Author Topic: relatives who make 200k/year recently went over the edge  (Read 4937 times)

clarkfan1979

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relatives who make 200k/year recently went over the edge
« on: September 03, 2017, 01:41:51 PM »
Wife's relatives who we really like recently went over the edge and have to borrow money from their parents.

Their life has always been a financial train wreck. However, because of their high salaries and free child care I always assumed they would always be able to pick themselves up. Apparently that wasn't true.

They are dual income at 200K/year and get 100% free baby sitting 5 days a week from two sets of grandparents. 

It hasn't been that fun recently to hang out with them because of their recent crisis. They actually play the victim card because they blame their situation on each other. The topic dominates the recent conversations and is pretty uncomfortable.   

remizidae

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Re: relatives who make 200k/year recently went over the edge
« Reply #1 on: September 03, 2017, 02:23:54 PM »
So what happened?

human

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Re: relatives who make 200k/year recently went over the edge
« Reply #2 on: September 03, 2017, 02:38:07 PM »
Yeah what a tease we want to hear all the salacious details. That's the problem with getting your financial house in order, you need to hear stories like this so you get to feel self righteous and smug about your own good choices so spill it!
« Last Edit: September 04, 2017, 05:27:23 AM by human »

marty998

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Re: relatives who make 200k/year recently went over the edge
« Reply #3 on: September 03, 2017, 03:04:51 PM »
Far out you'd have to blow a lot of money on useless shit to earn over $200k combined and still be in the hole

RetiredAt63

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Re: relatives who make 200k/year recently went over the edge
« Reply #4 on: September 03, 2017, 04:42:14 PM »
Far out you'd have to blow a lot of money on useless shit to earn over $200k combined and still be in the hole

Some people are just talented this way.
The measure of civilization is how people treat one another.

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clarkfan1979

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Re: relatives who make 200k/year recently went over the edge
« Reply #5 on: September 03, 2017, 04:47:17 PM »
So what happened?

They have to ask their parents for a "loan". Their parents have land that is valuable, but they don't have much cash.

If the parents "loan" doesn't cover their expenses, they will have to start selling off their 401K at 28% income tax, 5% state tax and a 10% penalty. They have about 125K in 401K, but only 70K after taxes. After that they will probably lose the house.

It will be interesting to see if they make any changes in their spending behavior. The only way for them to have a chance to pay their parents back is if they make changes. 

BTDretire

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Re: relatives who make 200k/year recently went over the edge
« Reply #6 on: September 03, 2017, 04:51:38 PM »
It would be so nice to have them come here tell their story, take there facepunches
and get some real life recomendations to fix their spending problem.

BlueHouse

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Re: relatives who make 200k/year recently went over the edge
« Reply #7 on: September 03, 2017, 05:03:48 PM »
Sounds so much like BOTH of my brothers.  They both make very good living.  Brother #1 has gone bankrupt once after a series of layoffs, because they do not plan for down times -- only up times.  And at all times, they spend spend spend.  The saddest part to me is that the spending values that he and his wife have, have been passed down to their children.  It's not good.  Brother #1, when expecting another layoff (he's in an industry where this is common) decided to make sure he had his golf clubs and clothes in the car when he thought it might happen.  He has also lectured me in the past how important it is to not give up on things you enjoy (golf, expensive coffee, expensive wine, tobacco products) just because you're out of a job and might lose your house.

Brother #2 has been more fortunate in his career security, but blames his wife for spending all of "his" money.  But when I dig, brother has a BMW 2-seater car (completely impractical) and a motorcycle!  I just didn't even know what to say when I heard this! 
Sometimes nothing can be a real cool hand

FINate

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Re: relatives who make 200k/year recently went over the edge
« Reply #8 on: September 03, 2017, 05:13:03 PM »
Sounds so much like BOTH of my brothers.  They both make very good living.  Brother #1 has gone bankrupt once after a series of layoffs, because they do not plan for down times -- only up times.  And at all times, they spend spend spend.

Heh, sounds like you're describing the State of California :)

Chesleygirl

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Re: relatives who make 200k/year recently went over the edge
« Reply #9 on: September 03, 2017, 05:43:21 PM »
He has also lectured me in the past how important it is to not give up on things you enjoy (golf, expensive coffee, expensive wine, tobacco products) just because you're out of a job and might lose your house.

What an important little nugget of wisdom he offered....:(

happy

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Re: relatives who make 200k/year recently went over the edge
« Reply #10 on: September 04, 2017, 02:39:18 AM »
He has also lectured me in the past how important it is to not give up on things you enjoy (golf, expensive coffee, expensive wine, tobacco products) just because you're out of a job and might lose your house.

What an important little nugget of wisdom he offered....:(
Of course, if you lose your house you can just rent ;)
Journalling at Happy Aussie Downshifter

marty998

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Re: relatives who make 200k/year recently went over the edge
« Reply #11 on: September 04, 2017, 03:11:25 AM »
He has also lectured me in the past how important it is to not give up on things you enjoy (golf, expensive coffee, expensive wine, tobacco products) just because you're out of a job and might lose your house.

What an important little nugget of wisdom he offered....:(
Of course, if you lose your house you can just rent ;)

Probably end up renting a house way out of budget as well.

SeaEhm

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Re: relatives who make 200k/year recently went over the edge
« Reply #12 on: September 04, 2017, 09:07:20 AM »
I think people want to hear stories of what they spend their money on and how they live their "lavish" life.
Just here to feel guilty about my purchases which are often irrational, wants, and in an atypical budget.

Chesleygirl

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Re: relatives who make 200k/year recently went over the edge
« Reply #13 on: September 04, 2017, 09:24:47 AM »
I often think that wanting to live in a super-large home is a self esteem issue.

former player

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Re: relatives who make 200k/year recently went over the edge
« Reply #14 on: September 04, 2017, 10:22:49 AM »
I often think that wanting to live in a super-large home is a self esteem issue.
Or build one - Trump Tower?
Be frugal and industrious, and you will be free (Ben Franklin)

clarkfan1979

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Re: relatives who make 200k/year recently went over the edge
« Reply #15 on: September 04, 2017, 02:30:03 PM »
I think people want to hear stories of what they spend their money on and how they live their "lavish" life.

They don't actually live a lavish life. Their lifestyle is just incredibly wasteful and inefficient. They buy a lot of stuff and then throw it away. Their stuff isn't super expensive, they just go through it really fast.

I will offer one example of inefficiency. They turn the AC to like 65 degrees when they leave their house in the morning even though no one is home during the day. Their reasoning is that they want the house to be cold when they get home from work around 4:00 and 5:30 p.m. Their electricity bills are like $400-$500 in the summer months.

If they bought a $100 programmable thermostat that would turn on their AC about one hour before they get home they would probably save $1500/year in electricity bills.

Sofa King

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Re: relatives who make 200k/year recently went over the edge
« Reply #16 on: September 04, 2017, 02:50:07 PM »
80% behavior 20% income.  I know people like this. I just sit back and watch it crumble around them and they always wonder why. LOL!!!

paddedhat

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Re: relatives who make 200k/year recently went over the edge
« Reply #17 on: September 04, 2017, 03:09:19 PM »
I often think that wanting to live in a super-large home is a self esteem issue.

I'm must have serious issues then. If the dear wife wasn't in the picture, I would be happy to live in a van, down by the river.

BTDretire

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Re: relatives who make 200k/year recently went over the edge
« Reply #18 on: September 05, 2017, 09:48:31 AM »
I think people want to hear stories of what they spend their money on and how they live their "lavish" life.

They don't actually live a lavish life. Their lifestyle is just incredibly wasteful and inefficient. They buy a lot of stuff and then throw it away. Their stuff isn't super expensive, they just go through it really fast.

I will offer one example of inefficiency. They turn the AC to like 65 degrees when they leave their house in the morning even though no one is home during the day. Their reasoning is that they want the house to be cold when they get home from work around 4:00 and 5:30 p.m. Their electricity bills are like $400-$500 in the summer months.

If they bought a $100 programmable thermostat that would turn on their AC about one hour before they get home they would probably save $1500/year in electricity bills.

 I like it cooler when I get home also, so I change my clothes and put on a pair of shorts, as I type this in my underwear.
 The thermostat is set at 78 in the summer, 68 or 69 in the winter.
I once had a circuit on my thermostat that would run the air or furnce for about 2 minutes when I pushed it. It was just enough to cool me down or remove a chill. I didn't need to change the thermostst setting.
 When we got a new air cond/ furnace, I didn't know how to connect the circuit, because it had so many more wires.
   But we had a benefit with the new air cond, it removed more humidity and so it felt much more comfortable.

Gone_Hiking

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Re: relatives who make 200k/year recently went over the edge
« Reply #19 on: September 05, 2017, 08:45:08 PM »
I think people want to hear stories of what they spend their money on and how they live their "lavish" life.

They don't actually live a lavish life. Their lifestyle is just incredibly wasteful and inefficient. They buy a lot of stuff and then throw it away. Their stuff isn't super expensive, they just go through it really fast.

I will offer one example of inefficiency. They turn the AC to like 65 degrees when they leave their house in the morning even though no one is home during the day. Their reasoning is that they want the house to be cold when they get home from work around 4:00 and 5:30 p.m. Their electricity bills are like $400-$500 in the summer months.

If they bought a $100 programmable thermostat that would turn on their AC about one hour before they get home they would probably save $1500/year in electricity bills.

Out of curiosity, in which state do they live?  $400 power bills are not unusual in Phoenix in June.  Having said that, keeping a house at 65 degrees when no one is there seems inefficient, wasteful, plain dumb - you name it.

Abe

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Re: relatives who make 200k/year recently went over the edge
« Reply #20 on: September 05, 2017, 09:47:02 PM »
Are they aware that programmable thermostats exist? A surprising number of things we find silly are just behaviors that developed without thinking hard about a problem and researching options to fix it. They just went with whatever seemed easiest at the time.

Also, so many people are just not able to grasp, even now, that bad things happen to good people. I may take this a little bit to the other end, but whenever I see a colleague with an expensive car/watch/useless other thing, I just think about the creaky edifice most of our lives are built on.

talltexan

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Re: relatives who make 200k/year recently went over the edge
« Reply #21 on: September 06, 2017, 01:21:41 PM »
I'm baffled by the thought of people with $200,000 income who have only $130,000 in a retirement plan.

And most of you probably have higher savings rates than I do.

eddiejoe

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Re: relatives who make 200k/year recently went over the edge
« Reply #22 on: September 06, 2017, 04:08:21 PM »
Something isn't adding up here. The $500 a month for AC anecdote was a good example of their wastefulness. But by a very conservative estimate of after tax income, they are blowing through OVER $10k a month. $500 is a lot, but that's a small percentage of what they are going through. Even going out to a $150 steak dinner every day of the month adds up to $4,500. 

You've refuted them living "Lavishly" because maybe it conjures up images of luxury resorts in the Caribbean. But are there any bad investments, major indulgences, or vices they have? Or do they live in a super HCOL area? It's just hard for me to imagine that they are nickeled and dimed out of $10K+ every month. That's a crap-ton of Lattes.

former player

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Re: relatives who make 200k/year recently went over the edge
« Reply #23 on: September 07, 2017, 02:50:48 AM »
Two car leases at $1,000 a month?  Large mortgage at high interest rate plus house bills, 3,000? Student loans at another $1,000 a month.  Credit card and other debt at $1,000 a month? Groceries and eating out $1,000? Perfectly doable, I should think, given what gets put in case studies.
Be frugal and industrious, and you will be free (Ben Franklin)

talltexan

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Re: relatives who make 200k/year recently went over the edge
« Reply #24 on: September 07, 2017, 07:11:42 AM »
Particularly if they're paying school tuition and not optimizing for taxes, that $200,000/yr can disappear quickly if you drive it.

Fishindude

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Re: relatives who make 200k/year recently went over the edge
« Reply #25 on: September 07, 2017, 07:19:56 AM »
Good example of what sissy's some people are.
They have resources; house equity and a 401K they could tap to dig themselves out of their hole, yet they squeeze mom & dad for money instead of making any personal sacrifice.
Shame on mom & dad for bailing them out.

eddiejoe

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Re: relatives who make 200k/year recently went over the edge
« Reply #26 on: September 07, 2017, 07:23:04 AM »
Two car leases at $1,000 a month?  Large mortgage at high interest rate plus house bills, 3,000? Student loans at another $1,000 a month.  Credit card and other debt at $1,000 a month? Groceries and eating out $1,000? Perfectly doable, I should think, given what gets put in case studies.

But what you just listed added up to $8,000 a month. So they would be putting away an extra $2,000 every month, which would mean they are not going into debt.

These people are literally at a point where they can't pay there mortgage, so you would assume they are at least spending more than $3,000 a month over what you are stating AND we have been told they do not live a lavish lifestyle and spend $0 on daycare. I'm just wondering maybe their income isn't as they say or there are hidden debts we are unaware of. 

dogboyslim

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Re: relatives who make 200k/year recently went over the edge
« Reply #27 on: September 07, 2017, 08:14:01 AM »
Far out you'd have to blow a lot of money on useless shit to earn over $200k combined and still be in the hole

Really easy.  600k house, two 60k vehicles, maybe a 50k boat.  A ski trip or trip to disney each year and Boom.  Lots of useless shit that's really easy to get with "low payments" but then you are so dependent on your cash flow that any hitch in the road sends you over the edge.

200k isn't as much as people think.  It is a lot of money yes, but a 600k house will run you 3.5k a month.  Each of the two cars will run 4-500 a month.  The boat another 300.  A disney/ski trip will run 7-8k for a family of 4-5.  So before you even buy your first pair of ugg boots or your early morning latte you are shelling out $5500 a month.  With taxes, health insurance and witholding the montly take home is probably in the 10-12k range, so they only have $6,500 a month to spend.  A family's gotta eat avocado toast you know!

So how to blow 6,500 a month?
Groceries, if you don't plan nor save could easily run $1200.  Dining out another $1200 (including avocado toast and lattes) or so.  Utilities at 500 for electricity probably another 500 for gas/water/sewer, Cable & Phone plans another 400.  Now you are down to $2,700. 

Timmy is joining a traveling soccer team, and Liz is taking dance, so there's another 500 in activity fees every month: $2,200.
We have to stay fit, so we join the Y, and the local Luxury club plus probably a cross-fit gym and yoga studio. Those fees probably run 500ish: $1,700.

We haven't paid for our car insurance yet, or our clothing, or our golf green fees or any toys.  Car insurance for safe drivers on those two cars in the midwest would run another 200 a month-ish.  The boat is probably in a marina dry-stack, so there's another 200 a month.  Clothing could easily run 4-500 a month if you need the latest lulu lemon or athleta fashions or whatever the mens equivalent is, now you are down to $800.

Hey, A new mac book pro came out!  Lets drop $2k on that!  and I want a new camera.  Wow, carbon wheels would go great with my roadbike....It wouldn't be long before cash flow is negative.
« Last Edit: September 07, 2017, 08:29:36 AM by dogboyslim »

Laura33

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Re: relatives who make 200k/year recently went over the edge
« Reply #28 on: September 07, 2017, 08:40:07 AM »
Two car leases at $1,000 a month?  Large mortgage at high interest rate plus house bills, 3,000? Student loans at another $1,000 a month.  Credit card and other debt at $1,000 a month? Groceries and eating out $1,000? Perfectly doable, I should think, given what gets put in case studies.

But what you just listed added up to $8,000 a month. So they would be putting away an extra $2,000 every month, which would mean they are not going into debt.

These people are literally at a point where they can't pay there mortgage, so you would assume they are at least spending more than $3,000 a month over what you are stating AND we have been told they do not live a lavish lifestyle and spend $0 on daycare. I'm just wondering maybe their income isn't as they say or there are hidden debts we are unaware of.

Target/Walmart, clothes, shopping as boredom -- easy to drop $1K/mo and not even know where it went (when I lost weight and needed an entire new work wardrobe, one trip to WHBM cost me $600 -- and that covered clothes for about a week).  Department store makeup, $200/pop.  Salon - regular hair/nails/etc, $200/mo.  If you shop at WF or the like, $1K/mo for groceries/eating out is low.  Starbucks every morning, lunch out every day -- $400/mo.  Home Depot/Lowe's runs, Bed Bath and Beyond for trinkets, another couple hundred bucks a month.  Kid activities and clothes, allowances, toys, another $2-400 each month.  Full cable/internet package $300, phones for everyone another $300.  Prime/Netflix/Hulu, grocery delivery, other subscriptions call it $50/mo.  Lawn care and cleaners, $500/mo.+  Two annual vacations with no travel hacking or deal-shopping, average $1K/mo. (airfare with kids, 2-Br place; skiing would be more with gear rentals and new clothes for kids every year).  Fun weekend activities like movies and festivals -- $500/mo.  Gym memberships ($200/mo).  Hobby toys (fancy mountain bikes that are used 2x/yr, jet skis/boat, tennis equipment, golf gear, all of the requisite clothes to go with + costs of access to course/courts, cost of boat slip, maintenance of equipment, etc.).  Jewelry.  Etc. etc. etc.  It's really, really easy to fritter away a $200K salary without even noticing it -- or without even feeling like it's a luxurious lifestyle (if your neighbors are going to the Caribbean and you "just" go to Disney, say). 

When DH and I married, we made $180K combined -- between me changing jobs with a significant pay bump and adding two incomes, I more than doubled my income from the year before, and suddenly had more money than I ever dreamed of.  Imagine my surprise to discover that with that huge salary, we could afford "only" a townhouse.  We still drove 4-5 yr old regular cars that were paid off, and most of our vacations were local or to visit family (though one of those was skiing with my dad).  Yes, we did save, but no more than maxing out our 401(k)s and putting a little more aside post-tax for EF, car replacement, etc.  Other than that, we managed to spend every penny on completely un-memorable things like Home Depot, eating out, going to the movies, the occasional weekend at a B&B, etc.  It was never tight, but boy, it sure didn't feel as luxurious as I had expected -- we really couldn't figure out how the people in the big houses across the way could afford them, or who these people were in Conde Nast Traveler who could afford $500/nt hotels on vacation.

I think this is the fundamental problem with our televised consumerism: you make something like $200K/yr and you think now you're rich, and that means you get the big house AND the car AND the fancy vacations AND the maid/gardener AND eating out all the time AND the clothes/jewelry/shoes AND private school AND AND AND.  But that lifestyle is a $500K/yr+ lifestyle, not a $200K/yr lifestyle.  So if you are focusing more on what you think you "should" have than on what you actually earn, you can set yourself up in a lifestyle that you really can't afford long-term.
Laugh while you can, monkey-boy

clarkfan1979

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Re: relatives who make 200k/year recently went over the edge
« Reply #29 on: September 08, 2017, 04:37:35 AM »
Something isn't adding up here. The $500 a month for AC anecdote was a good example of their wastefulness. But by a very conservative estimate of after tax income, they are blowing through OVER $10k a month. $500 is a lot, but that's a small percentage of what they are going through. Even going out to a $150 steak dinner every day of the month adds up to $4,500. 

You've refuted them living "Lavishly" because maybe it conjures up images of luxury resorts in the Caribbean. But are there any bad investments, major indulgences, or vices they have? Or do they live in a super HCOL area? It's just hard for me to imagine that they are nickeled and dimed out of $10K+ every month. That's a crap-ton of Lattes.

I think their wastefulness is the key to understanding their spending. It defies logic.

I didn't realize that so many people would want specifics. This is my best estimate of some of their expenses.

Mortgage $2200/month
Utilities: $400/month
House Maintenance: $300/month
Furniture & house decorations: $200/month
Car & RV Loans: $1200/month
Vehicle Insurance: $300/month
Vehicle Fuel and Maintenance: $500/month
Animal Purchases, Food & Care: $1200/month
Horse Riding Lessons: $800/month
Groceries: $1100/month
Starbucks/Take-Out: $300/month
Restaurants: $300/month
Clothes: $1300/month
Hobbies for parents & kid sports: $500/month






talltexan

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Re: relatives who make 200k/year recently went over the edge
« Reply #30 on: September 08, 2017, 07:01:52 AM »
Horse Riding lessons, there's your trouble. $10K a year looks like a childcare-level item in the talltexan budget.


eddiejoe

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Re: relatives who make 200k/year recently went over the edge
« Reply #31 on: September 08, 2017, 07:11:32 AM »
Something isn't adding up here. The $500 a month for AC anecdote was a good example of their wastefulness. But by a very conservative estimate of after tax income, they are blowing through OVER $10k a month. $500 is a lot, but that's a small percentage of what they are going through. Even going out to a $150 steak dinner every day of the month adds up to $4,500. 

You've refuted them living "Lavishly" because maybe it conjures up images of luxury resorts in the Caribbean. But are there any bad investments, major indulgences, or vices they have? Or do they live in a super HCOL area? It's just hard for me to imagine that they are nickeled and dimed out of $10K+ every month. That's a crap-ton of Lattes.

I think their wastefulness is the key to understanding their spending. It defies logic.

I didn't realize that so many people would want specifics. This is my best estimate of some of their expenses.

Mortgage $2200/month
Utilities: $400/month
House Maintenance: $300/month
Furniture & house decorations: $200/month
Car & RV Loans: $1200/month
Vehicle Insurance: $300/month
Vehicle Fuel and Maintenance: $500/month
Animal Purchases, Food & Care: $1200/month
Horse Riding Lessons: $800/month
Groceries: $1100/month
Starbucks/Take-Out: $300/month
Restaurants: $300/month
Clothes: $1300/month
Hobbies for parents & kid sports: $500/month

  • RV Loan
  • $2000 a month on horses & animals
  • $1300 a month on clothes

There are the indulgences I was looking for! All makes sense now. If someone comes to me asking for money to help pay their mortgage and they're not even willing to sacrifice their monthly horse riding lessons, I doubt I could even keep a straight face telling them no.

loyalreader

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Re: relatives who make 200k/year recently went over the edge
« Reply #32 on: September 08, 2017, 11:19:50 AM »
Two car leases at $1,000 a month?  Large mortgage at high interest rate plus house bills, 3,000? Student loans at another $1,000 a month.  Credit card and other debt at $1,000 a month? Groceries and eating out $1,000? Perfectly doable, I should think, given what gets put in case studies.
When DH and I married, we made $180K combined -- between me changing jobs with a significant pay bump and adding two incomes, I more than doubled my income from the year before, and suddenly had more money than I ever dreamed of.  Imagine my surprise to discover that with that huge salary, we could afford "only" a townhouse.  We still drove 4-5 yr old regular cars that were paid off, and most of our vacations were local or to visit family (though one of those was skiing with my dad).  Yes, we did save, but no more than maxing out our 401(k)s and putting a little more aside post-tax for EF, car replacement, etc.  Other than that, we managed to spend every penny on completely un-memorable things like Home Depot, eating out, going to the movies, the occasional weekend at a B&B, etc.  It was never tight, but boy, it sure didn't feel as luxurious as I had expected -- we really couldn't figure out how the people in the big houses across the way could afford them, or who these people were in Conde Nast Traveler who could afford $500/nt hotels on vacation.

Geez, Laura - get out of my head. Exactly the same with my ex and I. Certainly didn't feel like we were living a luxurious life. Things weren't exactly tight, but we weren't saving much and we didn't have much leftover at the end of the month. 

The funny thing is... I save a lot more now and live on a lot less and feel my life feels *way* more luxurious. Priorities. It really does depend on how you look at things.

FINate

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Re: relatives who make 200k/year recently went over the edge
« Reply #33 on: September 08, 2017, 11:44:21 AM »
They actually play the victim card because they blame their situation on each other. The topic dominates the recent conversations and is pretty uncomfortable.

Personal finances are personal and none of your business...that is, until people ask to borrow money, complain about their situation, or otherwise bring it up in conversation. Why not make it uncomfortable back and ask tough questions - "so, basically you want us to pay for your horse stuff? How much do you spend on that? Oh, and how much is that RV costing you?" They might hate you for it, but they might get the message.

Funny that people want to keep their finances private even when they're looking to pry into someone else's wallet. Sorry, if you're going to complain or ask for help I'm going to dig through your accounts to see if you really need it.