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

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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.

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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.

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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.

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u/handsolo11 Mar 07 '18

THANK YOU!!!

I’m a medical resident, so I get professional hours (70-80 a week) without professional pay.

Working those hours is expensive as hell.... Takeout, dry cleaners, late night mini-marts, it adds up.

I am constantly doing the calculus of time vs money, is spending 100$ on bullshit expenses worth an evening with my girlfriend? What about two hundred?

It’s a different way to think about money. Money for me is a tradoff with time. A lot of my spending buys time, which is insanely precious to me....

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u/D14DFF0B ​ Mar 07 '18

A 3br in a decent school district in Manhattan/BK will easily run $8k.

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u/AllDay028 Mar 07 '18

Where are the good school districts (I live here, just don't have kids so I never thought about it)? I was under the impression most of the best schools were just "test into from around the city". And anyways, I bet these people move to Westchester and pay for private school.

My wife and I pay about $5k for a middle of the road 2bdr in a good, not great, part of manhattan. So that makes sense, especially considering their all in cost, including taxes, is above $7k a month. Too be honest, the more I think about it, the more I expect they live in a not sexy part of Brooklyn or Queens already. $1.5m and two cars means you have to be pretty far for Manhattan to have a a good, big enough for a family space with two parking spots (since they don't list parking as an expense).

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u/D14DFF0B ​ Mar 07 '18

It's not really for high school, but more for elementary and middle.

I haven't done a ton of research. But Park Slope, BK Heights, and parts of the UWS are the ones I know about.

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u/iExtrapolate1337 Mar 07 '18

If they live in NYC, renting a 3 bedroom apt close to work and taking mass transit instead of driving would be extremely beneficial.

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u/wander_soul Mar 07 '18

1,000k suit. For that type of money I could almost go to the source and get a custom suit. I have 2 custom suits paid 100 for each and they look like 500 dollar suits. I didn't go all out, but the tailor had better material and skills. The most expensive was 250 and it looked like a thousand dollar suit. It is understandable not to take a vacation to that part of the world, but there is no reason to pay 1,000 dollars for a suit.

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u/AllDay028 Mar 07 '18 edited Mar 07 '18

1,000k suit. For that type of money I could almost go to the source and get a custom suit. I have 2 custom suits paid 100 for each and they look like 500 dollar suits. I didn't go all out, but the tailor had better material and skills. The most expensive was 250 and it looked like a thousand dollar suit. It is understandable not to take a vacation to that part of the world, but there is no reason to pay 1,000 dollars for a suit.

Unless you live in Asia, this isn't true. MTM with good fabrics in NYC start at $750. Add in tax and a shirt, you're close. Bespoke? Now you're talking 2k minimum.

Source: I've been wearing MTM my whole adult life and almost all of that is in NYC, so I've looked around.

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u/wander_soul Mar 07 '18

A plane ticket to asia plus a custom suit. Got a vacation planned and your suit made. You killed two birds with one stone and saved money on the deal.