$500k a Year yet Struggling? Let's Do a Double Take

I&#x27;ll share something I learned myself in another Hacker News comment.<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_Millionaire_Next_Door" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_Millionaire_Next_Door</a><p>&quot;Their findings, that millionaires are disproportionately clustered in middle-class and blue collar neighborhoods and not in more affluent or white-collar communities, came as a surprise to the authors who anticipated the contrary.&quot;<p>It really opened my eyes to the fact that most people I think are rich are actually not rich, just extremely completely in debt.<p>&quot;The authors make a distinction between the &#x27;Balance Sheet Affluent&#x27; (those with actual wealth, or high-net-worth) and the &#x27;Income Affluent&#x27; (those with a high income, but little actual wealth, or low net-worth).&quot;

If you&#x27;re making $500,000 a year anywhere on the planet and struggling you&#x27;ve most likely let your lifestyle get the best of you. Sure, maybe there are a few circumstances where that&#x27;s not the case: a major medical bill that you&#x27;re paying off, caring for your parents or other loved ones. But otherwise, there would be lots of places to cut back without a notable change in quality of life.

&quot;Some of these payments are applied to the principal on their loans, which increases the couple’s net worth by either building their home equity or by reducing their student debt. So that’s also savings.&quot;<p>I don&#x27;t count paying down a debt as &quot;savings&quot;. It might be an increase in net worth but not savings.<p>If paying down debt is considered &quot;savings&quot; now, then the entire USA is &quot;saving money&quot;. But I think that not only goes against the definition, but the spirit of the idea.

This is a surprisingly reasonable article from Bloomberg and it&#x27;s certainly true that Mortgage and 401k doesn&#x27;t feel like saving excess money, but it does essentially map to savings.<p>I&#x27;m not sure it&#x27;s really a useful conversation to have though. We live in a world where there are essentially an infinite number of things you cannot have. So feeling rich is pretty much a choice once you&#x27;re beyond probably double the average household income for the area you&#x27;re in.

103,500&#x2F;year on unexplained &quot;other expenses??&quot; Over $8,500&#x2F;month?!! Which is almost double their mortgage payments Um....<p>What the hell?<p>Their biggest line item is completely unexplained yet they are trying to explain where their money goes?<p>I live a fairly indulgent life and I spend less than that on everything in a year. I can&#x27;t imagine spending six figures on &quot;misc&quot; unless there&#x27;s a lot of hookers and blow involved.

I&#x27;d like to point out this is an opinion piece, and verifies the intuitive claim that 500k&#x2F;yr is not struggling to make ends meet even in nyc. The piece concludes with questioning why people feel like they&#x27;re paycheck to paycheck when they&#x27;re not, and cites wealth inequality (skewed idea of how well off one is by knowing wealthier people) and a lack in paycheck deposits because of other payments into things like 401k.

We make a little over $500K and I would not say we are struggling day to day, but we won&#x27;t have so much saved as people expect. We lead a modest life (live in an apt, drive a compact) and live in SV.<p>Monthly House rent is $3000, Kids schools is $2400, kids activities is $2000, groceries and eating out is $1500, travel expenses averaged is $1000, misc expenses (gas,utils,shopping,car maint) is $2000. We do not have any debt.<p>We pay over $160k in federal&#x2F;state income taxes and save $38k in 401k, $15k in 529 accounts annually.<p>Most of these expenses are regular day to day expenses we can&#x27;t cut down on to save more.

I&#x27;m in a small Midwestern city so my cost of living is very low compared to some places in the USA. I make less than some of my colleagues in larger cities but even with student loans and getting ready to buy a house, I am quite comfortable. Even still, I look at some of my coworkers who are making what I&#x27;m making and were freaking out when they changed our pay schedule so we would get paid a week later. What the hell are they spending their money on that one week is a huge deal for them but it isn&#x27;t for me? Sure some of them have medical bills and children but I was still surprised that it was such a big deal to so many people.

Here is a detailed list of the missing $103.5 K, from another article with more details on this couple:<p>Childcare (Two Children)- $42K<p>Food for four (includes date night every two weeks) - $23K<p>Home Maintenance - $5K<p>Property Insurance $2.5K<p>Gas - $5K<p>Car insurance - $2K<p>Life Insurance ($3 million term) $2.5K<p>Clothes for four people (no fancy bags, shoes or threads) $9.5K<p>Childrens Lessons (sports, piano, violin, academics) $12K<p>Total - $103.5 K<p><a href="https:&#x2F;&#x2F;www.financialsamurai.com&#x2F;scraping-by-on-500000-a-year-high-income-earners-struggling&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.financialsamurai.com&#x2F;scraping-by-on-500000-a-yea...</a>

I love how this old TV commercial pretty much sums up the way some people live:<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=PV_YAeXOSiw" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=PV_YAeXOSiw</a><p>People who think it&#x27;s OK to spend every dime that comes in. They&#x27;ve bought into the recent concept that they deserve everything they want and more... then when shit happens... it&#x27;s a damn hard lesson.

I can genuinely see that anybody could &#x27;struggle&#x27; anywhere, once you consider living costs and the miscellaneous monthly payments adult life insidiously inflicts upon you. Whilst income gradually rises, your corresponding monthly outgoings seem OK - until the income dries up (I&#x27;ve just watched the excellent NoClip documentary on the implosion of Telltale games in Marin County).<p>What I never quite grasp is why &quot;Silicon Valley&quot; job is still seen as a premium, rather than a massive risk. The sole benefit I can see is that you can flit between jobs and build up your income - but as your income goes up, so does your expenditure&#x2F;exposure.<p>I know there are other &#x27;hubs&#x27; emerging that are cheaper - but they always seem to be &#x27;emerging&#x27;<p>Is the issue the &#x27;gambler&#x27;s-dilemma&#x27; or are you on average better off in Silicon Valley or what?

Didn’t read the article, assuming it “was intentionally crafted to make an audience hate someone to maximize ad revenue.”<p><a href="https:&#x2F;&#x2F;mobile.twitter.com&#x2F;patio11&#x2F;status&#x2F;1110615248870891520" rel="nofollow">https:&#x2F;&#x2F;mobile.twitter.com&#x2F;patio11&#x2F;status&#x2F;111061524887089152...</a>

&gt;Just this month, CNBC ran a story entitled “Here’s a budget breakdown of a couple that makes $500,000 a year and still feels average.”<p>Yes, because they have been running that story <i></i>monthly<i></i> since 2017!<p><a href="https:&#x2F;&#x2F;twitter.com&#x2F;ejenk&#x2F;status&#x2F;1110616128118759424" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;ejenk&#x2F;status&#x2F;1110616128118759424</a><p>I don&#x27;t think CNBC is trying to drive a narrative here, but I do imagine that they&#x27;re getting ReallyGoodEngagement™ out of articles like this since they tend to inspire immediate outrage and incredulity.<p>patio11&#x27;s take on this: <a href="https:&#x2F;&#x2F;twitter.com&#x2F;patio11&#x2F;status&#x2F;1110615594561212416" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;patio11&#x2F;status&#x2F;1110615594561212416</a>

I took a look at the article they&#x27;re sourcing, and that article actually has mentioned the counterpoints it expects to see about the various line items and has an argument about why they think it&#x27;s reasonable that it&#x27;s on there. I don&#x27;t entirely agree with it, but I think the article is more nuanced than the bloomberg article suggests by just including the chart without any commentary from the article.<p><a href="https:&#x2F;&#x2F;www.financialsamurai.com&#x2F;scraping-by-on-500000-a-year-high-income-earners-struggling&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.financialsamurai.com&#x2F;scraping-by-on-500000-a-yea...</a>

130k supporting a spouse and living in manhattan, and even eating out constantly, is more than enough to save a ton of money per month. 500k and struggling is ridiculous.

When my wife and I had our first child, we lived in SF.<p>The neighborhood daycare in the Excelsior charged $1600&#x2F;mo. This is five years ago.<p>We&#x27;re about to have our fourth child. With the upcoming summer, if we still lived in SF, we&#x27;d have four children in daycare. $6,400&#x2F;mo.

I have second hand exposure to some of this mentality... and I believe a lot of the concern from individuals comes from being entirely of social cultural upbringing where under seven figures is totally inappropriate&#x2F;failing . .

Mortgage payments: $60,000<p>$60K &#x2F; year isn&#x27;t going to pay for the mortgage on even a small house in Silicon Valley.

Try raising a few kids in a major city and paying private school tuition and child care fees. It easily eats up most of $500K of income.