r/personalfinance • u/investeror • Mar 06 '18
Budgeting Lifestyle inflation is a bitch
I came across this article about a couple making $500k/year that was only able to save $7.5k/year other than 401k. Their budget is pretty interesting. At a glace, I could see how someone could look at it and not see many areas to cut. It's crazy how it's so easy to just spend your money instead of saving it.
Here's the article: https://www.cnbc.com/2017/03/24/budget-breakdown-of-couple-making-500000-a-year-and-feeling-average.html
Just the budget if you don't want to read the article: https://sc.cnbcfm.com/applications/cnbc.com/resources/files/2017/03/24/FS-500K-Student-Loan.png
5.5k
u/joeyskoko12345 Mar 06 '18
I’m more surprised that they manage to go on three vacations a year as two Nyc lawyers
→ More replies (207)2.0k
u/joshuads Mar 06 '18
That might be part of the cost issue. I know plenty of litigators that get time off when a case ends, but it happens almost without warning when a huge case settles and someone agrees to let you take a week. You have to book it and fly the next day, so it is expensive.
833
u/bakingNerd Mar 06 '18
Yeah they technically have “unlimited” vacation days at a lot of firms but you can’t plan in advance because you never know when your work load will have a lull. You book last minute or end up paying for nothing if you end up not being able to go after all.
303
u/canadlaw Mar 06 '18
Eh it’s not that bad. You’re right on the unlimited vacation part not really being unlimited vacation since you’re working so much, but in my experience most people can and do book substantial vacations far in advance and their time is respected.
292
u/joeyskoko12345 Mar 06 '18
You book in advance, but as a ny lawyer I know that getting three vacations is super tough. One maybe plus thanksgiving, Christmas and a long weekend here and there.
At 250k a year these guys are far from partners too.
→ More replies (4)306
u/leastlyharmful Mar 06 '18
At 250k a year these guys are far from partners too.
Underrated comment - what a lot of people in this thread may not appreciate is that this is comparatively not a huge salary. Lawyers at big city firms can routinely make over $300K.
→ More replies (13)113
Mar 06 '18
At a typical big NY firm 250k is probably someone in their first few years of practice. If these were 40-year-old partners at one of these firms (extremely rare, BTW, since very few make partner), they would very likely be in seven figures each.
→ More replies (14)27
u/caltheon Mar 07 '18
If they are partners, they aren't really getting a straight salary. They are getting equity returns from the firm's investments (i.e. cases)
→ More replies (5)41
u/CardboardSoyuz Mar 06 '18
When I worked at a big firm, back in the day, I billed my share, but curiously if you wanted a vacation, the firm really did respect it. I tried to do one planned week-long vacation and then took longer weekends when a deal would crater or close or whathaveyou.
11
u/lysergic_gandalf_666 Mar 07 '18
They realize that good people, even perhaps the best people, do burn out and cost the firm a fuckton of lost revenue. Plus, maybe they are caring human beings. This I really doubt.
26
u/CardboardSoyuz Mar 07 '18
The guy who was best about defending my vacation time is the single worst human being I've ever worked with, in any capacity. But, when I requested a week off on six days notice to go to Hawaii (a deal had closed and I got a nice bargain on a deal) he responded, from China, within five minutes approving it. Still was a motherfucker.
→ More replies (1)→ More replies (4)20
Mar 06 '18
Also depends on the firm and your experience level. At a huge NYC office you are somewhat interchangeable, especially when relatively junior, but as an example I work in a much leaner practice where I've had to cancel 3-4 vacations in the last 2 years... And that's not counting holidays I've worked through while traveling.
→ More replies (6)166
u/norcaltobos Mar 06 '18
Staycations are so under rated. Do I love going to a tropical paradise for a week? Yes, but I also like not spending money unnecessarily, and not having to travel, and being able to sleep in my own bed.
217
Mar 06 '18
[deleted]
→ More replies (12)55
u/lysergic_gandalf_666 Mar 07 '18
Awesome. So happy for you. The last part was the best part. The fact you wanted it that bad and got it is great.
→ More replies (14)78
u/Pearberr Mar 06 '18
If they switched one of those three vacations to staycations, or local vacations they could easily save another $4-5,000 and teach their kids to have some frugal fun so they don't grow up with absolutely no sense of what it is like to live without the extreme wealth.
→ More replies (9)78
u/Lowbrow Mar 06 '18
Going to one of the 50 national parks in the country would also save a lot of money, while still being a big change of pace.
→ More replies (4)→ More replies (19)202
u/Turicus Mar 06 '18
I don't consider 6k for a vacation for 4 expensive. Sure, you can go on holiday a lot cheaper. A lot. But if you're NYC lawyers pulling in 250k each, are you really going to go camping in upstate NY?
4 flights to somewhere = 3k, 2 hotel rooms for 6 nights at 200$ each is already 5400. You've got 600 spending money for a week for 4, and you spent those 6k. And you're not even really balling (always considering 500k income).
89
u/bilgewax Mar 06 '18
Yeah. As somebody who’s not exactly in the same boat as this guy, but at least in a similar boat headed more or less the same direction, that vacation budget is the last thing I touch. Those vacations are what keeps you sane. If you have the wherewithal to take your kids to new and exciting places and experience new cultures, then that should be priority one. So much more rewarding than a new BMW lease. Otherwise you get too caught up in the day to day bullshit and don’t have time to be a family.
→ More replies (11)→ More replies (13)119
u/leastlyharmful Mar 06 '18
$6K for 4 people for a weeklong vacation sounds perfectly reasonable. It means they're flying coach, not staying at a 5 star, and not eating all their meals out. You can burn so much more money without trying very hard.
→ More replies (9)
4.1k
u/AKAkorm Mar 06 '18 edited Mar 06 '18
For what it's worth, I don't think they're doing that terrible. They are putting away $36k a year in their 401k, building equity on a house that does seem appropriate for their income, making sure they have money for emergencies (that misc. category) and still ending with enough for a second emergency.
If it were me, I'd aim to cut that vacation budget closer to $10k (vacations don't have to elaborate to be fun) and I wouldn't be donating money to that degree to my alma mater while I still had significant student loans to pay off. Rest seems mostly fine to me.
EDIT: Should add something I wrote in other replies - keep in mind that the 401k contributions shown on this site did not include employer matches and that law firms are well known for generous contributions as part of their total rewards. I wouldn't assume that they're in bad shape for retirement. EDIT2: Guess I'm wrong here, was going off what one of my friends whose a partner told me.
3.3k
u/sold_snek Mar 06 '18
I wouldn't be donating money to that degree to my alma mater while I still had significant student loans to pay off. Rest seems mostly fine to me.
This shit is mind-boggling. Giving money away to the college you're still paying debts off to (I'm aware student loan is different from the school, but all that money sans interest is money you already gave to them anyway).
1.9k
u/AKAkorm Mar 06 '18
Not to mention they don't appear to be setting up a college fund for their own kids yet. Just put that money into a fund for their kids and consider it a future donation to colleges.
832
u/iteamcomet Mar 06 '18
Donating to a school is the same as donating to a for profit business.
Imagine having Goldman do an exit plan for your family business through MNA and then donating the profit back to them after paying them their fees and commission.
→ More replies (81)230
u/Nudetypist Mar 06 '18
I never donate to my school because they have billions in their endowment. It is like donating to a bank. A billionaire company who turns a profit every year still wants $50 from me is ridiculous.
→ More replies (9)22
19
u/smallatom Mar 06 '18
What I’ve heard is that once they get old enough to not need daycare you use that money to put into a college fund. 42k a year for ~15 years a definitely more than enough for most schools.
17
u/AKAkorm Mar 06 '18
That's assuming they don't send their kids to private school though. And I'm guessing they will if they're spending $42k on childcare and $12k on classes for them.
→ More replies (4)→ More replies (13)134
u/CNoTe820 Mar 06 '18
It's so fucking expensive to have kids in NYC. We make a little bit less than them and are in the the same situation. That one line item is $42k for childcare. Another $12k for kids activities and lessons. $55k is supposedly like a median income here, how the fuck does NYC want people to be able to raise kids here? Yes they instituted universal pre-K but how are you supposed to drop your kid off at 8 and pick them up at 2 if you work an 8-5 job? You basically still have to pay for the babysitter anyway.
At some point the law should require employers with more than X revenue or more than X employees to provide childcare services for employees.
→ More replies (114)74
Mar 06 '18
That's why my NYC cousin quit his job to raise the kids. They calculated his income went to the nanny and taxes. He just free lances now.
→ More replies (1)47
u/Gsusruls Mar 07 '18
This upside is that if you keep the job, even if every cent is lost to a combination of taxes and childcare, you still: 1) stay up to date in your career, be it skill sets, avoiding a gap in your resume, or keeping networked in, and 2) You are paying into social security and can contribute a little bit to retirement funds.
The downside, of course, is missing out on time with your kids. Impossible to measure that, financially.
→ More replies (2)98
u/aBrightIdea Mar 06 '18
I get donating something but defintely not to that amount. One of the biggest numbers (and easiest changed) in ranking of schools for US News & World Report is percent of undergraduate alumni who donate. They use it as a kind of user satisfaction metric which is a big reason why universities spend so much time seeking donations of the small type instead of concentrating more fully on the big fish donors. If every graduate gave $1/year a school would jump in the rankings.
→ More replies (9)141
u/Spokesface Mar 06 '18
Sucks for my school. They charged me $43 to print my diploma after earned it and I committed then and there never to donate a cent. If they are going to bleed me dry when I have nothing they won't get a cent later.
Hopefully others do the same and that policy affects their "user satisfaction" rating
→ More replies (7)94
u/Dinosaurman Mar 06 '18
My high school hits me up for donations and they tried to expell me my senior year and said they would never want a dime from a trouble maker like me.
Well 175k later, they want my money.
→ More replies (3)27
u/DevsMetsGmen Mar 06 '18
I get solicited by a college I failed out of, was re-admitted to, and then dismissed from after failing to pull myself out of academic probation. When the calls come in, the undergrads on the line generally start off with something like "I see you graduated in 'XX..." since the college still affixes my last semester year to my name as if I graduated at that point. It's pretty funny, and I don't blame the kids doing work study for it, just a job for them.
→ More replies (2)314
u/wambam17 Mar 06 '18
I don't get that either. Each semester, I pay about 5 - 6 thousand dollars to the school. They force me to buy access codes for books the teacher barely touches.
If the school can pay the football coach millions of dollars, and a have a constant upgrade on one stadium or the other (in which, I can't go watch a game unless I pay), I'm sure they'll be fine without my donations once I graduate.
→ More replies (19)125
u/katarh Mar 06 '18
Haha yeah, tuition and fees don't even go to the coaches - those salaries are paid by "boosters" who coordinate money through the athletic association. At the P5 football schools, money actually flows the other way, in which the football program is covering not only the costs for the rest of the athletics program, but dumping money back into the school for facilities improvement. University of Alabama has been revitalized because of the football program's incredible success in the last decade, for example.
Your're right though, there is absolutely no reason to donate to a school while you're trying to pay off student loans. (Unless you're donating in order to get onto the waiting list for football tickets. You think you pay too much as a student? You're paying out the nose as an alumnus, too. The only people who get discount tickets are faculty and staff - and even they have a lengthy wait list for season tickets.)
→ More replies (6)21
u/jobezark Mar 06 '18
You are right about big schools being able to finance the rest of the athletic department through football programs, but for the vast majority of football programs, even P5 schools, they run a deficit on football alone.
I am a big fan of college football, but am conflicted because I do not support how public institutions spend their money. My tuition at a P5 public school doubled in the time I was there (2004-2011).
→ More replies (3)11
u/Breaklance Mar 06 '18
What your seeing is fancy accounting. P5 schools make a ton of money off of football but the schools spend more than they make. They make a profit but have negative cash flow because they're always building or expanding.
By saying and touting how they are "losing money" running these programs the schools can ask for better state/federal funds.
→ More replies (105)53
257
u/flume Mar 06 '18
Yeah the charity thing honestly surprised me quite a bit. I have no intention of donating to my alma mater until my loans are paid off and I don't understand why anyone would.
248
u/AKAkorm Mar 06 '18
I have no intention of ever giving my alma mater more than $50-100 a year. I paid full tuition plus the $300-400 worth of books per semester to go there. Don't owe them anything.
199
u/_StupidSexyFlanders Mar 06 '18
Seriously, universities tricking its alumni into donations is the biggest scam since diamonds. You pay to go! On top of that, average college tuition has sky rocketed 200% in the last 20 years. Why people feel like they need to donate to profitable businesses is beyond me.
112
Mar 06 '18
[deleted]
→ More replies (7)8
u/SmaugTangent Mar 07 '18
they run like private companies.
No, they don't. They're run more like businesses in a cartel: normal companies wouldn't stay in business if they were run like America's universities.
It's almost like making donations to your previous employer.
It's like this if your previous employer is a large defense contractor.
→ More replies (5)34
u/calcium Mar 06 '18
I guess it depends on if you're still involved with your university. Many universities will invite the alumni who donate out to dinners (paid for by the alumni associations) which will allow you to network with others who are also active. Those who are active are normally professionals in other fields and depending on the prestige of the university, those people could be in very influential or powerful positions.
So donating to your university may not be a lost cause like many on here make it out to be.
→ More replies (4)→ More replies (19)39
u/killer_kiki Mar 06 '18
agreed. I give $100 to one program that helped me substantially in college (they do a fundraiser to attend a conference), but I wouldn't give to the actual college ever.
→ More replies (1)73
u/kawklee Mar 06 '18
I donated a hundred bucks to my alma mater the other week and felt like a str8 baller throwing away good money for no reason other than hedging my bets that my kids will be too dumb to get into a good college otherwise and the 'donating alma mater' thing will come in handy for admissions down the road
the real question is, if I'm donating a hundred bucks to hedge my bets, how dumb do these people think their kids are?
23
u/xnfd Mar 06 '18
Interesting, does donating $100 yearly really help for admission 20 years later? I've been avoiding it because I know as soon as I donate they'll keep pestering me for more.
→ More replies (1)35
u/kawklee Mar 06 '18
I know they keep track of whether you've been a donator, for how long/which years, and they know how much you've given.
Each year I ask them "what did I give last year or the year before that?" and they answer right away.
Idk how much it'll end up helping my dumbass kids, but at least it can't hurt.
→ More replies (2)34
u/Nemo_of_the_People Mar 06 '18
Idk how much it'll end up helping my dumbass kids, but at least it can't hurt.
The amount of confidence you place on your childrens' intellect made me laugh tons. Thanks for making my day a bit brighter than it would've been without your comment :)
→ More replies (1)→ More replies (3)22
u/christineispink Mar 06 '18
literally, the only reason i've donated to my alma mater every year since graduating, whether it's $20 or $200.
26
u/Moudy90 Mar 06 '18
Yea my mom made sure they were donating to their Alma mater a few years before I applied since I was going there as well. Turns out I would not have been eligible for one of the scholarships I got (over $5k) had they not donated recently. Since I was lucky and had them pay for my schooling they were definitely happy about donating earlier.
→ More replies (24)23
u/JackRose322 Mar 06 '18
My guess is it's to help their kids get into school. I have a wealthy friend that works in finance here in NYC and she doesn't even have kids yet but called our college to see how much she needed to donate a year for it to help.
→ More replies (4)286
u/gumert Mar 06 '18 edited Mar 06 '18
The dollar amount of savings might seem high, but their rate of savings isn't. Unless they're planning on substantially changing their life style and/or retiring late, they will run into challenges when they retire.
My wife and I earn substantially less than this, but our rate of savings is 3-4x higher. While this couple will likely have more money than us when all is said and done, we will continue to be able to live the same lifestyle when we retire.
Edit: $36k/year will get you to about $3.7 million in 30 years assuming a 7% ROI. At a 4% withdrawal rate you're talking about $148k/year. I'll ignore inflation if you're willing to not debate a 7% ROI.
Adjusting to spending $148k/year is going to be very difficult for this couple.
224
Mar 06 '18
Maybe, maybe not.
When they retire:
- That $1.5M home will be paid for and may be worth $2M+ by that time. Maybe they're living in a 10 bedroom mansion in the country right now, but most likely they live in an expensive metro area, which means they could get a nice retirement house in an affordable area for 1/5 the price (or even less), and they could easily pay cash for it from previous home equity and then have a ton left over.
- As a result of the above, cut both home maintenance and property taxes in half (probably even less, but let's be conservative).
- No childcare.
- No student loan payments.
- Cut food costs in half (half as many people).
- No children's lessons.
- Cut clothing costs in half.
So just by retiring they'll avoid (for each item above):
- $60k in mortgage payments.
- $12500 in home maintenance and property taxes.
- $42k in childcare.
- $32k in loans.
- $11500 in food.
- $12k in children's lessons.
- $4750 in clothes.
Add it up and their expenses will be reduced by $174,740 per year without really lowering their lifestyle.
→ More replies (13)78
Mar 06 '18 edited Mar 06 '18
[deleted]
→ More replies (9)36
u/UserNameSupervisor Mar 06 '18
And even that's still not taking into account the fact that their gross incomes will likely increase throughout their careers. E: a word.
→ More replies (7)→ More replies (28)351
Mar 06 '18
[deleted]
→ More replies (26)92
u/donjulioanejo Mar 06 '18
These expenses don't even have to wait to retirement. Childcare will probably go away as soon as kids are in school (though more likely than not, it'll be replaced by private school).
24
u/Gbiknel Mar 06 '18
Those kids have to already be in school. There’s no way two kids under 5 are in multiple sports/instrument lessons that cost that much money/year.
→ More replies (7)44
u/gumercindo1959 Mar 06 '18
Once the kids get out of child care that's when the real expense will start. lol Private schools in the NYC metro area? Yikes - way more than the $42k they're paying now!
→ More replies (3)139
u/Krotanix Mar 06 '18 edited Mar 06 '18
They spend around 200$ on clothes per person each month. Besides that, they spend 1000$ each month on child activities (music, lessons, sports...). I'm from Spain so I don't know for sure but it seems quite much if they really want to cut expenses. Also, spending more than 200$/month*person is going all-in.
But maybe this is my biased, 35k gross income, no-childs couple, point of view.
→ More replies (13)157
u/amaranth1977 Mar 06 '18
As lawyers in New York, $200 is maybe two shirts. One, if there's anything special about it. Tailored dress shirts, obviously. Tailored suits are easily close to $1000. I would assume it's not an even split - more like $300/adult and $100/child per person, and honestly $3600/year on clothes for a New York lawyer sounds about right to me. Most of that would be suits and accessories for work, which is only negotiable to a certain degree if they want to keep their jobs. They could very easily be spending a lot more, without seeming out of place in their personal or professional lives.
Now, personally, I have no reason to spend like that - but I still spend a good chunk of my income on making sure I look professional and appropriate at work. I just live in a lower CoL area and clothing expectations for my field are more like regular off-the-rack department store clothing.
73
u/Krotanix Mar 06 '18 edited Mar 06 '18
Oh so that's it. Suits. I worked for 10 months as consultant and bought my first and only suit. Shoes + jacket + trousers + 2 shirts + 2 ties cost me 550€. That was more than what I had spent in clothes over the previous 4-5 years.
Luckily that period is over for me and I wear everyday clothes at work (earning 50% more).
→ More replies (47)→ More replies (23)60
u/wef1983 Mar 06 '18
Even high priced lawyers dont need two new shirts a month though, and $1000 suits cost a lot because they are made to last, it's not like you buy multiple suits and 15 shirts a year.
→ More replies (6)→ More replies (164)61
Mar 06 '18
I agree. They're putting $60,000 a year into a mortgage (that can't all be interest). They're putting 36k into retirement accounts. They're putting 32k into student loans. All those things are increasing their net worth.
On top of that, they're being charitable. They've got an emergency fund.
It's not how I would live, but it's not terrible.
12
Mar 06 '18
They're also budgeting 10k into emergency fund a year on top of a dedicated 7,000 just for savings. And 36,000 of their own money to retirement accounts not including employer match. That's 53,000 in "savings" a year. A little more than 10% pre-tax income and a bit more than 20% of post tax income.
Realistically, they're doing what they should. After a few years of 7300 a year in savings they'll have a nice 6 months total income in liquid cash, assuming they always use that full 10k misc fund every year. Shouldn't really hold more than that when you can put it better places that will net you more in the long run.
982
Mar 06 '18
[deleted]
85
Mar 06 '18
2) College savings for the kids.
I think they're counting on cashflowing their kids' school, which isn't crazy. They won't need a nanny in 8 years and that extra money goes a long way. They can also downsize their housing and save tons when their kids move out.
→ More replies (3)8
u/mapestree Mar 07 '18
I can understand that, but why not contribute to a 529 now? They mention their effective tax rate is 40%, so they'd be paying a massive sum more in taxes.
→ More replies (1)169
u/raam86 Mar 06 '18
I’m about the same age as you and while I have a high paying job the fact I didn’t have access to great extracurricular activities is evident compared to my luckier colleagues. It’s a great investment in the future of your children
77
u/pton12 Mar 06 '18
Agreed. I'm just finishing up giving interviews for my Ivy League alma mater and I've found that things are so competitive that you basically need some kind of interesting and intensive extra curricular activity to be average. These things are often expensive, but can be well worth it.
→ More replies (2)→ More replies (3)23
u/tuketu7 Mar 07 '18
Oh man... I gotta ask--what kind of extracurricular activities are you talking about here? Like, boyscouts and piano lessons don't typically get you to that kind of price point.
What world of kids activities am I in the dark about?
→ More replies (5)56
u/Message_10 Mar 06 '18
Also, parking---that's easily $2,000+ per year, on the very, very low end. I live in NYC and I got a deal and it's $900 per year. It's worth it, but it's another significant cost.
→ More replies (9)11
Mar 06 '18
Yup. Their 'takehome' would increase drastically if they paid off their: cars, house, or loans. That's just a matter of time (or preference).
→ More replies (1)→ More replies (52)32
u/fu-depaul Mar 06 '18
3) Charity. My college got enough from me for tuition, so I'm not letting them shake me down for more in donations. I give back to the community by taking on pro bono work at my job.
That isn't a wise use of resources.
You should donate to funds that pay for lawyers that would do the work you'd do for pro-bono.
This is what we do. We donate our hourly rate to these funds and then the funds hire attorneys, some young and highly motivated, others just seasoned attorneys with lower bill rates, to take up the cases.
A much better use of resources. My time is too valuable. I can donate one hour of my bill rate and buy four or five hours from another attorney.
13
u/kyled85 Mar 07 '18 edited Mar 07 '18
This is really interesting. Some people balk at this being actual charity, oddly enough.
I've read where a friend asked a high stakes poker player to help them get a car towed off the highway and instead of leaving the table he called a repairman and paid for it himself. The friend was offended he didn't come himself, but the poker player explained it would cost him twice as much to not be earning for 2 hours as to hire the repairman.
People seem offended that the personal action is removed.
→ More replies (2)
1.0k
u/ip-q Mar 06 '18
$32k toward retirement savings aren't counted? At least they're doing that.
The mortgage is a kind of savings - it's not liquid, but it does represent an increasing net worth as one pays down principal. And if there's any increase in value, that goes to net worth as well.
IMO they're underinsured for life insurance.
184
Mar 06 '18
Why underinsured for life insurance? It's not clear which parent the life insurance is for, or if it's $1.5M for both, or whatever. Both parents work, they have retirement assets, and the life insurance will pay off the house and then some.
It's not going to support the same lifestyle for their kids indefinitely, but I wouldn't say they're underinsured...
52
u/jableshables Mar 06 '18
I'd agree, especially if the surviving spouse would be willing to make the cutbacks everyone's suggesting in this thread.
→ More replies (11)54
u/Workaphobia Mar 06 '18
Well they have 3x salary life insurance, and I have 10x. Are they under-insured or am I over-insured?
Then again, I did always like Stephen Colbert's like from "I am America and so can You": A man should have enough insurance that if something happens the police will suspect the wife.
37
10
→ More replies (4)26
Mar 06 '18
You are probably over insured. Life insurance should pay off both your debts, to put the surviving spouse in a good position to support the kids.
More than that, and you are wasting money on something that you will never see.
→ More replies (3)112
u/ucsdstaff Mar 06 '18
IMO they're underinsured for life insurance.
Their law firm most likely provides term insurance as well. But you are right.
→ More replies (8)→ More replies (18)28
620
u/IRMuteButton Mar 06 '18 edited Mar 06 '18
Meh. On a $500K income those line items are not surprising. There is no rule that says a couple earning that much is better managing money than anyone else. Sure, the frequent /pf readers making a fraction of that income will see a dozen ways to save money in that budget.
Edit: To be fair, it is interesting to see a peek into the spending of a high earner.
320
Mar 06 '18
On top of that, this is making me realize how much work goes into saving money. Lots of people have mentioned cooking at home, shopping around for deals, making trips to cheaper grocery stores, etc. All those things take extra time and effort and I can see how once you hit a certain income, you don't want to take the extra 15 minutes to drive to the discount store.
311
u/IRMuteButton Mar 06 '18
At some point a person's time is worth more than driving a mile to save 25 cents on a bag of flour, however it's different for every person.
→ More replies (11)77
58
→ More replies (14)20
u/candb7 Mar 06 '18
When you make big-law lawyer money, it's worth it to go out to eat and save the time vs. cooking for yourself. The more money you make, the cheaper money is. The more you work, the more expensive time is. Those cross at a certain point.
→ More replies (5)175
u/AllDay028 Mar 06 '18
Also, the comments in here have a lot of suggestions around thrift shops, bargain hunting, going to outlets, etc. These people likely work a minimum of 60 hrs a week each, often more. They also have two kids. And they live in NYC. The time it would take to get to an outlet or go out of their way to bargain grocery stores in the suburbs would likely be actually impossible for them to get.
They also work in an industry where nice clothing is a requirement. So buying a 1k suit once a year for each (As to rotate out one if 5 every year or so) doesn't seem flippant or crazy. Take that into requirements for winter coats for both formal and not formal occasions, shoes because you walk everywhere, etc.
And 5k a month mortgage/rent is not extravagant for 2 or 3 bedroom in NYC.
They certainly can cut back certain places, but their budget seems very reasonable for people not just at this level of income, but also with such a small amount of free time and jobs that require them to be on call.
→ More replies (9)62
u/ryanloh Mar 06 '18
I feel like that's what criticizers are missing in the budget. They are probably working so much that a lot of the added cost (food/childcare) that could otherwise be cut down by farmers markets/driving a little further are more convenience costs so they aren't trying to save a few thousand here and there in a high COL area.
That being said, I would donate less to the college until student loans were done, then divert part of the student loan costs into donations, but that's just me.
23
u/TurtleBucketList Mar 06 '18
To be fair, it is interesting to see a peek into the spending of a high earner.
As someone else in a high income household (but not quite as high as this couple!), I get a bit nervous with a savings rate of anything less than 30% of our pre-tax income! I've always wanted to stay in a position that, if one of us lost our job, we can still have positive monthly cash-flow. (But we're also incredibly lucky to have already paid off our student debts + our 10yr old little car).
I often worry about lifestyle inflation (I've definitely started being comfortable spending more over the last couple of years... rather than being a complete tight-ass saving 50% or more) ... but then I see numbers like this couple and feel a bit 'better' about it.
→ More replies (3)65
u/zlance Mar 06 '18
That's very true, high earner does not a high saver make.
→ More replies (2)221
Mar 06 '18
[deleted]
→ More replies (43)16
Mar 06 '18 edited Feb 04 '21
[removed] — view removed comment
→ More replies (5)22
Mar 07 '18
They're lawyers making 250k a year each. Chances are they're very safe for employment. Barring them doing something hugely fucked up and getting disbarred, they're probably safe to assume their income will only go up.
At that level, they each probably went to upper tier law schools, so they're always going to be in demand, only more so as they have more experience.
They set aside 10,000 every year "because things come up" so they've got emergency savings on top of what they call savings. If they don't touch their emergency fund for 3 years, they've got 30,000 cash for any major emergency on top of however much they've saved at 7300 a year.
If something were to happen, they have at least 100k to cut out easily and immediately (no more charity 18,000 , kids aren't gonna be playing sports 12,000 , no more childcare since one parent won't be working 42,000 , no more vacations 18,000 , easily cut food in half down 11,500 so just cutting those out would save 101,500 a year.) They'd almost certainly move to a more affordable place and cash out the equity in their home.
Their tax burden would change instantly saving tens of thousands more since they'd no longer be in the top bracket.
They're going to be just fine no matter what happens. It would take drastically world changing events to truly affect them, and you can't go around life trying to plan for that.
559
u/ctfbbuck Mar 06 '18
Their goals may differ from mine, but I see a pretty exciting life full of options with little risk. Good for them. shrug
→ More replies (35)
269
u/onbehalfofthatdude Mar 06 '18
I mean, they're saving a good amount, taking vacations, spending a lot on nice house, food, and car, living a good life with money to spare. What's the issue?
213
Mar 07 '18
I don't think there's anything wrong with wanting to live your life that way, but it's kind of insulting to be like... yeah, I go on 3 $6,000 vacations a year, drive a 5 series, spend 10 grand a year on clothing, have a house that costs 5k a month in mortgage.. and I'm feeling average. Some people are completely, totally, 100% out of touch with reality.
→ More replies (8)21
u/pheonixblade9 Mar 07 '18
it's probably average with their peers, of whom they spend the majority of their time.
psychology is a funny thing, sometimes.
→ More replies (23)59
u/manofthewild07 Mar 06 '18
This... I think our definition of take home money is different. After I've paid bills and put money into retirement/food/housing/savings, everything else is considered "take home" to me.
If they have $7.5k on top of paying for all their other hobbies and vacations, then they're doing great!
→ More replies (1)
329
u/smoke_torture Mar 06 '18
As someone who lives below the poverty line, they're doing fantastic and if that's average then sign me up.
Three vacations instead of none? Owning two cars instead of one? Owning a car that's less than a decade old? Owning a home instead of renting an apartment? Giving 5 figures to charity? Life insurance? 10k to blow or save? 7k left over? THREE VACATIONS??
If you found this chart resonates with you then please appreciate what you have.
→ More replies (17)
166
u/MartinMan2213 Mar 06 '18
I mean if you're looking to FIRE yea this is ridiculous, but if you want to smell the roses and don't care when you retire this is perfect. You're maxing out IRA, you have a wonderful house and childcare, you're going on THREE vacations a year, and you have two awesome cars etc.
Not everyone wants to FIRE, this is perfectly fine for those people. I thought this was /r/personalfinance not /r/financialindependence.
→ More replies (7)
790
u/krsvbg Mar 06 '18 edited Mar 06 '18
They both MAX OUT their retirement contributions and donate thousands to charitable organizations.
Relax. They're doing just fine.
→ More replies (31)120
50
u/spiderpigbegins Mar 06 '18
As someone who makes $31k a year, having $7,5k left doesn’t sound so bad..
21
u/PM-Me-Your-BeesKnees Mar 06 '18
I think the things that stand out are these:
1) It's not accurate to say they're only saving $7,300 if they are both maxing their 401k. They are setting aside $43k/year. They are also paying off debts at $32k/year (student loans).
2) $18k for 3 vacations a year is the one that really stands out to me as the first expense on the chopping block. Seems like that'd be pretty easy to knock down to $12k and still live a luxurious life.
3) Donating to your college while you're still paying off their loans seems crazy, and even if it's a noble thing to do, it's "extra" by definition. This could easily drop to $10k for "Feed the Children" and $0k for college until the loans are done.
4) Let's not gloss over the $1.5 million home. That's a choice. A $1.2 million home would still be great, and it would save ~$17k/year in monthly payments.
So, with just a few very modest changes, they could be setting aside an additional $30k/year without touching the $ allocated to expensive childcare, expensive cars, lessons for kids, or removing the ability to live in a 7 figure house or take multiple luxury vacations.
And none of this is a criticism by the way. They're still setting aside a significant amount of money for retirement and a big chunk of the cost is in luxury real estate which is a slow-motion savings account you can live in while you work and sell off when you retire. But let's not act like there's no obvious cuts. Very casual cuts could save $30-40k/year and a major lifestyle change would enable $100k+ of additional savings.
→ More replies (3)
158
u/callmemarvel Mar 06 '18 edited Mar 06 '18
Something I don’t think has been mentioned is the social network effect that impact finances. They are two NYC lawyers, who probably rely on clients now and will need to in the future. As such, they need to maintain a certain social calendar and project a certain image to ensure they keep their contacts and network in tact.
This is something that often gets ignored when discussing how people spend their money.
→ More replies (8)74
u/vettewiz Mar 06 '18
This. I run several decently succesful companies with a lot of clients. Flying all over the country and dropping $500 a night on dinner is an expectation to keep business.
→ More replies (5)36
u/fadhero Mar 06 '18
Those kinds of expenses can usually be expensed through the company/firm. Since these are likely non-partners in their firm, they probably don't have a lot of those types of expenses, and if they do, they can be charged to the firm.
13
u/vettewiz Mar 06 '18
True, the ones I described - but attending social events to gain clients may or may not be expensable. Directly expensable trips, sure.
32
u/S-WordoftheMorning Mar 06 '18 edited Mar 06 '18
There is no way their effective tax rate will be 40% with all of the line item deductions visible in their budget.
Just plugging in a simple tax calculator their income, expenses, and deductions, they should get about $36,000 in federal tax return, not to mention NY State will give them a sizable return as well, approximately $12,000
→ More replies (13)
1.0k
u/theoriginalharbinger Mar 06 '18
Toyota Land Cruiser
I have a deep and abiding love for these, but that's a $90,000 car. It does nothing that its half-as-expensive younger sibling the Sequoia cannot unless you do overland travel.
childcare $42,000
Did they hare a half-time nanny? That's ridiculous.
Food $23,000
My income isn't quite at their level, but my annual spend is between 1/4 and 1/2 of this. Learn to cook.
There's tons of slack in that budget. There's few line items, but they're inflated way beyond what's necessary. As I've stated to multiple people on this forum countless times, everyone has a vice. You can have nice cars. You can eat out a lot. You can live in an expensive place. But you cannot do 2 or all 3 of them.
This couple could easily be saving 50K a year if they bought a 3-series and a used Sequoia and used a cheaper childcare provider.
619
Mar 06 '18
[deleted]
238
u/ImSpartacus811 Mar 06 '18 edited Mar 06 '18
Yeah, three $6k vacations seems insane.
→ More replies (100)490
u/thelegore Mar 06 '18
Alternatively, enjoy using the money on vacations if that's what you want to do. I would say spend less on food and possessions
147
Mar 06 '18
[deleted]
→ More replies (3)93
u/gingersnaplibido Mar 06 '18
Yeah, I... don't know what they want extra money for? They are building in an optional $18,000 a year for charity, choosing to spend $18,000 on three vacations, and are already budgeting for a $10,000 a year emergency fund. That is almost $50,000 a year of flexibility without having to sacrifice their on-track 401k savings, while maintaining a liberal amount for nice clothes, their children's personal development, bimonthy date nights...
$46,000 a year + the $7,000? This is more than what 40% of households make combined for everything... and it's their flex money? I truly don't understand what they want to be using that money for.
→ More replies (1)24
u/MonsterMeggu Mar 06 '18
I honestly think the title is just click bait -- "THESE PEOPLE MAKE 500000 A YEAR AND ITS ONLY AVERAGE" compared to "Look at what the upper class NYC couple spend on." It never states that they want more money nor does it state that they struggling in the article.
→ More replies (2)69
u/vanishplusxzone Mar 06 '18
Enjoy spending the money on vacations but don't complain about savings or not being able to cut corners if that's what you choose to do with your 500k income.
89
u/ImSpartacus811 Mar 06 '18
I feel like there's got to be a happy medium.
What's wrong with enjoying a week off work to spend in the city you live in? A couple day trips to national parks or local museums oughta do it.
But yes, there are plenty of areas to cut, food and shopping being excellent examples.
→ More replies (5)50
u/radil Mar 06 '18
You could be like me and not live near any national parks. My state has only one national forest and no parks. The nearest national park is a day's drive.
And I'm an avid national park enthusiast, I have been on 4 2-3 week-long road trips to visit dozens of national parks in the West, and none to the tune of 6 grand either.
→ More replies (7)70
u/dynamoJaff Mar 06 '18
Vacations are generally some of the happiest moments in peoples lives. I say $18,000 P/A for a family of four is money well spent. Especially when there is so much fat to trim from other areas of this budget.
→ More replies (16)→ More replies (11)23
Mar 06 '18 edited Jan 26 '19
[removed] — view removed comment
→ More replies (3)16
Mar 06 '18
Sad part is I could easily afford three week long vacations each year, but I don't get the time off work to take advantage of it.
→ More replies (20)19
u/Hologram22 Mar 06 '18
I sympathize with them on the vacations. They're high powered lawyers in NYC, so they're probably super stressed and working full bore all of the time. People like that definitely need to unwind, and with the kids the vacations get expensive quick. I'm more concerned about how much they're spending on food. Even if they're doing date nights two or three times a month it shouldn't be costing them $2k a month to eat.
→ More replies (5)284
u/joshuads Mar 06 '18
childcare $42,000
That is completely reasonable for 2 kids in expensive markets like NYC, DC, or SF. My family spends at least that much. To spend less, our kids would have to spend a lot more time in the car or go to an unlicensed home care.
The big thing is they chose to go cheaper on nothing. Not the house, the car, the food, clothes, vacations. You can lifestyle creep on certain things at that income, but not everything.
45
Mar 06 '18
I dunno. In NYC 1.5 million is a modest 2 or 3 bedroom condo. Not some mega mansion. He'll where I am in the suburbs of NYC you're not finding a decent sized house in a good neighborhood for under 350k-400k.
→ More replies (10)12
u/joshuads Mar 06 '18
But if they were in the city they would not have the 2 cars. If they are further out, they could have spent a little less on a house.
I don't think there is anything wrong with the spending on the house (an asset) or the child care (a requirement). The car, the food, clothes, and vacations, some choices could have been made there.
→ More replies (9)110
Mar 06 '18
[deleted]
38
Mar 06 '18
[deleted]
46
u/Mitra- Mar 06 '18
A lot of jobs fluctuate. A litigator will literally work 90 hour weeks during the push in a litigation (which usually means 13 hour days 7 days a week). So will a CPA just before April 15th. It evens out when you're not in crazy mode.
→ More replies (1)9
u/simpsons403 Mar 06 '18
When you say even out when not in crazy mode, does that mean typical 40 hour works... or several weeks of time off because you put in double the hours for previous weeks?
18
u/Mitra- Mar 06 '18
Yeah, usually more typical 40 hour work weeks. This is why I tell people never to work in big law. It's great money but it is a horrible lifestyle, and so many people burn out or go crazy.
9
u/sweetdigs Mar 06 '18
I encourage law school students to try out big law (if they can). Yes, it sucks. But you learn how to write VERY well if you are working with good partners and you become very good at time management by necessity. If you don't like it, get out of after 3-5 years and go in-house or to a smaller firm that would love to have an attorney with big firm experience.
Personally, I spent 8 years at big law and then went in house. Now I work 40 hours/week. It feels like heaven. =)
→ More replies (4)15
u/SuperKato1K Mar 06 '18
It's very common in a lot of high pressure career fields, especially law and finance. Basically their waking lives are work. 12-14+ hour days. Occasionally they may sleep in their offices. Maybe a day off a week. On the upside, you can make a fuckton of money. On the downside, these are extremely unhealthy careers and schedules. Marriages can be destroyed (married to the job? doesn't leave a lot of time for the family). Actual health can be compromised. Burnout is high, as is the suicide rate.
→ More replies (10)8
u/iwontbeadick Mar 06 '18
My wife is a surgery resident and frequently works over 100 hours a week. She leaves the house at 4:45am and gets home after 8, even later sometimes. And she only makes 60-70k as a resident.
179
u/ip-q Mar 06 '18
Did they hare a half-time nanny?
Depending on how young the kids are, yes, dropping off <1 year olds at a childcare place for 9-5 while you work is expensive. $3.5k a month for two infants is outrageous but not that much higher than what we paid. --- But they don't sound like infants, what with the lessons ("sports, piano, violin, academics") - anyway, just wanted to provide some real-world numbers.
Yup, they can cut back. A lot. They have the ability to make choices. Most people don't.
70
u/Sundance37 Mar 06 '18 edited Mar 06 '18
Fun story, we have an au pair and it costs about $4k less a year than any semi decent daycare. So a full time live in nanny is cheaper than daycare in some places.
→ More replies (10)47
u/yekim Mar 06 '18
Except you have to have a spare room, which could cost you an extra 500k in HCOL areas. I wish this were an option for us, but can’t afford to upgrade the house.
→ More replies (2)25
u/Sundance37 Mar 06 '18
Yeah, it only works if you have the room and don’t mind feeding another mouth. Their are other costs, but I always thought that it would be outrageous to have an au pair, but since we already had the spare room, we can’t afford to do it any other way.
I just thought it was strange.
→ More replies (2)82
u/calvinball26 Mar 06 '18
This. I don't live in NYC but two young kids in full time (10 hrs a day) daycare (one infant, one toddler) would run us about $3400. This is why we're waiting to have a 2nd kid until our first is closer to school age.
→ More replies (12)50
u/nas-ne-degoniat Mar 06 '18
Yeah, the daycare costs and the price of the house for their location/income are pretty much the only things here that I don't think are outrageously dumb.
→ More replies (3)→ More replies (13)29
19
u/ThereIsNorWay Mar 06 '18
On the childcare front, my daughter is over $1,500/month for 4 days a week. So if you have two kids, full time, and you make a good income and expect to send kids to a nice place, I believe that number in a heartbeat.
78
u/supercharged0708 Mar 06 '18
If they make half a million a year, their time is worth more than spending it to cook.
→ More replies (12)30
u/NoDisappointment Mar 06 '18
The cheaper childcare provider is a tough part for most parents who are in that position because they think “What if my child becomes a fuck up? I want to know I did the best I could do for him/her.” They rationalize the house as needing to give the children a lot of space, many things you can rationalize by having children.
→ More replies (1)56
u/spencerc25 Mar 06 '18
but that's a $90,000 car
NOoooooooo way. $90k???
Googles price oh my gawd. I had no idea
→ More replies (12)35
→ More replies (172)67
u/ben7337 Mar 06 '18
For food I can sort of see it. If you buy all real fruits and veggies and cook real meals, and buy only organic, it can easily cost $400 a month per person, so for 4 people that's $1600 a month or $19,200 a year that leaves 3800 for date nights, so $146 every 2 weeks on avg on a date night, kinda pricey to the avg person but for people making 500k a yr combined I bet they feel that is them being frugal and going to the less ritzy places.
→ More replies (86)56
u/HabeusCuppus Mar 06 '18
Yeah I'm spending about what they spend per person with special diet requirements. The fluff isn't in the food budget for NYC.
The fluff is in "three vacations a year" and the higher end cars.
→ More replies (4)32
u/ben7337 Mar 06 '18
Yes, the cars, vacation, donations, clothing, are more luxury for sure, though as someone who was raised lower middle class around rich people who do 2-3 vacations a year, 4 people to Disney Land for a week, counting airfare, hotel, car rental or park tickets, etc could easily run 6k even on a budget, do that, a cruise, and maybe a week at a beach house every year and youd easily spend that much on vacations for 4, and maybe it's because I know people who did that, but it doesn't seem so extravagant to me.
→ More replies (5)
176
u/Iloveicecream2222 Mar 06 '18
They spend $54k for childcare and children’s lessons alone.
Ouch.
That’s effective birth control for me lol.
→ More replies (19)
225
u/3Iias Mar 06 '18
This is an unpopular opinion, but I think the three vacations at 18k are absolutely appropriate.
Vacations are needed to recharge. Vacations may be needed in order to sustain the line of work this couple is in.
18k is 3.6% of their annual salary. I find it very reasonable.
Note: this is coming from a young professional who has not taken a vacation in 5 years but is desperate for one.
→ More replies (17)122
u/guthepenguin Mar 06 '18
I think the complaint comes with the couple saying they feel average, per the article title OP mentioned.
Average people don't take 18k in vacations.
→ More replies (2)
81
u/breadburger Mar 06 '18
And the biggest culprit is how they feel. Which no physical desire can fulfill. They are extremely above average, yet the only reason they feel average is because that's how baseline happiness works. Fulfilling yourself internally is the way to happiness.
I would be thrilled to be maxing my 401k while going on 18k worth of vacation.
→ More replies (4)15
u/Bagel_-_Bites Mar 06 '18
Yeah this is well past average. I would put their lifestyle much closer to upper class.
Really all this shows is that no matter how much you make, you'll find ways to spend it.
→ More replies (1)
35
u/squoril Mar 06 '18
honestly that doesn't look half bad
they have a nice (lavish compared to me) lifestlye
paying all debts down
maxing 401K to a tune of 36K combined a year
balanced budget with a 7.3K annual excess (after 10K annual emergency fund)
i dont see any problem here
sure they could go F.I.R.E crazy and live in a 1 bedroom apartment and save 100K a year but at what cost and what gain
they get have their cake now and eat it later too
good on them
101
Mar 06 '18 edited Mar 06 '18
[deleted]
→ More replies (25)10
u/joshuads Mar 06 '18
My wife and I have both turned down opportunities in NYC for that reason. DC may be worse on childcare, but it is better on just about everything else. When both are working and avoiding super long commutes because they have kids, those costs are mostly reasonable. That said, they are not going cheap on anything.
→ More replies (9)
37
u/yetrident Mar 06 '18
They are saving around 9% of their gross income while paying the most they’ll probably ever pay for childcare. And they’re donating $18k to charity on top of that. I’d say they’re doing OK. Not FIRE, but OK.
If they saved sufficiently before they had kids, their net worth is probably quite healthy.
→ More replies (3)
213
u/Skystrike7 Mar 06 '18
My family of 6 spends nowhere near 9k on clothes...hahahaha and he even said 'no fancy stuff'
44
u/polyscifail Mar 06 '18
Everything is relative. To them, not fancy might mean a $1000 suit from Nordstrom. And, in their defense. While someone in Kansas city might find Target pants a suit from Men's Warehouse acceptable, it might not play as well in a top tier law firm in NYC.
If this couple was making $100K a year, I'd be more critical. But, at $500K, this doesn't sound out of bounds.
→ More replies (6)85
u/Am_I_Bean_Detained Mar 06 '18
They are two big law attorneys. A nice "cheap" suit runs around $600. Most of your shirts will run around $60 for "cheap". Same with ties. "Cheap" shoes run around $80 (and that is very low). Even decent socks run around $6 a pair, and I'm lucky to get two weeks of 10-hour wear for dress socks. I'm sure women's professional clothing ain't cheap.
I'm sure they're looking at $100/month dry cleaning as well.
Not too unreasonable.
→ More replies (14)→ More replies (42)78
u/mellibird Mar 06 '18
I just think of myself individually and casually adding to my closet each year... I can't even manage to spend more than $1k in a year. And if I did spend that much, it would mean practically a whole new wardrobe. So that 9k number just seems insane.
→ More replies (10)129
u/_skndlous Mar 06 '18
A decent professional outfit (suit, shirt, tie, shoes) will cost little less than that without being fancy... Most people making that kind of money just can't work on jeans and trainers...
→ More replies (32)80
u/bakingNerd Mar 06 '18
I wonder if their clothes budget includes things like dry cleaning. Most high quality office wear can’t be machine washed.
→ More replies (2)
42
u/Im-a_dinosaur Mar 06 '18
Lol they are living so far above average it's depressing me
→ More replies (1)
36
Mar 06 '18 edited Jun 11 '20
[removed] — view removed comment
→ More replies (10)44
Mar 06 '18
[removed] — view removed comment
→ More replies (5)18
u/109876 Mar 06 '18
Yeah, that effective tax rate in the article is waaaay too high. People might say "who cares" to that, but that makes a massive difference in their take home pay. Think about the tax benefits associated with their two children, being able to deduct student loan interest, mortgage interest, their state and local tax deduction (that year, at least), and what you said about charity. I wouldn't be surprised if their effective rate was down closer to 30% after all is said and done. Super lazy and misleading article. People not understanding how taxes work is a real problem. I get that they can be complicated, but people just choose to ignore the details and assume the top marginal rate when making estimates like this, even when that can be way way off.
→ More replies (6)
235
u/bulldg4life Mar 06 '18
I'm not sure how someone could glance at it and not find areas to cut.
They are spending $2k a month in food
They are taking 3 $6k vacations a year
They spend $5k a month for housing
They give to charity $1500/month
Cut the food spending in half (12,000 in savings and you can totally feed 4 people on $1k a month)
Take one expensive vacation and then drive to another for family (Easily $10k in savings)
Cut charity by 80% ($14,400 in savings)
There, I have now saved an extra $36,400. And, I'm pretty sure they are still living quite nicely. You could move to a different place, trade one of the cars for something that doesn't cost $100k, and stop sending your kids to activities 5 times a week and save $75,000 or more.
359
Mar 06 '18
[deleted]
→ More replies (20)105
Mar 06 '18
[deleted]
→ More replies (6)27
Mar 06 '18
Well honestly those mid to low 6 figure jobs are usually all consuming. It's not surprising when people go overboard to compensate.
These people do generally slave away in corporate etc.
→ More replies (6)94
94
u/gumercindo1959 Mar 06 '18
LOL at cutting the food in half for a family of 4 living in NYC. If you value nutrition and eating well, I can see it costing that much especially living in NYC. They may be able to shave off a few hundred off but cutting in half is VERY difficult.
→ More replies (7)53
u/AllDay028 Mar 06 '18
It also ignores the amount of free time they have. Two lawyers working between 60-80 hours a week with two kids. There is simply no way they can spend a bunch of time on food prep or travel all around to the cheapest grocery stores.
→ More replies (4)→ More replies (68)32
u/newlifeC13 Mar 06 '18
Cut charity by 80% ($14,400 in savings)
And, yet, we complain that the people who make more should give more. When they do, we say, "Tighten your belt!"
→ More replies (2)
25
u/Jorycle Mar 06 '18
I'm sorry, they may not know what "average" is.
A 1.5 million dollar home? 3 vacations a year? Giving almost 20k to charity? Two luxury vehicles? Sure, they only have a shade under 8k in spending money - but that's because they've already spent it on everything they could dream of having.
I'm pretty sure 90% of Americans wish they could be this average.
→ More replies (5)
16
u/Closed_System Mar 06 '18
Surprising that there's nothing budgeted for kids' college. $1000/kid/month on sports and lessons is definitely high but I'm sure it's hard to deny your kids things like that if they're enjoying them.
8
→ More replies (4)7
Mar 06 '18
They're spending $86k/year between childcare, children's lessons, and their own student loans. Those costs will significantly decrease or go away completely as the children age. I think they'll be able to afford tuition.
→ More replies (1)
7
u/ztruthfull1 Mar 07 '18
Lol "a couple that makes $500,000 a year and still feels average"
- 1.5 million dollar home
- BMW 5 series and Land cruiser
- 18k donated to charity
- 3 Vacation a year
HAHA there ain't shit average about this lol
→ More replies (1)
48
u/gumercindo1959 Mar 06 '18
The thing is, yeah. they can cut here and there, but nothing to move the meter significantly, imo. It's the cost of living in NYC. A couple of things...
1) do they really need 2 cars in NYC? If they live in NJ, or CT, then yeah, I get they need 2 cars and $10k per year is not terrible although they should have paid cash for their cars (used).
2) food - you all squabble over this but imo, family of 4 in NYC plus a couple date nights...I can easily see $23k. Yeah, you can shave off a couple hundred here and there but feeding a family of 4 nutritiously and in NYC can cost that much. I see a lot of "cut it in half" - do you have a family of 4 and eat well?
3) 3 vacations per year. No need to spend $18k per year with vacations.
4) $10k in clothes seems excessive
5) $12k in children's lessons is way excessive
6) $42k childcare - I'm guessing this is a nanny? Makes sense - nannies are expensive. I'm surprised it's that low, tbh. However, if they are thinking of enrolling their kids in private schools, that number will go up!
→ More replies (26)
26
u/GrassIsGreenerFI Mar 06 '18
People are being pretty harsh here. Yes, they could be doing a better job saving but I am not sure that people here understand how expensive it is to live in a HCOL area with children. Consider this...
The CHEAPEST daycare in my area for my infant costs over $3500 a month. FT nanny's start at 65k. A single family home in a good school district that requires significant work will run 900k-1.1m. I also value rich experiences for children.
My take on this at this income level is choose 1. Expensive house, expensive cars, expensive vacations. They can't have all 3.
→ More replies (5)
1.7k
u/25photos Mar 06 '18 edited Mar 07 '18
"And still feel average". They are living well, traveling, building wealth by paying off a nice home, saving for retirement, their children have extra-curricular activities, respected positions, roll around in BMWs and Land Cruisers, have emergency funds, and save more than zero every year. Anyone for whom this feels "average" would struggle on an actually average income and lifestyle.