The basics, some extras, savings: You need $150,000 a year

[packrat]

Re: The basics, some extras, savings: You need $150,000 a ye

If we made 150,000 a year we would jump for joy. We'd be able to save for retirement and the kids' schooling. I'd be very saucy and not buy the kids clothes from garage sales/resale shops, even throw caution to the wind and buy myself some proper clothes instead of the scrub pants and tshirts I've been wearing for two years. JD gets this new job and we'll be living off less than 1/3 of that after the pay cut. Ohhh maybe I'd get to go on a vacation for the first time 9 years! 150,000/year would be my Scrooge McDuck diving into his coins moment.

 

[Skippy123]

Re: The basics, some extras, savings: You need $150,000 a ye

Insidiously, wants become needs.

haha, I agree with this!

I think it is about priorities!

I know a few people who complaining about not having money but they go out to eat (eating out adds up quick) and send their kids to private school, etc.

 

[Tacori E-ring]

Re: The basics, some extras, savings: You need $150,000 a ye

If the $150,000 is post-tax, your employer provides healthcare, and you have no student loans, you would probably say it's more than one needs.

If it's $150,000 gross--which turns into ~$75,000 after taxes/SSI/401k only to matchpoint--and with that smaller sum you pay:
--$2,000/month on student loans, and
--$1,000/month on health insurance for a family of four,
you'd probably find it's not enough, especially in a city with a high cost of living.




One interpretation gives a family $12,500/month to play with, the other scrapes by only $3,250/month.

Both "make $150,000 a year," but the result is two VERY different lifestyle scenarios.

EXACTLY. If it is after taxes the article sounds spot on. $75,000 for a family of four would yield the basics, some extras, and some savings (they are not saying $150,000 would be JUST the basics unless I misread the article).

 

[winternight]

Re: The basics, some extras, savings: You need $150,000 a ye

Income matters of course but in my experience it is more about personal habits. Dh and I have consistently lived below our means when our income was lower and now that it is higher we still live below our means. I had a friend who was always making more money than me and always broke. She overspent on housing and eating/drinking out. It seems to me that some choices become needs. Usually there is a cheaper house or car or whatever. Of course where you live matters but that is also a choice.

Phoenix. I need to learn how to invest like you. I think I'm too risk adverse.

 

[TooPatient]

Re: The basics, some extras, savings: You need $150,000 a ye

Income matters of course but in my experience it is more about personal habits. Dh and I have consistently lived below our means when our income was lower and now that it is higher we still live below our means. I had a friend who was always making more money than me and always broke. She overspent on housing and eating/drinking out. It seems to me that some choices become needs. Usually there is a cheaper house or car or whatever. Of course where you live matters but that is also a choice.

Phoenix. I need to learn how to invest like you. I think I'm too risk adverse.

Not always a choice.

We live in a pricy area (still $100,000+ less for a house than on the other side of the lake; closer to $200,000 less if comparing similar houses) because we had to when we purchased. Even now, this is where a lot of the jobs in B's field are and pretty much all of the companies able to hire someone with his experience. There are still very few alternatives to where we live -- I'm going into a competitive program and very few schools offer what I need. (even fewer are in an area with any sort of jobs available)

 

[Phoenix]

Re: The basics, some extras, savings: You need $150,000 a ye

Phoenix. I need to learn how to invest like you. I think I'm too risk adverse.

I don't really wish to advise anyone cuz I don't know the investing environment in the US. And we're not even as risk-seeking as I'd like; DH is too risk-adverse and we never seem to have excess cash when MAJOR investing opportunities arise! All I can say is that i) you need to take risk and ii) it MUST be a calculated risk, ie. you must do plenty of reasearch, understand what it is you're doing, NEVER EVER invest in something that you don't understand or have an appreciation of as to its risk/ returns profile.

 

[Dancing Fire]

Re: The basics, some extras, savings: You need $150,000 a ye

$150K ?? i can live like a king if i made $75K per yr.

 

[partgypsy]

Re: The basics, some extras, savings: You need $150,000 a ye

After taxes and paycheck deductions our family of 4 lives on 53K a year (plus a dog, cat, fish and some hermit crabs!).
I'd say we live well on that amount. My main anxieties are however despite having health insurance, either losing my healthcare via losing/changing my job or otherwise unexpected medical/dental bills that would otherwise wipe us out, and help paying for college for my two kids.
I don't feel that healthcare should be dependent on one's job, because precisely the time you need healthcare access the most (catastrophic or chronic illness/accident) is when you would lose it; it's like double jeopardy.
I also wish that the student would not bear so much of the burden of the cost of higher education. Many many jobs in the US require a college degree but the cost is getting to be exhorbitant (and I'm not even talking about Ivy League schools). I was looking into it, and at this time, one would not be eligible for significant need based aid if the family earns more than say 37K a year. That is, there are a lot of middle class families that do not earn enough to save a significant amount for their child's college education, yet are not eligible for need-based aid.

 

[MichelleCarmen]

Re: The basics, some extras, savings: You need $150,000 a ye

After taxes and paycheck deductions our family of 4 lives on 53K a year (plus a dog, cat, fish and some hermit crabs!).
I'd say we live well on that amount. My main anxieties are however despite having health insurance, either losing my healthcare via losing/changing my job or otherwise unexpected medical/dental bills that would otherwise wipe us out, and help paying for college for my two kids.
I don't feel that healthcare should be dependent on one's job, because precisely the time you need healthcare access the most (catastrophic or chronic illness/accident) is when you would lose it; it's like double jeopardy.
I also wish that the student would not bear so much of the burden of the cost of higher education. Many many jobs in the US require a college degree but the cost is getting to be exhorbitant (and I'm not even talking about Ivy League schools). I was looking into it, and at this time, one would not be eligible for significant need based aid if the family earns more than say 37K a year. That is, there are a lot of middle class families that do not earn enough to save a significant amount for their child's college education, yet are not eligible for need-based aid.

There was an article I read yesterday about all this. They were saying it really is just a regional thing. That in some parts of the country, one family's comfortable income would be near poverty in other parts of the country simply due to the cost of living. Regardless, though, yeah the basic needs cannot be covered with the low cut-off for public assistance, which truely is ridiculously low. There is "basic health" for Washington State, which is low-cost health insurance and the amount a family can make ($1700ish per month) is BELOW poverty level.

 

[MichelleCarmen]

Re: The basics, some extras, savings: You need $150,000 a ye

Insidiously, wants become needs.

haha, I agree with this!

I think it is about priorities!

I know a few people who complaining about not having money but they go out to eat (eating out adds up quick) and send their kids to private school, etc.

Yep, I know of a couple who "never seem to have enough money," but bought a new car, they splurged on some fancy new toys, they upgrade EVERYTHING, and go on vacations...then she complained that she'd rather stay home with her kids and gave me a judgemental look. I'm thinking, UM, we make sacrifices for me not to work. Yes, I stay home with my kids, but that also means during spring break, we're going to a few museums, swimming, and other little treats, not on a lavish vacation!

 

[TristanC]

Re: The basics, some extras, savings: You need $150,000 a ye

$1 buys different things in different parts of the country. Even more so than in different parts of the world. Eventually, city centers in developed nations are more similar than dissimilar in terms of real estate prices, the cost of a fancy meal, travelling is always factored on the same basis (cheap, med, extravagant - just that if you lived in france, a wine valley tour by car is cheap, and a beach vacation to Thailand is a medium expense holiday. For someone from South East Asia, the opposite would be true).

There is also tax etc etc.

But the replies are interesting. I'm glad for diversity, and for everyone who thinks that when they earn more, there will be a healty bank balance then? You're wrong. You would have as much then as you do now. If you are aggressively paying off loans and mortgages, then yes, when those are ove you'll be fine. But if your money is being spent on day to day living, no, you won't be much richer when you earn more.

it is just habit forming.

 

[DivaDiamond007]

Re: The basics, some extras, savings: You need $150,000 a ye

If we made 150,000 a year we would jump for joy. We'd be able to save for retirement and the kids' schooling. I'd be very saucy and not buy the kids clothes from garage sales/resale shops, even throw caution to the wind and buy myself some proper clothes instead of the scrub pants and tshirts I've been wearing for two years. JD gets this new job and we'll be living off less than 1/3 of that after the pay cut. Ohhh maybe I'd get to go on a vacation for the first time 9 years! 150,000/year would be my Scrooge McDuck diving into his coins moment.

Basically this.

DH and I earn way less than 150K a year (like 100K less!) and are getting by. We live in Ohio, which is LCOL comparatively, but live in a HCOL city because we wanted to live near great schools for our 2 young children. When we bought our house we were making more money, but still bought less house than we could reansonably afford. I got laid off of a great job in October and now am in a different career making about half what I was before. We made lifestyle changes and are doing ok, but it's been a tough transition.

I agree with others that "basics" will depend on who you ask. For me cable isn't necessary, but internet is. Having some type of a phone is necessary, whether it be landline or a "dumbphone" cell. We live in an area where the public transportation is spotty at best so having a vehicle that runs is necessary. Personally we have two cars that run and are paid off. As mentioned in a previous post, A/C is necessary around here if you don't want to die of heatstroke in the summer and heat is necessary as it dips well below freezing in the winter.

While we live somewhat comfortably, we don't earn enough money to save for the kids' college, for a comfortable savings account, or for retirement. DH has a profit sharing account at work but I have nothing. Even if I had the opportunity to contribute it wouldn't be affordable. Knowing that there will be no Social Security or MediCare for us when we're older, we don't plan on ever being able to retire anyways. We are one of the first generations (the first?) that will not have a standard of living higher than our parents. We've only ever known wages to be stagnant, gas prices being the highest ever, a tanking real estate market, skyrocketing healthcare and college costs. It's no wonder we can't keep up! It's a sobering reality.

 

[rubybeth]

Re: The basics, some extras, savings: You need $150,000 a ye

But the replies are interesting. I'm glad for diversity, and for everyone who thinks that when they earn more, there will be a healty bank balance then? You're wrong. You would have as much then as you do now. If you are aggressively paying off loans and mortgages, then yes, when those are ove you'll be fine. But if your money is being spent on day to day living, no, you won't be much richer when you earn more.

it is just habit forming.

I agree to an extent; I think it takes a lot of discipline and self-awareness to NOT increase your lifestyle when your income increases, but it can be done. DH and I made a conscious decision NOT to buy a house when we could have gotten the first-time homebuyer's credit, since we liked our low rent and being able to become debt-free was our goal, not taking on more debt. One important thing I've learned from Dave Ramsey is that it's hard not to compare yourself with the Joneses who have 'everything,' but it helps to remember that the Joneses are broke/in debt--you don't want to be them, anyway.

 

[TristanC]

Re: The basics, some extras, savings: You need $150,000 a ye

Different demographics for different countries. Where I come from, renting is a cyclical trap for people who can't afford to own their own housing. The benefits are there for home owners, renters need to use all cash. So it is a different cycle.

What I meant was, that yes as you earn more you will start to find ways and means to spend more. So if you don't get a good habit of putting away money into the right pockets, no matter what you earn you will be living from debt to day.

People who earn $40K per annum can get by, and have money for their kids, a roof over their heads, 2 cars and a healthy bank account. Singles earning $120K might still be in a spiral of credit card debt. Of course if you combine sensibility with a high income + investment savvy you get a dang good life.

Or a big pink diamond.

Either way...

 

[rubybeth]

Re: The basics, some extras, savings: You need $150,000 a ye

People who earn $40K per annum can get by, and have money for their kids, a roof over their heads, 2 cars and a healthy bank account. Singles earning $120K might still be in a spiral of credit card debt. Of course if you combine sensibility with a high income + investment savvy you get a dang good life.

Or a big pink diamond.

Either way...

I plan on having BOTH a good life AND a big diamond.

 

[Cehrabehra]

Re: The basics, some extras, savings: You need $150,000 a ye

I see people every day living for very little a month (I imagine my ayi and her husband combined make less than $1000 a month) and still manage to save a TON of money. These people are savers, big time. They eat rice and fresh vegetables, very little meat. They go out to eat infrequently, buy inexpensive clothes and have only 4-5 outfits that they rotate through and don't wash every time. They take public transportation.

We are a family of 5 and we can live just fine on that amount of money, putting our children through school, decent cars. The variable really is housing. There are houses in the midwest that you can buy for less than 100k that you couldn't find in parts of california for less than a million. We have a very good life, but we thus far have been unable to afford a lifestyle equivalent move to be closer to our family in southern california.

This article is poorly done and inaccurate.