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I make substantially less than 400k and I assure you that I do not live in a cardboard box. $5k is high for monthly expenses. I rented a single bedroom in Manh

I make substantially less than 400k and I assure you that I do not live in a cardboard box. $5k is high for monthly expenses. I rented a single bedroom in Manhattan for $1850 and you can save even more if you're willing to live with roommates. I'm not sure what I can do to convince you I'm not lying, but consider that median household income is less than $100k in both SV and NY. If the average person can get by on <$100k, why wouldn't you be able to save tons of money if you're making $200k? I have friends getting by on $40k in NYC. Can you imagine how easy it is to save if you match your lifestyle to theirs? Of course, it's not going to buy you a luxury lifestyle. But personally I'd rather maintain a high savings rate than live in a glitzy apartment and spend thousands on bottle service.

dvt 10y ago
Ok, so maybe I'm just bad at math. I know that if you make 200k as an engineer in NYC (which is STILL high[1]), you make around 10k a month after taxes. 10k - 2k for rent - 1k for expenses = 7k saved if you don't go on vacation, and literally do nothing that costs money for ten years. Even saving 7k a month, you won't save 100k a year. [1] https://www.glassdoor.com/Salaries/new-york-city-software-engineer-salary-SRCH_IL.0,13_IM615_KO14,31.htm https://www.glassdoor.com/Salaries/new-york-city-software-en...
- morgante 10y ago
  7k is about right. My average savings rate over the past 3 years has been $6k and it's increased as my salary has. You're forgetting to include investment gains. With them, I can go on regular vacations and still reach $1m within 10 years. Also, since someone else mentioned it, my model conservatively assumes a 4% inflation rate. Over the 3 years I've been tracking, my model has consistently underestimated the growth in my savings.
- riboflava 10y ago
  $1k for other 'expenses' is huge. You can drive that down at least by half with wiser spending.
  - foldr 10y ago
    It's not huge. That's bills together with all of your everyday spending. It's certainly possible to get that down to less than $1000 a month but you can easily spend $1000 a month without doing anything extravagant.
  - dvt 10y ago
    Food, insurance, gas, water, electricity, student debt, etc. At least by half? Come on. Let's be real.
  - eru 10y ago
    You might want to save, but there's no need to be a total miser on any >100k salary.
- mercutio2 10y ago
  You are exaggerating NYC income taxes. At $200k, your effective income tax rate if you file single, including FICA, is 33%, not 40% [0]. Heck, your marginal tax rate isn't even 40%, and all those numbers are without taking a 401k tax deduction. People get this crazy idea that $200k isn't rich in NYC or SF. It is very, very rich, even for the area. COL adjustment for rent and groceries shaves off $15-30k, but it doesn't keep scaling up from there. [0] https://smartasset.com/taxes/new-york-tax-calculator https://smartasset.com/taxes/new-york-tax-calculator
  - winter_blue 10y ago
    > Heck, your marginal tax rate isn't even 40% That's wrong. The marginal tax for even a $50,000/year earner in NYC is over 42%. Source: http://arjun-menon.github.io/taxes-in-nyc/?income=50,000 http://arjun-menon.github.io/taxes-in-nyc/?income=50,000
    - mercutio2 10y ago
      There's actually no contradiction. Marginal tax rates go down 6.2% at 118,500 when social security cuts out, and they only go up about 3% from there to 200k. It's kind of outrageous, marginal tax rates going down for high earners, but there we are. But thanks for pointing out that I had the wrong zip code, so I missed NYC income tax, which is 3.65% marginal, bringing average tax rates at 200k to 36%, not 33% (albeit with zero deductions and exemptions, which obviously isn't reasonable, you'll deduct state income tax at the very least and shave off 1.4% immediately). Your link is in error, it treats Social Security tax as continuing past $118k.
      - winter_blue 10y ago
        > Your link is in error, it treats Social Security tax as continuing past $118k. Actually, the tool does stop adding Social Security after the income limit: http://arjun-menon.github.io/taxes-in-nyc/?income=200,000 http://arjun-menon.github.io/taxes-in-nyc/?income=200,000 > you'll deduct state income tax at the very least The tool also factors in state income tax deductions. You'll see it deducted in the link above The tool reports the marginal tax rate for a $200,000 earner as ~36%. -- But yea, you're right, it sucks that $50k earners are taxed even more % than $200k earners. The employer pays payroll taxes of 7.65% (6.2% + 1.45%), so actual marginal taxes are ~50% from an employer cost perspective. It's truly insane.

dvt 10y ago

Ok, so maybe I'm just bad at math. I know that if you make 200k as an engineer in NYC (which is STILL high[1]), you make around 10k a month after taxes. 10k - 2k for rent - 1k for expenses = 7k saved if you don't go on vacation, and literally do nothing that costs money for ten years. Even saving 7k a month, you won't save 100k a year. [1] https://www.glassdoor.com/Salaries/new-york-city-software-engineer-salary-SRCH_IL.0,13_IM615_KO14,31.htm https://www.glassdoor.com/Salaries/new-york-city-software-en...

morgante 10y ago
7k is about right. My average savings rate over the past 3 years has been $6k and it's increased as my salary has. You're forgetting to include investment gains. With them, I can go on regular vacations and still reach $1m within 10 years. Also, since someone else mentioned it, my model conservatively assumes a 4% inflation rate. Over the 3 years I've been tracking, my model has consistently underestimated the growth in my savings.
riboflava 10y ago
$1k for other 'expenses' is huge. You can drive that down at least by half with wiser spending.
- foldr 10y ago
  It's not huge. That's bills together with all of your everyday spending. It's certainly possible to get that down to less than $1000 a month but you can easily spend $1000 a month without doing anything extravagant.
- dvt 10y ago
  Food, insurance, gas, water, electricity, student debt, etc. At least by half? Come on. Let's be real.
- eru 10y ago
  You might want to save, but there's no need to be a total miser on any >100k salary.
mercutio2 10y ago
You are exaggerating NYC income taxes. At $200k, your effective income tax rate if you file single, including FICA, is 33%, not 40% [0]. Heck, your marginal tax rate isn't even 40%, and all those numbers are without taking a 401k tax deduction. People get this crazy idea that $200k isn't rich in NYC or SF. It is very, very rich, even for the area. COL adjustment for rent and groceries shaves off $15-30k, but it doesn't keep scaling up from there. [0] https://smartasset.com/taxes/new-york-tax-calculator https://smartasset.com/taxes/new-york-tax-calculator
- winter_blue 10y ago
  > Heck, your marginal tax rate isn't even 40% That's wrong. The marginal tax for even a $50,000/year earner in NYC is over 42%. Source: http://arjun-menon.github.io/taxes-in-nyc/?income=50,000 http://arjun-menon.github.io/taxes-in-nyc/?income=50,000
  - mercutio2 10y ago
    There's actually no contradiction. Marginal tax rates go down 6.2% at 118,500 when social security cuts out, and they only go up about 3% from there to 200k. It's kind of outrageous, marginal tax rates going down for high earners, but there we are. But thanks for pointing out that I had the wrong zip code, so I missed NYC income tax, which is 3.65% marginal, bringing average tax rates at 200k to 36%, not 33% (albeit with zero deductions and exemptions, which obviously isn't reasonable, you'll deduct state income tax at the very least and shave off 1.4% immediately). Your link is in error, it treats Social Security tax as continuing past $118k.
    - winter_blue 10y ago
      > Your link is in error, it treats Social Security tax as continuing past $118k. Actually, the tool does stop adding Social Security after the income limit: http://arjun-menon.github.io/taxes-in-nyc/?income=200,000 http://arjun-menon.github.io/taxes-in-nyc/?income=200,000 > you'll deduct state income tax at the very least The tool also factors in state income tax deductions. You'll see it deducted in the link above The tool reports the marginal tax rate for a $200,000 earner as ~36%. -- But yea, you're right, it sucks that $50k earners are taxed even more % than $200k earners. The employer pays payroll taxes of 7.65% (6.2% + 1.45%), so actual marginal taxes are ~50% from an employer cost perspective. It's truly insane.