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The things that stood out to me were the fact that they had no 529's, but where spending 18k a year on charitable donations. That seems off. That would be the first thing I'd adjust.
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Anything else you all noticed?
I know several well off families that don't contribute to 529's.
1. They may gain better returns elsewhere (e.g. real estate, managed funds, etc), even with deferring taxes on the 529 returns.
2. If their children get merit based scholarships (since they definitely won't qualify for need based) the 529 balance would be useless. Yes I know you can use it for the grandchildren, but you're locking up the funds for another 20-40 years.
Toyota Land Cruisers cost $85k and you buy them (never lease them) because they last forever. They could be in an Explorer or something similar for less than half of a Land Cruiser. If they stay in Brooklyn, the BMW needs to go. The article does not mention parking either. These two people lack common sense and are showoffs.
They really need to move to the suburbs and buy a house for 750K - 950k with good public schools. Based on the article, they might be able to clear enough from their apt to have no mortgage or a small mortgage. Once you are in the suburbs, everything costs less - day care, lessons, food, insurance.
The food bill is silly, too.
They could easily go from scraping by to wads of excess cash. Based on the article, they still would be scraping by.......
They are not even close to scraping by, they are living high off the hog.
My son, dil, grandson live in Carroll Gardens Bklyn, not too shabby a hood by any far stretch of the imagination. Part time pre school & part time nanny, One Honda Car, 1-2 vacations, they live quite well and don't bring down 500k a year either.
Curious why o/p posted in NJ forum and not NYC forum
What a joke. There are other nice good neighborhoods in Brooklyn where you can buy an apartment or home for far less then 1.5 million. Maybe not as hip as Park Slope but shouldn’t being cool and hip be considered a necessity even at the expense of college savings? Every friend I have in Park Slope has such brilliant children that there all going to receive scholarships to the Ivy Leagues anyway.
The writer blows off the idea of having only one car as not really much as it would only equate to 4500 a year in savings. That kind of thinking gets people into trouble.
Furthermore my sympathy goes out to the subject. To think that he had to live in a studio apartment in Manhattan on only 40k in 1999 is so sad. If only it was possible to move to Queens where I bought my first apartment when I was making 24k in the same year.
because people in NJ are still living in the NYC market, and because cost of living threads come up pretty often. Most recently the "can a family get by on 150k in Monmouth county" thread.
Also, I just like talking budgets and cost of living stuff in general.
The article doesn't make it very clear, but this is a hypothetical example of a possible Brooklyn couple that the blogger that runs the site created pretty much for the purpose of driving traffic to hid blog so he can get ad money. As the article is almost 3 years old and is still obviously going around, he at seems to have achieved his goal.
The fact that they're hypothetical is probably why a few things don't add up. Two cars in Brooklyn and $9K per year in lessons for non-school aged children stand out to me.
Sure, this is an example of how you get get caught up in the rat race (mo money, mo problems) but to call them 'struggling' in the same way you'd refer to a family of 4 with an income of $45k is pretty deceiving.
I know several well off families that don't contribute to 529's.
1. They may gain better returns elsewhere (e.g. real estate, managed funds, etc), even with deferring taxes on the 529 returns.
2. If their children get merit based scholarships (since they definitely won't qualify for need based) the 529 balance would be useless. Yes I know you can use it for the grandchildren, but you're locking up the funds for another 20-40 years.
Or you could just use it and pay the tax that you would have paid on any other investment anyway. It’s not like you put money in a 529 then it becomes useless if your child gets a scholarship or decides not to go to college.
$10,000 a year for 'something always comes up'? WTF does that mean? They already have money set aside for home maintenance. They have auto insurance, property insurance, and I am assuming they have premier health insurance. They have a near $800 a month clothing budget. What 'miscellaneous' are they spending $10,000 a year on?
They are LEASING 2 vehicles...1 luxury sedan and 1 luxury gas guzzler...while living in NYC. Smart!
3 vacations a year? That's fine, but maybe take a road trip/stay local every once in a while to any number of great vacation spots in the vicinity...the Hamptons, Jersey Shore, OBX, the Berkshires, Maine, Vermont, New Hampshire, etc. etc.
$18,000 to charity, LOL. Feed the Children, OK, god bless. But alumni giving? Isn't it enough that you gave them $300,000 in tuition? Criminy.
So they have $7,300 left at the end of the year? I'm impressed that they haven't found something else to throw that money at. Country club, golf club membership. Doggie spa and yoga. Personal yogi and life coach. Scientology. Champagne glass hot tub.
The problem with working and living in NYC is that eventually the taxes and expenses will catch up to you if you lose your job or have some kind of lifestyle changes such as divorce which is 50% of all marriages. You can't afford to be in this high stakes rat race for long. At some point you will lose your job or get pushed out due to re-org, I've seen it too often working in NYC that you've been working for 8-10 yrs and a new big whig comes to town and pulls the rug from everyone there and you'll be forced to pack up. Then that's when the mortgage and high taxes will hurt really bad.
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