on the 'taxes' segment: most people won't owe $32k in taxes unless they're actually earning a high amount anyway, so it's sort of self-fulfilling - if you include $32k in taxes, then yes, you'll need to earn far more than that to pay those taxes.
Not sure why 'cable/internet' are separate from 'entertainment'.
For the article they want to present a gross income figure, i.e. what salary do you need to afford the American Dream. The figure for taxes is simply the income tax due on a salary high enough to have an after-tax (net) income equal to the other expenditures. There's nothing funny or self-fulfilling about it.
Of course, you now have to take into account this extra income and add that to the taxes, and you'll add that result to the total income, which'll need taxing, but this fortunately has a closed form solution, and we can quickly calculate a final number. At least I think other people could quickly calculate it.
4k education expenses also seems excessive but I won't comment on that since I don't really know much about the US education system costs but apparel 2.6k? More than Utilities? WTF? That comes to around 200 dollars on apparel per month.
As someone else in the thread mentioned, this isn't the "America Dream", this is the "I want shit and have fun dream".
$12,659 per year on groceries works out to roughly $240 per week. While it is possible to reach that (e.g. by shopping exclusively at high-end specialty grocers and avoiding coupons), most families would pay far less. A family with access to a supermarket would probably spend around $80-$120 per week on groceries, or $4200-$6300 per year.
The car expenses assume a very large fuel-hungry vehicle, and appear to assume the vehicle will be purchased on a high-interest loan. A five-seat sedan would work just as well, and would result in expenses of about $3000 per year ($10k amortized over a ten-year operating lifetime, plus $2k per year in fuel).
Similar issues exist with the other large expenses. For example, the author's chosen goal for college savings is higher than the cost of a four-year degree at Stanford (according to the stanford.edu Net Price Calculator) and is far more than tuition costs at a normal school.
(1) automobile costs include more than amortized purchase costs and fuel (such as maintenance) -- especially if you are going to keep it operational for a decade. (2) what 5 seat sedan has a $10K new price?
> For example, the author's chosen goal for college savings is higher than the cost of a four-year degree at Stanford (according to the stanford.edu Net Price Calculator) and is far more than tuition costs at a normal school.
The savings target for college savings shouldn't be compared against the current cost, but against the expected cost at the time the student will be attending college.
> automobile costs include more than amortized purchase
> costs and fuel (such as maintenance)
> what 5 seat sedan has a $10K new price?
> The savings target for college savings shouldn't be
> compared against the current cost, but against the
> expected cost at the time the student will be
> attending college.
Its certainly not in the first few years (which is why some companies offer prepaid routine maintenance) -- in the latter several years of a 10 year life, that's far less the case.
> No need to buy new, let some other sucker eat the depreciation. A 3-4 year old Corolla (or equivalent) shouldn't cost more than $10k.
A 3-4 year old Corolla or other economy car is going to be spending more of the 10 year life you propose in the part of its lifespan where the "maintenance is not a significant expense compared to the purchase price and fuel" argument is invalid than a new car.
> Inflation isn't going to be a significant factor, since long-term savings are going to be placed in something like a TIPS bond.
A TIPS bond is indexed to general inflation, inflation of higher education costs has been much higher than the general inflation for quite a long time. So, yes, for college savings, inflation is likely to be significant factor, even if you use an investment vehicle protected against general inflation.
> It is possible that the total cost will increase, but what are the chances it'll cost more for a regular school then than it does for a top-tier school now?
Quite good. Using reference points I'm familiar with, the tuition for a UC now are higher than the tuition at Caltech in the early 1990s, and the ratio of college tuition inflation to general inflation has been higher in the second half of that interval at the first, having stabilized at around 2.0 from the late 1990s on, where it had been at around 1.5 in the early 1990s. So
I disagree with both of these assertions.
No need to buy new, let some other sucker eat the depreciation. A 3-4 year old Corolla (or equivalent) shouldn't cost more than $10k.
According to edmunds.com, your typical 4 year old Toyota Corolla will cost closer to $15k+.
Not qualifying for financial aid, the total cost (tuition, room, books) per year @ Stanford will run you $50-60K--easily $200K+ for four years.
If this tuition history chart (http://www.collegecalc.org/colleges/california/stanford-univ...) is any indication of the future, four years at Stanford or any prestigious college in 2032 will set you back a ~half million USD!
I suppose the parents can bet on the smarter of the two kids...
> Saving $2500/year @ 10% compounded annually over 18
> years is a little over $120K.
> Not qualifying for financial aid