Living on $100k a Year
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In Germany, for example, a two-income couple making 84,000 Euro ($100,000) in Bavaria nets 57% of their income: https://www.icalculator.info/germany.html. In Maryland, a relatively high-tax state, they net 76% of their income. And that doesn't adjust for the additional upper middle class tax benefits like the mortgage interest deduction, which don't exist in Germany, which would take the net income over 80% on a typical house.
A couple earning 840,000 Euro ($1 million), in contrast, net 55% of their income, barely different from the previous example. In Maryland, they net 54%, less than in Germany! In contrast, actual corporate tax rates in Germany are about 15.5%, versus 18.5% in the U.S. (and Germany is quite high compared to say Canada, at 8.5% or France, at 11.2%).
I live on the east coast, but about an hour east of D.C. Around here, you can live very comfortably on $100,000/year. Certainly, more comfortably (at least, materially) than you typical middle class German family. The only reason the situation gets worse as you get closer to D.C. is expensive housing and worse schools, which are problems that are entirely inflicted by the middle class on itself (through anti-development and pro-segregation policies).
I got into $200k worth of undergrad student loans. I am still paying them back and probably could have done things to reduce that burden early on. Regardless, I don’t regret it for a second because I’ll be done paying for them in about three years, and I’ll keep the high income job and great network I’ve accumulated in the process.
This option should most certainly be made clearer to students. I don't want to play a blame game, but I think its somewhat related to the culture of parents wanting "the best" for their kids and considering all money spent on education as an "investment". Its not. Its a huge financial commitment and should be thought through carefully.
Now, its not like college is completely useless. The connections you form there last for life. Many founders initially met in college and so on. But someone considering taking on ginormous student loan debt probably should consider whether that is worth paying off loans for decades.
Still, I agree with the general idea you're reaching for. The ostensible premium of elite private schools isn't worth going into crippling debt for in most cases I can envisage.
I went to a small state college with a horrible computer science department. Four years out of college I was making just as much as people who had way more debt than I had (I.e. none)
I can tell you that UGA requires freshmen to live on campus, though in my case I was able to get a waiver because my parents were local. And I get the impression that their housing costs are actually fairly competitive compared to local commercial rent.
I didn't go to a community college but I did go to a cheap state school with the intention of transferring to GA Tech under a 3 + 2 program - I was accepted straight out of high school but I got a scholarship to go to the no name school.
When it was time to make a decision, I felt GT was a waste of time for me. I didn't want to be a "computer engineer" I wanted to develop software. I don't see my career trajectory being any different. No one cared what school I graduated from three years after I started working.
However, you can't just extrapolate from these experiences to everyone going to college across the entire work force. Our field is a bit uniquely ... democratic.
GA Tech is $12,500 if you don't stay on campus for a GA resident. If you meet the HOPE scholarship requirements (https://en.m.wikipedia.org/wiki/HOPE_Scholarship), it will pay 90% of the tuition costs - not including books and fees - reducing that cost by about $9000 a year.
If you don't have the qualifications for Hope, more than likely you wouldn't be admitted into GT anyway.
Yes the ethics of using the lottery to fund education is unclear and no it doesn't apply to every state, but is the University of Illionois worth it unless you are qualified for a high paying job to make the expense worth it (serious question - I don't know)? If not, are their cheaper state schools?
This applies not just to German citizens but to anyone who studies in Germany. The stipend sources may be slightly different where you come from though.
The problem is that most people in the US that "know" Germany gives everyone a college edu, thinks it is literally everyone and it certainly is not the case. Could people from Germany please stop spreading partial truths?
* $18,000/year 401k contribution (similar to pension, but I take on the market risk)
* $5,500/year IRA contribution (similar to pension, but I take on the market risk)
* $200,000 total in tuition per child at my alma mater.
* Health insurance costs. This can easily be $12,000/year or more for a family.
None of these are included in the tax amounts that we pay.
This is also not considering that German cities are much cheaper than equivalently walkable American cities.
If we taxed our middle class what Germany taxes its middle class, we could afford cheap tuition too (for the 1/4 of our kids we chose to send to college).
While I'm in favor of free/cheap education, this made me think of a convincing argument for the student loan / US system. Those who benefit from the education are "taxed" for it in the form of loan payments for a few years, those who don't benefit (directly) from the education are not.
I guess ideally you could balance the benefit to society vs the benefit to the individual getting the education and subsidize it proportionally. But that's obviously not practical so we should probably push closer to the society end of the margin of error.
> Those who benefit from the education are "taxed" for it in the form of loan payments for a few years, those who don't benefit (directly) from the education are not.
Not only that, but the benefits of free/cheap education largely accrue to the middle and upper classes whereas the lower class also has significantly higher taxes under the European system.
I'm most familiar with the UK where universities like Oxford, Cambridge, LSE, Imperial, etc. are all overwhelmingly middle class. I'm sure the pattern is repeated in Europe as well.
This could be fixed by increasing the taxes on the middle class and up, leaving the lower class taxes the same.
>are all overwhelmingly middle class.
There are likely factors other than cost for people from lower classes to going to university at a lower rate, but it's the opportunity to do so that's important and cost is often the biggest impediment to it.
How exactly would you sell that? It requires a certain amount of commitment to furthering society to ask people to pay more in taxes. And there is all this right-wing media and people who will constantly shout "Big Government is taking all your hard earned money!" argument.
Its rather amazing that Europeans have accepted high taxes on middle and upper classes as a fact of life. But then, If you look at history, it was the poor who got taxed the most in pre-revolutionary France, while the rich got away with massive tax cuts. I fear this might lead to something similar in the US in the future: push too many people into poverty and they will rise in revolution.
It saddened me to read that snippet. Growing up on the west coast, I was aware of some ideological/cultural differences between urban metros and the Middle America, but I was not aware of that sense of classism.
A take-away I had from Trump's election was that there still is a lot of economic struggle in the interior of the US. Nobody seems to be interested in improving the situation, and very few of these communities have the means and/or the willingness to move towards greener pastures. Is there anything that can be done to improve the situation?
I work in a typical liberal as hell company in a very expensive city. The level of hate/class superiority towards the unwashed masses from my co-workers is absolutely mind blowing. It is casual hate that shows up everywhere, every day in a unrelated conversations. If one was to do s/<who they talk about>/gay|minority/g they would be terminated on the spot. It goes all the way up the corporate latter. All of them are card carrying progressives.
Went into tech and only interacted with other white collar workers.
Of course I don't agree with Trumps demonization of "other" but I do see how he easily tapped into their resentment. People don't seem to realize how many Trump voters in middle America voted for Obama in 2008 and 2012.
The needs of the least populous states - trump country -have been ignored in the national conversation for too long by both parties. Trump was just paying lip service to their needs and is actively selling them out. But no one else was even paying lip service.
I'm not part of Trump's core demographics - both a minority and part of the "liberal tech elite" but a lot of his policies will help me a lot more than they will help people who voted for him.
Yeah I'm ignoring the so called "moral majority", there is no hope for them. Hopefully changing demographics will continue to make them even less relevant.
Rules can always be changed but it must be done before the beginning of the game.
Plnty of us are interested. But people with enough money to pay for their own media, and their own politicans and party, they are really not interested.
If you wanted to build complexes to stimulate the economy, you'd probably need on the order of... $100M in buildings, and another $100M in endowments for operating expenses/grants/risky loans.
So 200M is a lot, but it's also only the retirement wealth of 100-200 upper-middle class families, of which there will be thousands per major metro (and perhaps a million or so across the US).
I think it's mostly a logistics problem -- in those million families, there are probably 10,000 that are interested in resettling to the middle of the country and would be willing to move half of their wealth into local investments on a generational scale (while keeping the other half in say, the market).
That means we could do 250-500 self-sustaining mixed-use complexes backed by endowments for operations costs, which is probably enough to target 50-100 towns.
The question becomes the organizational aspects of those people finding each other, building trust (between each other and with the involved communities), and finding the appropriate legal instrument to manage the money on that scale.
These are all much harder problems than finding money or media attention.
Yes, but it's all the things that "coastal elites" don't want to hear. The first two topics of conversation would likely be about trade and immigration policy. But it's hard to talk about either without being shouted down as xenophobic or racist. It's worth noting that Obama ran on a platform to renegotiate NAFTA during his first primary.
With regards to protectionism I don't know what more evidence you could need aside from the changes to the US economy brought on by NAFTA, which were all predicted. It's been fine for the economy as a whole, but we're not talking about things like the GDP. We're talking about the economic well-being of the people who used to manufacture things in the US. Watch carefully, because that is the sleight of hand that unrelentingly responds to any talk of protectionism. They talk about sound economic theory about how protectionism impacts things like GDP. Not the topic at hand.
As far as reigning in illegal immigration, there have been reports all across the country that farmers are losing money because they can't find enough people at any price who are willing to do farm work since the crackdown.
85,000 NEW H1Bs are issued each year, they last 3 years and can be extended for another 3. So right off the bat that's as many as half a million. There is no issue limit on H1Bs for universities and non-profits. In 2012 alone, for example, the total number of H1Bs (normal + university/non-profit) issued was 135,530. It's safe to say there are far more than 85,000 H1Bs in the US.
>because they can't find enough people at any price who are willing to do farm work since the crackdown.
I suspect their definition of "any price" is very different than mine.
On the other hand, I'm sure overprocessed sodium filled food and fast food will become a lot more attractive than even what it is today.
That's a serious problem, if only there was some way to raise their wages.
>farmers have to pay 5x as much to attract labor
Yep, there it is. Some of those poor people will transition to these new higher wages in farming. This will reduce labor supply in other sectors which will push wages up across the board. Rinse and repeat for other industries full of illegal immigrants: construction, maid services, etc.
https://www.washingtonpost.com/news/wonk/wp/2013/05/15/north...
I accept your data/claims at face value, that illegal immigration and temporary worker visas have suppressed wages of the poor in some sectors so much that even increasing the wage 5x is insufficient to attract native laborers. What we disagree on is whether or not that wage suppression is a good thing.
It's farm labor - how much can working conditions improve while you are actually doing your job? If I had a choice between making minimum wage and getting government assistance and doing back breaking labor at $20 an hour, I'm not sure that I wouldn't take the minimum wage job and make the commensurate lifestyle choices - roommates, public transportation instead of a car, or if I were so inclined being a part of the underground economy.
How many unemployed people are physically capable of doing that kind of work?
Who cares whether unemployed people are capable of hard physical labor? Plenty of people in the country are capable, so farm wages will just have to compete against other sectors. And when it does, it will raise the wages of EVERYONE in those other sectors because people will leave for the higher wage farm work. This is the mechanism I keep bringing you back to about how it helps all the poor, not just the ones who take the farm labor jobs.
Why do you feel it's okay to bring in desperately poor brown people to do work that you claim Americans won't do at even 5x the rate we pay the desperately poor people? Why shouldn't back-breaking work bring in a wage that is competitive with the broader market? Why is it okay to flood the market with an over-supply of desperately poor people? Do you think it would have any impact on your income if we brought in 10s of millions of workers to compete against you in whatever you do for a living?
And if food is more expensive to produce in the US because of labor costs, why would it be any different from anything else - the big companies will either start selling cheaper (less healthy) substitutes, or import it from places with cheaper labor.
As we've covered, repeatedly, reduced supply of labor will increase the wages of those poor you're worried about buying food. Based on the first google results I could find farm labor constitutes 10-20% of the cost of food. Even at the high end, if you DOUBLE the wages of farm labor the price goes up 20% but wages go up 100%. And this same principle applies to every sector where new farm labor is pulled from. Wages go up more than prices, so it's a net win. This is great for the poor worker, but bad for the wealthy worker who doesn't get raises due to this increased competition on the low end of wages. To the extent that the wage gap might be a concern of yours, this is one significant way to reduce the wage gap using market forces.
> the big companies will either start selling cheaper (less healthy) substitutes
Millions of new potential customers have extra money in their pocket to be able to afford luxury food products. Meanwhile there are far fewer impoverished people looking to buy food (migrant/illegal workers). So if anything, it increases the market for luxury goods and decreases the market for cheaper unhealthy substitutes.
>import it from places with cheaper labor.
This is only a problem if you believe 100% of the illegal and temporary work visa produced goods could be replaced with imports. Not only is that not true, but even if it WERE true, that doesn't say anything about other sectors predominately filled with migrant/illegal workers such as hotel maid services or construction. My house, in my neighborhood, is not going to be built by someone who isn't physically here.
I feel we've sufficiently covered the initial premise, which is that the policy I've described helps poor middle Americans. You might be able to debate the extent to which it would help them, or that this is good for the over-all economy/country, but it's undeniable that artificially increasing supply of labor in some sectors drives down wages for everyone in those sectors and in the labor markets that compete with those sectors.
Lets engage in a very simple intellectual exercise:
remove all immigration restrictions and all protections that we have.
Do you believe that
a) your family in a short term would be better off/not different/the worse off?
b) your family in a long term would be better off/not different worse off?
- shortage of housing
- ballooning social security budgets
- extreme long waiting times to get health care service
- a marked increase in crime, especially in certain categories (sex crimes, robbery, arson)
and long-lasting:
- taxes need to increase across the board with ~2% (in a country already burdened with close to the highest taxes in the world)
- costs for state pensions stand to double in the coming 20-30 years
- the real estate market will need to adjust to the new situation (oversupply in the high priced sector, a shortage in the low and medium price sectors)
- the labour market does not fit the education level of the new population. Available jobs require higher education levels than most immigrants have or can reach leading to high unemployment among immigrants. The extensive social security system and the related high taxation level takes away incentives - and in some cases actually presents negative incentives [1] - to go from state benefits to paid employment.
The situation in Sweden is made worse by the fact that the country officially does not mandate nor stimulate assimilation of immigrants into Swedish society while the native Swedish (and assimilated migrant) population do expect immigrants to assimilate to a large extent, leading to increased segregation [2].
[1] It is fully possible in Sweden to end up with a lower spendable income when moving from state benefits to paid employment, mostly due to the fact that those on state benefits often get extra benefits for specific purposes (e.g. housing costs).
[1] Sweden does not have a single monolithic constitution, instead relying on four fundamental laws (the Instrument of Government (Swedish: Regeringsformen), the Freedom of the Press Act (Swedish: Tryckfrihetsförordningen), the Fundamental Law on Freedom of Expression (Swedish: Yttrandefrihetsgrundlagen) and the Act of Succession (Swedish: Successionsordningen)). An 1974 amendment to the Instrument of Government act states that immigrants can choose to keep and strengthen their ethnic and cultural identity instead of assimilating into Swedish culture.
In the short term I think I would be much better off. I don't believe enough people who can compete with me economically would be all that interested in coming here, and/or them coming here doesn't improve their ability to compete with me. However, I'd be able to hire poor people for slave-like wages to perform all sorts of odd jobs for me around the house. I'd have a maid, etc.
In the long term I would be much worse off. The influx of poor people from other nations would completely overrun our public infrastructure: public schools, welfare programs, etc. The reason why illegal immigration "works" for the upper-middle and upper class is because it's illegal. My taxes would have to go through the roof to pay for all of this.
This is where I fundamentally disagree - every single developer in the US making US salaries will lose to eastern european/Indian/Chinese developer moving to the US because they will accept lower salary. Not much lower, but 20-30% lower because for them it would be amazing increase in their quality of life.
I hope he succeeds. The more we share jobs/experiences/wealth/etc. the more we'll understand each other.
$100k still goes far in a high cost of living, coastal area. However, I drive a used car. I'm a renter, and probably will be for awhile. If I wanted to be a homeowner, a good portion of my retirement savings / investments would be going towards that.
If I decided to have kids, which would mean at least a place with additional bedrooms, plus additional health care coverage costs, etc., I could see it getting tight. I might have to compromise my retirement savings goals.
I don't have a lot, but I'm also a minimalist. And I realize that, income wise, probably 80% of society has it worse than me. I don't know how households earning around $50k would feel any semblance of having a future financially. Growing my savings/investments is the only way I feel like I'm getting ahead. Having any sort of typical American dream goal (house, kids, etc) would basically nullify my ability to get ahead, with the exception of building some home equity.
Barring equity compensation that appreciates, you’re likely to grow your income until around 35. Then you plateau.
You’re also unlikely to retain companies or career skill set through to retirement. So you’re facing a crisis where you need to transition and maintain salary around age 40, where 1987 you would be entering peak earning years.
It’s a particularly vicious cycle as professionals marry late and have kids late, so when you’re scrambling to maintain your 401k to retire, you get hit with a big college bill in your late 40s/early 50s. If you invest unwisely and don’t have a home, you’re choosing to either retire comfortably or not pay for college.
I agree, though, that the purchasing power is nowhere near 1987 and that the plateau comes earlier. I suppose it's what makes saving earlier and saving more ever pertinent for the younger generation. If I can get to 200k before I plateau, I'd be happy. If I have a working spouse that makes at least 100k, I'd say we could probably keep the American dream alive for us.
At least via my 401k, there are few poor options to choose, thankfully. The worst you could probably do is pick a fixed income class (and get no growth) or go too risky with international funds (if you for some reason went 100% international). But the target-date funds and index funds provided (SP500, etc) are diversified and generally considered good investments.
I guess what I'm trying to say is: financially, you are likely to be OK, if you manage to have a spouse that will be a good partner and you both stay together while bringing up the kids (and that is a BIG IF). It get VERY dicey if you do split, in which case you have to pay for spousal and child support (I've seen this happen wayy too many times).
Which brings me to what has been my most important realization perhaps: be VERY VERY careful when you choose your spouse and how you combine your finances. I'm not saying that you spouse will be bad; but statistically it seems like there is a 50% chance that it won't work out, for whatever reason. This can ruin your finances. So spend some significant time and effort to try to make the right decision there. This is kinda hard when society emphasizes getting married and having kids ASAP.
When I started working in software I made way more money right out of school than my family ever made. And I developed a lot of bad spending habits as a result. After a few years I got my head on straight. Paid off all my debt, got disciplined about saving, and cut out unnecessary expenses.
It’s not that hard to live very comfortably on 100k. But you aren’t going to be eating out all the time, driving new cars, living in a gigantic mcmansion, etc.
Edit: My youngest sibling was born in 93. 30k in 93 is like 50k today. HALF of what the people in this article are living on. Give me a break! These people don’t need a raise or a hand out, they need a realistic budget.
When your father was working and you were growing up, $30k was worth more (perhaps much more, depending on how old you are) than it is now. His job probably had benefits and protections modern jobs don't have. What used to work for people increasingly doesn't work, in large part because benefits are disappearing, government programs and subsidies are being cut, and what's considered a "fair wage" hasn't tracked at all with how much things actually cost, especially on the coast.
40 years ago, 100,000 miles was considered the practical life of a car. If it hadn't rusted out by then it had probably had a major failure such as a transmission or engine. The only advantage they had was being mechanically simple and easier to repair, but they needed more repairs and more maintenance than a car made in this century.
Today's used cars are fantastically reliable, historically. (At least if you stick with 'Best Buy' recommendations.)
It's not that they don't know it's a terrible financial move, they just don't have any other options besides high interest loans or not owning a car (which likely means not being able to get to
I was able to turn my situation around, not by getting tax cuts or help from the government, but by changing my lifestyle and my idea of what I needed. That house that you think you can afford that sets you back 20% of your gross pay? You don't need it. Cut your residence costs to something reasonable like 10% of of gross pay and boom, you magically have a surplus of ~$800 / month. That $400 - $500 / month car payment? You don't need that either. Stash away four months of the savings we just got on our residence and buy a used clunker for $3200, drive that into the ground, and by the time that dies, you will have saved up enough money to buy a perfectly fine used car for cash.
I have an artist friend who lives in NYC on ~$30k / year. She even has a car, which is an expense that a lot of people in NYC do without. Even in this situation she has been able to consistently put money away into savings and investments because she manages her money well. It's not about how much you make. Your choices have far more to do with it than most people are willing to admit.
The other person is making $100k in a very high cost of living area. He's living as you do- frugal, paying down debt, and living within his means. He does raise a good point though- $100k does not feel like the fortune and there is still quite a bit of inequity.
Of course the billionaires like it this way. They are destroying the middle class, but they keep the fighting at the lower ranks.
It's not the 1% that are the problem, it's the .01%.
If you're in the US, how are your parents faring for retirement? Are you and your siblings helping out?
I ask because my parents are retired, and they are nearing the age where they will need assistance. It's just going to be my sister and I when it comes time to deal with figuring out what we are going to do. My mother has been financially dependent on my father throughout their entire relationship.
I currently live near them and visit once a week, but I don't see how I can afford to stay in the area if I want to start a family of my own, unless I find a partner that earns around as much as I do so that we can clear $300k+ a year. Modest starter homes in a neighborhood with both decent schools and a commute time under an hour to where the jobs start at $700k.
My sister and I also have to figure out how we are going to deal with my mom's relatives, who currently barely want anything to do with her, but will be ready to take advantage of her once my dad passes (assuming he passes away first -- I'm quite sure he will), and she's the main holder of everything. I already saw it happen with both of my grandmothers, so this isn't just unfounded pessimism. Both sides of my family are full of shitty people.
I absolutely do not mind every single cent in their networth being used to care for my mother in old age. I do mind that money being mismanaged and wasted, especially if that results in her needing more than what was originally set aside by my father.
Apologies, no harm intended towards older people, just have seen a lot of them get screwed over. e.g. my managers Mom had all her (late) husbands retirement money in a pretty great account which was sponsored by her husbands company. But her friend convinced her to take it all out and hold it in cash, which turned out to be really really bad advice.
What’s the point though? If anything there are more benefit programs today than were available then. At $100k/yr you really should not be eligible for much benefit when you consider how much better you are doing than average.
Most people who understand this stuff don’t consider safety net programs like food stamps or WIC that way. The difference is that the Food stamps/WIC allow you to work, and most people on them do. “Welfare” requires you to not work in order to get a benefit.
The most vociferous disgust regarding people on welfare usually comes from people who you would consider to be on “welfare”.
Food stamps are exactly the same, as is the reduced price lunches mentioned. If his parents made more money they would lose access to those welfare benefits.
When the average redneck is barking about “welfare queens”, he’s not talking about food stamps, WIC, Medicaid or SSDI. Half his family is enrolled in one or more.
The difference with something like food stamps is that a “normal” working class two parent household can get some benefit. It doesn’t make a lot of sense, but that is what many if not most people believe when you actually ask them.
When well to do people hide their assets in trusts so they can collect Medicaid when they get old, they don’t consider that welfare either.
That's something a lot of people on salary don't get. Back when I was on W-2 and had much lower compensation than I nominally have now, I had my ducks in a row, taxes paid, a positive savings rate, and good credit. That hasn't been the case since I went self-employed about ten years ago.
If someone were to divide my annual revenue (less expenses) by 12 and distribute it to me on the 1st of every month, a lot of problems would be solved. But because that's not how reality works, I take a bath in late fees, interest, overdraft fees, no access to credit due to bad rating, etc.
Some of those things are more avoidable than others depending on the choices one makes, but that's not the point. The point is that W-2 and SE income are not equivalent. Unless you've devised some compensation scheme that is substantially similar to salary as a contractor, you can't afford anywhere near a $100k lifestyle as a consultant earning $100k+. There are many days I'd happily trade places with folks who get a lower, but steady paycheck every two weeks for doing more or less one job.
But in a way, you're making my point for me; because $100k in SE income is not the same as $100k in W-2 income, it requires special budgeting considerations, to the degree that I'd benefit from reading a whole book about it. :-)
I did.
>But in a way, you're making my point for me; $100k in SE income is not the same as $100k in W-2 income.
Actually, I'm making the exact opposite point. The budget is the exact same. The budget is what forces you to not over-spend when times are good, so that you have plenty of money around when times are lean.
Otherwise, it seems your advice is "live within your means", "spend less than you make" and "save for rainy days". Thanks, dad.
No, it means you've failed to accurately assess what the "line" even is.
>Otherwise, it seems your advice is "live within your means", "spend less than you make" and "save for rainy days". Thanks, dad.
No, my advice was a specific set of principles and practices laid out within Ramsey's book which could help you to overcome the problems in your life that you were discussing. I was not promoting useless platitudes.
Everyone is in a different financial position but instead of recognizing that and living a life you can afford, people get jealous of what their neighbours have or their friends are doing and pursue the same lifestyle regardless of if they can afford it or not.
I do not sympathize with someone struggling to make ends meet on $100K a year. That is a ton of money and if you have debt and bills you can’t handle then unless it’s just a result of horrible life circumstances, it’s most likely your own bad decisions.
My thought pattern here is that if you can't manage on $100,000 a year then you'll have the same problem at $200,000 a year, so on and so forth.
I'm very sympathetic to people who, when making decent financial decisions, are unable to meet their basic needs. Poverty / under-earning like that just creates a constant stress that is completely debilitating and unproductive. It has a real psychic toll.
It's just difficult for me to imagine not being able to make $100,000 work, save for a bunch of kids. But after all, those are somewhat of a choice as well.
It is also hard to be sympathetic given that $100k is substantially higher than the median income in many of these areas, and while not wealthy by any means, many people living a little closer to the median have a pretty decent standard of living simply by managing their finances wisely.
I have many friends in this situation. Too many people refuse to live a lifestyle afforded by their income even though it would be pretty comfortable if they did. My lifestyle, which is far from austere and in Seattle, easily fits into $100k income (though I'd probably have to cut back on the luxury a bit if I had kids).
I won't say this can't be true, but by experience casts doubt on trusting what people "feel".
For example, lots of people feel they struggle to attain homeownership. But homeownership rates are within 1% of what they were in 1980. Meanwhile, median house sizes have increased 50% since then (or 100%!, relative to household size).
Lots of people feel they aren't being paid enough. But median household income has increased ~25% over the past 40 years (50%, relative to household size). (Looking at household, not individual, child care has transitioned from one stay-at-home parent to one working parent + contracted child care and only the latter adds to "household wages".)
Lots of people feel that education is too expensive, but total scholarship money has exploded. In my home state of Florida, a 970 (Math + Reading) SAT and 3.0 GPA gets you a 75% scholarship to any state school. That is well within reach for most university-bound students. Or achieve a 1270 SAT + 3.5 GPA + 75hrs community service for 100% scholarship.
Lots of people feel cost of living is rising. And yet, there are 10% more people living in urban areas since 1980, which tend to be far more expensive than rural ones.
Sometimes I think all some people ask is to own a home and a couple cars in a good neighborhood with good schools in a big city, travel abroad, and go to private or out-of-state school for a few months salary of a hobby job (and obviously without ROTC) after buying the new $700 smartphone every year and continue that lifestyle into government-sponsored retirement. You know...do what their parents did, but without any of the drawbacks.
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In reality, I suspect these feelings are grounded much more with keeping up with the Jones' (+ Facebook), rather than the objective quality of living.
It started when an Austrian software engineer published his entire spending, and where every cent of his taxes goes, in this post: https://www.reddit.com/r/dataisbeautiful/comments/7h2idb/wha...
Other users, employed in all industries, quickly responded, some from Japan https://redd.it/7h99vj , Seattle https://redd.it/7h6bsr , Brisbane, Australia https://redd.it/7h9gpe , New York City https://redd.it/7has76 , rural TN https://redd.it/7hbhe9 , London, UK https://redd.it/7h9tjf , a Major in the US Air Force https://redd.it/7ha2q0 , and another one from Switzerland https://redd.it/7hbehc
There’s dozens more posts, I can’t link them all, you can find the rest at https://www.reddit.com/r/dataisbeautiful/ – but many of them show how people can live very successfully on low wages, and others yet struggle with much more money.
I've posted this book a zillion times on HN, but "$2.00 a Day: Living on Almost Nothing in America" really changed a lot of my thoughts and feelings about what is going on in America today. Highly recommend reading it:
https://www.amazon.com/2-00-Day-Living-Nothing-America/dp/05...
Housing to live near a job that pays 100K a year.
https://www.theguardian.com/world/2017/dec/01/un-extreme-pov...
Is this due to housing cost? Student debt? Medical debt? Bad decisions? Good decisions that were invalidated by events? Who knows?
"The report, put out by Pew Charitable Trust, includes the results of surveys conducted in 2014 and 2015 to see how Americans were coping with what are referred to as financial shocks—those one-off expenses that crop up from time to time. Pew found that in large part, Americans’ ability to weather financial shocks is partially dependent on something that Americans still struggle to accumulate: savings." https://www.theatlantic.com/business/archive/2017/04/savings...
It really should not, if you've budgeted conservatively in the way that our grandparents generation did. For example, if you don't have 3-6 months of expenses in a savings account, short term disability insurance, long term disability insurance, and a term life insurance policy of 10x your annual salary, you're living a fairly high risk financial lifestyle. Again, if you budgeted the way your grandparents did you wouldn't have any debt except MAYBE your house, so a financial setback would almost certainly not result in more interest or fees, since you wouldn't be paying any interest to begin with.
You've accepted this false narrative that the banks have sold you on that being perpetually indebted to them is normal. It's not, from a historical standpoint. And you don't have to live that way.
However, we live in an apartment and don’t have kids.
There is absolutely no way we could do kids and a mortgage with this debt burden without life going to hell. Once that debt goes away, though? Not a problem at all...for one kid and a cheap house. ($250k house, which is what we wanted anyway, as we aren’t fans of big houses)
Tax breaks are at best a very short term proposition, and if the numbers are to be believed, the current tax plan only serves to widen the gap over time.
Unfortunately, many Americans have been convinced to vote against their best interests since in many places, D means Devil. Having a strong stance on hot button issues like abortion is more important than whether you will gut a union or make a fair tax code.
If it's an indication about how bad things are, a probable child molester has an actual shot of being reelected, simply because of the R next to his name. We are not selecting for the best candidates.
That's not really supported by the data. A more accurate summary would be "the poor, unable to, the rich, not numerous enough to". Raising taxes on the top 1% or the top 0.1% or the top 0.01% has very little impact on total revenues simply because you need to raise taxes 50x, 500x, or 5000x as much in order to extract as much revenue as you would get by raising taxes on the top 50%.
1. To be are I think this doesn't include payroll taxes so it's a bit of a skewed number.
Yes, there are few people, numerically, in the top 0.01%, but that doesn't mean their taxes are inconsequential. Otherwise you might as well argue that they should pay no taxes at all. Absurd.
These deductions and "welfare for the rich" basically amount to hundreds of billions in lost revenue.
This is well documented, NYT has a good run down: https://www.nytimes.com/2015/03/18/business/economy/taxes-ta...
If you're in the top 0.1%, the actual taxes you pay each year is a far lower percentage than the middle class would pay, due to this unequal system. The rich get richer, and use that money to rig the game further.
Just look at the current tax bill that was passed.
This is false. Paid tax rates rise progressively with income in the US.
https://taxfoundation.org/summary-latest-federal-income-tax-...
The NYTimes article that you link to doesn't really discuss tax benefits that are valuable to the top 0.1% so much as those that are valuable to the upper-middle class: the mortgage interest tax deduction, 529 plans, 401k/IRA deductions, various aspects of our health care law, etc are all extremely valuable to this group but small potatoes to those making $2M+ per year.
That is a common opinion, and one that is not justified by the facts.
About half of income tax comes from 1% of taxpayers.
Here's some mind blowing advice - stop buying useless ornaments that do nothing to elevate you or enhance your life in meaningful ways. People have been hoodwinked into buying junk and stand there teary eyed wondering how it all happened and why they're so empty inside. How they went so far but did so little.
This years black friday/cyber monday sales were extraordinary - because people are idiots.
It's not a mystery. Make conscious choices in your life and you won't be a victim. Someone making 6 figures is the last person anyone should feel sad for.
Living in a high-cost city isn't necessarily a luxury. Many people who do would prefer not to, but cities concentrate economic opportunities and that is why people migrate to them. This is why urbanisation is a byproduct of economic development pretty much everywhere.
Case in point: I lived in Atlanta for ten years and recently moved back to Athens, a small university town about an hour and some change east. There's no question that it's much cheaper to live here. But if I wanted an actual job in my field, I'd pretty much have to live in Atlanta - that's why I moved there in the first place.
I'm fortunate enough to be self-employed and to no longer care, as the vast majority of my customers are out of state. But make no mistake, there are vanishingly few tech job opportunities here - and this is a fairly educated college town.
And as we know, IT is fairly democratic in the degree to which it can be done remotely. But if you specialise in finance, entertainment, fashion, big law, aerospace, or a variety of other areas, there are certain places you more or less have to be. The American economy is eminently decentralised compared to that of most countries, but still - the cities have the lion's share of white collar, professional middle-income jobs.
This is why lowering taxes is great.
I think it's telling that one family cited credit card debt like it's an act of nature instead of a conscious choice. And just because you qualify for a million dollar mortgage doesn't mean you should get one. Spend that big salary on a home near your workplace and sell the $40,000 SUV.
The sooner we wake up from the "dream" of being deep underwater in debt to fund an ecologically and economically unsustainable lifestyle, all the while just a paycheck or two away from complete ruin, the better off we'll be.
I'm not saying that means people who can't afford to live in places like NYC or SF shouldn't move, just that there's a complex tension between economic theory and "messy" human reality.
The ideal rationally self-interested agent described in economics texts would just move from place to place in search of profit-maximising opportunities, but that's not what actually existing humans do much of the time. They have relatives, friends, aesthetic preferences, social obligations, religious beliefs, and other things that "do not compute" in mathematical models.
You might be able to afford a better lifestyle on a modest paycheck in Sioux City, Iowa, but what happens when that company, the approximately ~1 serious tech employer in town, lays you off? In the Bay Area, you just go across the street.
Lest anyone think I'm a cheerleader, I live in northeast Georgia and have no intention of moving to the Bay Area. :-)
True. We aren't around "900 of the world's top 1000" companies, but in the 20 years I've lived here, I've never found there to be a lack of development jobs.
As a single person, you could easily live comfortably in parts of metro Atlanta making 70K.
I agree that metro Atlanta is not an especially high-cost area, though parts of it certainly are; ITP in general is getting overheated. I lived in Midtown for the better part of ten years and by the end of that, rents seemed on par with Brooklyn and Chicago, though I did have to upgrade from single-person housing on account of a short-lived marriage.
Nowadays, I've moved back to Athens. Where are you?
Salary.com is seems pretty much in line with my experience.
Benefits may be better at a larger company but salaries are about the same.
Even so, don't complain that you can't live off of 100K. They are purposefully making lifestyle choices that the median household making 70K a year can't make.
I agree!
They compute fine -- most models are just "lying with math" by excluding the value of those things from their calculations.
It's not different than a friend who ignores those things when using words -- of course it doesn't make sense why you don't move if you don't account for the full value of where you are at present.
I think if we accounted for the destroyed social value that most of these economic models have inflicted, it would be the obvious massive negative that most people anecdotally tell. I think it's very telling how rarely you see these kinds of things modeled in economic theory despite how obviously part of the way humans value things they are.
Economics is merely institutionalized fixation on money, and produces precisely the psychopathic models you'd expect from that.
"You can't argue with the math!"
"Well, hold on now, I think you left a whole bunch of things out!"
If you don't know where the problem in the math is, despite there being an extremely obvious problem, many people will ignore your objections. That's why they use math, to paper over their obviously poor behavior.
Being able to strip that bare is useful.
It seems to me we'd do better taking an empirical approach and pricing in widespread psychological realities.
For instance, it's clear that one of the things people don't do very well with, especially as they head into middle age and beyond, is big downward adjustments in lifestyle. It just doesn't accord with the expectation of upward mobility and progression through life anywhere, least of all in the land of the American Dream.
So, even when economic circumstances get worse, their spending tends to remain stubbornly high relative to the quantitative reality. It seems to me sanctimoniously chiding people for that is not a constructive response. It's clearly what most people do, in some measure. The question is how to best deal with that systemically, if in any way at all.
lol a home in downtown DC, where the MD guy likely works, is gonna set you back 2 million at least. you're not gonna find a 1br apartment downtown for less than 2k/mo.