House size has nothing to do with it. My house is about 1,500 sf, but my net worth is… well, high. Part of that is because I always “underbought” on the house. Sure I can afford a $3k/month mortgage, doesn’t mean I have to.
I certainly agree that anyone making $200k who does not max out their 401(k) is nuts, but that is not the question. You were stating that a $200k leaves a net income of $120k. Nobody defines “net income” as being after whatever voluntary savings you choose to make.
Your example budget stated a family of three.
I am actually in favor of a generally low tax society. However, I think that the current situation does need more tax revenue and that for people earning $200k the difference in lifestyle will only be marginally “less comfortable”. We would always like things to become more comfortable, of course, but sometimes there are more important priorities - such as controlling the runaway deficit.
Fair enough. Since the house is an asset as well, “underbuying” is not that effective. And I don’t have a mortgage. Even though with current low rates it makes financial sense, wife didn’t want to have one.
I hate tiny spaces. I would feel claustrophobic in 1500sf. But I guess that’s just me.
As I said, if you want comfortable retirement, 401k contributions are not “voluntary”.
Quibble.
There is absolutely NO way in the world that more tax revenue will control the runaway deficit. It will just expand the government more. Increasing the tax revenue is like pissing on a forest fire.
Well, firstly because certain aspects of income don’t scale. People on higher incomes spend more on optional items and luxury versions of necessary items and less of a percentage on actual necessities.
They can afford to contribute more without putting their basic needs at risk.
Also, I think it’s basically a feature of capitalism that money tends to flow towards money. I don’t think this requires any evil or corruption – it’s just that increasing capital brings increasing investment opportunities.
A flat tax policy does nothing to resist this; and over time median income will tend to stagnate and bring with it many social problems. Progressive tax has the side effect of resisting this trend.
If one buys a $700K house in an area with “atrocious” public schools, one should probably include quite a bit of vaseline in that $1.2K grocery budget.
That’s just… not smart.
And if you want a place to keep your boat, marina fees are not voluntary.
Normal people do not get the option of a “comfortable retirement.” Normal people, even financially astute ones, sit around wondering if they are going to have to work as WalMart greeters until they are 80 years old. Normal people tend to have to scale down big time after retirement. I’m glad you have the opportunity to retire comfortable, but please recognize you are incredibly fortunate in a way that millions of Americans are not.
Likewise, I like natural food, too. I can’t afford it. Many people have kids with a special diet and they just have sick kids because they can’t afford it. Many people would like to keep their house nicely climate controlled, but they can’t afford it.
We live in a reality of scarce resources, and the vast majority of people- the “middle class”- have to make some real trade-offs, including with things they “need.”
How can you not see the arrogance of this statement? Do you not understand how many millions of people in this country, who once they pay their bills, don’t have two nickels to rub together, let alone to put away from retirement.
This DreamCatcher ideal you have for yourself, that you refer to as ‘basic’ and ‘non-voluntary’, would requre a winning lottery ticket for millions of people who need every last cent they earn from week to week to make sure thay don’t starve to death.
A 401k is not voluntary? No, eating is not voluntary. A comfortable retirement, as a mere concept, is a fuzzy pipedream for more people than I care to think about.
That is true as well.
If they plan for the future, they do.
What’s your point? Is your definition of “rich” someone who eats natural food, can do a special diet so his kid doesn’t get sick and doesn’t roast in his house during hot summers? Wow. Your standards are pretty low.
Pretty well my opinion as well. I’m all for progressive taxation, even though it’s against my own interests, because I think it imposes less hardship on members of society taken as a whole and because it has what I consider positive social effects.
And as I said, that is not relevant to the question of what constitutes “net income.” Eating is even less voluntary, yet you did not subtract food expenses in your calculation of net income.
That doesn’t mean that every one of those who have “two nickels to rub together” is “rich”. Or even the majority of them. Which is what the OP was about.
If you prefer, move the 401k contributions to the expenses list. Six of one, half dozen of other.
Ahem. The reason no one has answered your question is that it has been asked and answered about a dozen times in this thread. Perhaps you should consider reading it!
3 people in the household, two of us share the same bedroom. But it’s a nice house with an in-ground pool, hardwood floors, tiled kitchen and bath, that cost $130k. The yard is in horrible shape, but that’s due more to the drought and my refusal to waste precious water on the grass, unlike many of my neighbors.
We’re also a one-car family, the car being a Nissan Versa.
Our biggest expense, other than the mortgage, is our daughter’s education, on which we spend close to $1,000/month (including tuition, food, books, supplemental weekend classes, educational summer camps, etc).
Most of our assets are in equities, mutual funds, and REIT’s (about 3% in the last - I like living dangerously! 
)
This is it. Michael Jackson is rich. to think otherwise is just insane.
I see what you did there.
Once again, I am forcefully reminded about how much real estate costs vary. In Toronto and within a day’s drive of Toronto, you couldn’t buy a free-standing house for $130K, probably not even a dog-house, much less a “nice house”.
Extrapolating out my current mortgage ($1550/ mo, 145k 10 year note, with tax/insurance included), 4k per month comes out to somewhere in the neighborhood of a 375k note.
No, what the OP was talking about was the silly meme that people who ‘make $200,000’ are being defined as rich and will have to pay draconian taxes. Ignoring:
- That it’s $200K in taxable income, which is quite different than a salary of $200k,
- That some of that income may be in the form of capital gains or other income that is taxed at a lower rate,
- That even if they do have over $200K of taxable income derived from salary, only that portion above $200K will be subject to the new rate.
So effectively, the entire premise of the OP is wrong. Some ‘poor’ schlub who has over $200K in taxable income will not pay significantly more taxes than before until he truly is rich. But in the end going on an on about who is and is not rich just hides the fact that people with lots of money are trying to trick stupid people who do not have a lot of money into supporting policies that hurt them.