7 ms·

What the hell were the couple in example #1 doing with their $200K income? If they wanted to pay off their debt in 10 years, they'd need about $2800 a month, a

What the hell were the couple in example #1 doing with their $200K income? If they wanted to pay off their debt in 10 years, they'd need about $2800 a month, assuming the rate was the full 12% the whole time. I agree with a lot of the article, but a couple of idiots who pissed away the fruits of their education on too many vacations and fancy cars (obviously not any real investments, otherwise they could have refinanced their student debt) don't give a very good example.

Xichekolas 18y ago
I was thinking the exact same thing when I read that. Sadly I know _many_ people that make six figures and complain about things like student debt and credit card debt. One guy claimed he was lower middle class (he was making $110k at the time, with only a wife, who didn't work, to support). If $110k is lower middle class, then I must be in poverty. It's like the idea that they can lower their living standard slightly to achieve financial goals just doesn't occur to some people. People that make good money and manage it poorly garner zero sympathy from me.
- newt0311 18y ago
  Yeah, but college didn't teach them about basic finance!!! Clearly its not their fault. On a more serious note: It would be nice if some finance education was mandatory. Ex: there is no good reason for having any credit card debt and yet people still have tons. It shows that they don't know how to manage their income even if they have lots to go around.
- jwesley 18y ago
  The lawyer mentioned was clearly a dope. The story said he accepted a loan for over $100K without knowing what the interest rate was or who he was borrowing from. Sure, they might have pressured him (like car dealerships do), but you'd have to be moron to get suckered that bad.
  - kragen 18y ago
    The interest rate was pretty good, only varying up to 9%. I'm not a fan of variable-rate loans but he seems to have come out on the good end of this one.
- tptacek 18y ago
  I don't know about "lower middle class", but in Manhattan and San Francisco, $110k is definitely "bachelor-class". You might not be able to comfortably raise a child, commute from Jersey to Manhattan, and make student loan payments on $110k/yr. Then you say, "well then don't live in Manhattan", which is probably true-but-not-obvious, but also implies you're going to take a wage cut to work somewhere else. And not everyone is as geographically mobile as a 25 year old hacker.
  - Xichekolas 18y ago
    I should have qualified and said this was Kansas City. $110k definitely can raise a family there. It's not exactly the carefree level of money, but when the average house costs $185k, it's no where near 'lower middle class'.
  - yummyfajitas 18y ago
    You can easily commute from Jersey to Manhattan, make student loan payments and raise a child on $110k/yr. I did the first two on only $20,000/year (though I admit, my loans were a lot more sensible than those of the couple described in this article). You could also live on $110k manhattan if you are willing to live north of 111th st. A 2br 2bath up there ran $2100/month back during the bubble (less now).
    - tptacek 18y ago
      I was offered a job at Bloomberg in 2003, at a significantly better starting than $110k/yr, moving from Ann Arbor, MI. I did this math. So, three things: (1) I'll spare you yet another hypothetical family budget monthly itemization. (2) I'll concede that it is clearly possible to raise a family in New York on $110k/yr. (3) I'll assert again that it is not comfortable to raise a family in New York on $110k/yr, nor does it appear to be easy. There are obviously a lot of sacrifices you can make to make the budget work out, but in a family scenario, not all sacrifices are tenable.
      - yummyfajitas 18y ago
        Could you define comfortable? I'm really curious to know what goods and services are beyond your reach at $110k/year. I've also done the math and lived it. Commuting from jersey is better, but even manhattan (north of 111'th st) is quite livable.
- jcromartie 18y ago
  It's always relative. People seem to define "rich" as "someone with more money than me."
- jcromartie 18y ago
  It's always relative. People seem to define "rich" as "someone with more money than me."
tptacek 18y ago
Uh, even for two people with six-figure salaries --- and speaking from experience here --- two thousand eight hundred dollars a month is a shitload of money. It's a second full-sized house in a nice neighborhood, or the rent on two apartments, or (wait for it) seven BMW 315i car payments.
- acgourley 18y ago
  Yes it's a lot of money, but it also leaves them with a lot of money left every month. I don't know exactly what your net income in CA on 200k is (and if they filed jointly, etc), but they should take home at least 10k a month. They still have 7k a month to live on. I don't see the problem.
  - poppysan 18y ago
    I live in CA and am struggling at just under 6 figures. Childcare and Mortgage on an (average 500K) home is the majority of my salary. Here is the problem. With over 80% of my net going to living expenses, there is no extra 2800 to go to school loans. Thank heavens I have no loans, just have to pay my wife's off....
    - acgourley 18y ago
      Wouldn't you say that a large part of a mortgage payment is actually an investment? If you were faced with large student loan payments, you could just decide to rent rather than take on a huge investment. Again, I don't see the problem.
      - tptacek 18y ago
        I'm wondering if you had a straight face on when you said "a large part of the mortgage payment is an investment". Either way: if they want to build a family, the rent vs. mortgage decision isn't going to change the equation much. Again, assume they have a kid. They have to factor in: * Commute distance, which will determine how often they actually see their children. * Lease security; it is extremely traumatic to move a school-age child to a new school district, or even just a new school. * School quality: the places with the best rental stock are not necessarily places with acceptable public school, or accessible child care. Again: the article's claim isn't that a couple can't survive on 200k. It's that they couldn't stay married. I can see reasons why.

Xichekolas 18y ago

I was thinking the exact same thing when I read that. Sadly I know _many_ people that make six figures and complain about things like student debt and credit card debt. One guy claimed he was lower middle class (he was making $110k at the time, with only a wife, who didn't work, to support). If $110k is lower middle class, then I must be in poverty. It's like the idea that they can lower their living standard slightly to achieve financial goals just doesn't occur to some people. People that make good money and manage it poorly garner zero sympathy from me.

newt0311 18y ago
Yeah, but college didn't teach them about basic finance!!! Clearly its not their fault. On a more serious note: It would be nice if some finance education was mandatory. Ex: there is no good reason for having any credit card debt and yet people still have tons. It shows that they don't know how to manage their income even if they have lots to go around.
jwesley 18y ago
The lawyer mentioned was clearly a dope. The story said he accepted a loan for over $100K without knowing what the interest rate was or who he was borrowing from. Sure, they might have pressured him (like car dealerships do), but you'd have to be moron to get suckered that bad.
- kragen 18y ago
  The interest rate was pretty good, only varying up to 9%. I'm not a fan of variable-rate loans but he seems to have come out on the good end of this one.
tptacek 18y ago
I don't know about "lower middle class", but in Manhattan and San Francisco, $110k is definitely "bachelor-class". You might not be able to comfortably raise a child, commute from Jersey to Manhattan, and make student loan payments on $110k/yr. Then you say, "well then don't live in Manhattan", which is probably true-but-not-obvious, but also implies you're going to take a wage cut to work somewhere else. And not everyone is as geographically mobile as a 25 year old hacker.
- Xichekolas 18y ago
  I should have qualified and said this was Kansas City. $110k definitely can raise a family there. It's not exactly the carefree level of money, but when the average house costs $185k, it's no where near 'lower middle class'.
- yummyfajitas 18y ago
  You can easily commute from Jersey to Manhattan, make student loan payments and raise a child on $110k/yr. I did the first two on only $20,000/year (though I admit, my loans were a lot more sensible than those of the couple described in this article). You could also live on $110k manhattan if you are willing to live north of 111th st. A 2br 2bath up there ran $2100/month back during the bubble (less now).
  - tptacek 18y ago
    I was offered a job at Bloomberg in 2003, at a significantly better starting than $110k/yr, moving from Ann Arbor, MI. I did this math. So, three things: (1) I'll spare you yet another hypothetical family budget monthly itemization. (2) I'll concede that it is clearly possible to raise a family in New York on $110k/yr. (3) I'll assert again that it is not comfortable to raise a family in New York on $110k/yr, nor does it appear to be easy. There are obviously a lot of sacrifices you can make to make the budget work out, but in a family scenario, not all sacrifices are tenable.
    - yummyfajitas 18y ago
      Could you define comfortable? I'm really curious to know what goods and services are beyond your reach at $110k/year. I've also done the math and lived it. Commuting from jersey is better, but even manhattan (north of 111'th st) is quite livable.
jcromartie 18y ago
It's always relative. People seem to define "rich" as "someone with more money than me."
jcromartie 18y ago
It's always relative. People seem to define "rich" as "someone with more money than me."

tptacek 18y ago

Uh, even for two people with six-figure salaries --- and speaking from experience here --- two thousand eight hundred dollars a month is a shitload of money. It's a second full-sized house in a nice neighborhood, or the rent on two apartments, or (wait for it) seven BMW 315i car payments.

acgourley 18y ago
Yes it's a lot of money, but it also leaves them with a lot of money left every month. I don't know exactly what your net income in CA on 200k is (and if they filed jointly, etc), but they should take home at least 10k a month. They still have 7k a month to live on. I don't see the problem.
- poppysan 18y ago
  I live in CA and am struggling at just under 6 figures. Childcare and Mortgage on an (average 500K) home is the majority of my salary. Here is the problem. With over 80% of my net going to living expenses, there is no extra 2800 to go to school loans. Thank heavens I have no loans, just have to pay my wife's off....
  - acgourley 18y ago
    Wouldn't you say that a large part of a mortgage payment is actually an investment? If you were faced with large student loan payments, you could just decide to rent rather than take on a huge investment. Again, I don't see the problem.
    - tptacek 18y ago
      I'm wondering if you had a straight face on when you said "a large part of the mortgage payment is an investment". Either way: if they want to build a family, the rent vs. mortgage decision isn't going to change the equation much. Again, assume they have a kid. They have to factor in: * Commute distance, which will determine how often they actually see their children. * Lease security; it is extremely traumatic to move a school-age child to a new school district, or even just a new school. * School quality: the places with the best rental stock are not necessarily places with acceptable public school, or accessible child care. Again: the article's claim isn't that a couple can't survive on 200k. It's that they couldn't stay married. I can see reasons why.