Let's talk SF COL (rent, health insurance, mortgage)

[unknown00]

https://www.cnbc.com/2018/06/28/fami...francisco.html

Article says "In 2017, one Twitter employee earning a $160,000 salary told The Guardian that he's barely scraping by in Silicon Valley. The employee's biggest expense is the $3,000 monthly rent he pays on a two-bedroom house where he lives with his wife and two kids"

I have a really close friend in the same situation (though not in SF) - family of 4, single HH income, make $160k/salary, pays $3000/month for mortgage. He lives a very comfortable life. How can you be scraping by? $160k/salary after insurance & tax & maxing out 401k (which is optional) you are probably pocketing $7k/month. $3k rent/mortgage isn't even half of that...plus the article doesn't mention if the mother works or not...

[Commonproject]

Originally Posted by unknown00

https://www.cnbc.com/2018/06/28/fami...francisco.html

Article says "In 2017, one Twitter employee earning a $160,000 salary told The Guardian that he's barely scraping by in Silicon Valley. The employee's biggest expense is the $3,000 monthly rent he pays on a two-bedroom house where he lives with his wife and two kids"

I have a really close friend in the same situation (though not in SF) - family of 4, single HH income, make $160k/salary, pays $3000/month for mortgage. He lives a very comfortable life. How can you be scraping by? $160k/salary after insurance & tax & maxing out 401k (which is optional) you are probably pocketing $7k/month. $3k rent/mortgage isn't even half of that...plus the article doesn't mention if the mother works or not...

ppl have different definitions of scraping by. I'll bet you neither of them is saving anything - that could mean scraping by or living comfortably

[Flightoficarus87]

Originally Posted by Commonproject

ppl have different definitions of scraping by. I'll bet you neither of them is saving anything - that could mean scraping by or living comfortably

This.

And everyone's financial situation is unique. Some people have large amounts of student debt (i.e - high monthly payments), other types of debt, or other expenses (such as costs related to raising children, etc, etc) that can take a lot out of what people are able to spend on basic living expenses, and/or what they can save. Sometimes people can simply be less fiscally responsible as well (i.e - blowing money on things like expensive cars and such that are more luxuries than needs).

[unknown00]

Originally Posted by Commonproject

ppl have different definitions of scraping by. I'll bet you neither of them is saving anything - that could mean scraping by or living comfortably

True, everyone has a different definition. I guess billionaires can also say they are "just scraping by" as well...

FWIW - my friend is saving a lot, I asked. $7k take home after maxing out 401k (saving) - $3k mortgage = $4k - $2k monthly family = saves about $2k/month in addition to maxing 401k. Since he is single HH, the wife stays at home so no need to pay for daycare.

[DKM]

Something is wrong with your numbers if this friend lives in CA. The takehome is too small. He's putting 1500 a month into the 401k, so what's his health insurance and other reductions? A single earner with a mortgage and family of 4 should have a higher take home. $3k mortgage, does that include property tax? $2k a month to support a family outside of mortgage is not enough unless you own cars outright, and don't do much with your family... I was in a similar situation and my numbers were way different.

Also that twitter guy was renting. Many people don't understand how much cheaper a mortgage is after tax, him included.

[chup76]

160k after taxes with max 401k + insurance = 7k sounds about right.

3k mortgage
7-3 = 4k

Perhaps sending kids to private school or preschool.. that's at least 1 k each kid so 2 k there.

4 - 2 k = 2 k

After school activities for kids which could be pretty hefty (ie piano, soccer, karate, swimming, etc) School Loans? Cell phones? internet ? Car Insurance? Car payments? all Organic food for kids? Stay at home mom to drive kids to and from school + after school activities etc. + vacations + presents + birthdays etc etc ...

2 k for all the above would be pretty tight.

[unknown00]

For my friend (probably an outlier) - mortgage includes property tax, no loans, own cars (they don't drive anything fancy), stay at home mom so no daycare/commute/nanny/maid. To be fair, his kids are really young

Therefore, internet/cell phone/utilities/car insurance/gas/food/misc kids expenses = ~$2k/month. Personally speaking that seems easily achievable

[chup76]

Yeah I think it depends on
1. Stay at home mom or not
2. Private School (ie preschool or regular school) or Public for the kids.

In SF, it's a lottery system for public school so if you get unlucky (ie me) and your kids get assigned to a far away school that
ranks in the lower end of public school test scores, that means you send them to private school which is like 1k a month . Multiple that by the number of kids you have and things get pretty tight.

So I can see how that Twitter employee can say he's barely scrapping by.

[jloaklife]

In the guys defense my husband and I made around $180k combined (w-2 income not salary) when we got married. If he is renting that means he probably wants to save for a house. If houses where you live cost around $1M that means you have to save A LOT of money. If you have two kids and a wife to support I could see how that would feel tight. Not to mention daycare is absurdly expensive so having two incomes could be a wash depending how much income the second person is able to produce.

I will also mention my coworkers who have kids talk about all the activities they put their kids in (karate, dance lessons, piano, tutors) and no, we are not talking about high schoolers we are talking about five year olds. You heard me...Tutors for five year olds.

It's one of the main reasons my husband and I haven't had kids yet (I am early thirties and he is mid/late 30s). We are finally getting to the point where we think we might be able to afford either one person staying at home or both folks working and paying for daycare. I'm pretty sure we will not be getting a kindergarten tutor but they say becoming a parent changes you...

[ssmaster]

Originally Posted by jloaklife

In the guys defense my husband and I made around $180k combined (w-2 income not salary) when we got married. If he is renting that means he probably wants to save for a house. If houses where you live cost around $1M that means you have to save A LOT of money. If you have two kids and a wife to support I could see how that would feel tight. Not to mention daycare is absurdly expensive so having two incomes could be a wash depending how much income the second person is able to produce.

I will also mention my coworkers who have kids talk about all the activities they put their kids in (karate, dance lessons, piano, tutors) and no, we are not talking about high schoolers we are talking about five year olds. You heard me...Tutors for five year olds.

It's one of the main reasons my husband and I haven't had kids yet (I am early thirties and he is mid/late 30s). We are finally getting to the point where we think we might be able to afford either one person staying at home or both folks working and paying for daycare. I'm pretty sure we will not be getting a kindergarten tutor but they say becoming a parent changes you...

This is correct. The responses assume the family living on $160,000 already own a home. The more realistic scenario is they have to save $180,000 for a down payment. So add another $3000 a month to the budget with a five year plan. Ouch.