# How to make $500,000 per year and still struggle **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [July 10, 2019, 9:59pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866 "2019-07-10T21:59:10Z")\ **Posts on this page:** 16\ **Page:** 3
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [July 12, 2019, 3:35am UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/41 "2019-07-12T03:35:37Z")
Not sure I get it that they are refinancing through the mortgage. What, are they taking out some kind of HELOC to have extra money to pay off their mortgage? I doubt the HELOC interest is lower than the 10 year mortgage, but there’s a whole world of stuff I don’t know out there, so who knows why they would do it that way? ---
**Author:** ![Broomstick](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/broomstick/32/246_2.png) [@Broomstick](https://boards.straightdope.com/u/Broomstick)\ **Post date:** [July 12, 2019, 8:42am UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/42 "2019-07-12T08:42:33Z")
> [@aceplace57](#): > > It is amazing that some people find themselves short of money earning 500k a year. That’s ten times my income. It’s twenty times my income right now and yet I have no debt and save some money every single month. I’m pretty sure my frugal lifestyle would not be acceptable to many people - home too small, lack of fine wine most of the time, less than constant travel, vehicles too old - but I’m in the black. ---
**Author:** ![Hermitian](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hermitian/32/470_2.png) [@Hermitian](https://boards.straightdope.com/u/Hermitian)\ **Post date:** [July 12, 2019, 1:38pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/43 "2019-07-12T13:38:12Z")
> [@Spiderman](#): > > Don’t forget there’s: > $18m/ year to 401(k) > $100/month to Bitcoin - an investment > $4m/month to Vanguard - another investment > > He may be in hock now, but with saving/investing $67m/year they’ll have a good retirement! Is it common to use “m” to mean thousands where you are from? I don’t think I have ever seen that. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [July 12, 2019, 1:42pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/44 "2019-07-12T13:42:20Z")
> [@Dewey\_Finn](#): > > The article says that they have a ten-year mortgage and that’s why the monthly payment is so high. Normally, I’d think it a good thing to be paying off the mortgage more quickly, but they’re running a monthly deficit of almost $3,000, which they finance by increasing the mortgage amount. So I don’t think it makes sense to pay down the mortgage that aggressively. My question is why are they even mortgaging in the first place? Unless they live in San Francisco or Boston, they should be paying cash for every property they purchase. They should have a home to live in and rental properties - shit they could afford to hire a property manager. Caught that mistake right there and didn’t need to read the rest. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [July 12, 2019, 4:07pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/45 "2019-07-12T16:07:26Z")
> [@asahi](#): > > My question is why are they even mortgaging in the first place? Unless they live in San Francisco or Boston, they should be paying cash for every property they purchase. I disagree. If you feel the market is going to give you better returns than your mortgage, go for the mortgage and invest the difference. But you have to be disciplined and use the difference in your investments. Depends on your risk tolerance and all that, but I always opt for a low-interest loan vs paying cash if the interest is low enough. (For example, four years ago, I had a 3-year car loan at 1.5%. I could easily have paid for the car in cash. Instead, I got the loan, and invested the rest. The market has done much better than 1.5%, so yay me. Thing is, in that case, with such a short investment horizon, that was a more risky play. But when we’re talking on 20- or 30-year time spans, historically, your investment income will have made more money than what you paid out in the loan and interest And I’m not even taking into account mortgage interest deductions on your taxes.) ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 12, 2019, 4:25pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/46 "2019-07-12T16:25:33Z")
The other thing is that the house they’re in cost something like $1.3 million. So they’d either have to pay cash for a smaller house or save until they accumulate $1.3 million. A mortgage (that one can afford) is a reasonable decision. The problem with the hypothetical couple is the idea that each year, they’re paying aggressively towards the mortgage and investing heavily while at the same time adding about $36,000 to the mortgage. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [July 12, 2019, 4:47pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/47 "2019-07-12T16:47:42Z")
> [@asahi](#): > > My question is why are they even mortgaging in the first place? Unless they live in San Francisco or Boston, they should be paying cash for every property they purchase. They should have a home to live in and rental properties - shit they could afford to hire a property manager. Caught that mistake right there and didn’t need to read the rest. That’s assuming they can save the cash to do a lump sum. Considering their lack of short term planning, their long term is worse. ---
**Author:** ![eenerms](https://avatars.discourse-cdn.com/v4/letter/e/cdc98d/32.png) [@eenerms](https://boards.straightdope.com/u/eenerms)\ **Post date:** [July 12, 2019, 5:36pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/48 "2019-07-12T17:36:41Z")
> [@pulykamell](#): > > I don’t for a second believe this is real. Me either! ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [July 12, 2019, 6:15pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/49 "2019-07-12T18:15:54Z")
> [@pulykamell](#): > > I disagree. If you feel the market is going to give you better returns than your mortgage, go for the mortgage and invest the difference. But you have to be disciplined and use the difference in your investments. Depends on your risk tolerance and all that, but I always opt for a low-interest loan vs paying cash if the interest is low enough. (For example, four years ago, I had a 3-year car loan at 1.5%. I could easily have paid for the car in cash. Instead, I got the loan, and invested the rest. The market has done much better than 1.5%, so yay me. Thing is, in that case, with such a short investment horizon, that was a more risky play. But when we’re talking on 20- or 30-year time spans, historically, your investment income will have made more money than what you paid out in the loan and interest And I’m not even taking into account mortgage interest deductions on your taxes.) I get what you’re saying, and you’re not wrong if you play your cards right - the math is definitely there, and I won’t argue otherwise. I just don’t like being leveraged to that degree, but that’s admittedly an investment decision (approach) that factors the highly subjective nature of one’s own personal comfort level, as opposed to pure investment/market math. IME, markets change, and they tend to change when we don’t want them to. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [July 12, 2019, 6:32pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/50 "2019-07-12T18:32:22Z")
> [@Shodan](#): > > It took too long to get to the obvious answer, which is “spend less on food”. > > Regards, > Shodan From what I remember from economics class, candles basically pay for themselves. ---
**Author:** ![HelenGawn](https://avatars.discourse-cdn.com/v4/letter/h/a88e4f/32.png) [@HelenGawn](https://boards.straightdope.com/u/HelenGawn)\ **Post date:** [July 12, 2019, 8:48pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/51 "2019-07-12T20:48:11Z")
> [@Isamu](#): > > Yeah I would never pay for anything above economy class because I hate flying in the first place. Paying more for doing it would make me hate it even more. > > I do pay for nice hotels because I like to stay in nice places and the price difference between a cheap hotel and a nice hotel ($50 - $400) is bearable. YMMV I hate flying, too. On a recent trip, I was miserable the entire three hours in economy. For the return I upgraded, and it was _much_ better. (Plus I didn’t know you only get _one_ carry-on in economy.) If I had to fly across an ocean, damn right I’d upgrade, and I’m really poor. In fact, I hate flying so much I’d take a freighter. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [July 12, 2019, 9:25pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/52 "2019-07-12T21:25:21Z")
> [@msmith537](#): > > From what I remember from economics class, candles basically pay for themselves. I think you’re thinking of insulation. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 12, 2019, 11:41pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/53 "2019-07-12T23:41:51Z")
> [@msmith537](#): > > From what I remember from economics class, candles basically pay for themselves. Depends on how much fire insurance you carry. ---
**Author:** ![actualliberalnotoneofthose](https://avatars.discourse-cdn.com/v4/letter/a/e79b87/32.png) [@actualliberalnotoneofthose](https://boards.straightdope.com/u/actualliberalnotoneofthose)\ **Post date:** [July 13, 2019, 6:47am UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/54 "2019-07-13T06:47:25Z")
There have been people who post here who make high six figures and insist everyone who doesn’t is lazy. Then when they lose their jobs and realize they don’t have modern skills they wonder why they can’t just go out and get another high six figure job based on their obsolete reputations. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [July 14, 2019, 4:31pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/55 "2019-07-14T16:31:15Z")
> [@Lord\_Feldon](#): > > On the off chance this is real: > > “As you can see, each year we have a large deficit.” > > No. They are investing **$66,000 a year** between the 401k and the monthly Vanguard contribution. I’m not saying that should be their first cut, but you do not have a “large deficit” when just the money you’re choosing to sit on could finance an above-average household in Kansas. That was my first take on this, not so much the expenses that could obviously be cut. This isn’t a _really_ extreme case where people gross $500k and don’t save _anything_. You could probably find such a person though more likely in SF or NY than Kansas. But right, these people are saving pretty much. Not only the 401k and monthly taxable Vanguard account contribution, but the flip side of the huge mortgage payment is that they will own a $1mil+ house free and clear in less than 10 yrs. Ballpark of $100k/y of the $120k/y mortgage is probably principal reduction and that’s also savings, thus ~$166k or ~1/3 of pre tax income. If you inhabit forums like ‘Bogleheads’ that’s not a super high savings rate, but compared to the general population or even population of people making $500k it’s pretty high savings. All they have to do is trim the total of non-mortgage spending categories which total $220k/y by around $33k/y 15% to come out even at that level of savings. And various of those categories are obviously bloated some nearly to the point of implausibility. Although I guess $36k/yr for ‘food’ must include restaurants which isn’t noted separately, and combined with $36k in airline flights, so eating out all over the country/world is not that unbelievably high. As somebody else noted $6k/yr for car insurance but no direct car expense listed also must be wrong, maybe that’s total car expense. Anyway spending $220k to live, exclusive of mortgage, is obviously not the most of anyone on the planet. You just have to spend a moderate amount less than that at that income in order to save what they aim to save. But it’s not really such a bizarre case IMO in the big picture. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [July 14, 2019, 4:53pm UTC](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866/56 "2019-07-14T16:53:15Z")
> [@actualliberalnotoneofthose](#): > > There have been people who post here who make high six figures and insist everyone who doesn’t is lazy. Then when they lose their jobs and realize they don’t have modern skills they wonder why they can’t just go out and get another high six figure job based on their obsolete reputations. Ergo, their laziness prevents them from maintaining a six figure salary? [Previous page](https://boards.straightdope.com/t/how-to-make-500-000-per-year-and-still-struggle/836866.md?page=2)