I now realize that ** Finagle** refers to a gross income which would be much less than I thought after taxes, medical insurance and such. Still a nice income, and all his “nothing fancy” (or similar) don’t impress me much. Adding a nice house+ nice vacations+nice car+nice retirement fund+nice private school+nice rany days fund+ nice…etc… doesn’t results in just a nice lifestyle. A lot of “nice” add up to luxurious because people with more ordinary means will have the nice house and the nice car but no savings nor vacations, or will pay the nice private school and have a nest egg but will live in a small crappy house, with crappy furnitures and a crappy car, and so on…
That’s a clear example of luxuries.
I don't actually care if you believe me or not. That scenario I described is pretty accurate for someone living on the East Coast. $100K/year gives you some leeway, but if you're staring down retirement and moderately fiscally responsible, then you're going to live a solid but unostentatious existence on that kind of income. You can do much better if you can cut down on housing costs or simply say "screw it" and forget about saving for retirement.
As for whether the majority of Americans are actually doing so well, let me point you to some statistics:
In terms of retirement savings, retirement savings, 36% of Americans have saved nothing and 80% worry that they won’t have enough.
Or credit card debt – average household credit card balance is $7K, but that goes up to $15K if you count the people who are really in deep.
And the average college student has a balance of $24K in student loans
Your average American with children might be living a comfortable life, but they’re spending some sleepless nights worrying about how to pay for stuff while they do it.
People subconsciously want to keep up with the Jones’s. The Jones’s always seem to make more money.
I know that it kind of irked me the first time I realized that, aside from the secretary, I was the lowest person paid in my department by a whole fucking lot. I came from academia, so I started at the very bottom of my pay band despite having “beyond and above” credentials. I also lacked the decades’ worth of pay raises that my coworkers enjoyed, and there weren’t very many newbies like me around to compare myself to. Why wouldn’t I feel poor when everyone around me seemed to have a nice car, a boat, a kid in an Ivy League university, a big house, and plans for a European vacation, while I was wearing thrift store clothes, eating crackers for lunch, and taking the bus so I didn’t tax my sometimey jalopey?
But I am actually doing pretty well for myself (and I’m doing a lot better now than I was back then). Compared to most Americans, I’m average. Compared to the entire world, I’m like Bill Gates. Pretty much everything I want, I have. Or will have, with just a little bit more saving under my belt.
So I try to remember this whenever I compare myself to other people. Still, I don’t think I’m crazy for feeling the way I do sometimes. We live in a very materialistic society, where you can’t watch TV for five minutes without someone trying to make you feel inadequate for not having X, Y, or Z. Even the unrealistic lives of fictional characters promote feelings of financial insecurity and social inferiority. I am happier now than I did when I watched TV all the time.
Do you have kids?
Try telling them that they can’t go to their friends birthday party because we don’t have money for a present, or even worse, you’ll just have to show up empty handed.
I agree as an adult this is just ridiculous and I would think that anyone who was my friend would understand; as a kids it’s a matter of social life and death which is a huge part of their lives.
Thank the Dear Lord the trend now is for parents to specifically say on the invite that
“Presents are NOT ALLOWED! Our kids have WAY too much stuff already! If you MUST spend money, make a donation to your favorite charity if it makes you feel better”
As for the dress thing, kids grow out of clothes all the time. It happens.
At $100k gross - with a family assuming one income, you get to pick (in most parts of the country) one or two luxuries. Private school, vacation, nice new car, dining out regularly, a regular housekeeper and lawn service, but not all of the above. At $200k you can add two maybe three more, but you REALLY need to start putting enough money away as well so that when BAM hits, you don’t need to pull the kids out of private school, sell the car, and wonder how you will pay a five figure property tax bill - because when you do get laid off, your unemployment will max out at a pittance of your income - the government expects you to save at that level. You should be thinking carefully about your ability to maintain your standard of living and not take on a lot of obligations that will result in a really bad situation when you lose your job. This is especially true if you are in business - I don’t know how often surgeons get let go, but corporate VPs “pursue other opportunities” all the time and often take months to find something new. Likewise, you should save for your kid’s college, you won’t be getting financial aid.
It changes a little when its two incomes - two incomes brings a little more stability in case of job loss, but brings more working expenses, especially with young kids.
Sure, but $100k/yr for a household is comfortable.
Let’s assume you only actually bring home about half of that after taxes, insurance, 401k, etc… are taken out.
You still bring in something like 4200/month, which is enough to pay a $1500/month house note, a $350/month car note, $75 for satellite TV, $150 for 2 smartphones, $50/month for internet connectivity, $180/mth for electricity (my average), $50/mth for water/sewer/garbage and $50/mth for natural gas.
That’s a total of $2405, leaving you with another $1800 per month for food, fun, gas, savings, etc… And if you need more than that, you could always buy a used car outright, downgrade the internet and satellite TV, and keep your house warmer/cooler to drop the electricity bills.
The big expenses left out of that, bump, are student loans and child care. Another way to say that is whether 100k is comfortable depends on the size of your family (and whether you have a SAH parent) and how much debt you took on to make that 100k in the first place.
The problem here is, $100k ISN’T that much in some areas, despite what some people would say here. As a data point, the median household income where I live in Fairfax County, Virginia is over $100k (Cite 2009 US Census Bureau[pdf], 2012 American Community Servey). Yes, it’s way above the national average, but all over this stuff relative, because the cost of living here is just outrageous.
As a single guy, I do fine on less than that, even with some luxuries, like a nicer car and a larger than necessary apartment. But I can definitely say if I had to support a wife and kids, suddenly that larger appartment becomes necessary, I have to get a much cheaper car and probably dip into my savings to make it by.
I have friends all over the country, and I do sometimes talk to them about this sort of stuff. One I know, for instance, lives in a rural area, makes maybe 30-40% of what I do, and has a wife and a kid. He’s living more or less how I’d expect I’d have to live in this area if I were in his same situation. Or another friend who recently bought a house, and I was looking around here at the same time. They paid quite a bit less for a 3 bedroom single-family home in a rural area than I would have had to have paid for a 1 bedroom condo in this area.
That all said, yeah, my area is the exception, not the rule, as 5 of the top 6 are in this area. Even around here, it’s not too much farther out where the cost of living starts to drop sharply, and I know plenty of people who are willing to make that commute. So, that all said, I can thoroughly understand that 100k is a lot in most of the country, but I can also understand why people living in a place, like here, particularly if they have kids, wouldn’t see 100k as being all that much. Really, I’d rather see all these talks with numbers about incomes and cost of living having some sort of regional adjustment so we can talk about it without this sort of distortion on the data.
Here is what I think is a good metric on the state of your income and savings. What would you do if someone dropped $1,000 in your lap? (We’ve had threads on this.) Answers ranged from paying off credit card debt, doing postponed maintenance, having fun, or just putting it in the bank because one has no needs. You can ratchet up the number to see which amount makes a big difference in your life.
But you can halve the amount of discretionary income simply by including the grocery bill (apparently, $550/month for a family of two, excluding non-food purchases, I think) and gasoline (average of $386 in 2011). And we’re not even into actually discretionary expenses.
I think that a household income of 100k is perfectly adequate, but when we’re talking about turning down the heat to manage to pay the bills, it’s hardly to think of it as particularly wealthy.
Although, I look at my household budget (which feels fairly frugal), and I really don’t know how people live on an “average” income.
The problem is that people tend to forget that other people have different lives.
For every person who makes $50,000 a year ($100k as a couple) that lives comfortably, there is at least one person(or couple) paying for their past. Anything from having to rely on credit cards to student loans to making the IRS love their pocket books.
And that’s on top of anything that might screw them in the short term. Water heater expenses, engine expenses, hockey-stick-to-mouth expenses. Whatever.
It’s easy to go “Well, I worked past all of my troubles! Everyone else can too!” but that isn’t the reality. Not everyone has a family they can turn to. Not everyone has a reliable job they can turn to. Et cetera.
Americans have been indoctrinated into a “work hard and you’ll succeed!” mentality. Most people work hard so why shouldn’t they get more equal consideration? And when they look at something like a CEO who will generally have the same to double the workload they have and are being compensated with 400x their salary, they get their sensibilities hurt.
I would opine that most Americans would welcome an existence where they were rewarded for their working output/productivity.
I’m really more interested in the fact that a 90th percentile income can be looked at by a lot of people as merely “decent”. That’s the part I find fascinating.
But you’re not engaging with the people who are trying to explain that.
Should an American making $10,000 a year regard that as decent because it is over ten times the global median?
One thing we conflate (and it drives me nuts) is the difference between income and wealth.
Let’s say you make $150k a year as a household income - that’s pretty high percentile wise. But if you have a negative underlying net worth - because of student loans, or an expensive past - its going to go a less far - even if you are frugal and live in a cheaper part of the country. If you make $40k a year, and its all interest and dividends from your portfolio and its all pretty much disposable because you paid off the house long ago, you’ll probably have a very similar lifestyle to the guy making $150k with negative assets. You also have something he doesn’t have - you have time - you don’t spend 40 hours a week (or honestly, if you make $150k a year on one income - probably more) at work. Which means you can do some side consulting jobs, or paint people’s living rooms. We used to have the independently wealthy fry cook at work. He only worked in the Winter - six months a year he played tennis and drove around in a Mustang convertible. In Winter, he didn’t have anything to do, so he worked and made a little extra money to keep the Mustang up.
Yes, IMO
I do think there is an effect where when you make more, you have to pay more for some things, and people do no always understand the impact that has.
For example, I make about $50K a year in base salary in a middle-middle class job. But my health insurance premiums are reasonable for just me, but for the family they are $10K a year, and since we each have a $2400 deductible, I have to save another chunk in case we actually need to go to the doctor. If I actually made $39k/year, my kid would be eligible for CHIP. Now, I am very grateful that we can afford to insure ourselves, and that that means my husband is covered as well, but I do kind of suspect that when someone who lives on $40K and insures their kid through CHIP hears I live on $50K, they are thinking that means I have $500/month more to spend than they do. I don’t. I imagine that scales up.
The reason that this is hogwash can be explained by looking at different areas of the same country: It is far more expensive to live in Washington DC than it is to live in Topeka, KS.
Why don’t we just move everyone in DC to Topeka who makes less than $50k per year so that they can live way better?
It doesn’t work that way, even within a single country. Most of the lowly-paid are manual laborers. Let’s say a McDonalds employee or such. Well, you can’t flip burgers from Topeka for people in DC. So you can’t move. But you also can’t move up in DC that much because you spend most of your time struggling to survive.
So, how will be give the people with the “benefit” of making $10,000 such purchasing power as if they were living in the poor parts of Africa? Just because there are people in Africa that subsistence farm/fish all their meals doesn’t mean that Americans who are destitute should be thankful they can barely survive in a different system where they can’t even afford to buy six square feet to grown their own food with their income.
The view of having enough cash to be “rich” compared to poor people in different situations, in my opinion, would be meritorious only if the US had some comparable way to reasonably afford subsistence-level farming or fishing if you couldn’t make enough money to feed yourself.
I assumed you were talking about you, an adult.
That’s a very good point. If your household is making $100k, but you’ve got, collectively, $200k in student loan debt and $500k in mortgage debt, then all that income doesn’t go so far. But with the same income and no debt, including a paid-off house, then you really should do fine no matter where in the country you live.