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Comment by TTPrograms | Hacker News Reader

I don't really see how people get to much more than $40K a year in expenses. That's like a $2K/month apartment and a pretty nice used car with lots of margin for going out.

Granted if you're too aggressive with IRA investing or student loan payoff you can get in a situation like this. That's my downfall - I'd rather be in the market, but you really shouldn't expose your emergency fund to that kind of risk, especially given near-perfect correlation between market performance and personal financial security.

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Food, housing, and cars aren't the only annual expenses to consider. The biggest one you're missing is health (even with insurance). One major acute health problem that lands you in the ER or the need to see a doctor could easily adds thousands to annual expenses. This happens all the time. You'd be surprised how many people get put into collections for unanticipated health expenditures.

In America.

I can assure you that's not everywhere the case. In the bay are, $40k/year will barely make up for your rent/house payment - especially if you have a family to support. And then there's also a student loan payments, health insurance...

I was really, really surprised when my wife and I moved to London, England 2 years ago. In rural Japan I was spending not much more than $10k a year (although I had subsidized housing from my job). To put it mildly I'm very frugal (and like living lightly). In England we were living in an admittedly nice flat in Watford, but I swear $40k would be tight. I think train fare alone for my wife and me was something like $12k a year. Rent, utilities and council tax was probably pretty close to $20k a year. Not a lot of room left for anything else.

We also had to budget for a vacation abroad so that we could see the sun ;-) (I'm only partially joking...)

OP had a house and an expensive car to pay off. That's got to be a lot of money right there. Also, OP probably ate more expensive food and probably ate out a lot more. It's not difficult to imagine how a lot of the money can be spent on these things. Let's not forget that taxes will eat a lot of the gross income too.

I don't understand why Americans ever talk in gross income. Where I live people speak and negotiate only in net income, they don't even consider taxed money as their money.

An expensive ($800k+ home) in Dallas could easily cost $10k a month to maintain. Generally, as people make more money, they find more ways to spend it. More/expensive cars, more/expensive housing, more/expensive vacations, etc.

Health insurance, Internet, Phone...these are the things people always leave out. They are just as much a necessity as electricity and transportation.

cocaine is one way.

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