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Yep, it's the "keeping up with the Jones" and the Hedonic Treadmill.[1] The $500k lawyer isn't going to just drive a Honda. He has to have the BMW 7 Series ($
by jasode 10y ago
Yep, it's the "keeping up with the Jones" and the Hedonic Treadmill.[1]
The $500k lawyer isn't going to just drive a Honda. He has to have the BMW 7 Series ($130k) -- and he wants a brand new one every 2 or 3 years. Instead of getting a mortgage that consumes a tiny fraction of his income or buying a cheap house free & clear, he'll take on a mortgage up to the max credit limit allowed by the bank. Hence he has a $2+ million dollar estate in a gated neighborhood. Does he have kids? Well then, it must be private school. The most desirable private schools in NYC cost $40k tuition per student per year. 3 kids means $120k/year. Basically, you do the arithmetic and $500k/year is abject poverty -- uh I mean -- middle class.
[1]https://en.wikipedia.org/wiki/Hedonic_treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill
- rayiner 10y agoI know a lot of people in that income bracket. I don't know anybody with a 7 series or an estate in a gated neighborhood. They're comfortable, but more like Audi A3 than 7 series. Few lawyers (or consultants or bankers) can make $500k in Iowa City (or even Seattle for that matter). Someone with a household income of $120k can easily afford a 2400 square foot house (that's the national average for a new house) within 30 minutes of work in a good school district near Des Moines. I'd estimate same combination takes an HHI of around $300k in the DC metro area. Jump to $500k (at that bracket you're losing almost half in taxes), and you're wearing nicer suits and saving better for retirement and your kids' college, but saving $100k per year isn't going to let you quit your job and live off interest any time soon.