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You would assume people earning these kind of wages are highly educated and would have learn financial literacy via their parents and/or school. We had whole cl

by wdb 5y ago

You would assume people earning these kind of wages are highly educated and would have learn financial literacy via their parents and/or school. We had whole classes about this at high/secondary school

HarryHirsch 5y ago
One would think that a goodly number of them live in coastal California, where the housing market is fully out of control. The article hints as much. Can we fix the housing market and then start blaming victims?
- tluyben2 5y ago
  > Some of these millennials — known as HENRYs — prefer a comfortable, expensive lifestyle. That is what the article says so seems there is at least some issue with their spending habits.
  - HarryHirsch 5y ago
    I mean, what are you supposed to do when you work in Irvine and are starting a family? The rent starts at 3500 dollars, so you'd need a family income of at least 100 kUSD. This is madness.
    - tluyben2 5y ago
      Sure, if that is the case and you cannot work anywhere else where the ratio is somewhat different then yes, you have an issue. But it feels like, and I see this a lot more on HN than elsewhere, that people want to hold on to the location and lifestyle they dreamt of (for some reason) while they could have a far less stressed out and comfortable life somewhere else. Things in life are not always perfect and if you can make 100k in Irvine or 80k somewhere where this housing problem is not a thing, why not move? Somewhere there is a misplaced entitlement is there not? Why should you be able to live there if the situation at hand tells you you cannot afford it? The housing issue needs to be fixed, but until it is, maybe you cannot live there. That is not the end of the world. And the article (and reality around me) does give me the impression that not only live people in houses they cannot afford but also have a life style to match. We are in sort of a bubble for a long time now already, but what do you reckon happens when the next crisis hits and all these people lose their jobs basically over night?
      - sparker72678 5y ago
        > why not move? Maybe you have kids, and don't want to take them away from their school. Maybe you have kids with an ex, and you're legally not allowed to move more than N miles from your ex without their agreement. Maybe you're heavily invested in your community with friends, family, church, sports, etc. Maybe you can move, and get a job somewhere else, but for some reason your partner is much less likely to be able to. It's not that moving is always impossible. Heck moving might truly be the better idea. But it can be extremely costly socially to move, and even then it isn't necessarily going to actually solve your problem.
    - dangus 5y ago
      It’s only madness if local wages don’t pay well enough to compensate. In reality, the sixth digit of a six figure salary is less meaningful than it used to be. That’s the reality of normal and expected currency inflation. I’d like to see less hysteria over home prices and “a bar of soap used to be five cents, everything is so expensive now!!” The average home is larger with more amenities than it was during the mid-century. You can get roommates, your kids can share bedrooms. You don’t need two bathrooms: my parents grew up with four kids sharing one bathroom. And, yes, parents always had to make lifestyle sacrifices to raise kids. My parents weren’t going out to eat and traveling to exotic locations when they were raising me. By the way, people don’t shop on home prices, they shop on monthly payment. That’s a large reason why home values increased during Covid: interest rates plummeted, so everyone can afford a higher priced home.
      - wan23 5y ago
        Not everyone can afford a higher priced home, even with low interest rates, because funding a down payment can be a significant hurdle in places where modest homes are over a million dollars.
        deleted 5y ago
        [deleted]
- octopoc 5y ago
  FTA: > HENRYs [High Earners, Not Rich Yet] typically fall victim to lifestyle creep, when one increases one's standard of living to match a rise in discretionary income. They prefer a comfortable and often expensive lifestyle that leaves them living paycheck to paycheck. That kind of problem can't be solved with more money. It has to be solved with a behavior change.
  - triceratops 5y ago
    > They prefer a comfortable and often expensive lifestyle Is that so crazy if you're making 1.5x the national median income? > That kind of problem can't be solved with more money Who's talking about "more money"? > solved with a behavior change. Or a zoning change? Or changes to property taxes?
    - bhaak 5y ago
      >> They prefer a comfortable and often expensive lifestyle > Is that so crazy if you're making 1.5x the national median income? You left out the rest of the quote: "that leaves them living paycheck to paycheck." If you're living paycheck to paycheck, you are living above your means. You have no financial room to adjust if something unexpected happens. That's a problem. A completely unnecessary one as you would have enough leeway if you reduced your cost basis. People that earn much less usually don't have that possibility.
      - triceratops 5y ago
        > If you're living paycheck to paycheck Sure. But if regulations force prices of essentials (like housing) up enough to take most of your paycheck, how much is it down to personal responsibility? And how much to regulations beating down regular workers?
        bhupy 5y ago
        Why can't it be both? Yes, housing regulations are pretty much the root cause of all of the Bay Area's problems (IMO). But at the same time, people making $100k+ aren't helpless, they have all the agency and means to live within their means. This includes making the decision to live with roommates, or perhaps even leaving the Bay Area for saner pasteurs like other commenters in this thread. Earlier, you said the following: "Is that so crazy if you're making 1.5x the national median income?", and I'd like to dig into that a little more. It's not really accurate to compare Bay Area's income with the national median without also considering how the cost of living compares with the national median also. Bay Area new grads are certainly high earners relative to people in Iowa, but they're decidedly middle class relative to their peers in the Bay Area. If you want a proper apples-to-apples comparison of how "HENRYs" ought to live their lives, you need to compare them with people in other parts of America that are also middle class relative to their local peers. Either that, or you have to compare their income to the median income in the Bay Area, which I believe is around $96k. So if you're earning $100k, you're not earning 1.5x the median, you're at the median, and should therefore spend like you're in the median.
lm28469 5y ago
It's a mindset, I have friends who earn X times as much as I do and spend it all on vacations and gadgets. If I had their salaries I would retire in 10 years, priorities I guess
P_I_Staker 5y ago
It's not a financial literacy problem. It's a quality of life thing. People want or have convinced themselves they need to live a certain way. Sometimes it's "keeping up with the johns'", but I think it's more that what people see as the base level of living at their level is too expensive, and people don't want to give anything up. A huge number of people operate at the verge of insolvency, because they refuse to compromise quality of living. It's not just about knowing, you have to be willing to give something up.

by wdb 5y ago

HarryHirsch 5y ago

One would think that a goodly number of them live in coastal California, where the housing market is fully out of control. The article hints as much. Can we fix the housing market and then start blaming victims?

tluyben2 5y ago
> Some of these millennials — known as HENRYs — prefer a comfortable, expensive lifestyle. That is what the article says so seems there is at least some issue with their spending habits.
- HarryHirsch 5y ago
  I mean, what are you supposed to do when you work in Irvine and are starting a family? The rent starts at 3500 dollars, so you'd need a family income of at least 100 kUSD. This is madness.
  - tluyben2 5y ago
    Sure, if that is the case and you cannot work anywhere else where the ratio is somewhat different then yes, you have an issue. But it feels like, and I see this a lot more on HN than elsewhere, that people want to hold on to the location and lifestyle they dreamt of (for some reason) while they could have a far less stressed out and comfortable life somewhere else. Things in life are not always perfect and if you can make 100k in Irvine or 80k somewhere where this housing problem is not a thing, why not move? Somewhere there is a misplaced entitlement is there not? Why should you be able to live there if the situation at hand tells you you cannot afford it? The housing issue needs to be fixed, but until it is, maybe you cannot live there. That is not the end of the world. And the article (and reality around me) does give me the impression that not only live people in houses they cannot afford but also have a life style to match. We are in sort of a bubble for a long time now already, but what do you reckon happens when the next crisis hits and all these people lose their jobs basically over night?
    - sparker72678 5y ago
      > why not move? Maybe you have kids, and don't want to take them away from their school. Maybe you have kids with an ex, and you're legally not allowed to move more than N miles from your ex without their agreement. Maybe you're heavily invested in your community with friends, family, church, sports, etc. Maybe you can move, and get a job somewhere else, but for some reason your partner is much less likely to be able to. It's not that moving is always impossible. Heck moving might truly be the better idea. But it can be extremely costly socially to move, and even then it isn't necessarily going to actually solve your problem.
  - dangus 5y ago
    It’s only madness if local wages don’t pay well enough to compensate. In reality, the sixth digit of a six figure salary is less meaningful than it used to be. That’s the reality of normal and expected currency inflation. I’d like to see less hysteria over home prices and “a bar of soap used to be five cents, everything is so expensive now!!” The average home is larger with more amenities than it was during the mid-century. You can get roommates, your kids can share bedrooms. You don’t need two bathrooms: my parents grew up with four kids sharing one bathroom. And, yes, parents always had to make lifestyle sacrifices to raise kids. My parents weren’t going out to eat and traveling to exotic locations when they were raising me. By the way, people don’t shop on home prices, they shop on monthly payment. That’s a large reason why home values increased during Covid: interest rates plummeted, so everyone can afford a higher priced home.
    - wan23 5y ago
      Not everyone can afford a higher priced home, even with low interest rates, because funding a down payment can be a significant hurdle in places where modest homes are over a million dollars.
      - deleted 5y ago
        [deleted]
octopoc 5y ago
FTA: > HENRYs [High Earners, Not Rich Yet] typically fall victim to lifestyle creep, when one increases one's standard of living to match a rise in discretionary income. They prefer a comfortable and often expensive lifestyle that leaves them living paycheck to paycheck. That kind of problem can't be solved with more money. It has to be solved with a behavior change.
- triceratops 5y ago
  > They prefer a comfortable and often expensive lifestyle Is that so crazy if you're making 1.5x the national median income? > That kind of problem can't be solved with more money Who's talking about "more money"? > solved with a behavior change. Or a zoning change? Or changes to property taxes?
  - bhaak 5y ago
    >> They prefer a comfortable and often expensive lifestyle > Is that so crazy if you're making 1.5x the national median income? You left out the rest of the quote: "that leaves them living paycheck to paycheck." If you're living paycheck to paycheck, you are living above your means. You have no financial room to adjust if something unexpected happens. That's a problem. A completely unnecessary one as you would have enough leeway if you reduced your cost basis. People that earn much less usually don't have that possibility.
    - triceratops 5y ago
      > If you're living paycheck to paycheck Sure. But if regulations force prices of essentials (like housing) up enough to take most of your paycheck, how much is it down to personal responsibility? And how much to regulations beating down regular workers?
      - bhupy 5y ago
        Why can't it be both? Yes, housing regulations are pretty much the root cause of all of the Bay Area's problems (IMO). But at the same time, people making $100k+ aren't helpless, they have all the agency and means to live within their means. This includes making the decision to live with roommates, or perhaps even leaving the Bay Area for saner pasteurs like other commenters in this thread. Earlier, you said the following: "Is that so crazy if you're making 1.5x the national median income?", and I'd like to dig into that a little more. It's not really accurate to compare Bay Area's income with the national median without also considering how the cost of living compares with the national median also. Bay Area new grads are certainly high earners relative to people in Iowa, but they're decidedly middle class relative to their peers in the Bay Area. If you want a proper apples-to-apples comparison of how "HENRYs" ought to live their lives, you need to compare them with people in other parts of America that are also middle class relative to their local peers. Either that, or you have to compare their income to the median income in the Bay Area, which I believe is around $96k. So if you're earning $100k, you're not earning 1.5x the median, you're at the median, and should therefore spend like you're in the median.

lm28469 5y ago

It's a mindset, I have friends who earn X times as much as I do and spend it all on vacations and gadgets. If I had their salaries I would retire in 10 years, priorities I guess

P_I_Staker 5y ago

It's not a financial literacy problem. It's a quality of life thing. People want or have convinced themselves they need to live a certain way. Sometimes it's "keeping up with the johns'", but I think it's more that what people see as the base level of living at their level is too expensive, and people don't want to give anything up. A huge number of people operate at the verge of insolvency, because they refuse to compromise quality of living. It's not just about knowing, you have to be willing to give something up.