Author Topic: $250,000 A Year Is A Shoe Size Too Small  (Read 3918 times)

Trebek

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$250,000 A Year Is A Shoe Size Too Small
« on: May 31, 2012, 03:34:22 PM »
Wow... this article is SO bad it was like reading a train wreck! I couldn't look away!! Australian houses are in a massive bubble right now and cost 8-9 times the average median wage, but $5,000 a month for spending? Freaking hell... and everyone of them doesn't seem to have heard of lifestyle inflation...

http://www.theage.com.au/executive-style/why-a-spare-million-dollars-wont-put-you-on-the-rich-list-20120530-1zje0.html
« Last Edit: May 31, 2012, 07:01:44 PM by Trebek »

KittyWrestler

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #1 on: May 31, 2012, 03:49:29 PM »
pasted from the article:
"For many wealthy folk and wannabes, stashing the cash is not enough - they need to know they're doing it faster than those next door. This is one reason people seek the help of financial planners, Gerrard said. "People do voice concern as to whether they are keeping up," he said.
"Everyone is looking at the Joneses They look at what the neighbours have and feel quite poor.""

That's pure sadness...

gooki

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #2 on: May 31, 2012, 04:19:47 PM »
But $5,000 a month for spending? Freaking hell... and everyone of them doesn't seem to have heard of lifestyle inflation...

That's the kicker for me, and is the enlightenment I've received from MrMM. I still want to inflate my lifestyle a little, but not with credit, and not at the expense of time with my children.

This quote made me cringe most:

"the lease on a set or two of European wheels as well."

Why on earth is someone earning $250,000 a year leasing two vehicles?

Trebek

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #3 on: May 31, 2012, 07:07:22 PM »
Why on earth is someone earning $250,000 a year leasing two vehicles?

It's a thing in Australia called a "Novated Lease". Basically you can lease a new (or slightly old 4 years max normally) car and use it as a tax write off. The payments for the lease come out of your pay BEFORE tax which means it reduces your taxable income and thus you save on paying taxes. You do have to drive the car a certain amount though (usually min 15,000km+ each year). It's a thing that really should be canned under the whole sustainability push. The government is effectively encouraging people to buy new instead of old AND to drive crap loads more than they should.

They should make public transport tickets tax free or something, that would be far better for everyone I'd say.

gooki

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #4 on: May 31, 2012, 07:35:41 PM »
Interesting, but surely people in these high paying jobs can do maths.

I'll guess the top tax bracket is 30%. So effectively they're getting a 30% discount on any lease payments.

A quick google shows a 2012 BMW 5 series novated lease starts from around $2,000 a month excluding maintenance. After the tax write off that's $1,400 a month or $16,800.00 per year.

A quick check on carsales.com.au show's you can buy a 2005 BMW 5 serries for $22,000. Less than the cost of 18 months lease payments.

Shakes head in disbelief that people piss away $34,000 an year in car lease payments (two vehicles as per the quote), and then complain they don't have enough spending money as they want.

Trebek

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #5 on: May 31, 2012, 08:04:06 PM »
I'll guess the top tax bracket is 30%. So effectively they're getting a 30% discount on any lease payments.

You guess wrong. Welcome to Australia...

Australian Tax Brackets

"$180,001 and over $54,550 plus 45c for each $1 over $180,000"

That means a person earning $200,000 per year would be taxed $54,550 + $20,000 * 0.45 = $63,550 in tax making your actual income $136,450 per year (EDIT: That's a total tax rate of 31.77% so I guess you weren't too far off :P).

Also we have a 10% "GST" or Goods and Service Tax on (pretty much) everything you buy with your after-taxed money. Needless to say I opt to just not buy pretty much anything bar food lol

erwannabe

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Re: $250,000 A Year Is A Shoe Size Too Small
« Reply #6 on: June 01, 2012, 02:25:46 AM »
I know lots of people pulling 6 figure incomes mainly in the mining industry. But the absolute worst is the fact that these people are making more $ than they ever though possible but due to the high demands of the lifestyle, they are drinking away their money (and other vices).  Australia is expensive, so a 6 figure income isn't as great as it sounds once all the taxes are taken, and taking into consideration high living costs.

Edit to add in some mining towns it costs $1500 per WEEK to rent a crappy 3 bedroom house.
« Last Edit: June 01, 2012, 02:28:11 AM by erwannabe »