3 ms·

> within a year or two you would have far more security than the $30k household will ever have. Within a year or two? I think you mean "after your first payche

by vacri 9y ago

> within a year or two you would have far more security than the $30k household will ever have. Within a year or two? I think you mean "after your first paycheck". The ability to have a grand or two 'cushion' money in the bank is an incredible difference between the haves and have-nots. And I don't mean "money in my day-to-day account", I mean emergency money of any kind. It's bizarre that a 300k/yr household can even contemplate being similar to a 30k/yr one.

geggam 9y ago
Depends on where you live. 30k in the Midwest compared to 300K in San Francisco is actually not too far apart. 2 Beds 1 Bath -- 650 Jackson MO or 7800 a year or 25% of the income gross $4940 - $5160 /mo 2 beds / 2 bath 979 sqft say 5000 a month or 60000 a year or 20% of the income add the huge differences in effective tax rate of CA to MO combined with the jump in federal tax rates and it is arguable that 30k in MO would actually be better off
- mikesickler 9y ago
  Yeah but look at the different in what you're left with after rent and taxes. It's not even close.
- mindways 9y ago
  ...even if we take this not-quite-equivalence at face value (note: 650 < 979 and 20% < 25%), most life expenses don't scale linearly with housing values - not even close. Groceries may be more expensive in the big city, but not 10x more expensive. You're not paying 10x more for a car, or a plane flight. And insurance premiums / deductibles sure aren't 10x cheaper in a less expensive part of the country. Plus, the "$300K in expensive place" household has the option of moving to the less expensive place. The reverse is hardly true. > it is arguable that 30k in MO would actually be better off 1. No. 2. Even if we were to accept that $30K in one place went just as far as $300K in another, "better off" ignores that higher property costs are likely to indicate a more desirable place to live. (For whatever reason: access to jobs, lower crime rates, pleasant to live in, what-have-you.)
- vacri 9y ago
  I just can't believe how wilfully ignorant people are about this. You're talking percentages, but ignore the absolutes. 75% of 30k buys you a lot less than 80% of 300k, even after taxes.
IanCal 9y ago
I popped in $300k/year into an online calculator and it suggested that would leave you with ~118k/year. Minus the ~26k/year you'd have on $30k (both household married income) is 92190 So, if you lived as a $30k/year household you'd be able to save 3.5 years worth of expenses every year, ignoring any kind of tax efficient ways of doing so. In your first pay packet you'd have a spare seven and a half thousand dollars. At a 3% withdrawal rate you'd want to have $860k in investments, meaning you could expect to work for ~8-9 years then retire forever. Less if you can invest in a more tax efficient way, are OK with just cutting down to part time or taking on a bit more risk. Oh, and if you're comparing yourself to a $30k household that can afford to save anything, all these numbers just go up and up. So, comparing a $30k/year household who are able to save literally nothing, you could have the same life but only have to work for less than ten years rather than 40+. Quick numbers, but I'd be surprised if the various simplifications change the overall result particularly drastically.

by vacri 9y ago

geggam 9y ago

Depends on where you live. 30k in the Midwest compared to 300K in San Francisco is actually not too far apart. 2 Beds 1 Bath -- 650 Jackson MO or 7800 a year or 25% of the income gross $4940 - $5160 /mo 2 beds / 2 bath 979 sqft say 5000 a month or 60000 a year or 20% of the income add the huge differences in effective tax rate of CA to MO combined with the jump in federal tax rates and it is arguable that 30k in MO would actually be better off

mikesickler 9y ago
Yeah but look at the different in what you're left with after rent and taxes. It's not even close.
mindways 9y ago
...even if we take this not-quite-equivalence at face value (note: 650 < 979 and 20% < 25%), most life expenses don't scale linearly with housing values - not even close. Groceries may be more expensive in the big city, but not 10x more expensive. You're not paying 10x more for a car, or a plane flight. And insurance premiums / deductibles sure aren't 10x cheaper in a less expensive part of the country. Plus, the "$300K in expensive place" household has the option of moving to the less expensive place. The reverse is hardly true. > it is arguable that 30k in MO would actually be better off 1. No. 2. Even if we were to accept that $30K in one place went just as far as $300K in another, "better off" ignores that higher property costs are likely to indicate a more desirable place to live. (For whatever reason: access to jobs, lower crime rates, pleasant to live in, what-have-you.)
vacri 9y ago
I just can't believe how wilfully ignorant people are about this. You're talking percentages, but ignore the absolutes. 75% of 30k buys you a lot less than 80% of 300k, even after taxes.

IanCal 9y ago

I popped in $300k/year into an online calculator and it suggested that would leave you with ~118k/year. Minus the ~26k/year you'd have on $30k (both household married income) is 92190 So, if you lived as a $30k/year household you'd be able to save 3.5 years worth of expenses every year, ignoring any kind of tax efficient ways of doing so. In your first pay packet you'd have a spare seven and a half thousand dollars. At a 3% withdrawal rate you'd want to have $860k in investments, meaning you could expect to work for ~8-9 years then retire forever. Less if you can invest in a more tax efficient way, are OK with just cutting down to part time or taking on a bit more risk. Oh, and if you're comparing yourself to a $30k household that can afford to save anything, all these numbers just go up and up. So, comparing a $30k/year household who are able to save literally nothing, you could have the same life but only have to work for less than ten years rather than 40+. Quick numbers, but I'd be surprised if the various simplifications change the overall result particularly drastically.