6 ms·

Two of my friends surprisingly told me they live paycheck to paycheck on salaries well into the six digit range. When I asked why, they both said "that's just h

by proee 7y ago

Two of my friends surprisingly told me they live paycheck to paycheck on salaries well into the six digit range. When I asked why, they both said "that's just how they've always lived." So having the discipline to save a little is clearly a challenge for them, despite having a very good income.

rofo1 7y ago
I know a lot of people like this. A lot! And they are not traditionally dumb either (about other things). It's amazing; it's like they are under some kind of spell and can't see right before their eyes, just when it comes to this. Frugality and being content with what you have goes a long way. People should stop comparing themselves to other people. That explosive emotional combination of greed and envy is behind so many bad financial decisions.
- lovehashbrowns 7y ago
  That's me! I make a ton of money for where I am NOW, but there are certain circumstances that made it so that I'm now just trying to recover. Logically, I always knew that every single step I was taking would lead me to this. Emotionally, it didn't matter and I'd be able to deal with it.
luckylion 7y ago
There's a difference between "all I'd need to do to put a thousand or more dollars aside each month is to not party hard each weekend" and "all I'd need to do to put a thousand or more dollars aside each month is to not pay rent or not buy food" though, isn't there?
- rofo1 7y ago
  "well into 6 figures" Do you understand how much money that is? Compared to the rest of the world population, I mean. Please don't tell me these people cannot food and rent.
  - luckylion 7y ago
    That's my point. His well-off friends are burning through their money by spending it on luxuries. If somebody sits them down in January and tells them they need to have saved up $20k by December, it's a small adjustment in lifestyle and a change in a few habits. For a family making $50k a year, that's very different.
    - User23 7y ago
      Luxuries, like a neighborhood where you don't have to avoid human feces the second you step out the front door? Or luxuries like having a commute under two hours? Look it's not frappuccinos and asian fusion cuisine that is depleting these people's balance sheets, it's landlords eventually capturing all income gains as they always have and always will.
      - war1025 7y ago
        Rent is definitely not the same soul-crushing experience in most parts of the US as it seems to be in the Bay area.
  - RootKitBeerCat 7y ago
    It’s really not that difficult to be broke in a major USA city, on 100k a year, if you work in certain industries or hang out in certain crowds.
    - root_axis 7y ago
      It's never "difficult to be broke", just spend more money than you have, even billionaires go broke.
      - charlesdm 7y ago
        Most billionaires don't go broke because they spend more than they have on personal expenses. They tend to go broke because of bad investing. Plenty of billionaires became billionaires in the first place by investing aggressively and using debt to build something. And once the music stops, or the table turns, that might all crumble if caught off guard.
nostrademons 7y ago
It's weird that the converse holds as well: I know someone who managed to save up $20K in 2 years on a grad student salary of $30K/year, in the Boston metro area. That's a third of his income on a salary well below the median. It'd be interesting to see how savings rate correlates with income, both across groups and as one individual's income rises over time. I suspect that you'd find some correlation (though probably not as much as you'd expect) across the whole population, but when tracking an individual, their savings rate probably will remain largely constant whether they're making $30K/year or $300K/year.
- BonesJustice 7y ago
  As with many things in life, habits play a huge role. People with low incomes have little choice but to budget responsibly or go into crippling debt. Once you get into the habit of spending responsibly, it’s easy to continue that habit even as your income rises. You’re used to making what you earn go a long way. On the other hand, if your attitude is, “yeah, maybe I’m not making much now, but I should totally be making fat stacks in a couple years,” then your poor spending habits are likely to continue. You’ll go into debt with the expectation that you’ll be able to pull yourself out of it as your income rises. But living beyond your means is a very hard habit to break. You start to rationalize: “hey, I should have a much better lifestyle making $100k than I did at $50k.” Except, well, you weren’t really living off $50k; you were living off $50k plus a lot of high-interest credit.
  - jimmaswell 7y ago
    > People with low incomes have little choice but to budget responsibly or go into crippling debt. Not at all, poor people waste their whole paychecks on lottery tickets and such all the time. They just end up never having any savings.
    - BonesJustice 7y ago
      I suppose it depends on whether expected future debt is considered ‘debt’. If you have no savings, then it’s very likely you’ll still go into crippling debt eventually; at best, you’re staving it off until retirement. At that point, cheap credit is probably not going to be as readily available. But I get your meaning. Yes, there is definitely an in-between where people can spend their entire income without accumulating immediate debt (social debt and future debt not withstanding).
katzgrau 7y ago
I read somewhere that it's typical to spend about 5% more than you earn if you don't track your finances / budget. Having lived both a budget focused and YOLO lifestyle, I'd agree. It just kind of happens - restaurants, vacations, other luxuries that ultimately end up having a pretty minor impact on one's perception of quality of life. As software developers, we have pretty analytical minds. It's kind of absurd if we don't place some occasional focus on simple things like personal finance and retirement planning.
- ben_jones 7y ago
  Personally I value my time working so highly that everything else became secondary. I don't even work on anything particularly important or wide-reaching, I've just clicked something in my brain that puts grocery shopping, budgeting, and other activities second such that I spend an egregious amount of money on take out and other lifestyle creeps. I think its because there is such a gully between middle class and upper class in the bay area. I make low six figures and the next bracket is so far away that I just feel kind of meh about it. I think this behavior is hugely detrimental and I'm actively trying to change it, but its what I notice as status quo for my peers and I.
- vincent-toups 7y ago
  I don't buy the trope that software people have analytic minds. I've seen a lot of source code.
  - kingo55 7y ago
    Compare them to the general population.
- tempsy 7y ago
  Funnily enough, it is because I have an analytical mind that I actually think I over optimized on my spend. I, like many I know in this industry, have been playing the credit card reward game since 2012. I live a very minimalistic lifestyle as far as buying things goes, but then plan out rounds of credit card applications and "manufactured spend" to rack up hundreds of thousands of points at minimal cost every year, and have used those points to fund nearly free travel for the past 6 years (mostly one summer vacation and holiday travel + weekend trips). I can't remember the last time I paid for a flight or hotel unless it was a really good deal and made more sense to use cash vs points. Have been fortunate to fly international business/first/suite class + stay in some really nice hotels.
empath75 7y ago
I’m making well into six figures and I don’t have any significant liquid savings. Child care for two kids, student loans, rent, new minivan, it adds up quickly. I have a bunch of money in my 401k, but I’d be struggling pretty quickly if I were laid off with no severance.
kartan 7y ago
> Some 40% of Americans would struggle to come up with $400 for an unexpected expense. Would you say that they are in that 40%? Or is it a different case?
refurb 7y ago
The reality is that although there are people out there that end up dire financial straits through no fault of their own (job loss, health issues, etc), an awful lot of people end up in poor financial condition just due to lack of impulse control. It's not hard to do. Most people think nothing of spending $100 at the bar on a weekend, but do that every weekend, that's >$5000 which is a chunk of change even for well off people.
cletus 7y ago
That blows my mind, actually, for two reasons: 1. If you're a single person, even in the Bay Area, I have no idea what you're spending that money on; and 2. In 10-20 years when those same people are no longer a "culture fit" I wonder if they'll rue their frrivolous ways. So being poor or being close to it affects people in different ways IME. For some, this means spend as soon as you have it or it'll just go away (eg there is a noticeable uptick in large TV purchases around the EITC). Others will live ridiculously frugally. Some will be super-driven. Others almost defeatist. In my case there was a time growing up when we were "poor". This is Australian "poor" not American "poor", which is a whole different thing. I don't mean homeless either. Just money was really really tight, as in baking bread because we couldn't afford to buy it, that sort of thing. This actually wasn't obvious to me at the time. Many who have been "poor" IME never escape the feeling that even in times of bounty everything may still disappear tomorrow. There is much less sense of security. I really think this is one thing that many people who have always had money just don't understand. And I don't mean "wealthy". I just mean they never grew up in an environment where they had serious money worries. Anyway, the income potential in Australia in software is substantially lower than the US. I was fortunate enough to get a job in Big Tech (NYC) some years ago. I noticed that I'd feel "bad" when I "wasted" $20 on something, like a shirt I didn't end up liking. A few years ago I ran the numbers on how much I'd saved since coming to the US and honestly I was shocked, as in up until that point I had no idea just how little of my income I was actually spending. And this is a holdover from that psychological lack of financial security. To put this in perspective after paying all living and food expenses, my discretionary purchases and so on that I was still saving 30-40% of my gross income (including 401k). I'd say my income is pretty typical for Big Tech, nothing extraordinary. Thing is, I actually have no idea what I'd the rest on if I decided to live paycheck to paycheck. So when I hear stories like yours I'm honestly befuddled.
- zxcmx 7y ago
  A machining hobby, boating, owning a racecar, getting a helicopter, building a bunker, failing at a startup, having a health problem, travelling around the world ski-ing or mountaineering, getting divorced, paying child support, extreme altruism...
- NTDF9 7y ago

by proee 7y ago

rofo1 7y ago

I know a lot of people like this. A lot! And they are not traditionally dumb either (about other things). It's amazing; it's like they are under some kind of spell and can't see right before their eyes, just when it comes to this. Frugality and being content with what you have goes a long way. People should stop comparing themselves to other people. That explosive emotional combination of greed and envy is behind so many bad financial decisions.

lovehashbrowns 7y ago
That's me! I make a ton of money for where I am NOW, but there are certain circumstances that made it so that I'm now just trying to recover. Logically, I always knew that every single step I was taking would lead me to this. Emotionally, it didn't matter and I'd be able to deal with it.

luckylion 7y ago

There's a difference between "all I'd need to do to put a thousand or more dollars aside each month is to not party hard each weekend" and "all I'd need to do to put a thousand or more dollars aside each month is to not pay rent or not buy food" though, isn't there?

rofo1 7y ago
"well into 6 figures" Do you understand how much money that is? Compared to the rest of the world population, I mean. Please don't tell me these people cannot food and rent.
- luckylion 7y ago
  That's my point. His well-off friends are burning through their money by spending it on luxuries. If somebody sits them down in January and tells them they need to have saved up $20k by December, it's a small adjustment in lifestyle and a change in a few habits. For a family making $50k a year, that's very different.
  - User23 7y ago
    Luxuries, like a neighborhood where you don't have to avoid human feces the second you step out the front door? Or luxuries like having a commute under two hours? Look it's not frappuccinos and asian fusion cuisine that is depleting these people's balance sheets, it's landlords eventually capturing all income gains as they always have and always will.
    - war1025 7y ago
      Rent is definitely not the same soul-crushing experience in most parts of the US as it seems to be in the Bay area.
- RootKitBeerCat 7y ago
  It’s really not that difficult to be broke in a major USA city, on 100k a year, if you work in certain industries or hang out in certain crowds.
  - root_axis 7y ago
    It's never "difficult to be broke", just spend more money than you have, even billionaires go broke.
    - charlesdm 7y ago
      Most billionaires don't go broke because they spend more than they have on personal expenses. They tend to go broke because of bad investing. Plenty of billionaires became billionaires in the first place by investing aggressively and using debt to build something. And once the music stops, or the table turns, that might all crumble if caught off guard.

nostrademons 7y ago

It's weird that the converse holds as well: I know someone who managed to save up $20K in 2 years on a grad student salary of $30K/year, in the Boston metro area. That's a third of his income on a salary well below the median. It'd be interesting to see how savings rate correlates with income, both across groups and as one individual's income rises over time. I suspect that you'd find some correlation (though probably not as much as you'd expect) across the whole population, but when tracking an individual, their savings rate probably will remain largely constant whether they're making $30K/year or $300K/year.

BonesJustice 7y ago
As with many things in life, habits play a huge role. People with low incomes have little choice but to budget responsibly or go into crippling debt. Once you get into the habit of spending responsibly, it’s easy to continue that habit even as your income rises. You’re used to making what you earn go a long way. On the other hand, if your attitude is, “yeah, maybe I’m not making much now, but I should totally be making fat stacks in a couple years,” then your poor spending habits are likely to continue. You’ll go into debt with the expectation that you’ll be able to pull yourself out of it as your income rises. But living beyond your means is a very hard habit to break. You start to rationalize: “hey, I should have a much better lifestyle making $100k than I did at $50k.” Except, well, you weren’t really living off $50k; you were living off $50k plus a lot of high-interest credit.
- jimmaswell 7y ago
  > People with low incomes have little choice but to budget responsibly or go into crippling debt. Not at all, poor people waste their whole paychecks on lottery tickets and such all the time. They just end up never having any savings.
  - BonesJustice 7y ago
    I suppose it depends on whether expected future debt is considered ‘debt’. If you have no savings, then it’s very likely you’ll still go into crippling debt eventually; at best, you’re staving it off until retirement. At that point, cheap credit is probably not going to be as readily available. But I get your meaning. Yes, there is definitely an in-between where people can spend their entire income without accumulating immediate debt (social debt and future debt not withstanding).

katzgrau 7y ago

I read somewhere that it's typical to spend about 5% more than you earn if you don't track your finances / budget. Having lived both a budget focused and YOLO lifestyle, I'd agree. It just kind of happens - restaurants, vacations, other luxuries that ultimately end up having a pretty minor impact on one's perception of quality of life. As software developers, we have pretty analytical minds. It's kind of absurd if we don't place some occasional focus on simple things like personal finance and retirement planning.

ben_jones 7y ago
Personally I value my time working so highly that everything else became secondary. I don't even work on anything particularly important or wide-reaching, I've just clicked something in my brain that puts grocery shopping, budgeting, and other activities second such that I spend an egregious amount of money on take out and other lifestyle creeps. I think its because there is such a gully between middle class and upper class in the bay area. I make low six figures and the next bracket is so far away that I just feel kind of meh about it. I think this behavior is hugely detrimental and I'm actively trying to change it, but its what I notice as status quo for my peers and I.
vincent-toups 7y ago
I don't buy the trope that software people have analytic minds. I've seen a lot of source code.
- kingo55 7y ago
  Compare them to the general population.
tempsy 7y ago
Funnily enough, it is because I have an analytical mind that I actually think I over optimized on my spend. I, like many I know in this industry, have been playing the credit card reward game since 2012. I live a very minimalistic lifestyle as far as buying things goes, but then plan out rounds of credit card applications and "manufactured spend" to rack up hundreds of thousands of points at minimal cost every year, and have used those points to fund nearly free travel for the past 6 years (mostly one summer vacation and holiday travel + weekend trips). I can't remember the last time I paid for a flight or hotel unless it was a really good deal and made more sense to use cash vs points. Have been fortunate to fly international business/first/suite class + stay in some really nice hotels.

empath75 7y ago

I’m making well into six figures and I don’t have any significant liquid savings. Child care for two kids, student loans, rent, new minivan, it adds up quickly. I have a bunch of money in my 401k, but I’d be struggling pretty quickly if I were laid off with no severance.

kartan 7y ago

> Some 40% of Americans would struggle to come up with $400 for an unexpected expense. Would you say that they are in that 40%? Or is it a different case?

refurb 7y ago

The reality is that although there are people out there that end up dire financial straits through no fault of their own (job loss, health issues, etc), an awful lot of people end up in poor financial condition just due to lack of impulse control. It's not hard to do. Most people think nothing of spending $100 at the bar on a weekend, but do that every weekend, that's >$5000 which is a chunk of change even for well off people.

cletus 7y ago

That blows my mind, actually, for two reasons: 1. If you're a single person, even in the Bay Area, I have no idea what you're spending that money on; and 2. In 10-20 years when those same people are no longer a "culture fit" I wonder if they'll rue their frrivolous ways. So being poor or being close to it affects people in different ways IME. For some, this means spend as soon as you have it or it'll just go away (eg there is a noticeable uptick in large TV purchases around the EITC). Others will live ridiculously frugally. Some will be super-driven. Others almost defeatist. In my case there was a time growing up when we were "poor". This is Australian "poor" not American "poor", which is a whole different thing. I don't mean homeless either. Just money was really really tight, as in baking bread because we couldn't afford to buy it, that sort of thing. This actually wasn't obvious to me at the time. Many who have been "poor" IME never escape the feeling that even in times of bounty everything may still disappear tomorrow. There is much less sense of security. I really think this is one thing that many people who have always had money just don't understand. And I don't mean "wealthy". I just mean they never grew up in an environment where they had serious money worries. Anyway, the income potential in Australia in software is substantially lower than the US. I was fortunate enough to get a job in Big Tech (NYC) some years ago. I noticed that I'd feel "bad" when I "wasted" $20 on something, like a shirt I didn't end up liking. A few years ago I ran the numbers on how much I'd saved since coming to the US and honestly I was shocked, as in up until that point I had no idea just how little of my income I was actually spending. And this is a holdover from that psychological lack of financial security. To put this in perspective after paying all living and food expenses, my discretionary purchases and so on that I was still saving 30-40% of my gross income (including 401k). I'd say my income is pretty typical for Big Tech, nothing extraordinary. Thing is, I actually have no idea what I'd the rest on if I decided to live paycheck to paycheck. So when I hear stories like yours I'm honestly befuddled.

zxcmx 7y ago
A machining hobby, boating, owning a racecar, getting a helicopter, building a bunker, failing at a startup, having a health problem, travelling around the world ski-ing or mountaineering, getting divorced, paying child support, extreme altruism...
NTDF9 7y ago