Author Topic: "10 Places Where You Can Earn Six Figures and Still Be Broke"  (Read 4993 times)

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 22
This is actually my first post here ever and I haven't yet introduced myself, but I can't help but post this study that I saw someone post on Facebook. Click below to read the analysis and enjoy (or facepalm, throw your laptop into the fireplace, whatever):

Article: "10 Places Where You Can Earn Six Figures and Still Be Broke"
http://www.magnifymoney.com/blog/featured/10-places-can-earn-six-figures-still-broke1352891854

So, I live in the DC area, which, according to this "analysis," is the #1 worst place to live for a family of three making $100,000. My fiancé and I currently make just about half of $100,000. Yet, we still manage to save some money. (For more context, we're new to MMM/FIRE and are currently in the process of improving our situation.) I'm sitting here at my desk laughing at the numbers reported in this article. $1,011 for average monthly transportation costs?? $302 for average monthly ENTERTAINMENT costs?! The provided calculations have the average DC family coming in at NEGATIVE -$315 a month. So, wipe out your entertainment costs and at least zero out! The one saving grace of the calculated average costs is that it DOES include personal savings - but only at a rate of 5%.

I just did some super quick calculations and came to this conclusion: If my fiancé and I were making $100k in our current situation, we would easily be able to save AT LEAST 50% of our income. Granted, we don't need childcare and we don't have student debt (or any debt for that matter). Still, that is SIGNIFICANT.

These kind of articles/studies in general frustrate me because it can become a cop-out for so many people who live in these areas and make a decent income. It becomes so easy to say, "oh, welp, it's really expensive to live here and there's nothing I can do about it," while simultaneously out at bottomless brunch.

nereo

  • Senior Mustachian
  • ********
  • Posts: 13526
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #1 on: June 28, 2017, 11:10:30 AM »
hate those click-bait finance articles.  You can feel broke and go bankrupt on virtually any salary in any city.  Or you can thrive just about anywhere with the median (national) household income. Tens-of-thousands live in DC on less.
We lived in the DC area for years (commuted from NoVA) and earned in less than half of that $100k target, yet we too managed to save and feel affluent.  Our transportation costs felt huge, but were closer to $300 than $1,100.  Entertainment was about $50 for both of us (mostly netflix).
YMMV

Travis

  • Magnum Stache
  • ******
  • Posts: 3179
  • Location: South Korea
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #2 on: June 28, 2017, 11:28:12 AM »
So is the article saying there's nobody in D.C. making less than $100k, or rather if you only make that much you WILL run out of money?  After you've run out of money, do you stay or move?  My ability to do 6th grade math says you can't simply exist with a negative balance indefinitely.


It's too bad that site doesn't have a comments section.

eddiejoe

  • 5 O'Clock Shadow
  • *
  • Posts: 26
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #3 on: June 28, 2017, 11:39:13 AM »
As a fellow DMV-ian I agree that a family of 3 making $100k can get by and save money, but compared to a family of 3 making $100k in a rural part of the country the life that salary buys you is night and day. I grew up in rural NC, a household income of $100,000 would put you in the 90th percentile of earnings for my home county.

To be honest I am surprised that you and your fiancé live in this area making $50k combined (that's how I read it at least) income and still manage to save. Forgive my tact, but does one or both of you still live at home? Or way out in MD/VA?   

(also note, they are including in their calculation an expense of "personal savings" at $313.18 a month, so the real number is $-1.82 renaming income)

SeaEhm

  • Bristles
  • ***
  • Posts: 447
  • The Guilt is Real
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #4 on: June 28, 2017, 11:41:18 AM »
This is the methodology.  Obviously, they took "typical" figures for individual sections and painted them across the board.

"
Quote from: Article
We based our findings on the projected disposable income for a family of three — two adults and one child age 4 years old. We assume the total household gross income is $100,000.
We estimated post-tax income for each metro area.
Housing

Based on metro-level estimates from U.S. Census Current Population Survey
Child care

Economic Policy Institute — State level child care costs in the U.S.
Food

Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, April 2017
Based on a moderate plan for a family of three: One male (age 19 to 50 years), one female (age 19 to 50 years), and child (age 4 to 5 years). Adjustment factor of 5% added.
Transportation

Based on metro-level data compiled by the U.S. Dept. of Transportation
U.S. Dept. of Housing and Urban Development “Location Affordability Portal”
Student debt payment

State Level Household Debt Statistics 2003-2016, Federal Reserve Bank of New York.
The Student Loan Debt Balance per Capita is distributed equally over 10 years with an interest rate of 4.66%.
Entertainment

We assumed all households would spend 5% of their income on entertainment, per the Bureau of Labor Statistics Consumer Expenditures Survey (CE)
Personal savings

We assumed all households would set aside 5% for personal savings, based on averages from the St. Louis Federal Reserve Bank, personal savings rate.
Data analysis by Priyanka Sarkar, Arpi Shah and Mandi Woodruff."

Not everyone is going to be "typical" in each aspect.  Some may have no debt, but more transportation costs or vice versa. 

How much is rent for a 2bedroom in DC?  It seems like their housing for SF was a bit low and didn't include electricity and those minor things associated with living.  Maybe toilet paper and tooth paste is part of the entertainment budget?

nereo

  • Senior Mustachian
  • ********
  • Posts: 13526
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #5 on: June 28, 2017, 01:15:28 PM »

To be honest I am surprised that you and your fiancé live in this area making $50k combined (that's how I read it at least) income and still manage to save. Forgive my tact, but does one or both of you still live at home? Or way out in MD/VA?   

(also note, they are including in their calculation an expense of "personal savings" at $313.18 a month, so the real number is $-1.82 renaming income)

"Way-out" is a subjective.  Alexandria, part of their region - about 20 min from downtown on the Metro (providing it hadn't broken down that day), or faster via the VRE. I find it humorous how people who live in the city sometimes consider anything past the 14th street bridge to be 'way out' there, but to each their own. 
According to most 'rules of thumb' we were spending too much on our rental (almost 50% of takehome pay) but still >$400 less than what they list.  Food was another $400 less, no student debt repayment (they list $430/mo), less than half their transporation budget (we were ~$300, they list $1,100), half of what they spend on food (~$300-350 vs $740) and substantially less in taxes (quick, back-of-envelope shows we paid $1400 less per month int taxes). 

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #6 on: June 28, 2017, 03:30:58 PM »
To be honest I am surprised that you and your fiancé live in this area making $50k combined (that's how I read it at least) income and still manage to save. Forgive my tact, but does one or both of you still live at home? Or way out in MD/VA?   

(also note, they are including in their calculation an expense of "personal savings" at $313.18 a month, so the real number is $-1.82 renaming income)

I mean, we aren't yet saving 50% of our income, or even 25% currently (but we're working on making changes!), but we definitely don't accrue debt every month. We are just frugal where we can be, and admittedly, sometimes we HAVE to be. We live in a 1-br rental in VA in a bike-able distance to the metro, we cook at home a lot, we don't have a lot of "entertainment" expenses. Also of note, we don't have any debt or children. However, I do realize that our current income isn't sustainable long-term, which is why, after reading MMM and becoming more educated on financial health, we are going to be making positive changes to our income. We both currently work in the arts, but I'm planning on moving into a more lucrative field.

I know that this article is more for the drama factor than anything else...I guess my main reason for posting it was because I dislike how articles like this make it easy for people who might be living beyond their means/in debt to say there's nothing they can do about their situation.

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #7 on: June 28, 2017, 03:32:40 PM »
hate those click-bait finance articles.  You can feel broke and go bankrupt on virtually any salary in any city.  Or you can thrive just about anywhere with the median (national) household income. Tens-of-thousands live in DC on less.
We lived in the DC area for years (commuted from NoVA) and earned in less than half of that $100k target, yet we too managed to save and feel affluent.  Our transportation costs felt huge, but were closer to $300 than $1,100.  Entertainment was about $50 for both of us (mostly netflix).
YMMV

Right? It's totally doable. Our situations sound really similar.

We do want to increase our income so we can save a higher percentage of it, but it's possible to live decently and save in a high COL area even if you aren't pulling in six figures.

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #8 on: June 28, 2017, 03:37:01 PM »

How much is rent for a 2bedroom in DC?  It seems like their housing for SF was a bit low and didn't include electricity and those minor things associated with living.  Maybe toilet paper and tooth paste is part of the entertainment budget?

Depends on the location. I live in NoVA - we live in a 1br townouse and it costs us $1,550 + utilities, which is about average/slightly below average. 2 bedrooms can run from $1,600 (super low) to easily over $2,000, especially if it's a newly developed luxury condo. And those new developments are popping up EVERYWHERE, all the time. The amount of cranes in DC is insane right now.

Hard to tell where TP might fit into their calculations - I usually lump stuff like that into my grocery budget. :p

remizidae

  • Stubble
  • **
  • Posts: 249
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #9 on: June 28, 2017, 06:40:53 PM »
Thanks for posting! Good to see that I am below average in every spending category. Except that $300 for entertainment actually seems quite low to me. I spend about twice that, although maybe some people are categorizing restaurant and alcohol spending as food?

eddiejoe

  • 5 O'Clock Shadow
  • *
  • Posts: 26
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #10 on: June 29, 2017, 06:03:45 AM »
To be honest I am surprised that you and your fiancé live in this area making $50k combined (that's how I read it at least) income and still manage to save. Forgive my tact, but does one or both of you still live at home? Or way out in MD/VA?   

(also note, they are including in their calculation an expense of "personal savings" at $313.18 a month, so the real number is $-1.82 renaming income)

I mean, we aren't yet saving 50% of our income, or even 25% currently (but we're working on making changes!), but we definitely don't accrue debt every month. We are just frugal where we can be, and admittedly, sometimes we HAVE to be. We live in a 1-br rental in VA in a bike-able distance to the metro, we cook at home a lot, we don't have a lot of "entertainment" expenses. Also of note, we don't have any debt or children. However, I do realize that our current income isn't sustainable long-term, which is why, after reading MMM and becoming more educated on financial health, we are going to be making positive changes to our income. We both currently work in the arts, but I'm planning on moving into a more lucrative field.

I know that this article is more for the drama factor than anything else...I guess my main reason for posting it was because I dislike how articles like this make it easy for people who might be living beyond their means/in debt to say there's nothing they can do about their situation.

Understood, I was imagining a place within (reasonable) walking distance to a metro which is at least $1,800 even in the far reaches of the lines, and I've heard horror stories about people commuting from Hagerstown or further in the name of cheap housing.  I live in Arlington and I can't see how the volume of "Luxury Apartments" being built can match the number of people who can actually afford them. But It's the DMV and a lot more people are willing/must use 50%+ of their income on housing.

I can see people justifying the high price of DC/SF/NYC living as the reason they are not savings money or going into debt. But the point of the article still remains true, the same salary can go much further in Johnson City than DC.

Ocinfo

  • Bristles
  • ***
  • Posts: 313
To be honest I am surprised that you and your fiancé live in this area making $50k combined (that's how I read it at least) income and still manage to save. Forgive my tact, but does one or both of you still live at home? Or way out in MD/VA?   

(also note, they are including in their calculation an expense of "personal savings" at $313.18 a month, so the real number is $-1.82 renaming income)

I mean, we aren't yet saving 50% of our income, or even 25% currently (but we're working on making changes!), but we definitely don't accrue debt every month. We are just frugal where we can be, and admittedly, sometimes we HAVE to be. We live in a 1-br rental in VA in a bike-able distance to the metro, we cook at home a lot, we don't have a lot of "entertainment" expenses. Also of note, we don't have any debt or children. However, I do realize that our current income isn't sustainable long-term, which is why, after reading MMM and becoming more educated on financial health, we are going to be making positive changes to our income. We both currently work in the arts, but I'm planning on moving into a more lucrative field.

I know that this article is more for the drama factor than anything else...I guess my main reason for posting it was because I dislike how articles like this make it easy for people who might be living beyond their means/in debt to say there's nothing they can do about their situation.

Understood, I was imagining a place within (reasonable) walking distance to a metro which is at least $1,800 even in the far reaches of the lines, and I've heard horror stories about people commuting from Hagerstown or further in the name of cheap housing.  I live in Arlington and I can't see how the volume of "Luxury Apartments" being built can match the number of people who can actually afford them. But It's the DMV and a lot more people are willing/must use 50%+ of their income on housing.

I can see people justifying the high price of DC/SF/NYC living as the reason they are not savings money or going into debt. But the point of the article still remains true, the same salary can go much further in Johnson City than DC.

Believe it or not, rental prices have dropped in the last 12 months in the DMV. There are something like 20k new rental units expected to deliver in DC this year but only about 10k new residents. I'm very bearish on commercial real estate (including apartment buildings) since they're building because financing is cheap with little regard for actual supply/demand.


Sent from my iPhone using Tapatalk

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #12 on: June 29, 2017, 06:16:05 PM »

I live in Arlington

Ha! Me too. :) We actually got a great deal on our rental. It's a little bit older, but it's in a great neighborhood. We're about two miles from the nearest metro.

Paul der Krake

  • Walrus Stache
  • *******
  • Posts: 5076
  • Age: 12
  • Location: UTC-10:00
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #13 on: June 29, 2017, 07:16:42 PM »
There is no place in the country where a family of 3 making 6 figures cannot live comfortably, unless they make a number of wildly inefficient choices along the way.

mm1970

  • Walrus Stache
  • *******
  • Posts: 8285
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #14 on: June 30, 2017, 12:18:44 PM »

How much is rent for a 2bedroom in DC?  It seems like their housing for SF was a bit low and didn't include electricity and those minor things associated with living.  Maybe toilet paper and tooth paste is part of the entertainment budget?

Depends on the location. I live in NoVA - we live in a 1br townouse and it costs us $1,550 + utilities, which is about average/slightly below average. 2 bedrooms can run from $1,600 (super low) to easily over $2,000, especially if it's a newly developed luxury condo. And those new developments are popping up EVERYWHERE, all the time. The amount of cranes in DC is insane right now.

Hard to tell where TP might fit into their calculations - I usually lump stuff like that into my grocery budget. :p
This doesn't seem to be too bad, based on what I was paying in the 1990s.  Arlington.

redbird

  • Pencil Stache
  • ****
  • Posts: 533
Re: "10 Places Where You Can Earn Six Figures and Still Be Broke"
« Reply #15 on: July 01, 2017, 12:38:28 AM »
The provided calculations have the average DC family coming in at NEGATIVE -$315 a month. So, wipe out your entertainment costs and at least zero out! The one saving grace of the calculated average costs is that it DOES include personal savings - but only at a rate of 5%.

I've lived in more than 1 of those HCOL areas they've mentioned (MD/DC area and Oahu, Hawaii), with high rent, and I got nowhere near the spending levels they say. Definitely take these articles with a grain of salt!

I just moved from the MD/DC area back in May. I paid $2k + utilities for a 2br/2ba apartment.