Author Topic: Struggling at >250k  (Read 7900 times)

NumberCruncher

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Struggling at >250k
« on: December 05, 2012, 10:49:15 AM »
http://www.thejanedough.com/i%E2%80%99m-not-rich-why-am-i-being-taxed-like-i-am/

I agree that billionaires pulling in much more money with capital gains not being taxed as much is shitty, and that living in NY is expensive, but come on! It sounds like if even one of them got a job elsewhere for less money, the cost of living decrease (and tax decrease) would be phenomenal enough to make up for it. 

Jamesqf

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Re: Struggling at >250k
« Reply #1 on: December 05, 2012, 12:03:21 PM »
Kinda hard to figure this one out.  They make $250K, pay $100K in taxes, that leaves $150K.  Subtract $3K/month for rent, that leaves $114K.  Just what are they spending it on?

mlipps

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Re: Struggling at >250k
« Reply #2 on: December 05, 2012, 01:44:29 PM »
What kind of accountant saves for a house before paying off student loans? That makes no sense.

mustache brony

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Re: Struggling at >250k
« Reply #3 on: December 05, 2012, 02:17:28 PM »
It makes me a little sad that they have such problems with taxes, but can't (or don't) take advantage of their tax advantaged retirement accounts. I'm not quite sure why that is so I'm not judging.

chucklesmcgee

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Re: Struggling at >250k
« Reply #4 on: December 05, 2012, 03:51:57 PM »
What kind of accountant saves for a house before paying off student loans? That makes no sense.

The antimustachian kind who wants to get a house ASAP.

mustachecat

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Re: Struggling at >250k
« Reply #5 on: December 05, 2012, 06:26:45 PM »
Yes, they're insane. We live in NYC, we make 44% of what they make, we go on more vacations than they do... and we save more. Yes!!! I finally feel like a Mustachian!

Although... reading between the lines, if they're paying $22,000 in student loan interest a year, wouldn't their balances be around $366,666? I bet that's what's eating up their cash. Interesting that they don't address it. Probably because they don't want to hear, "Well, you chose to finance those graduate degrees."

dragoncar

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Re: Struggling at >250k
« Reply #6 on: December 05, 2012, 06:48:08 PM »
They say the loans are $145k, so they either have a 9% approximate interest rate (in which case saving for a house is duuummmbb) or they are making extra payments.

kudy

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Re: Struggling at >250k
« Reply #7 on: December 05, 2012, 07:12:19 PM »
At least the note in italics at the bottom by "Sophia Bera, CFPģ from LearnVest Planning" brings some sanity into the article.
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mustachecat

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Re: Struggling at >250k
« Reply #8 on: December 06, 2012, 05:47:46 AM »
They say the loans are $145k, so they either have a 9% approximate interest rate (in which case saving for a house is duuummmbb) or they are making extra payments.

Oh, duuuuh. Not sure how I missed that.

Okay, these people are just plain terrible.

Jamesqf

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Re: Struggling at >250k
« Reply #9 on: December 06, 2012, 12:05:30 PM »
Although... reading between the lines, if they're paying $22,000 in student loan interest a year, wouldn't their balances be around $366,666? I bet that's what's eating up their cash.

Even paying $22K on student loans, that should still leave them with $92K to after taxes, rent, and loans are taken care of.  So where does it go?

lhamo

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Re: Struggling at >250k
« Reply #10 on: December 06, 2012, 09:46:16 PM »
There is a lot of wierd justification going on here.  Take this comment:

"Weíve discussed moving, but itís unlikely that we would both be able to get jobs elsewhere. We rent a one-bedroom apartment near our offices in a neighborhood where they go for $3,000 a month. We could move to a slightly cheaper outer borough, but weíre both called into our offices at odd hours and we also work long days. So we pay for the convenience of living near work."

So if you don't want to give up the convenience of living near work now, when you are relatively free and unencumbered (high incomes, no kids), why the heck are you saving money now to BUY A HOUSE IN THE SUBURBS LATER?????  This doesn't make any sense at all.  They whine about how long it is going to take them to save up so that they can move farther from work, probably because they want to have kids along with the house (not planning at all for that added expense, either, it seems) but aren't willing to move now so that they can save major money and get rid of debt while also building savings.  And seeing if they actually LIKE living in the suburbs.  Many don't.  Even with kids. 

Their $3000 apartment close to work is a ridiculous luxury when they have that kind of income.  They could get a decent apartment in Queens or parts of Brooklyn for much less.  Yes, they'd have to add a commute and maybe the occasional late-night car service, but it would pale in comparison to that level of rent. 

I  bet they are eating out a lot, too.  Yes, groceries in Manhattan are expensive but I'm guessing they live in the financial district, which is close to Chinatown, where you can get amazingly cheap groceries if you know where to shop.

Sorry, I don't have a lot of sympathy.  DH and I lived in NYC on much less from 1999-2002.  bought a coop in Queens and had a great life on a combined salary of $100k, which we saved generously with.  We had no student loan debt, which was major, but still we spent MUCH less than these people and had what I felt was a very cushy lifestyle.  Yes, we had a subway commute but that is typical for many people in the NYC area.

Wherever you go, there you are

Hamster

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Re: Struggling at >250k
« Reply #11 on: December 06, 2012, 10:42:43 PM »
Sorry, I don't have a lot of sympathy.  DH and I lived in NYC on much less from 1999-2002.  bought a coop in Queens and had a great life on a combined salary of $100k, which we saved generously with.  We had no student loan debt, which was major, but still we spent MUCH less than these people and had what I felt was a very cushy lifestyle. 

Well duh. You did fine because you only made 100k. These poor people are stuck making 250k which is much worse than 100k, because they are trapped. They can't move because they might make less, and if they made less, they would have to move. How can you have your pudding if you don't eat your meat?

Besides, who could possibly live on only $95k left after taxes, rent, and loan payments...

So, as this couple suggests, people in Iowa who make $50k a year and spend less should pay more taxes so these two can enjoy a higher cost of living in NYC, because $250k is a pittance...

ruthiegirl

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Re: Struggling at >250k
« Reply #12 on: December 07, 2012, 07:41:17 AM »

So, as this couple suggests, people in Iowa who make $50k a year and spend less should pay more taxes so these two can enjoy a higher cost of living in NYC, because $250k is a pittance...

This was the bit that disturbed me, too.   

I am new to all of this, so correct me if I am wrong, but wouldn't contributing to their 401K decrease the income that can be taxed?  Seems like they are missing a crucial opportunity to save for retirement and lessen their tax load. 

ruthiegirl

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Re: Struggling at >250k
« Reply #13 on: December 07, 2012, 07:46:41 AM »
Oh wait, I am a dumbass.  The article has a response from an expert answering my question.  "Max out the 401K"  seems to be the repeating message. 


PJ

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Re: Struggling at >250k
« Reply #14 on: December 07, 2012, 09:50:51 AM »
How can you have your pudding if you don't eat your meat?
 
 
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Angelfishtitan

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Re: Struggling at >250k
« Reply #15 on: December 07, 2012, 09:53:45 AM »
Besides, who could possibly live on only $95k left after taxes, rent, and loan payments...

Hamster has it right, it is hard being an accountant/lawyer AND a crybaby. It takes a lot of DESERVED stuff to keep yourself happy.

I understand I am not living in NYC, but my wife and I get by on about $35K a year budget without even trying. They are clearly lying in regards to:

Quote from: Article
We budget constantly. As an accountant, Iím always reviewing our spending, and trying to find ways to cut back. We take the subway. We donít buy name-brand clothes, and we donít buy anything unless itís on sale. We take only one fun trip a year and the most weíve ever spent on that is $1,600.

Otherwise they wouldn't be able to spend $95K minus whatever the put away (which $100K savings over six years = ~$17K/year, so they spend about $78K/year after taxes/mortgage/student laons/savings). Also $3000/month for rent to live close to work when you have public transit? Entitled much?

Sylly

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Re: Struggling at >250k
« Reply #16 on: December 07, 2012, 10:03:36 AM »
Quote from: Article
We donít buy name-brand clothes, and we donít buy anything unless itís on sale.

Well, that in itself doesn't necessarily mean they're not buying unnecessary stuff. The retail industry seems to rely on the fact that people like bargains, and with the right marketing, will get fooled into buying things they wouldn't have otherwise bought just because it's a good deal ("I saved $50!".. never mind the other $50 that you had to spend to say that...). So I can see how the writer may think that she's spending reasonably because she always buys things on sale.


venkol

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Re: Struggling at >250k
« Reply #17 on: December 10, 2012, 12:30:45 PM »
I built a potential list of their expenses for them leaving exactly 1K over at the end of the year.  I don't know if this is what they are actually spending, but this has to be somewhat in the ball park.  Yes it is possible to spend 150K in NYC, but you pretty much have to live like a queen to do it.  Don't forget that this "budget" also includes $55K in savings and debt repayment.

150K
-36K Rent
-10K Utilities (Heat/Power/Cable/Cell Phones etc)
-30K House savings (They saved 100K in 3 years including interest income)
-12K Cars + Parking ($700/mo for car+insurance + $300/month parking space)
-19K Food and Dining Out/Bars ($1.5K a month seems pretty damn generous for 2 people)
-20K to bring Sexy Back (Clothes, Make Up, Gym, tan, Laundry) and Toys
-22K Student Loans

« Last Edit: December 10, 2012, 12:33:23 PM by venkol »

mustachecat

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Re: Struggling at >250k
« Reply #18 on: December 10, 2012, 03:50:39 PM »
Actually, their lives are even more extravagant than that.

They hope to save $100K in another three years, after having saved for three already. So let's say $15,000 instead of $30,000. They live right by work and take the subway, so no car payments either.  So, let's say $5,000 (two unlimited MetroCards for a year, plus $200+/month in cabs we'll say they forgot about) instead of $12,000.

So that's an extra $22,000 on top of the incredibly generous hypothetical budget that venkol made.

mustachecat

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Re: Struggling at >250k
« Reply #19 on: December 10, 2012, 03:51:57 PM »
Ugh, also: the Jane Dough story hasn't been updated with this, but LearnVest (where the story originally appeared) ran this addition:

Quote
Update, December 5, 2pm: The original version version of this essay claimed that if the Bush-era tax cuts for married couples expire, the coupleís taxes would increase by 3%, which would be thousands more dollars they would pay in taxes. This was incorrect: the 3% increase would only apply to any money they make over the $250,000 threshold. Citizens for Tax Justice estimates that families with $250,000 to $300,000 in taxable income would on average owe an additional $199 a year.   

venkol

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Re: Struggling at >250k
« Reply #20 on: December 10, 2012, 03:58:27 PM »
Actually, their lives are even more extravagant than that.

They hope to save $100K in another three years, after having saved for three already. So let's say $15,000 instead of $30,000. They live right by work and take the subway, so no car payments either.  So, let's say $5,000 (two unlimited MetroCards for a year, plus $200+/month in cabs we'll say they forgot about) instead of $12,000.

So that's an extra $22,000 on top of the incredibly generous hypothetical budget that venkol made.

EDIT:  Reading the article again, they claim they take the subway, don't buy brand name clothes, and their largest vacation was $1600 a year.

$22K, unaccounted for in a year, and they wonder why they feel poor.  My guess it goes down the toilet to booze, eating out, broadway shows, etc. 
« Last Edit: December 10, 2012, 04:06:46 PM by venkol »