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Comment by naravara | Hacker News Reader

>what world are these people living in that you can't give up a job that you hate because you can't afford to live on 500-600k.

The one where you lock into a mortgage and a car that assumes a $1.2M salary to keep ahead of.

It's really easy to let your lifestyle expenses balloon, especially in a high-COL city where minor increases in living space/amenities can end up costing large amounts of money.

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Yup. The golden rule: don't ratchet up your lifestyle when your income rises and you'll be far happier in the long run.

Also don't give a damn what people think about you. Typically people get trapped in that mouse wheel because "look what they have."

Yep. And if you get windfall and are really itching to spend it do yourself a favour and research what stuff is expensive but lasts. In NPV terms you'll be saving money, but you won't be pulling on hard-to-escape expenses.

Source: I sold a company and quadrupled my spend on housing. Something stupid that I regret. But I also spent money on high quality stuff that is still lasting almost a decade later.

This isn't really germane to the $500k+ set the article is talking about. Everything you're buying at that tier is going to last. What eats up their incomes is housing, transportation, and stuff like private school tuition and childcare.

The challenge there is it's hard to ramp those down once you lock in. Downsizing on housing means having to move and possibly sacrificing social life and opportunities along the way. Pulling your kids out of private school has consequences for their long term prospects and their socialization. And so on.

> Everything you're buying at that tier is going to last.

I respectfully disagree. Luxury goods are often flimsy or expensive to maintain (e.g., Toyotas vs Porches) so research is still required.

As for private school and housing, these are exactly the expenses I'm talking about not getting wound up in. I went to private school almost my whole life, and I understand what it is to not want to be pulled away from a community, but the reality is that $500k—let alone $1m—is more than enough to afford a good private school and a good home in any city. The struggle to live on $500k / year is an artificial, self-sabotaging one.

I'm surprised no one here has yet name-checked Tom Wolfe's Bonfire of the Vanities. There is a famous comedic passage in which Sherman McCoy discusses his expenditures relative to his (vast) income.

EDIT:

One breath of scandal—

—his spirits plunged even lower. One breath of scandal, and not only would the Giscard scheme collapse but his very career would be finished! And what would he do then? I'm already going broke on a million dollars a year! The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay $21,000 a month for the $1.8 million loan he had taken out to buy the apartment. What was $21,000 a month to someone making a million a year? That was the way he had thought of it at the same—and in fact, it was merely a crushing, grinding burden—that was all! It came to $252,000 a year, none of it deductible, because it was a personal loan, not a mortgage. (The cooperative boards in Good Park Avenue Buildings like his didn't allow you to take out a mortgage on your apartment.) So, considering the taxes, it required $420,000 in income to pay the $252,000. Of the $560,000 remaining of his income last year, $44,400 was required for the apartment's monthly maintenance fees; $116,000 for the house on Old Drover's Mooring Lane in Southampton ($84,000 for mortgage payment and interest, $18,000 for heat, utilities, insurance, and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes). Entertaining at home and in restaurants had come to $18,000.

-------------

It goes on. The guy needs Mr. Money Mustache.

Yeah... I literally don't buy it. High Cost of Living city has nothing to do with needing $500k/yr in earnings (post tax). What kind of mortgage and car do you have that? Simple answer... that's a $10M house or a $2M car or half of each of those.

Besides the fact that if you're earning $1.2M salary, you're taking home other bonus/stock that are comparable. Getting locked into this sort of lifestyle is a choice not driven by need. A drug dealer in "low cost" Detroit or Sinaloa might make the same claims...

The median annual earnings of palo altans is about $400k/year. That's probably workable for cheaper areas like south palo alto where a house built in the 80s will run you $2.5 mil. Move closer to downtown and you could easily double or triple your necessary annual take.

"According to Census data, the median household income in Palo Alto is $137,000 a year, while the US average is $57,600"

from: https://www.cnet.com/news/silicon-valley-middle-class-earns-...

I think this type of Census data understates household incomes. I am not exactly sure why, but Atherton comes in at about 400k a year per household. That is a lot, but doesn't seem like a lot for Atherton.

No, this seems right. The typical distribution of income across the pop., even in a distorted environment like the valley, looks far more like a Poisson distribution with a long tail than a typical Gaussian

137 is a median. Half the people in Palo Alto make less than 137 in household income? Maybe, if you count East Palo Alto. But Atherton at 443 ( https://www.bloomberg.com/graphics/2018-hundred-richest-plac... ) ? seems too low

I can't find the $400k/year number anywhere. The census puts it at "$250,001" which seems like a fishy number.

https://www.bloomberg.com/graphics/2018-hundred-richest-plac...

I believe it is skewed since many people in these neighborhoods aren't making their money through salary income (anymore), but instead through interest / dividends.

If you sold your company, aren't working at FB/goog/etc and are sitting on a ton of stock holdings, your income is going to show as near $0

that should be accounted for in govt household income calculations, but I could be wrong. For example, ton of stock holdings will pay you dividends or capital gains.

What you put on your tax return every year doesn't really reflect your actual wealth. Even in tech most people top out at ~$200k-$250k base salaries but you may vest and accumulate millions in stock RSUs that you don't sell in a given year.

Stock RSU vests go on your tax returns.

Ah ok - I'm thinking private shares

Those do too. The only thing that doesn't is deferred compensation in the form of an ISO or NSO. The latter is recognized as ordinary income when exercised.

Don't RSUs show up on the W-2 as income though (even if you don't sell them)?

They do; RSU vesting is a taxable event. It's counted as ordinary income based on the fair market value at the time it vests and taxes are due immediately. Companies tend to withhold a percentage of the shares and sell them to cover your tax burden.

My working explanation is that it's actually survey data. the richest people either don't answer the survey or understate their actual holdings when they do answer.

You don't want to rely on it for means because the high incomes are capped at a relatively low level so that they don't out high-earners in sparse areas. But that shouldn't affect medians.

Those numbers don’t remotely reflect the cost of living for people moving to the area now. Prop 13 has distorted things dramatically. In Palo Alto, there are numerous retired people living in houses paying property tax rates essentially set in the 1970s. In fact, Palo Alto has the lowest tax rate in the country by percent since the houses are so expensive but the people pay so little compared to the value.[1] You could definitely live off $500k, but $137 would be really tough to near impossible with a family. Prop 13 has really broken the California housing market.

https://www.bizjournals.com/sanfrancisco/news/2016/12/01/pro...

Stock options are not counted as income. They are exactly that: Stock options. Your income is your take-home pay, specifically gross pay on your stub extrapolated to annual salary.

Yes, there is capital income from stocks and other market investments, but appreciation for those comes under capital gains, which are calculated (and taxed) separately, and don’t count as employment income, for good reason: You can’t use stock options vesting in 4 years to buy food tomorrow or pay mortgage next month.

Which makes it ironic that capital gains taxes can bite exercisers before they are actually able to be liquidated.

The spread between purchase and grant price for Incentive Stock Options actually is counted towards income for Alternative Minimum Tax.

100% agree. We recently purchased a car. In our case the "expensive" aspect is that we bought new... a new Subaru Outback. We could certainly afford a brand new Escalade, but those types of behaviors would lock me into my current employer or something that pays similarly and that idea isn't something I'm fond of.

And this dude bought that shit despite hating his professional life. Hard to feel bad for him.

I've been in a similar position as you for most of my life. One weird aspect: employers/managers/companies have come to rely on you "needing" the pay cheque as a powerful motivator and control. When you can literally walk away from a job because you don't need the money to make your end of month payments it makes the relationship weird in some aspects. I don't even know if the party who traditionally holds this power consciously realizes it, but in my experience they seem to exhibit less confidence or willingness to play the "because I own you" card. It could also just be that I come across as less of a push-over and they respond accordingly. Regardless, interesting phenomenon...

I’ve heard it given the name “Fuck you money” – the money you have that gives you the ability to just say “Fuck you!” and walk away from your employment.

More like a 2M house and a 120K car. 500K/year isn't enough to live in a 10M house because it's 20 years of work (30, accounting for other expenses) and that assumes no cut in income. To get into a 10M house one needs to start a very successful business, which is quite possible after all the experience at such a job.

Usually when someone mentions a salary figure it's pre-tax. $500k in NYC is ~285k post-tax.

If you have a family, a $1.5m house (which barely gets you a shabby 3-bedroom in a high cost city) will, assuming you put $300k down, be around $8-$10k/month in mortgage + property taxes + insurance + any hoa/maintenence, which is by itself 40% of your monthly take home.

> If you have a family, a $1.5m house (which barely gets you a shabby 3-bedroom in a high cost city)

Uh... median house price in Seattle is less than half that. $1.5 million for a house in Seattle will get you an extremely nice house. Extremely nice.

If you disagree, it's because you have incredibly high standards for what constitutes "nice". That's fine, but it makes it more than a bit silly to complain that you "can't afford" a different lifestyle.

You're just making bad choices at that point.

I didn't mention Seattle...I'm referring to NYC or SF.

So literally 2 cities. Wildly expensive cities like DC, Seattle, Boston are still highly livable on $1.5 million.

Honestly, if you're regretting your life choices so severely but you're unwilling to live anywhere but NYC/SF, you're either not really regretting your life choices that much, or you're just really bad at making good decisions with your life.

I'm making the assumption that there are more jobs that pay $500k+ in Silicon Valley and NYC. If you can get that salary in 2nd cities like SEA or BOS then of course you're doing better than someone making the same in higher CoL places.

Article says friend is in Manhattan and earned (i.e. total comp) $1.2mm. Very unusual for anyone in finance to have that high a salary short of being a CEO earning $10mm+.

Suppose he lives on the UWS in a 2000 square foot 3-4 bedroom condo which he bought for $4mm and has a $3mm mortgage. With a 30year fixed mortgage, that's maybe $180k a year. Don't forget the $60+k a year in condo fees and taxes. Throw in anywhere from $40-80k for nanny/childcare/preschool for the 1-2 kids he may have and you already have nothing left over if he went to a $600k comp.

I'm not saying he can't choose to live more conservatively, but when you're used to making $1.2mm a year, it's not hard to imagine how he got here. High cost of living does play a part, especially in NYC.

$1.2M total comp is not that unusual in finance if you've been in a number of years[1].

[1]https://www.wallstreetoasis.com/salary/investment-banking-co...

So... sell your expensive shit and buy less expensive shit. That's what us plebs are expected to do. No one's locked into anything.

> where minor increases in living space/amenities can end up costing large amounts of money.

It is pretty crazy how little extra money buys you. E.g. in NYC, the only differences between a $2,000 month apartment and a $20,000 a month apartment are going to be things like location, granite countertops, a well-designed bathroom, and better windows. But in most cases the actual floor space and layout is going to be almost identical.

Clearly those things are worth something, but it's easy to see how the work and stress of paying for those accents is to result in a net negative happiness for many if not most people.

This is not true. $20,000/mo rent in NYC will get you a gigantic apartment (thousands of square feet), as you can verify on any housing listings website.

It can get you that, but not if you want to be in SoHo on the 30th floor of a luxury building or whatever.

You are wrong. You'll pay $60-70 a square foot, but 20k will get you a lot.

https://streeteasy.com/building/chelsea-modern/rental/265743...

https://streeteasy.com/building/336-west-23-street-manhattan...

To consume $100k a month we need a $10-20 million dollar mortgage (50-100k/mo depending on years and rate). I have to assume a few cars, dining, etc would probably end up being $10-20k/mo so the mortgage is probably around $15 mil. So in NY or SF you are looking at something like a 1-2k sq/ft 2 bed 1 bathroom shithole apartment. Not so luxurious after all really.

Less than $15m could buy a 5 bedroom mansion of a single-family home in San Francisco, and in New York, a ridiculously stunning 5 bedroom apartment.

Where did you get 1-2k sq/ft 2 bed 1 bath shithole from?

And that's not even taking into account taxes...

I assume you're being sarcastic... a $15M shithole apartment! X^D

Yeah looks like I obviously touched a nerve with some people here I guess?

You didn't touch a nerve. You're out in bizzaro-land. $15MM in Manhattan will get you a brownstone on the Upper West Side.

Putting kids through school, paying for parent's mortgage, vacation properties, country club dues.

> country club dues

> vacation properties

I'm glad there's a "stupid tax" for wealthy people too.

You're likely not going to get that $1.2 million job unless you "travel in the same circles" as the people hiring.

Your NYC numbers are way off. Here are some listings for apartments for sale between 9 and 12 million: https://streeteasy.com/for-sale/manhattan/price:9000000-1200...

For those who don't feel like clicking the link: most are very large (5-6 br) apartments, in expensive neighborhoods, in nice new buildings.

Yeah, Manhattan real estate is something like $1600/sqft and SF is $850-$1200 unless you want something in one of the fancy new high-rises. $15 million will buy you 12,500 square feet haha. Just check Zillow.

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