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Only if you’re wealthy. At $260k/yr, you’re barely middle class; better to owning your primary vehicle and residence as soon as you have enough saved to pay the

Only if you’re wealthy. At $260k/yr, you’re barely middle class; better to owning your primary vehicle and residence as soon as you have enough saved to pay their annual taxes for a couple decades, unless you have at least $2.6mil of (semi-liquid, non-volatile) cash savings / money market / index fund investments accrued (so, not real estate or angel investing). Whatever amount of profit you lose on interest skimming isn’t worth the fragility of risking your home because you have a payment due and who knows what went wrong upstream, especially if you don’t/can’t review the annual financials of your annuity payer to see that they’re almost out of runway.

abduhl 1y ago
There is nowhere in America where $260k/year is “barely middle class.” 260k/yr is a top 10% income nationally. Calling it anything other than upper class is ludicrous, especially since the payment requires no geographic tie like a salaried job would.
- bodiekane 1y ago
  $260k is absolutely middle class, nowhere near "upper class", by any reasonable consideration of lifestyle, freedom, power or day to day experience. The median home price in SF is $1.3. Using the calculator at zillow (https://www.zillow.com/homeloans/buyability/ https://www.zillow.com/homeloans/buyability/) with an income of $260k, looking to buy a $1.3MM house, you'd need a down payment of over $300k. So suppose you get your $260k payout and want to live in SF... you have to rent for what... 5 or 10 years to save up the $300k down payment (while living modestly to save tens of thousands per year). Then finally you can buy your average home, watch half your income disappear to taxes and another third to mortgage, and then you'll still have enough to live a comfortable, middle-class life. You're not buying yachts, getting meetings with senators or buying your kids into elite schools. You're not flying private, hiring personal assistants or buying a vacation home in Aspen. You're not making dozens of angel investments or being courted as a limited partner by VCs or PE funds. "Upper class" probably starts at around $10-15 million in liquid assets, to be able to really have the freedom, flexibility and power to live a life that's distinct from middle class existence. If you can't give your son a "small loan of $1 million" to start his business (and be able to shrug off a complete loss as a learning experience) then you're not upper class.
  - abduhl 1y ago
    You are conflating upper class income with being wealthy in the Bay Area (and not just wealthy, uber wealthy; I know plenty of comfortable wealthy people who aren’t meeting congresscritters and making VC/PE calls). They’re different metrics. GP said $260k/yr was BARELY middle class. That statement is farcical: 260k/yr is a top 10% income in America. It is upper class income under all but the most ludicrous of definitions. By the way, the solution to your “I want to buy a house in SF” problem isn’t to move to SF and pay an insane amount of rent for 5-10 years, it’s to keep living like you did and doing your normal job that you were doing before you won 260k/yr for 2 years while you save. I won’t even bother digging into how warped your view of what it means to be upper class is, I’ll just say stay on that hamster wheel and keep chasing that dream dude.
- deleted 1y ago
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- altairprime 1y ago
  260k/yr at an effective tax rate of about 50%, so actual spendable/saveable money is only $130k in free cash; people wildly overestimate their spending / saving risk decisions based on pre-tax gross salary versus what they actually receive and can use, and at 11k/mo it’s easy to fall into the trap of spending it every month because it’ll be there next month too. The Bay Area is especially egregious about using up that post-tax amount but I stand by my advice to save 10x annual income before playing margin investor with interest rates.
  - abduhl 1y ago
    The effective tax rate on 260k/yr is 22% federally. The person we are discussing lives in Washington state. Their effective tax rate is 22%.
    - altairprime 1y ago
      Great! They’ll be able to save a nest egg in as little as twelve years, then, if my brief mental napkin math works out — unless they make the mistake of buying a house whose payment triples that time.

abduhl 1y ago

There is nowhere in America where $260k/year is “barely middle class.” 260k/yr is a top 10% income nationally. Calling it anything other than upper class is ludicrous, especially since the payment requires no geographic tie like a salaried job would.

bodiekane 1y ago
$260k is absolutely middle class, nowhere near "upper class", by any reasonable consideration of lifestyle, freedom, power or day to day experience. The median home price in SF is $1.3. Using the calculator at zillow (https://www.zillow.com/homeloans/buyability/ https://www.zillow.com/homeloans/buyability/) with an income of $260k, looking to buy a $1.3MM house, you'd need a down payment of over $300k. So suppose you get your $260k payout and want to live in SF... you have to rent for what... 5 or 10 years to save up the $300k down payment (while living modestly to save tens of thousands per year). Then finally you can buy your average home, watch half your income disappear to taxes and another third to mortgage, and then you'll still have enough to live a comfortable, middle-class life. You're not buying yachts, getting meetings with senators or buying your kids into elite schools. You're not flying private, hiring personal assistants or buying a vacation home in Aspen. You're not making dozens of angel investments or being courted as a limited partner by VCs or PE funds. "Upper class" probably starts at around $10-15 million in liquid assets, to be able to really have the freedom, flexibility and power to live a life that's distinct from middle class existence. If you can't give your son a "small loan of $1 million" to start his business (and be able to shrug off a complete loss as a learning experience) then you're not upper class.
- abduhl 1y ago
  You are conflating upper class income with being wealthy in the Bay Area (and not just wealthy, uber wealthy; I know plenty of comfortable wealthy people who aren’t meeting congresscritters and making VC/PE calls). They’re different metrics. GP said $260k/yr was BARELY middle class. That statement is farcical: 260k/yr is a top 10% income in America. It is upper class income under all but the most ludicrous of definitions. By the way, the solution to your “I want to buy a house in SF” problem isn’t to move to SF and pay an insane amount of rent for 5-10 years, it’s to keep living like you did and doing your normal job that you were doing before you won 260k/yr for 2 years while you save. I won’t even bother digging into how warped your view of what it means to be upper class is, I’ll just say stay on that hamster wheel and keep chasing that dream dude.
deleted 1y ago
[deleted]
altairprime 1y ago
260k/yr at an effective tax rate of about 50%, so actual spendable/saveable money is only $130k in free cash; people wildly overestimate their spending / saving risk decisions based on pre-tax gross salary versus what they actually receive and can use, and at 11k/mo it’s easy to fall into the trap of spending it every month because it’ll be there next month too. The Bay Area is especially egregious about using up that post-tax amount but I stand by my advice to save 10x annual income before playing margin investor with interest rates.
- abduhl 1y ago
  The effective tax rate on 260k/yr is 22% federally. The person we are discussing lives in Washington state. Their effective tax rate is 22%.
  - altairprime 1y ago
    Great! They’ll be able to save a nest egg in as little as twelve years, then, if my brief mental napkin math works out — unless they make the mistake of buying a house whose payment triples that time.