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I don't make $100K and I don't live paycheck to paycheck, but I can see how it can happen where I live.
I make $80K a year and live outside DC (not the cheapest area). After taxes, insurance, and 401K, my take home is $65K a year. Things like my mortgage tick up every year due to tax increases, usually about $600 more each year ($50 added to my monthly mortgage payment each year). I live in a 35-year-old townhouse in a suburban neighborhood, it's nice, but not a mansion. My mortgage payment is currently $2140 a month. It's going up to $2190 a month in June. My HOA fees are also up every year too. The two combined are a few hundred shy of half my take home pay. And that's not including little maintenance costs here and there. And my salary has been frozen for two years now so income isn't keeping up with expenses and lately rising grocery prices had been pinching things more.
By the way, according to Zillow, if I bought my house today, my mortgage would be $3265 a month.
I am lucky in that I have a nice "emergency fund" that I can tap into if needed (I can't add to it anymore, but I haven't had to take anything out yet either). And I have no debt aside from the mortgage (no car loans, student loans, or credit card debt). I also don't have a cable bill (I cut that a few years ago to save money).
Even though I don't have any of those bills and I am a good saver and frugal, I've run the numbers and, in time, I will slowly be priced out of the area (or I have to slowly reduce saving for retirement--which is a non-starter since there are no pensions for me, it's all 401K and IRA). Luckily, My job is now remote and in May my daughter graduates from high school and I can move out of the area to someplace cheaper (and I am).
But if someone was in my same boat, was as frugal as me, made just $20K more than me, but just bought a home or is renting, yeah, I can see paycheck to paycheck unless they were willing to not save (or not save much) for retirement.
Your 401K is a waste of money unless you are getting a company match. You are saving on taxes now by contributing, but the distributions will be taxed as regular income when you retire. Do you think taxes will be lower when you retire being that they are going up every year? It is better to INVEST the money and only pay taxes at capital gains rates.
Your 401K is a waste of money unless you are getting a company match. You are saving on taxes now by contributing, but the distributions will be taxed as regular income when you retire. Do you think taxes will be lower when you retire being that they are going up every year? It is better to INVEST the money and only pay taxes at capital gains rates.
I predict my taxes will be about the same. I’m pretty solidly in the middle of my tax bracket and I don’t know that I’ll make much more before I retire (wages have frozen and I’m moving out of the area to a rural, low cost of living area with few jobs. My current job allows telecommuting though, so effectively my dollars will go further).
Work offers matching up to 5%. I also have a Roth IRA, but I can’t save a lot in it, the max allowed is $7K a year. Between the two I should have some flexibility to save on taxes when I retire. One nice thing about my 401K is it reduces my AGI which opens up scholarships and grants for my daughter. With her grades and my AGI, half of her college costs are coved by scholarships. That saves me $20K to $30K a year (tuition is $40K to $60K a year) for the colleges we’ve heard from so far (she’s still waiting on two other schools).
It is not smart to have $1000 in savings earning 0% interest. 100% of my money is working for me. If I need an emergency $1000, I can just pull out a credit card and pay it off at the end of the month.
The question is how much the $1000 makes "working for" you. To me it's an excessive strain to worry about whether the automatic payment deductions will be covered. I just don't care about foregoing minimal returns on my money.
Your 401K is a waste of money unless you are getting a company match. You are saving on taxes now by contributing, but the distributions will be taxed as regular income when you retire. Do you think taxes will be lower when you retire being that they are going up every year? It is better to INVEST the money and only pay taxes at capital gains rates.
Your 401K is a waste of money unless you are getting a company match. You are saving on taxes now by contributing, but the distributions will be taxed as regular income when you retire. Do you think taxes will be lower when you retire being that they are going up every year? It is better to INVEST the money and only pay taxes at capital gains rates.
That's nonsense. A 401k isn't a waste of money. You do realize that you are using the tax money to invest and make money? Anytime and anyway you invest in yourself for your retirement years, is not a waste.
Your 401K is a waste of money unless you are getting a company match. You are saving on taxes now by contributing, but the distributions will be taxed as regular income when you retire. Do you think taxes will be lower when you retire being that they are going up every year? It is better to INVEST the money and only pay taxes at capital gains rates.
In all likelihood it will be lower. The income stream would normally be lower than when someone was working.
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