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On the one hand, if you're making that much then you are fortunate enough to be generally insulated from a whole range of problems/stressors that most of the na
by dv_dt 9y ago
On the one hand, if you're making that much then you are fortunate enough to be generally insulated from a whole range of problems/stressors that most of the nation doesn't have. On the other hand, it really does feel like barriers are raising to maintaining that level life or being able to use that level of compensation to finance a way to the next level of stability. Especially if you're new to that socioeconomic level, and have a family and want to do responsible financial planning for their futures (college) while maintaining some quality of life and involvement with that family.
You get the harder burden of higher expected contributions for college (as it should be), but there's a valley where it hits upper middle class harder than the next economic class strata up while taking away supports that the low/middle financial levels receive. I joke (and cry) that the college pricing is one of the only negotiations where the other side gets to look at exactly where the buyers are coming from financially, and then dictate their price. It sets up a mechanism where families have a lot of potential wealth basically siphoned off by colleges and student loan arrangements - upper middle, middle, or lower economic class. (and btw the college financial formulas in the US heavily favor income over assets as inputs to ramp up expected contributions - another way that the capital wealthy, vs income wealth classes win out...)
The recent tax changes also seem to hit hard to if you're already a homeowner and might sell and buy to relocate for a job. So that's an special added mobility dampener if moving to places like silicon valley where the home cost might go up - but now the tax advantages for mortgage interest hit limits much earlier, taking away more of the salary bump from moving.
Oddly enough, if you have the resources, starting up a business a year or so before kids applying for college is an interesting thought - one that I doubt I'd try due to the risk. But potentially then, you get a big drop in the income input in the college expected contribution calculation which can come back as an investment if you later make good on the business. But again, it's an approach that is much more available to the capital wealthy, and more difficult and risky for high-income earners to employ.
Edit: on the college thing: I've had friends in the same economic class seriously run trade-off analysis on wether they should pay for college for their kids or use that same amount to offer their kids a startup/personal-investment fund thinking if they get the same or better value on experience + potential payoff vs the non-college option.
- sp527 9y agoThanks for the answer! It's disappointing to find someone else who clearly appreciates the problem, but also doesn't have great ideas about how to mitigate. Sheltering wealth in a business doesn't work, unfortunately. My dad is an SMB owner and his business' financials were included in the financial aid calculation, including the value of all its assets like real estate.
- dv_dt 9y agoIt's a side option, but have you shopped overseas public universities? Depending on what the major interest is and where you're comfortable going, even the out-of-nation rate can be competitive with private universities in the US.
- sp527 9y agoI've heard as much. For context, I'm only 27, unmarried without kids, and just trying to think ahead :)
- dv_dt 9y agoAh, good for you for planning ahead! Then my advice is save early and consistently, and look into Bernie Sanders or other progressive politicians. I'd rather be paying higher taxes for very low cost to free public universities than the current system - I think that's much more economically efficient. The current structuring of public universities is actually a drag on our economy. It's a financialized extraction of wealth from most income-earning people of any class, and reduces economic activity by pulling working cashflow out of the real value-producing portions of our economy and into the banking/finance sector. This is said as a parent with a kid going into college soon. None of what I've advocated for there probably lands soon enough to make a bit of financial difference for me, but maybe for you.
- sp527 9y agoHaha I wish I was a less cynical person when it comes to political reform. I don't quite agree with Sanders' approach because I think it's very hard to make his numbers work without meaningfully detracting from aggregate economic performance. But I also think there are far better measures that can be taken and I'm not sure he ever mentioned (some) of them: (1) adjust federal student aid/loan programs to prevent manipulation; that unregulated money has actually done more than to inflate college costs than almost anything else, (2) eliminate medical industry price gouging through regulation, particularly around Medicaid, Medicare, and ACA spend and perhaps more directly if legally viable, (3) incrementally (as opposed to wholesale) widen the social safety net from the bottom up in a fiscally responsible way, which is precisely how ACA was structured and deployed imo, (4) cut military spending dramatically. Maybe one day we can get to a place where this is possible. Of course none of that helps any of us in this particular wealth/income gray zone :) Good luck with the college financing though! Hope you figure out something that works.