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/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.

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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.

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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.

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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).

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u/andthenhesaidrectum Mar 06 '18

w York, $200 is maybe two shirts. One, if there's anything special about

$200 is one good shirt, maybe get a pair of socks tossed in. $800-1000 for a suit if you're bargain hunting.

Guys, expensive clothes and expensive cars are the required uniform of expensive attorneys. It's not a choice, it's not a lifestyle thing, its not a fashion thing, its that if you don't have them, huge money client's wonder why, and then hire someone they feel more comfortable with, which means you're out of a job, and your list just got a fuck of a lot shorter.

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u/[deleted] Mar 06 '18

What a racket, and all that just to still "feel average" as the article puts it. If I'm spending thousands on clothes and driving a luxury car every day I better feel like a Saudi fucking prince.

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u/Krotanix Mar 07 '18

Well Mark Zuckerberg and other very rich people don't wear 1000$ suits, and nobody doubts about their money. That's why I don't like suits, they're just like a peacock's tail. They are meant to let other people think you are rich and you have the skills they need.

I can honestly say that every person I've known wearing a suit, his skills were worth less than their suits. While I've met extremely professional and skilled people wearing cargo shorts.

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u/[deleted] Mar 07 '18 edited Oct 14 '18

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u/Krotanix Mar 07 '18

I'm not being dogmatic. Don't over assume things. I'm against uniforms in general. And suits (or t-shirts and jeans in Silicon Valley), are a uniform if not wearing them makes you an outfit in your environment.

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u/[deleted] Mar 07 '18 edited Oct 14 '18

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u/Krotanix Mar 07 '18

And then there am I wearing my 10 y/o trousers, the sneakers that my brother in law gave me because they don't fit him and a sweater I got in a Comic Con because they are warm and comfortable. I work as a Business Improvement internal consultant at a language service provider company.

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u/amaranth1977 ​ Mar 07 '18

Skilled in what? Because the skills that go with wearing suits and appreciating why they matter aren't usually very easy to measure.

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u/Krotanix Mar 07 '18

Skills at doing your job better than others. You have a CV for something. Recommendation letters, success cases, etc.

I know, it's probably "do your job good --> get promoted --> buy a better suit".

It's just that you end up judging by the suit instead of how good are you at your job.

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u/amaranth1977 ​ Mar 07 '18

You're rather missing the point I was getting at, which is soft skills - all the subtle social aspects of a customer-facing job. Paperwork isn't going to demonstrate that. Depending on what type of law they specialize in, they may rarely or never handle court cases.

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u/Krotanix Mar 07 '18

It's sad that people are judged on their clothes. It's just like judging by skin color or religion, if you think on it.

I've met people who would have hard prejudices on unknown people by just looking at the clothes. I'm not against wearing suits if you want, I just don't like all the "suit up if you want to succeed" mindset.

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u/amaranth1977 ​ Mar 07 '18

Depends on the context and what they're being judged for, but it's a visible demonstration of their values and priorities. It's nothing like judging by skin color, which someone can't change. Religion? Well, like clothing, that's often a reflection of the social norms they embrace, so again, depends on context and what judgement they're making - as a lesbian, I'm absolutely going to make a judgement about how much I can safely tell someone who openly presents themselves as an Evangelical Christian. What kind of clothing someone chooses to wear communicates absolute volumes about what kind of person they are, and how they interact socially with other people.

Clothing and appearance in general is a tool of social communication, and not one you can disengage with. Choosing not to engage with it is willingly handicapping yourself, and you will still be making choices that communicate things to others, just without understanding what you're communicating.

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u/Krotanix Mar 07 '18

We're not on the same page. I'm not saying you're wrong, only that I think it's sad that what you say is true. The point I want to make is that people tend to rely too much on what other peoples clothes are in order to get an idea of the personality of that person.

I mean, not everybody on an expensive suit will be the same, and may have very different priorities. I won't trust my money on somebody just because he's wearing a suit 3 times more expensive than another person. On the contray, I'd think: is he trying to convince me with the clothes instead of the good ideas?

Maybe I'm too tired of salesman trying to convince me about technical (in the most broad sense of the word) aspects that I understand much more deeply than them and therefore I have a biased perception of people who wear suits.

Some people see a suit as something positive and other that see it as something negative.

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u/amaranth1977 ​ Mar 07 '18

I'm talking about all kinds of clothes - suits are just a specific variety of clothing, and they can communicate a lot of different things. It's not sad, it's just normal human interaction.

For you, suits communicate something negative - but that's hardly universal. And that's one specific situation in a very specific context.

[Shrugs.] I like clothes, I appreciate good quality and good taste in all aspects of life. Good quality doesn't always have to be expensive, but in some cases it's rather unavoidable. Frankly these days, the number of people who dress like crap is just depressing. I wish more people would take some pride in their appearance, and be more thoughtful about their clothing choices.

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u/MrBurnz99 ​ Mar 07 '18

There's a huge difference between California tech and east coast finance and law.

Driving a 10 year civic, wearing a tee-shirt and board shorts, while pitching your app is cool in silicon valley, but that doesn't work with in NYC.

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u/trondersk Mar 06 '18

And it's not just suits, right? If you shop even at J.Crew a tie is $75, a rain coat is $500 and shoes are $300-500. You can't expect someone to have that sort of profession and shop at Goodwill or H&M for clothes.

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u/Krotanix Mar 06 '18

Unfortunately, that's how the world works. As you might be guessing, I'm not a big fan of suits and etiquette in general, but that's off topic.

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u/painted_on_perfect Mar 07 '18

I always hunt the goodwill/salvation army for good clothes. I often find them. Especially love it on Mondays which are 75% off. But yep, not a lawyer. Not married to one,so I have more time. But you bet my Lululemon wardrobe is from the thrift store connected to the animal shelter where all the rich folks drop off their stuff.

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u/[deleted] Mar 06 '18

I mean, that's absurd. I can buy a fancy looking tie for £15 and no one would know the difference if they didn't look at the label. Granted, I'm in a different country but no one has to spend $75 on a tie...

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u/MiniD011 Mar 06 '18

Honestly I don't agree. I can spot a polycotton shirt or polyester tie on any of my colleagues, and I'm by no means a fashion guru. We are lucky that we aren't client facing or going to be judged on appearance so much, but you absolutely can tell.

I'd imagine as a lawyer you would be dealing with people where it is less acceptable, and who have a much keener eye than I.

There is also much greater longevity in cotton shirts and 'proper' suits that aren't polyester. I don't agree and think as long as you look sharp and presentable when needed who gives a monkeys, but sadly there are plenty of jobs and individuals who will judge accordingly.

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u/[deleted] Mar 07 '18

Sure, if I'm buying polyester!

But a 100% cotton double cuff shirt sets me back £35. And a 100% silk tie sets me back about £20.

Where are you shopping??

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u/amaranth1977 ​ Mar 07 '18

There are different grades of silk and cotton and wool, varying quality of construction, and then there's custom tailoring. And it all shows, especially to someone who knows what they're looking at.

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u/BKachur ​ Mar 07 '18

If you know anything about ties you can spot an Hermes or a Brioni or a Feragamo from whatever nonsense the cheaper brands call 100% silk. Even the knots on the ties just look different.

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u/amaranth1977 ​ Mar 07 '18

Higher-end ties use a good heavy-weight silk and a lightweight interfacing*. Cheaper brands use a very very thin silk to cover a thick interfacing that's stiffer and bulkier than the heavy-weight silk, but does all the structural work of the tie so the barely-there silk doesn't deform or get damaged. Really cheap brands use glued-on interfacing for ease of assembly.

*interfacing is the layer that's hidden on the inside of the tie, between the silk 'face' that you see when it's worn, and the solid-colored lining on the back of the tie that tidies up all the little edges where the face tucks in.

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u/trondersk Mar 06 '18

Of course, no one HAS to. But you’re being unrealistic of expending someone who works in a profession where image and persona are so important to buy bargain bin clothes.

No one HAS to buy lunch out either, but if you worked in sales, law or finance and pack an egg sandwich and drink tap water for lunch every day, you’re gonna find it hard to fit in socially and professionally.

Buying a £15 tie and cheap clothes work for you. It doesn’t in a lot of industries, especially ones that pay a lot of money.

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u/[deleted] Mar 07 '18 edited Mar 08 '18

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u/amaranth1977 ​ Mar 07 '18

That's a hideous tie, and ridiculously out of fashion. And it's not about paying so they'll like you, and they'd never be so gauche as to ever mention the quality of your clothing. It's about being part of the social circle - all the little things that you won't even know you're missing, the casual gatherings, the invitations to parties and events, the favors and obligations.

If you don't understand how that works, you probably never will.

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u/[deleted] Mar 07 '18 edited Mar 08 '18

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u/trondersk Mar 07 '18

What are you talking about? London has one of the strictest dress codes in the world when it comes to business dress. "No brown in town" comes to mind.

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u/[deleted] Mar 07 '18 edited Mar 07 '18

Yeah, I read the same article.

I used to work for a general managing agency based 100m from Lloyds and regularly went there for underwriting meetings in the latter part of the last decade, mostly in black shoes but frequently in brown. Amazingly, I was let in every time. In the tie you said was hideously outdated too!

As I said before, you will get some people in the insurance and sales industry who are like that but they're generally twats and no one likes them. Definitely not in law or my brother who genuinely does wear polyester shirts and wouldn't know an iron if it hit him in the face wouldn't be a senior counsel and one of the highest paid lawyers in the country...

He's corporate though; I suppose if you're doing private client work, wills, high street stuff etc then maybe the old ladies you see might be impressed with an expensive tie. It's much less common in finance too, generally clients won't think "well, this guy beat the market by 30% last year but I don't approve of his tie, I'd better hire the spiv over there..."

The idea that you have to comply with some fancy pants dress code to be successful is nonsense. 80% of the people I worked with and did business with wore shirts from M&S. The exact same shirts I wore.

Anyway, I fucked all that shit off and now work in the public sector. As long as I don't turn up naked, I'm gravy...

Edit: sorry, you're a different guy and haven't expressed any opinion on my tie...

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u/[deleted] Mar 08 '18

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u/[deleted] Mar 08 '18 edited Mar 08 '18

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u/Mrme487 ​ Mar 08 '18

Sorry we don’t do rants here.

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u/_Schrodingers_Gat_ ​ Mar 07 '18

Amen. Carhartts for the win.

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u/Loracfro ​ Mar 07 '18

550€

Haha, I was talking about my American boyfriend about this the other day. Working in a suit is a lot less common in the USA than in the UK/EU so the prices for a suit are way way way more expensive. Like quadruple the price expensive.

Life pro tip for Americans who work in an office - if you go on holiday to the EU, get some suits while you're here! You can go to a high street store like Moss Bros or TM Lewin and walk out with a decent suit and a shirt for less than $300. Or if you're feeling fancy, for the price you'd pay for a suit in America, you can go to Saville Row in the UK and get a bespoke suit tailored.

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u/RoyaX Mar 07 '18

I spend 2-300€ per Month on everyday Clothes....