
Trying to Live on 500K in New York City - transburgh
http://www.nytimes.com/2009/02/08/fashion/08halfmill.html?_r=1&ref=business
======
gamble
> Nanny: $45,000 a year.

Of course, no banker would dream of paying his nanny less than $500,000 a
year, considering the difficulty of surviving on such a salary in NYC.

~~~
patio11
Amen. Every time I hear the "waily waily waily you can't live for less than
$90k in California" I think "for God's sake you've interacted with several
people today who are doing it -- think back to the last ten times you
physically handed money to anyone, they're not making $90k".

This problem is not unique to California or Manhattan. I get the same from
people who choose to live in Nagoya apartments which cost about my monthly
salary, then whine how impossible it is to get ahead in this city. Hey, I work
five minutes from where you work yet my rent is $450... considered a lifestyle
change, maybe?

~~~
jfarmer
I lived on $50k/year in SF with no problem. Do people really complain about
making less than $90k?

~~~
ardit33
to be honest, i think minimum "comfortable" wage in SF is about 200k. i make
in the 6figs (as most senior engineers around here), and why I live
comfortably as bachelor, I still don't think I make enough for me to afford
having a family in SF.

I rent and have a roomate, cook often at home (drink lot of coffee though),
but still, when you substract taxes, 401k, medical stuff for the parents, when
you add everything up the savings are about 2k a month at best.

Think about it, 24k a year, where the cheapest comfortable place to live go
for about 700k+. If you are conservative, and want to put 20% down, (that's
about 140k) of savings you need in the bank.

To live in SF, you will have to have at least 200k, as a family to live
comfortably. About 100k if you are a bachelor.

Sure you can live with a lot less, but you are probably not saving much for
your future.

~~~
patio11
It seems to me that the problem isn't so much that you're "not saving much for
your future" as you're "not saving enough to buy a comfortable house located
in San Fransisco". Which might be indicative of a problem in one's
expectations more than indicative of the necessity to make six figures as a
bachelor.

(Incidentally, in many other places, socking away $2k a month would be
considered pretty damn good. The starting salary for an engineer in my neck of
the woods is $2.2k a month. You look pretty darn rich compared to him, even
considering his vastly lower cost of living.)

~~~
menloparkbum
You don't really need a $100K salary to be comfortable as a bachelor in SF,
but it helps. Raising a family here is a mixed bag. It helps to have a lot of
money because the school system sucks. You'll either need the extra $100K for
private school or drug rehab if you send your kids to public school. I love SF
but if I had kids I'd move somewhere else. Oh, and buying a house here is
insane unless you're mega loaded or you buy and sell houses professionally.

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ryanwaggoner
_If a person is married with two children, the weekly deductions on a $500,000
salary are: federal taxes, $2,645; Social Security, $596; Medicare, $139;
state taxes, $682; and city, $372, bringing the weekly take-home to $5,180, or
about $269,000 a year, said Martin Cohen, a Manhattan accountant._

Martin needs to check his figures. Social security, for example, is 6.2% for
the first 106k of income, which is a weekly deduction of about $127, not $596.
This is a difference of almost $25k / year.

It's also highly unlikely that a person in this scenario wouldn't have a range
of tax mitigation strategies, from retirement investments to real estate.

EDIT: Here's another one:

 _The total costs here...are $790,750, which would require about a
$1.6-million salary to compensate for taxes._

By and large, people making millions of dollars per year in income do _not_
end up paying effective tax rates of greater than 50%. The highest marginal
tax rate is currently 35%, so even once you account for SS/Medicare, city, and
state taxes, you're still not above 50%, especially once all deductions are
taken into account. Additionally, many of these folks are probably subject to
AMT, which is a flat rate of 26-28%.

~~~
mattmaroon
And you're not even factoring in that most of their income comes in the form
of grants or options that pay the capital gains tax rate.

~~~
ryanwaggoner
Agreed, though the article specifically said "salary", so I gave them the
benefit of the doubt there ;)

~~~
mattmaroon
It did, I'm just assuming Obama was including incentive based compensation or
otherwise it's just too trivial to game.

~~~
Retric
Actually he is fine with incentive based compensation, but the government
needs to be paid back before they can collect the incentive's. What he is
trying to avoid is news story's where the government lost money and the
bankers got million+ dollar compensation.

~~~
mattmaroon
I'm sure in the long run he is also fine with >$500k salaries. I would sure
hope so.

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froo
As I was going through the list I still don't feel any sympathy for these
bankers.

The whole idea of budgeting for the majority of people is to make do with
seemingly limited resources. It's what everyone does to manage their own
money.

Why can't someone who is supposed to manage everyones money practice a little
self restraint?

~~~
tptacek
I don't think the article was trying to make you feel sympathy; I think it was
playing with subtext.

~~~
sethg
It's hard to tell, because I've seen a lot of "lifestyle" articles in the
Times that seem pitched to appeal to people with seven-figure incomes.

E.g., there was a cover story in the NYT Magazine a few months back about
surrogate motherhood, by a woman who was married to an investment banker, and
not only dropped $25K to have another woman gestate her baby but hired a nanny
--excuse me, a "baby nurse"--to care for the kid. Not that there's anything
wrong with either one, but I'd be embarrassed to have my face in the
foreground of this picture:

[http://graphics8.nytimes.com/images/2008/11/30/magazine/30su...](http://graphics8.nytimes.com/images/2008/11/30/magazine/30surrogate.2-500.jpg)

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JimEngland
I love how two vacations a year, at a total of $16,000, is considered a
"living expense."

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wallflower
I feel silly reposting a very recent comment but it's relevant:

Tom Wolfe's "Bonfire of the Vanities" (Going broke on a million a year), p.137

"One breath of scandal, and not only would the Giscard scheme collapse but his
very career would be finished! And what would he do then? I’m already going
broke on a million a year!

The appalling figures came popping up into his brain. Last year his income had
been $980,000. But he had to pay out $21,000 a month for the $1.8 million loan
he had to take out to buy the apartment…

Of the $560,000 remaining of his income last year, $44,400 was required for
the apartment’s monthly maintenance fee… $18,000 for heat, utilities,
insurance and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes.
Entertaining at home and in restaurants had come to $37,000. This was a modest
sum compared to what other people spent."

Also UrbanBaby: UrbanBaby is an anonymous message board frequented by some
typical New York UES/UWS mothers. Here they talk about not being afford
private school on $400k/yr (DC = dear child, DH = dear husband)
<http://www.urbanbaby.com/talk/posts/50368448>

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patio11
_The total costs here... are $790,750, which would require about a
$1.6-million salary to compensate for taxes._

Wait a second, 50% taxes? Not the marginal rate, the effective total rate?
That is truly gobsmacking if it is accurate.

I did a little math, too, and it doesn't seem impossible, particularly if
you're actually spending most of that money (and thus hitting the 8%+ NYC
consumption tax). 35% federal bracket, 7% state bracket, 3% city bracket, plus
property and consumption taxes, and you'd be paying more than fifty cents out
of every dollar in taxes. And since your total tax rate approaches your
marginal rate as your income increases, their total tax rate may well be in
excess of 50 cents on the dollar.

Glad I don't live there. I don't make anywhere NEAR $1.6 million a year but if
I ever do, I will live somewhere that values having me around.

~~~
Retric
Only stupid people making that much money pay anywhere near that much in
taxes. Get an interest only mortgage and suddenly your rent is "tax free".
Also options can be counted as capital gains which is 15% etc. There are a lot
of tricks you can play with that level of income. Consumption taxes only apply
to a smaller subset of spending because so much of your money is spent on
services and out of state.

PS: The worst income bracket is single and making ~100k because they are in a
high tax bracket and need to pay 15% in SS taxes on all of it.

~~~
anamax
> Get an interest only mortgage and suddenly your rent is "tax free".

The mortgage interest deduction only applies to the first $1M of the loan.

And, the mortgage interest deduction goes away under AMT.

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jackowayed
wait! so in a time when many are without jobs and struggling to survive, the
bankers whose salaries are coming largely from taxpayer money might have to
keep wearing their old $1k suits, cut back to _1_ $8k vacation per year, take
public transit, take their children out of elementary schools that cost more
than instate college without even giving room and board, and have their
personal trainer come only once a week?!

Those poor, suffering souls. I'm sure that someone will form a charity where
ordinary people donate small things they don't need anymore, like their old
$15k dresses, so that the bankers don't have to risk being starved of their
luxuries.

------
critic
Columbia and NYU grad students make about 25K/year.

~~~
jballanc
...and live like shit! I should know, I'm a grad student just across the
river, and I work a second job and live in Harlem just to make ends meet.

Anyone who hasn't lived in NYC will have a hard time understanding. Living in
the city definitely has its perks, and even having to work the second job, I
wouldn't trade it for the world...

...that said, I don't have a PS3, or an Xbox, or a Wii, or a Plasma/LCD, or a
stereo, or a car less than 7 years old, or more than 7 changes of clothes, and
I only just got cable last year. Life in the city is about trade-offs.

If you're coming from the suburbs, and expect the same sort of lifestyle in
the city, don't take a job that pays less than $80k/yr!

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nazgulnarsil
and the costs being prohibitively high have _nothing to do_ with the fact that
there are so many people receiving these ridiculous salaries and driving up
the costs of services? give me a fucking break. hello supply, meet demand.
when salaries go down these ridiculously inflated prices will come down or
these houses will be empty and these services going bankrupt.

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noonespecial
I really like it. What would be a reward to most of us is a bitter punishment
to them. They've created a life as artificial as their balance sheets and then
bid it up to an absurd level.

This is a perfect punishment for the epic fail they have foisted on the world.
Make them live like the merely rich. The sardonic nature of it all makes me
damn near gleeful.

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sethg
I'm sure there are Indian or Chinese bankers who would be happy to take over
the reins at these companies for $400K or even $250K. Viva globalization!

~~~
jyothi
Oh give me $100K and I would build a whole business out of India. $100K is
enough gas for at least 2 years for most startups out of here and hopefully
start making profit by then.

edit: people as much as it applies to businesses need to learn to live lean,
at least when necessary.

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mynameishere
There's nothing special about New York City. There are huge financial firms in
Omaha, and Goldman Sachs et al can simply move there or other places. Problem
solved.

------
awt
All they have to do is get jobs at profitable companies.

~~~
jcl
Or get by without the bailout money.

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callmeed
What is a co-op maintenance fee and why does it equal the mortgage payment?

(sorry, I'm from Oregon, never heard of a 96k co-op)

~~~
astrec
A co-op is (usually) a non-profit that owns an operates a building. When you
buy a co-op apartment you effectively buy a share(s) in the co-op which
entitles you to occupy a particular apartment. As a shareholder in the co-op
you are required to pay maintenance to cover your share of the operating costs
of the building: energy and utilities, maintenance, doorman etc. Some co-ops
also generate revenue from flip taxes.

Maintenance doesn't have to equal the mortgage payment - our Brooklyn co-op
costs around $650pcm in mortgage, and $800 in maintenance.

~~~
mcdowall
Even that is insane!!

I have a share in the freehold of my flat in the UK, my maintenance comes in
at £480 per annum, this includes buildings insurance, cleaning, heating and
general building maintenance.

Thats pretty damn steep over there!

~~~
astrec
A good whack of it goes towards fuel oil to run the steam heat system, then
you've got a surgeon sized insurance premium in case some litigious oaf slips
on the sidewalk, and finally a couple of full time staff.

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gaius
Looking at those numbers, Obama has done NYC out of an awful lot of taxes. I
wonder how much schadenfreude will be left once that trickles down to services
that ordinary people take for granted - or who will make up the shortfall.

~~~
captainobvious
The 500k limit is only on executives of banks that receive future
extraordinary assistance from the government--the execs are free to find jobs
elsewhere if they don't want the restrictions. The banks are free to not take
the assistance if they can maintain a healthy capital level without it. With
fractional-reserve banking that is the condition they implicitly agreed to in
exchange for the ability to conjure money from the (almost) ether.

~~~
tptacek
It also only applies to the top N executives at those firms, where last I
checked N was 5.

~~~
byrneseyeview
Seems like there's a glaring loophole there. Let's say they want to pay their
top five people ten million dollars each. And let's say they can think of five
VP-level people who should be earning around $500K each. Why not say "Oh,
these VPs are crucial to our survival. They're worth $20 million a year.
Sadly, we can only pay them $500K of that." At that point, the VPs get about
what they would normally get, and the traders can safely be paid $10 million a
year.

Or am I misunderstanding the cap?

~~~
micks56
I guess it depends on the final drafting. Drafting the cap as "top 5 highest
paid people can't make more than $500k" should solve the loophole you just
wrote about.

~~~
tptacek
Drafting the cap as "the top 5 highest paid people can't make more than $500k"
isn't the same as a $500k cap on the top 100,000 employees?

~~~
micks56
If you sort employees by pay it is the same. But if you sort employees by
power it might not be.

For example, some sales people at tech companies make much more money than
mid-level managers taking home a couple hundred thousand dollars per year.
Some of those sales people will make more than the senior level executives.
Which one is more important and is higher rank is up for debate.

In my comment above I tried to explain a way to fix the loophole that
byrneseyeview listed. Saying nobody makes more than $500k is a way to fix
that.

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Keyframe
> co-op maintenance fee of $8,000 a month

seriously, how on earth can co-op maintenance for apartment amount to 8k a
month unless you are building it from scratch?

~~~
gravitycop
For one thing, taxes are high in New York City, which makes everything
expensive. The "maintenance fees" can include more than what might normally be
considered "maintenance": salaries for doormen and superintendants, utilities,
building mortgage, and real-estate taxes.
[http://www.wallfly.com/review/manhattan_ny/faqs/faqs_co-
ops....](http://www.wallfly.com/review/manhattan_ny/faqs/faqs_co-ops.php#014)

~~~
Keyframe
ah yes, I forgot about property taxes. We don't have them here where I live,
taxation is mostly through income and consumption taxes. Property taxation
always seemed stupid and somewhat evil to me. What if you happen to lost your
income source for awhile or something along that line? You would loose your
property you own because you cannot pay legal racketeering on something that
is yours.

~~~
gravitycop
_Property taxation always seemed stupid and somewhat evil to me._

Given a choice of income-, consumption-, or property- taxation, it seems to me
that property-taxation would provide the least perverse incentive.
<http://en.wikipedia.org/wiki/Perverse_incentive> Consumption taxation
perversely punishes consumption, and income taxation perversely punishes
productivity. The economic effect of either of those, therefore, is harmful.
Property taxation, on the other hand, is simply rent on property that is also
latently owned by various layers of government. If one wishes to pay less rent
to the government, one is free to move to a less-desirable (e.g. smaller;
less-conveniently located) property.

 _What if you happen to lost your income [...] You would loose your property_

One could sell, and move to a less-expensive property. Then, the original
property would be available to one who is more-productive. The economy,
therefore, gains when low-productivity individuals sell expensive properties.

 _legal racketeering on something that is yours._

Actually, nothing within a governmental jurisdiction can be outright privately
owned. Therefore, said property cannot be said to be outright "yours". A
government always retains ultimate ownership of properties "privately owned"
within its jurisdiction. If one wants to truly own his own property outright,
he either needs to found it from scratch (and provide for all of the
maintenance and defense needs), or buy it from some existing government.
Buying a condo in Manhattan is usually not the same thing as buying it from
its true latent owners: the borough of Manhattan, the city of New York, the
state of New York, the nation of the United States of America, the North
American Free Trade Agreement, and the United Nations.

~~~
Keyframe
> One could sell, and move to a less-expensive property. Then, the original
> property would be available to one who is more-productive. The economy,
> therefore, gains when low-productivity individuals sell expensive
> properties.

that is the evil part I was refering to.

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kingkongrevenge
How about a $500K salary cap for presidents of universities that accept
federal grants and loan subsidies? Heh heh.

~~~
maximilian
Its actually football coaches at big universities that make all the money.
Median salary is over a million dollars last I saw. The academic salaries are
_much_ more reasonable. Mostly in the 100-200K range for upper level profs and
administrators.

~~~
ecuzzillo
If you want to win at football, you most definitely need a good football
coach, and the markets for pro football coaches and college football coaches
are hardly separate. So you have to pay college football coaches somewhere in
the ballpark of pro football coaches.

What has never been properly explained to me is the utility of winning
football teams to universities. I really would like to hear about that.

~~~
KaiP
Top football programs basically fund entire athletic departments. So in order
to maintain a top brand, paying an excellent coach 10% of your budget doesn't
seem to be a bad investment.

See
[http://online.wsj.com/article/SB122853304793584959.html?mod=...](http://online.wsj.com/article/SB122853304793584959.html?mod=googlenews_wsj)

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mattmaroon
They should just do what Steve Jobs does. Get a wardrobe of nothing but jeans
and black turtle necks, and subsist on cancer-fighting carrots and peas.

