's an indication about how bad things are, a probable child molester has an actual shot of being reelected, simply because of the R next to his name. We are not selecting for the best candidates.
That's not really supported by the data. A more accurate summary would be "the poor, unable to, the rich, not numerous enough to". Raising taxes on the top 1% or the top 0.1% or the top 0.01% has very little impact on total revenues simply because you need to raise taxes 50x, 500x, or 5000x as much in order to extract as much revenue as you would get by raising taxes on the top 50%.
1. To be are I think this doesn't include payroll taxes so it's a bit of a skewed number.
Yes, there are few people, numerically, in the top 0.01%, but that doesn't mean their taxes are inconsequential. Otherwise you might as well argue that they should pay no taxes at all. Absurd.
These deductions and "welfare for the rich" basically amount to hundreds of billions in lost revenue.
This is well documented, NYT has a good run down: https://www.nytimes.com/2015/03/18/business/economy/taxes-ta...
If you're in the top 0.1%, the actual taxes you pay each year is a far lower percentage than the middle class would pay, due to this unequal system. The rich get richer, and use that money to rig the game further.
Just look at the current tax bill that was passed.
That is a common opinion, and one that is not justified by the facts.
About half of income tax comes from 1% of taxpayers.
I think it's telling that one family cited credit card debt like it's an act of nature instead of a conscious choice. And just because you qualify for a million dollar mortgage doesn't mean you should get one. Spend that big salary on a home near your workplace and sell the $40,000 SUV.
The sooner we wake up from the "dream" of being deep underwater in debt to fund an ecologically and economically unsustainable lifestyle, all the while just a paycheck or two away from complete ruin, the better off we'll be.
I'm not saying that means people who can't afford to live in places like NYC or SF shouldn't move, just that there's a complex tension between economic theory and "messy" human reality.
The ideal rationally self-interested agent described in economics texts would just move from place to place in search of profit-maximising opportunities, but that's not what actually existing humans do much of the time. They have relatives, friends, aesthetic preferences, social obligations, religious beliefs, and other things that "do not compute" in mathematical models.
lol a home in downtown DC, where the MD guy likely works, is gonna set you back 2 million at least. you're not gonna find a 1br apartment downtown for less than 2k/mo.
$100k still goes far in a high cost of living, coastal area. However, I drive a used car. I'm a renter, and probably will be for awhile. If I wanted to be a homeowner, a good portion of my retirement savings / investments would be going towards that.
If I decided to have kids, which would mean at least a place with additional bedrooms, plus additional health care coverage costs, etc., I could see it getting tight. I might have to compromise my retirement savings goals.
I don't have a lot, but I'm also a minimalist. And I realize that, income wise, probably 80% of society has it worse than me. I don't know how households earning around $50k would feel any semblance of having a future financially. Growing my savings/investments is the only way I feel like I'm getting ahead. Having any sort of typical American dream goal (house, kids, etc) would basically nullify my ability to get ahead, with the exception of building some home equity.
Barring equity compensation that appreciates, you’re likely to grow your income until around 35. Then you plateau.
You’re also unlikely to retain companies or career skill set through to retirement. So you’re facing a crisis where you need to transition and maintain salary around age 40, where 1987 you would be entering peak earning years.
It’s a particularly vicious cycle as professionals marry late and have kids late, so when you’re scrambling to maintain your 401k to retire, you get hit with a big college bill in your late 40s/early 50s. If you invest unwisely and don’t have a home, you’re choosing to either retire comfortably or not pay for college.
I agree, though, that the purchasing power is nowhere near 1987 and that the plateau comes earlier. I suppose it's what makes saving earlier and saving more ever pertinent for the younger generation. If I can get to 200k before I plateau, I'd be happy. If I have a working spouse that makes at least 100k, I'd say we could probably keep the American dream alive for us.
At least via my 401k, there are few poor options to choose, thankfully. The worst you could probably do is pick a fixed income class (and get no growth) or go too risky with international funds (if you for some reason went 100% international). But the target-date funds and index funds provided (SP500, etc) are diversified and generally considered good investments.
My thought pattern here is that if you can't manage on $100,000 a year then you'll have the same problem at $200,000 a year, so on and so forth.
I'm very sympathetic to people who, when making decent financial decisions, are unable to meet their basic needs. Poverty / under-earning like that just creates a constant stress that is completely debilitating and unproductive. It has a real psychic toll.
It's just difficult for me to imagine not being able to make $100,000 work, save for a bunch of kids. But after all, those are somewhat of a choice as well.
Housing to live near a job that pays 100K a year.
That's something a lot of people on salary don't get. Back when I was on W-2 and had much lower compensation than I nominally have now, I had my ducks in a row, taxes paid, a positive savings rate, and good credit. That hasn't been the case since I went self-employed about ten years ago.
If someone were to divide my annual revenue (less expenses) by 12 and distribute it to me on the 1st of every month, a lot of problems would be solved. But because that's not how reality works, I take a bath in late fees, interest, overdraft fees, no access to credit due to bad rating, etc.
Some of those things are more avoidable than others depending on the choices one makes, but that's not the point. The point is that W-2 and SE income are not equivalent. Unless you've devised some compensation scheme that is substantially similar to salary as a contractor, you can't afford anywhere near a $100k lifestyle as a consultant earning $100k+. There are many days I'd happily trade places with folks who get a lower, but steady paycheck every two weeks for doing more or less one job.
But in a way, you're making my point for me; because $100k in SE income is not the same as $100k in W-2 income, it requires special budgeting considerations, to the degree that I'd benefit from reading a whole book about it. :-)
Living in a high-cost city isn't necessarily a luxury. Many people who do would prefer not to, but cities concentrate economic opportunities and that is why people migrate to them. This is why urbanisation is a byproduct of economic development pretty much everywhere.
Case in point: I lived in Atlanta for ten years and recently moved back to Athens, a small university town about an hour and some change east. There's no question that it's much cheaper to live here. But if I wanted an actual job in my field, I'd pretty much have to live in Atlanta - that's why I moved there in the first place.
I'm fortunate enough to be self-employed and to no longer care, as the vast majority of my customers are out of state. But make no mistake, there are vanishingly few tech job opportunities here - and this is a fairly educated college town.
And as we know, IT is fairly democratic in the degree to which it can be done remotely. But if you specialise in finance, entertainment, fashion, big law, aerospace, or a variety of other areas, there are certain places you more or less have to be. The American economy is eminently decentralised compared to that of most countries, but still - the cities have the lion's share of white collar, professional middle-income jobs.
"The report, put out by Pew Charitable Trust, includes the results of surveys conducted in 2014 and 2015 to see how Americans were coping with what are referred to as financial shocks—those one-off expenses that crop up from time to time. Pew found that in large part, Americans’ ability to weather financial shocks is partially dependent on something that Americans still struggle to accumulate: savings." https://www.theatlantic.com/business/archive/2017/04/savings...
It really should not, if you've budgeted conservatively in the way that our grandparents generation did. For example, if you don't have 3-6 months of expenses in a savings account, short term disability insurance, long term disability insurance, and a term life insurance policy of 10x your annual salary, you're living a fairly high risk financial lifestyle. Again, if you budgeted the way your grandparents did you wouldn't have any debt except MAYBE your house, so a financial setback would almost certainly not result in more interest or fees, since you wouldn't be paying any interest to begin with.
You've accepted this false narrative that the banks have sold you on that being perpetually indebted to them is normal. It's not, from a historical standpoint. And you don't have to live that way.
Everyone is in a different financial position but instead of recognizing that and living a life you can afford, people get jealous of what their neighbours have or their friends are doing and pursue the same lifestyle regardless of if they can afford it or not.
I do not sympathize with someone struggling to make ends meet on $100K a year. That is a ton of money and if you have debt and bills you can’t handle then unless it’s just a result of horrible life circumstances, it’s most likely your own bad decisions.
It is also hard to be sympathetic given that $100k is substantially higher than the median income in many of these areas, and while not wealthy by any means, many people living a little closer to the median have a pretty decent standard of living simply by managing their finances wisely.
I have many friends in this situation. Too many people refuse to live a lifestyle afforded by their income even though it would be pretty comfortable if they did. My lifestyle, which is far from austere and in Seattle, easily fits into $100k income (though I'd probably have to cut back on the luxury a bit if I had kids).
I won't say this can't be true, but by experience casts doubt on trusting what people "feel".
For example, lots of people feel they struggle to attain homeownership. But homeownership rates are within 1% of what they were in 1980. Meanwhile, median house sizes have increased 50% since then (or 100%!, relative to household size).
Lots of people feel they aren't being paid enough. But median household income has increased ~25% over the past 40 years (50%, relative to household size). (Looking at household, not individual, child care has transitioned from one stay-at-home parent to one working parent + contracted child care and only the latter adds to "household wages".)
Lots of people feel that education is too expensive, but total scholarship money has exploded. In my home state of Florida, a 970 (Math + Reading) SAT and 3.0 GPA gets you a 75% scholarship to any state school. That is well within reach for most university-bound students. Or achieve a 1270 SAT + 3.5 GPA + 75hrs community service for 100% scholarship.
Lots of people feel cost of living is rising. And yet, there are 10% more people living in urban areas since 1980, which tend to be far more expensive than rural ones.
Sometimes I think all some people ask is to own a home and a couple cars in a good neighborhood with good schools in a big city, travel abroad, and go to private or out-of-state school for a few months salary of a hobby job (and obviously without ROTC) after buying the new $700 smartphone every year and continue that lifestyle into government-sponsored retirement. You know...do what their parents did, but without any of the drawbacks.
---
In reality, I suspect these feelings are grounded much more with keeping up with the Jones' (+ Facebook), rather than the objective quality of living.
It started when an Austrian software engineer published his entire spending, and where every cent of his taxes goes, in this post: https://www.reddit.com/r/dataisbeautiful/comments/7h2idb/wha...
Other users, employed in all industries, quickly responded, some from Japan https://redd.it/7h99vj , Seattle https://redd.it/7h6bsr , Brisbane, Australia https://redd.it/7h9gpe , New York City https://redd.it/7has76 , rural TN https://redd.it/7hbhe9 , London, UK https://redd.it/7h9tjf , a Major in the US Air Force https://redd.it/7ha2q0 , and another one from Switzerland https://redd.it/7hbehc
There’s dozens more posts, I can’t link them all, you can find the rest at https://www.reddit.com/r/dataisbeautiful/ – but many of them show how people can live very successfully on low wages, and others yet struggle with much more money.
I've posted this book a zillion times on HN, but "$2.00 a Day: Living on Almost Nothing in America" really changed a lot of my thoughts and feelings about what is going on in America today. Highly recommend reading it:
https://www.amazon.com/2-00-Day-Living-Nothing-America/dp/05...
https://www.theguardian.com/world/2017/dec/01/un-extreme-pov...
Is this due to housing cost? Student debt? Medical debt? Bad decisions? Good decisions that were invalidated by events? Who knows?
However, we live in an apartment and don’t have kids.
There is absolutely no way we could do kids and a mortgage with this debt burden without life going to hell. Once that debt goes away, though? Not a problem at all...for one kid and a cheap house. ($250k house, which is what we wanted anyway, as we aren’t fans of big houses)
Here's some mind blowing advice - stop buying useless ornaments that do nothing to elevate you or enhance your life in meaningful ways. People have been hoodwinked into buying junk and stand there teary eyed wondering how it all happened and why they're so empty inside. How they went so far but did so little.
This years black friday/cyber monday sales were extraordinary - because people are idiots.
It's not a mystery. Make conscious choices in your life and you won't be a victim. Someone making 6 figures is the last person anyone should feel sad for.
This is why lowering taxes is great.
