Author Topic: Yet another amusing financial analysis  (Read 4453 times)

madhadron

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Yet another amusing financial analysis
« on: May 27, 2013, 10:01:45 PM »
https://blog.wealthfront.com/college-vs-retirement-savings-silicon-valley/

Apparently a household income of $250k/year is going to leave you destitute and indebted in the valley. The hilarious part is that they claim their assumptions are optimistic, even while quoting assume $237k for college education for each of two kids and $22k/year of costs of upkeep for each kid before college. Considering Berkeley, the local public university, costs $15,000/year, their calculations are truly bizarre.

Cecil

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Re: Yet another amusing financial analysis
« Reply #1 on: May 27, 2013, 11:04:45 PM »
The monthly budget of a 30-year old couple, apparently:

$3700 - Mortgage ($800k @ 3.75%)
$830 - Property Tax
$1000 - Cars (!)
$140 - Car Insurance
$200 - House Insurance
$0 - Home security
$350 - Home Upkeep

$450 - Groceries
$325 - Restaurants
$60 - Entertainment
$50 - Haircuts
$500 - Clothes (!)
$40 - Dry Cleaning

$225 - Cable/Internet/Phone
$500 - Utilities (!)
$18 - Gifts (!) (Not a typo)
$0 - Charity (!)
$200 - Gardener (!)
$350 - Housekeeper (!)

$350 - Other (!)
$3000/yr - Vacation.

$1800/month - total child maintenance, per child - on top of everything already mentioned
$1000/month - extra saving required for 18 years in order to send each child to college.

Sadly, this couple only makes $250k, and so they're probably going to wind up about $600k in the hole by the time they're 50. Maybe Uncle Sam should cut them a break on their tax bill.

Tyler

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Re: Yet another amusing financial analysis
« Reply #2 on: May 28, 2013, 12:09:48 AM »
Considering Berkeley, the local public university, costs $15,000/year, their calculations are truly bizarre.

Silicon Valley exists exclusively its own crazy little protective bubble.  I know someone who went to Palo Alto High -- unfortunately there's a measurable suicide rate there for students who don't make it into Stanford.  First world problems. 

The spending in the article is silly.  But in my experience it wouldn't surprise me if it's not too far off base. 
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Another Reader

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Re: Yet another amusing financial analysis
« Reply #3 on: May 28, 2013, 08:01:30 AM »
Yet another reason to move out of Silicon Valley and rent my house to an aspirational (read: on the hamster wheel) couple in their 30's.  At least a couple of the comments lambasted the writer's assumptions.

brewer12345

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Re: Yet another amusing financial analysis
« Reply #4 on: May 28, 2013, 10:41:03 AM »
The monthly budget of a 30-year old couple, apparently:

$3700 - Mortgage ($800k @ 3.75%)

Sodding arseholes!
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Jamesqf

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Re: Yet another amusing financial analysis
« Reply #5 on: May 28, 2013, 12:02:03 PM »
The monthly budget of a 30-year old couple, apparently:

$3700 - Mortgage ($800k @ 3.75%)

Sodding arseholes!

Why?  In that area, that's a perfectly reasonable (even modest) price for a house, which is likely to hold its value, or even appreciate.  It's all those other expenses - $1000/month for cars, insane utility bills, etc - that are killing them.

kisserofsinners

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Re: Yet another amusing financial analysis
« Reply #6 on: May 28, 2013, 12:06:29 PM »
I live there and I guess I'm just doing it all wrong. :( Maybe they are eating their clothes?
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Joet

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Re: Yet another amusing financial analysis
« Reply #7 on: May 28, 2013, 02:11:23 PM »
my wife and I live in that general area, make a bit more than they do [tho are a bit older than 30] and have no child expenses whatsoever. Their annual 'spending' is $82k in the first year. I'm not sure if that includes their ginormous mortgage. If it does, wow they are spending only $6,833/mo with 2 kids and a ginormous mortgage. I'd say their spending is WELL controlled. (but what do I know). I cant seem to stay under $10k/month all-in in this area.

edit: it does not include mortgage/property tax: so they're at $11,371/mo spending. Hah! [/condescending glare]. I spend NEARLY $1k/less/mo than them. Although my house is worth the same as their example [give or take 50k], my mortgage + property tax is ~$1200/mo less or so. heh. and there's that no kids thing...
« Last Edit: May 28, 2013, 02:14:14 PM by Joet »

Johnny Aloha

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Re: Yet another amusing financial analysis
« Reply #8 on: May 28, 2013, 02:33:13 PM »
I have a very similar mortgage, our spending is under $6k/month.

kisserofsinners

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Re: Yet another amusing financial analysis
« Reply #9 on: May 28, 2013, 03:35:01 PM »
To be clear our spending is <$4000 and is about to go down with the mortgage (including ins and taxes) over what we are currently paying in rent.
Hedonism on a budget

dragoncar

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Re: Yet another amusing financial analysis
« Reply #10 on: May 28, 2013, 04:53:29 PM »
They also assume a 45% effective tax rate, despite an $800k mortgage?

mpbaker22

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Re: Yet another amusing financial analysis
« Reply #11 on: May 28, 2013, 05:46:31 PM »
Their yearly dry cleaning budget and their monthly clothing budget are both more than my entire yearly clothing budget.

Their haircut and manicure budget is more than my haircut budget for a decade.

$200/month for a gardener?
$400/month for a housekeeper?

I actually spend a lot on food (and restaurants/bars) but they spend almost $800/month.  That's actually insane.

$500/month in utilities?  Again that's nearly a years worth of utilities.


Yep, they're really living in extreme poverty!