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500 dollars for house maintenance means 6000 per year in upkeep. That is plenty. Roofs don't fall apart every year you know.
If you make 250k, own a 600,000 house and have a 3000 mortgage you need to refinance that or you bought too big. I dont want to be overtly rude about this, but some people are good with their money, and some people arent. Some people go after that high end dream first and find out it was too much for them to handle, and others step up their growth slowly which leverage the power of on hand capital. (I re-read this, and I come off as a heartless ******* on this one. I'm not gonna delete it because I really do think it's true. I do feel bad for people who are upside down but a person who makes 250k can fix that very quickly, another reason why they are rich.)
500 a month for house maintenance is definitely plenty! We have almost 20 years of home ownership and don't average anywhere near $500/mo.
I also agree with you on stepping up slowly. I moved to the area 20 years ago. After one year in an Annandale apartment, planning to get married, my wife and I found we could buy new 2bdr townhome condo in Woodbridge, just north of I95 near Occoquan for about the same as renting and was still convenient for us working in Springfield. After 8 years, our son was born and we moved further into PW into a new (but relatively small) SFH. After another 8 years in '09, we sold our house in a day (not upside-down) and moved very close to work and bought a 40 year old home in W. Springfield. We've been able to update this house and I'd say we have a good quality of life in our early 40's with a combined gross income of just about $150k. I just think: If we made $250k, we could continue to live as we do and still have the extra $100k. While $250k is not "rich" in my eyes, with common money management skills a person should do fine on that amount.
Ok, but *when* were you doing it? Because when you bought your house determines how much you paid, which determines your mortgage, which determines how much disposable income you have. Buying even a modest-sized house in the DC area in the last 8-10 years has meant spending at least 500K (and more like 600-650 inside the Beltway)--which means a huge chunk of income goes to the mortgage.
I can see how if you bought your house prior to 2003 or so, yeah, 250K would be a very comfortable income. Likewise, if you live outside the DC area (other than a few other high-COL cities).
Amen! If we lived in Syracuse or Abilene, we'd be wealthy. In N. Arlington, we're comfortable but average. (Though our income isn't quite that high.)
It does seem to me that the $250k threshold could be adjusted up in areas with a higher COL.
Could you move and make same salary? In most areas, I wouldn't be able to do that. I make just under $80k with 20yrs. and a Masters degree. I hear people say, "Think of how you could live in North Carolina", or "Ohio"...just pick a place that's cheaper. But the reality is I'd also probably cut my salary in half and it would just balance out.
It does seem to me that the $250k threshold could be adjusted up in areas with a higher COL.
Could you move and make same salary? In most areas, I wouldn't be able to do that. I make just under $80k with 20yrs. and a Masters degree. I hear people say, "Think of how you could live in North Carolina", or "Ohio"...just pick a place that's cheaper. But the reality is I'd also probably cut my salary in half and it would just balance out.
That's the best idea yet, except Republicans hate high COL areas because in general those are in cities, and the GOP platform has clearly sided against cities this 4 years (for some awful reason). So if this was proposed what you would see is a large amount of benefits being provided to those in cites (not GOP constituents) and very little to those in rural and exurbs (largely GOP supporters). So it would be counter intuitive to what the GOP wants politically.
I do agree, that there should be a COL factor included, but I would go so far as saying people in this area making 270k are "just breaking even"
Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by Carlingtonian
Ok, but *when* were you doing it? Because when you bought your house determines how much you paid, which determines your mortgage, which determines how much disposable income you have. Buying even a modest-sized house in the DC area in the last 8-10 years has meant spending at least 500K (and more like 600-650 inside the Beltway)--which means a huge chunk of income goes to the mortgage.
I can see how if you bought your house prior to 2003 or so, yeah, 250K would be a very comfortable income. Likewise, if you live outside the DC area (other than a few other high-COL cities).
We admittedly bought our house before prices went out of control, and we "only" spent $300K. On the other hand, we did a 15-year mortgage, so our monthly payments are the same as someone who bought a much more expensive house later on and did a typical 30-year mortgage.
Location: Chapel Hill, NC, formerly NoVA and Phila
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I think as a person who grew up in an upper-middle class family, I understand the "standards" in DC for living as an upper-middle class family - decent home in a good school district, kids in sports and other activities, nice clothes, one or two nice vacations per year, decent cars, up-to-date electronics, etc. $250K will buy you that and a bit more. Although, I do undertand that $250K is not letting you live as royalty in this area. That income level will not allow you to have a private jet, you'd struggle to keep 3 kids in private school, and you might not be able to afford a vacation home with that income.
On the other hand, if 90% of households in NoVA are living below the $250K income threshold, it would be easy to understand why most people would think that $250K IS rich, even in NoVA. And I think when *most* people hear that $250K is not rich in NoVA, it is easy to scoff at it.
As with everything else, it all comes down to perspective. But if $250K is not rich for this area, then what is? A $500K income? $800K? Is it a household making in the top 5% for income in the area? Or is it only the top 1%. But let's face it, no matter what income someone makes, there will always things that that income can't buy. Can someone with a $500K income in this area afford a winter home and a summer home? Can he afford a personal driver? A live-in housekeeper? Probably not all of the above. But does that mean he is not rich?
And as many of us have discussed on here, income isn't the only thing that defines someone as rich. More importantly is the wealth the person has. And the obligations he carries. Does he make $250K but owe $100k in student loans? Is he sending back money to family in a 3rd-world country. Does he have a $10 Mil trust fund to his name? Or is he a person who came from a middle class family, worked hard, took out students loans, and landed a good job? Rich is hard to define.
Since some of you gave me a hard time for taking the quote out of context, my question is, at what threshold would you draw the line to define "the rich" around here if $250K is not it? Would it have to include wealth? And would it be too much of an invasion of privacy to go to that level of detail for a person?
And as many of us have discussed on here, income isn't the only thing that defines someone as rich. More importantly is the wealth the person has. And the obligations he carries. Does he make $250K but owe $100k in student loans? Is he sending back money to family in a 3rd-world country. Does he have a $10 Mil trust fund to his name? Or is he a person who came from a middle class family, worked hard, took out students loans, and landed a good job? Rich is hard to define.
Since some of you gave me a hard time for taking the quote out of context, my question is, at what threshold would you draw the line to define "the rich" around here if $250K is not it? Would it have to include wealth? And would it be too much of an invasion of privacy to go to that level of detail for a person?
But the problem is, if you take the worst case on "personal costs" you are not taking into account that those payments are tax deductions. Having 3 kids, daycare cost, medical, large student loan, large interest payments on a house because of a bad rate, and the list goes on and on. If you run a small business some people put their car as the business car thereby making that deductible for operation/maintenance. You can't have your cake and eat it too. That is why my numbers assumed the actual standard of living. Not high end, not low end. But someone who wants to have a normal life of things they want will be rich after about 5-10 years of living that lifestyle.
If your deductible costs add up to 40k or 50k as some are saying in their arguments, then really you need to be making MUCH more than 250k for this to apply. 250k is taxable income.
No, Tysons, obviously roofs don't have to be replaced every year. The point was that every year SOMETHING expensive will happen along with many minor every day maintenance issues. 500 per month is ridiculously low. If condos charge fees just to cover a small portion of maintenance, that is more evidence of what a SFH owner can expect.
Once you have bought an older home you will understand.
Our collective point was that you grossly overestimated what your hypothetical family would have available to save.
500 dollars for house maintenance means 6000 per year in upkeep. That is plenty. Roofs don't fall apart every year you know.
If you make 250k, own a 600,000 house and have a 3000 mortgage you need to refinance that or you bought too big. I dont want to be overtly rude about this, but some people are good with their money, and some people arent.
401K plan is moot, in my example that was 10 years of your life and you earn 1 million in capital on hand. You still have 30 years of a career in which you could have been paying to the 401k etc either before or after. Lets say for instance you arent a jerk who needs a 2 million dollar mansion (sorry to you jerks out there I know I have been yelled at for mocking you before).
After 5 years you can buy your mortgage outright at that income rate. And effectively drop your monthy house payments to just the taxes of 500 or 600 per month. Now you are saving an extra 15000 per year from that alone and again hold a very large equity.
College plan is part of the 1500 per month on "child expenses" if you are spending more for that per month on your kids, you need to re-evaluate what you are spending on. I understand child care easily exceeds this, but to imply that the years between 1-4 should be the ones considered for a long term budget analysis is foolish. They could just as easily be between the age of 6-10 which would be far less expensive.
On the health care front, I agree 1500 will be dug into very badly if you are much older. But then again you can't do a full analysis on the worst case. Average health care cost in this region is just under 300 per person. So thats 600 of that 1500, leaving 900 for food/miscellaneous. Seeing as children costs are already split out, and that I threw in another 500 in for fun money, this should be an appropriate amount to live a comfortable, going out, enjoying yourself life style.
As far as the car, if you are making 250k per year and can't afford to buy a car outright you are in need of a serious financial consultation on the power of interest rates or you need to perhaps reconsider the type of car you are purchasing. With that car being purchased outright, the effective cost per year for the cars ownership (sub gas which comes out of expenses) should be about 300 per month or 3600 per year if average driving of 10,000 miles per year.
Again, are these people the yacht club super rich? No. Are they very well off and never have to worry about money, can put their money to work, and all it takes is 5 years of living within your means? Yes
I understand I am saying this to a bunch of NOVA people, and I am gonna get a HUGE backlash, but we live outrageously expensive lives compared to what most American's do. What you call "necessities of life" others in this country call the spoils of the rich. These aren't necessities, they are wants. Which is fine, I want stuff too, I know the longer I can fight that urge to buy something, the more likely the purchase of it will be easier to absorb.
Are you supporting a family of 4 or 5 in this area? Because your numbers are completely out to lunch for most people who are. I'm not saying you need $250k to support a family here, or even half that, but it costs a lot more than you seem to think.
Just one example:
Quote:
Originally Posted by tysonsengineer
If you make 250k, own a 600,000 house and have a 3000 mortgage you need to refinance that or you bought too big. I dont want to be overtly rude about this, but some people are good with their money, and some people arent.
With 20% down, the mortgage comes out to $480K, or $2400/mo at 4.5% (not as low as you can get now, but not unreasonable for someone who bought in the last few years). Add $600/mo for taxes and insurance and you are at $3000/mo - or about 14% of gross income - not exactly "too big". And in a lot of areas around here you are going to have a tough time finding a 4br house for $600k that isn't a fixer upper.
There are a heck of a lot of people around here making even $250k who are living what could be described as a "middle class" lifestyle and don't have a lot of money left over for extras each month after paying their expenses and putting aside a reasonable amount for the future. They are live in modest 1950s or 60s homes and drive older cars. Are they well off? Yes. Do they own some luxury items like an ipad? Yes. But they are not taking extravagent vacations, shopping at all the high end stores, or paying for a maid and butler. And there are a lot of people making less who have very tight budgets and/or are not able to save as much as they should for college, retirement, etc, despite a six figure income.
I'm not saying it's impossible for a family to save $100k/yr on a $250k salary. But it's not easy around here. For one thing, you'd need pre-tax income of $166k (at a 40% marginal federal/state/SS) rate to get to that $100k of post-tax savings. That leaves $84k (pre tax) for the rest of your expenses. Is this doable? Yes, but it's not easy, especially if you have young children and two parents working long hours and commuting.
I'm not saying it's impossible for a family to save $100k/yr on a $250k salary. But it's not easy around here. For one thing, you'd need pre-tax income of $166k (at a 40% marginal federal/state/SS) rate to get to that $100k of post-tax savings. That leaves $84k (pre tax) for the rest of your expenses. Is this doable? Yes, but it's not easy, especially if you have young children and two parents working long hours and commuting.
For people making 270-290k you mean? Based on all of your numbers above the person would have to make substantially more for this to apply to them.
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