Author Topic: Scraping by on six figures?  (Read 3966 times)

neverrun

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StockBeard

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Re: Scraping by on six figures?
« Reply #1 on: March 01, 2017, 04:25:47 PM »
Hmm, I was going to have a good laugh at the article but then found a few things that made sense to me. Seattle is a HCOL area, maybe not to the levels of The Bay Area yet, but it's getting there, so I'm seeing lots of similarities. As a tech guy making 6 figures myself, I can echo some of the comments, in particular:

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Sam, 40, lives with his wife and three kids in San Jose, earning around $120,000 a year at a multinational software company. I get paid a very good wage, but I have three kids, childcare is ridiculously expensive so my wife mostly takes care of them, he said.

He feels pressure being the sole breadwinner.
I can relate to that. My wife would not be able to get a job that would pay high enough to pay for daycare for 3 kids, so she has to stay at home, that's the financially logical choice. It does put some pressure on me, as without my salary, my family would theoretically have no income (except for the part where we saved a lot to become financially independent)

But there's also some optimism in the article, at least from my perspective:
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Although he said his salary means he can afford to live a decent life, he finds the cost of living, combined with the terrible commute, unpalatable. Hes had enough, and has accepted a 50% pay cut to relocate to San Diego.

We will be unequivocally better off than we are now.
That's exactly how I've decided to handle it. We moved to Seattle where I'm making a huge salary, but we're extremely careful to not fall into the lifestyle inflation traps here. To me, that means no home ownership, and finding a place that's cheap enough. We've made a lot of compromises to save a lot of money while we're here, while at the same time understanding that the situation is not sustainable in the long run (our rent is going up 5% per year, much faster than inflation or than my salary).
Bottom line: make a lot of money for a few years, then move to a Lower COL Area (in our case, somewhere in Japan). I'll have to accept a much lower salary (I'm also expecting a 50% cut), but it won't matter that much as we're getting freaking close to FI.

In other words, use the geographic arbitrage to your advantage here, Make/Save money while you're young in the Bay Area, then move out once you're rich enough that you and your family could live very well in other places.

I feel the article is not too far from reality, it might indeed be impossible for families to start a new life in the bay area. Then again, It's all about compromises: live further from the city, or live in a small place (our family of 4, soon to be 5, rents a 900sq feet condo. Choices, people). You also don't have to buy bagels or coffee, FFS.
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BlueMR2

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Re: Scraping by on six figures?
« Reply #2 on: March 01, 2017, 06:15:28 PM »
I totally get the article.  I've had job offers double what I make now, but when I go and compare the COL and the transportation issues of those big cities that have these jobs, it's totally not worth it.  I'll stick to my small city in the midwest!  Getting paid 2x as much, but having a 6x longer commute to get to a house that costs 10x as much (or the same length commute but stuck with a tiny jail cell apartment that still costs 5x what my house does per month).  No thank you.

anorman79

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Re: Scraping by on six figures?
« Reply #3 on: March 01, 2017, 07:34:15 PM »
I get the last guy's plight in the article. Daycare is obscenely expensive. Often your options are pay exorbitant amounts of money so you can both work and further your careers, or have one of the parents stop working and go single income. Either way it's tough especially in a HCOL area.

Then again some people are atrocious at managing their money. My boss(who makes about 250k/year) got pissed that I buttoned up how our company treats some of the executive fringe benefits, resulting in them owing more in taxes. She actually made a comment that she wasn't quite living paycheck to paycheck but it was close and I was taking food off of her table. Maybe don't drive the super high end luxury car or keep your country club membership?

neverrun

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Re: Scraping by on six figures?
« Reply #4 on: March 02, 2017, 04:33:44 AM »
I too have lived in a High COL, I guess I played Geo Artibridge.  I began my career in NYC and made career moves and took a slight (10%) pay cut to Detroit.  But when I first started in NYC I was making 1/3 of my current salary (16 years ago).

While I understand thinking I should be getting more for $160,000 it really is all about choices.  I had co-workers who had a "normal" house by living in and commuting from PA 90 miles away from the office.  I choose to live in a smaller place but 16 miles from the office.  And in fact I began making those choices that set me up to be able to live in a decent manner closer in when I was making that smaller salary and having little responsibility first by renting and then by moving into a smaller condo in a good location but still in an outer Borough.  If I was still in NYC I would likely have moved into a slightly larger place or a smaller SFH.  But I would have done so by planning for it over all those years.

 

Villanelle

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Re: Scraping by on six figures?
« Reply #5 on: March 02, 2017, 05:07:01 AM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

Tasty Pinecones

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Re: Scraping by on six figures?
« Reply #6 on: March 02, 2017, 06:09:05 AM »
I knew a guy that left a job where I worked in flyover country to go to San Diego for a modest raise. No research. He was back in a few months asking for his old job back. Housing was the eye-opener.

slugline

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Re: Scraping by on six figures?
« Reply #7 on: March 02, 2017, 08:21:00 AM »
It's such a shame that the terrain is so scenic. Maybe if it wasn't the city would be more inclined to allow more high-rise development to correct this market failure.

Laura33

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Re: Scraping by on six figures?
« Reply #8 on: March 02, 2017, 12:45:21 PM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

Funny, that was my thought exactly!
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Villanelle

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Re: Scraping by on six figures?
« Reply #9 on: March 02, 2017, 10:24:57 PM »
I knew a guy that left a job where I worked in flyover country to go to San Diego for a modest raise. No research. He was back in a few months asking for his old job back. Housing was the eye-opener.

Yes.  If I tell people I own a home in San Diego (not near the water or in a fancy downtown area, just the not-super-far-out suburbs) and it's worth about $575k, then assume it's a McMansion.  Ha!  Try a >2000 sqft attached townhouse with dated finishes and no yard at all.  (Of course, when I'm listing it for rent, that's not exactly the description I use!)

paddedhat

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Re: Scraping by on six figures?
« Reply #10 on: March 03, 2017, 08:09:15 AM »
I too have lived in a High COL, I guess I played Geo Artibridge.  I began my career in NYC and made career moves and took a slight (10%) pay cut to Detroit.  But when I first started in NYC I was making 1/3 of my current salary (16 years ago).

While I understand thinking I should be getting more for $160,000 it really is all about choices. I had co-workers who had a "normal" house by living in and commuting from PA 90 miles away from the office. I choose to live in a smaller place but 16 miles from the office.  And in fact I began making those choices that set me up to be able to live in a decent manner closer in when I was making that smaller salary and having little responsibility first by renting and then by moving into a smaller condo in a good location but still in an outer Borough.  If I was still in NYC I would likely have moved into a slightly larger place or a smaller SFH.  But I would have done so by planning for it over all those years.

I lived in that area of PA. for my entire career, and was NOT one of those super commuters. It was however, a fascinating social experiment  to observe. Starting at 5AM there would be a procession of individuals leaving my rural neighborhood to drive 15-20 minutes east to the bus parking. They would then spend 2-1/4 hours (if everything went perfectly) to end up at port Authority. From there is is subway, bus or shoes, to the office. At five PM, the whole process reverses, and on a good day, they roll past my door at 7:30PM  on the last leg of their journey. 14-15 hours a day,  fifty thousand miles of commuting a year,  zero personal time, or a real life away from the job. I'm surprised more of them don't kill themselves. Yea, it was a bad idea, thirty, forty years ago, when a handful of folks were the real oddballs that did it. By the peak, immediately before the recession hit, it turned into roughly 40K in my county alone who did the trek, and it resulted in a totally screwed up community. Kids who never saw their parents, housing costs that made little sense, grossly inflated and collapsing when the economy tanked (and have yet to recover) and countless other issues. Good to see that you avoided that mess, it's a really, really poor way to waste your life.

dreaming

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Re: Scraping by on six figures?
« Reply #11 on: March 03, 2017, 09:21:27 AM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

The guy that moved taking the 50% cut was making $700,000.  I wonder if $350,000 is still enough for him to live on in the San Diego market.

Eric

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Re: Scraping by on six figures?
« Reply #12 on: March 03, 2017, 12:04:24 PM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

The guy that moved taking the 50% cut was making $700,000.  I wonder if $350,000 is still enough for him to live on in the San Diego market.

I hear the $8 bagels and $12 fresh pressed juices are a lot cheaper there.  He should be fine.
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Villanelle

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Re: Scraping by on six figures?
« Reply #13 on: March 03, 2017, 11:51:22 PM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

The guy that moved taking the 50% cut was making $700,000.  I wonder if $350,000 is still enough for him to live on in the San Diego market.

Sure, it's enough to live in San Diego, but so is $700k enough to live on in SF, but it sounds like it wasn't, for him.  And in fact, he could afford far more in SF on $700k than in San Diego on $350k.  That's the point  A 50% pay cut to move to a town that's 50% (or hopefully >50% cheaper) makes a lot of sense.  You have the same lifestyle but you save more.  If he moved for reasons other than finances, fine.  San Diego's weather is much better.  But if he made the move because he thought it would be better for his bottom line, it was a mistake. Not only did he lose out on the geographic arbitrage (move to the cheaper place *after* you quit working), but he took a 50% pay cut for a 15% cheaper lifestyle, meaning he had less money leftover every month. 

SD's $8 bagels are only $7 and the fresh juices only $10, so he was likely spending less.  SF's $2m house is only $1.5 in SD.  But that doesn't change the fact that overall, the math means he was less well off.  Again, maybe he moved for other reasons, but it doesn't sound like that's the case. 
« Last Edit: March 04, 2017, 09:16:26 PM by Villanelle »

dcamnc

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Re: Scraping by on six figures?
« Reply #14 on: March 04, 2017, 08:46:34 PM »
I have absolutely nothing of value to add. I just want to say, good lord, I'm glad I live in the low col boonies.

Lagom

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Re: Scraping by on six figures?
« Reply #15 on: March 04, 2017, 10:04:20 PM »
Meh. I live in Silicon Valley with a $3500/month rent on a 3/1.5 1200 sqft SFH that is in no way fancy. My employer is in San Diego and I travel there frequently and all I can say is San Diego is WAY cheaper than here when it comes to housing. This is true even in the fancier areas, but there are also many more options to live in especially affordable housing for people willing to endure a semi long but not too terrible commute. 50% is still too much of a pay-cut to move there, of course, but I have had many frustrating conversations with San Diegans trying to claim their expenses are just as ridiculous as mine.

That said, my family of 4 lives almost entirely off my wife's teacher salary with only a small supplement from mine that should become unnecessary once she moves into the last pay column for her district next year. Her salary is considerably (bigly!) below $120k and we are not ERE kinds of folks by any stretch (e.g. I just dropped $2400 on a new home gym setup, albeit to eliminate $260/mo in membership fees from our past gym). So while I somewhat sympathize (childcare costs are definitely insane around here), that guy still was definitely complaining too much.
« Last Edit: March 04, 2017, 10:07:50 PM by Lagom »

Tasty Pinecones

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Re: Scraping by on six figures?
« Reply #16 on: March 05, 2017, 10:04:47 AM »
I have absolutely nothing of value to add. I just want to say, good lord, I'm glad I live in the low col boonies.

Me too. Did the big city for a while. No more, thanks. $3500 per month would make payments on five houses like mine. 

StockBeard

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Re: Scraping by on six figures?
« Reply #17 on: March 05, 2017, 10:59:45 AM »
that guy still was definitely complaining too much.
Haven't we all seen the other side of the fence, though? I'm seeing two things in the article:
1) A journalist looking for a story that drives traffic. Collect some comments from people who say they would have expected much better out of a 6 figures salary, then make it sound as if they're overly complaining
2) People who are not really complaining, but were expecting that on a 6 figures salary, one could live like a king pretty much anywhere in the world.

Especially on #2: Nowadays I make about 6 times what I made with my first salary 15 years ago. Back in 2003, with my engineer's salary in France, I could afford a great condo for myself (700 sq ft), with a view on the Mediterranean sea, in one of the most expensive cities in France: Antibes. In many aspects, I lived like a king. Fast forward to 2017, in Seattle, my 900sq feet costs more than 3 times the price of my French condo, and does not have a view of  the sea. I could say the same about pretty much every aspect of life: things are much more expensive in a HCOL (duh). I think people expect to be able to afford much more when people keep telling them that they make 4 or 5 times the national average, when in reality the prices of everything around you just mean you are just above middle class as long as you stay in a HCOL.
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Lagom

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Re: Scraping by on six figures?
« Reply #18 on: March 05, 2017, 12:06:11 PM »
that guy still was definitely complaining too much.
Haven't we all seen the other side of the fence, though? I'm seeing two things in the article:
1) A journalist looking for a story that drives traffic. Collect some comments from people who say they would have expected much better out of a 6 figures salary, then make it sound as if they're overly complaining
2) People who are not really complaining, but were expecting that on a 6 figures salary, one could live like a king pretty much anywhere in the world.

Especially on #2: Nowadays I make about 6 times what I made with my first salary 15 years ago. Back in 2003, with my engineer's salary in France, I could afford a great condo for myself (700 sq ft), with a view on the Mediterranean sea, in one of the most expensive cities in France: Antibes. In many aspects, I lived like a king. Fast forward to 2017, in Seattle, my 900sq feet costs more than 3 times the price of my French condo, and does not have a view of  the sea. I could say the same about pretty much every aspect of life: things are much more expensive in a HCOL (duh). I think people expect to be able to afford much more when people keep telling them that they make 4 or 5 times the national average, when in reality the prices of everything around you just mean you are just above middle class as long as you stay in a HCOL.

Sure, but for the purpose of this forum he is still complaining too much. We don't strive to live like kings here, after all (at least not most of us). If you are willing to forego a middle/upper-middle class lifestyle, you can absolutely make fantastic progress towards FIRE in HCOL areas. Excepting making a similar income in a LCOL area (say by owning a successful business), I would argue that's probably the fastest path to FIRE for an average joe.

That said, you are probably right that the journalist is spinning the interviews to follow the intended narrative.

mm1970

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Re: Scraping by on six figures?
« Reply #19 on: March 09, 2017, 02:24:52 PM »
I totally get the article.  I've had job offers double what I make now, but when I go and compare the COL and the transportation issues of those big cities that have these jobs, it's totally not worth it.  I'll stick to my small city in the midwest!  Getting paid 2x as much, but having a 6x longer commute to get to a house that costs 10x as much (or the same length commute but stuck with a tiny jail cell apartment that still costs 5x what my house does per month).  No thank you.
Pretty much this.  I have a lot of friends up there.  And it's one of the few places where I'm pretty sure we could both get jobs.  I'm estimating that we could increase our income by about $100k.

But man the traffic...I've got friends in Fremont, and their traffic is horrid.  Shut down the freeway?  Rats in a maze.

I've got friends in Mtn View (bought a long time ago), and while they've got better commutes and a decent mortgage, they still have to juggle childcare and nannies and schedules, because that's what you do (leave early to pick up the kids, ha!)

No thanks.  I'll be underpaid and all, in a tiny house, but hey, look, it's 2:30 and my kid has a baseball game at 4.  See ya.  Or, it's Wednesday morning and I just finished my 58 minute commute.  By bicycle.  Because I'm slow and hit a bunch of red lights, or I could have done it in 52.

mm1970

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Re: Scraping by on six figures?
« Reply #20 on: March 09, 2017, 02:27:37 PM »
He took a 50% pay cut to move to San Diego??  Did this guy do much research?

I just checked a cost of living calculator to see if my initial reaction was correct.  It says that equivalent to $160k in the greater San Fran area is $131337.87 in the San Diego area.  If this guy took a 50% pay cut, he's behind, not ahead. 

I recall a study a couple years ago that said San Diego had the second least affordable housing in the nation (meaning it was less affordable than either NYC or San Fran, though I don't recall which).

The guy that moved taking the 50% cut was making $700,000.  I wonder if $350,000 is still enough for him to live on in the San Diego market.

Sure, it's enough to live in San Diego, but so is $700k enough to live on in SF, but it sounds like it wasn't, for him.  And in fact, he could afford far more in SF on $700k than in San Diego on $350k.  That's the point  A 50% pay cut to move to a town that's 50% (or hopefully >50% cheaper) makes a lot of sense.  You have the same lifestyle but you save more.  If he moved for reasons other than finances, fine.  San Diego's weather is much better.  But if he made the move because he thought it would be better for his bottom line, it was a mistake. Not only did he lose out on the geographic arbitrage (move to the cheaper place *after* you quit working), but he took a 50% pay cut for a 15% cheaper lifestyle, meaning he had less money leftover every month. 

SD's $8 bagels are only $7 and the fresh juices only $10, so he was likely spending less.  SF's $2m house is only $1.5 in SD.  But that doesn't change the fact that overall, the math means he was less well off.  Again, maybe he moved for other reasons, but it doesn't sound like that's the case.

I think it's going to depend a LOT on where you spend your money.  If it's housing, and you are able to bring it way down by moving, you totally come out ahead.  And: traffic.  Not that SD is great (it's not), but depends on where he lives/ works, he can get a lot of his time back.