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Living on $100k a Year (npr.org)
81 points by santaclaus on Dec 3, 2017 | hide | past | favorite | 192 comments



Recently, the news media seems to have developed a weird fetish for the petit bourgeoisie. The U.S. is highly atypical in how we treat the upper middle class.

In Germany, for example, a two-income couple making 84,000 Euro ($100,000) in Bavaria nets 57% of their income: https://www.icalculator.info/germany.html. In Maryland, a relatively high-tax state, they net 76% of their income. And that doesn't adjust for the additional upper middle class tax benefits like the mortgage interest deduction, which don't exist in Germany, which would take the net income over 80% on a typical house.

A couple earning 840,000 Euro ($1 million), in contrast, net 55% of their income, barely different from the previous example. In Maryland, they net 54%, less than in Germany! In contrast, actual corporate tax rates in Germany are about 15.5%, versus 18.5% in the U.S. (and Germany is quite high compared to say Canada, at 8.5% or France, at 11.2%).

I live on the east coast, but about an hour east of D.C. Around here, you can live very comfortably on $100,000/year. Certainly, more comfortably (at least, materially) than you typical middle class German family. The only reason the situation gets worse as you get closer to D.C. is expensive housing and worse schools, which are problems that are entirely inflicted by the middle class on itself (through anti-development and pro-segregation policies).


Just a heads up: The numbers for Germany on that page include all social security contributions, including health insurance (4.7k€) and pension contributions (6k€). (Not sure if you accounted for these in your number for Maryland.)


The Maryland number includes social security, but not health insurance. Health insurance is hard to account for, because most people in the $100,000 get employer-provided health benefits on top of salary, which are tax-free. But I'm also excluding a bunch of itemized deductions (mortgage interest, etc.) that don't exist in Germany that are widely used in that income bracket in the U.S.


Not to mention high quality education through university.


Yeah, that's something I always forget about when talking to people from the US: I don't have any student loans. A semester at a university in Germany costs around 250€ (plus housing and food), so it's hard to get to a point where you need 10 years to pack back loans. I had a part time job all through university and even saved up a reasonable amount of money.


There is really no reason for an American to have a unaffordable student loan. They could easily go to a state school instead of a private college and save thousands.


That’s not the full equation. There are a lot of jobs out there that you straight up cannot get out of college without going somewhere “prestigious.” That translates into YEARS worth of lost income and a completely different/lower earning career trajectory. Yes, some folks manage to get into FAANG out of state school, but that isn’t the norm. It’s damn near impossible to get into investment banking or management consulting straight out of college from a state school, for example.

I got into $200k worth of undergrad student loans. I am still paying them back and probably could have done things to reduce that burden early on. Regardless, I don’t regret it for a second because I’ll be done paying for them in about three years, and I’ll keep the high income job and great network I’ve accumulated in the process.


I mean, isn't that the only equation? If your income covers it, by definition not unaffordable. But there's people who get degrees that don't give a surefire way to pay back the tuition who go to those schools too.


I don't understand why this comment is downvoted. There are many many inexpensive state/community colleges that have pretty affordable programs which would probably provide the same level of education. If one is hell-bent on getting a degree from a better Uni, you can always apply and transfer later.

This option should most certainly be made clearer to students. I don't want to play a blame game, but I think its somewhat related to the culture of parents wanting "the best" for their kids and considering all money spent on education as an "investment". Its not. Its a huge financial commitment and should be thought through carefully.

Now, its not like college is completely useless. The connections you form there last for life. Many founders initially met in college and so on. But someone considering taking on ginormous student loan debt probably should consider whether that is worth paying off loans for decades.


I don't know that it's quite that simple; for one, tuition dominates college cost discussions while actual costs consist in large part of living expenses, i.e. room, board, food, misc. Second, there are some impressively expensive state schools out there, and not all have especially affordable in-state tuition, particularly not to those of working class background.

Still, I agree with the general idea you're reaching for. The ostensible premium of elite private schools isn't worth going into crippling debt for in most cases I can envisage.


How many college students have to stay on campus? How many could go to two year college, stay at home and then transfer two years later?

I went to a small state college with a horrible computer science department. Four years out of college I was making just as much as people who had way more debt than I had (I.e. none)


I dropped out of UGA 2.5 years in and moved to Atlanta to pursue a burgeoning tech career. :-)

I can tell you that UGA requires freshmen to live on campus, though in my case I was able to get a waiver because my parents were local. And I get the impression that their housing costs are actually fairly competitive compared to local commercial rent.


If someone's ultimate goal is to graduate from UGA and they are not local, they still could probably find a two year college where their core credits would transfer (English, math, etc.)


I think that's probably true.


Most people who go to a CC with the intent of transferring to a larger school don’t do it. Too many distractions get in the way.


Isn't better for distractions to get in their way while they are at community colleges and not out of as much money than for the same distractions to get in their way at a more expensive school and either way not come out with a degree?

I didn't go to a community college but I did go to a cheap state school with the intention of transferring to GA Tech under a 3 + 2 program - I was accepted straight out of high school but I got a scholarship to go to the no name school.

When it was time to make a decision, I felt GT was a waste of time for me. I didn't want to be a "computer engineer" I wanted to develop software. I don't see my career trajectory being any different. No one cared what school I graduated from three years after I started working.


Well, indeed, and I followed a similar career path to you. I was a philosophy major at UGA, and by the time I was 20 I was the senior technical personality at a small local ISP and interested in VoIP. I had been working nearly full time since my second semester. By the time my sophomore year began, work had rapidly evolved to take up 98% of my time and attention. I technically lingered into the first part of my junior year, but by that point long a very token and symbolic presence in class. The next step up from there was going to be a move to Atlanta and a big-boy corporate job, so I took it.

However, you can't just extrapolate from these experiences to everyone going to college across the entire work force. Our field is a bit uniquely ... democratic.


I often hear people refer to tuition + room and board as just tuition, especially in the context of student loans. And "money paid to the school" is ~= tuition, even if it's not itemized that way.


In-state tuition at the University of Illinois is $31,000 per year.


I just looked on the website - it's $17100 a year (for engineering). But how much is a two year state school? That would save some money at least for the first two years before transferring.

GA Tech is $12,500 if you don't stay on campus for a GA resident. If you meet the HOPE scholarship requirements (https://en.m.wikipedia.org/wiki/HOPE_Scholarship), it will pay 90% of the tuition costs - not including books and fees - reducing that cost by about $9000 a year.

If you don't have the qualifications for Hope, more than likely you wouldn't be admitted into GT anyway.

Yes the ethics of using the lottery to fund education is unclear and no it doesn't apply to every state, but is the University of Illionois worth it unless you are qualified for a high paying job to make the expense worth it (serious question - I don't know)? If not, are their cheaper state schools?


I have a kid there; my number comes from the actual invoices.


State schools are still ridiculously expensive


Does everybody in Germany get to go to college for for 250€ ?


If you're accepted, you only pay "administrative fees" per semester. Covering textbooks, food, housing are on you though there are numerous stipends you can apply for and get.

This applies not just to German citizens but to anyone who studies in Germany. The stipend sources may be slightly different where you come from though.


The answer to my question is "no."

The problem is that most people in the US that "know" Germany gives everyone a college edu, thinks it is literally everyone and it certainly is not the case. Could people from Germany please stop spreading partial truths?


They pay for those benefits by heavily taxing the middle class. If someone proposed a tax bill that cut corporate tax rates, held the line on taxes on incomes over $250,000, dramatically jacked up taxes on people making $50,000-$250,000, and instituted a 25% sales tax, to pay for free/cheap education and healthcare, they'd be shot.


As an American, I incur the below costs:

* $18,000/year 401k contribution (similar to pension, but I take on the market risk)

* $5,500/year IRA contribution (similar to pension, but I take on the market risk)

* $200,000 total in tuition per child at my alma mater.

* Health insurance costs. This can easily be $12,000/year or more for a family.

None of these are included in the tax amounts that we pay.

This is also not considering that German cities are much cheaper than equivalently walkable American cities.


German social security is roughly similar to ours. So if you want to live comfortably in retirement, you have to put extra money away there too. As for health insurance: employers cover on average 71% of insurance premiums for families; at the $100k mark, it's probably significantly higher than that. Finally, as for tuition--you get cheap tuition in Germany because: (1) people making 30,000 Euros are getting taxed a lot more to pay for it; and (2) most kids get tracked out of college and sent to apprenticeship at 16.

If we taxed our middle class what Germany taxes its middle class, we could afford cheap tuition too (for the 1/4 of our kids we chose to send to college).


> If we taxed our middle class what Germany taxes its middle class, we could afford cheap tuition too.

While I'm in favor of free/cheap education, this made me think of a convincing argument for the student loan / US system. Those who benefit from the education are "taxed" for it in the form of loan payments for a few years, those who don't benefit (directly) from the education are not.

I guess ideally you could balance the benefit to society vs the benefit to the individual getting the education and subsidize it proportionally. But that's obviously not practical so we should probably push closer to the society end of the margin of error.


I agree that it's not so simple.

> Those who benefit from the education are "taxed" for it in the form of loan payments for a few years, those who don't benefit (directly) from the education are not.

Not only that, but the benefits of free/cheap education largely accrue to the middle and upper classes whereas the lower class also has significantly higher taxes under the European system.

I'm most familiar with the UK where universities like Oxford, Cambridge, LSE, Imperial, etc. are all overwhelmingly middle class. I'm sure the pattern is repeated in Europe as well.


>the lower class also has significantly higher taxes

This could be fixed by increasing the taxes on the middle class and up, leaving the lower class taxes the same.

>are all overwhelmingly middle class.

There are likely factors other than cost for people from lower classes to going to university at a lower rate, but it's the opportunity to do so that's important and cost is often the biggest impediment to it.


> This could be fixed by increasing the taxes on the middle class and up, leaving the lower class taxes the same.

How exactly would you sell that? It requires a certain amount of commitment to furthering society to ask people to pay more in taxes. And there is all this right-wing media and people who will constantly shout "Big Government is taking all your hard earned money!" argument.

Its rather amazing that Europeans have accepted high taxes on middle and upper classes as a fact of life. But then, If you look at history, it was the poor who got taxed the most in pre-revolutionary France, while the rich got away with massive tax cuts. I fear this might lead to something similar in the US in the future: push too many people into poverty and they will rise in revolution.


Yeah I definitely agree with that solution.


Where are you seeing those US numbers? Effective rates for the wealthy in the US are often much lower than the expected rate due to deductions and loopholes.


Paycheck city. What deductions and loopholes? For the most part, you're just talking about the favorable treatment for capital gains, which exists in Germany too. Indeed, Maryland's combined state+federal capital gains right is a touch higher than Germany's.


> "And now I'm one of those coastal elites, a term, you know, that people in Middle America use. And it feels like betrayal," he says. "But what I've learned in moving to the coast is there's real inequality. And the biggest driver of that inequality is the tax code. The biggest social welfare has been to the rich and powerful, giving them loopholes and abilities to keep money from the government and keep money from the rest of us."

It saddened me to read that snippet. Growing up on the west coast, I was aware of some ideological/cultural differences between urban metros and the Middle America, but I was not aware of that sense of classism.

A take-away I had from Trump's election was that there still is a lot of economic struggle in the interior of the US. Nobody seems to be interested in improving the situation, and very few of these communities have the means and/or the willingness to move towards greener pastures. Is there anything that can be done to improve the situation?


> A take-away I had from Trump's election was that there still is a lot of economic struggle in the interior of the US. Nobody seems to be interested in improving the situation, and very few of these communities have the means and/or the willingness to move towards greener pastures. Is there anything that can be done to improve the situation?

I work in a typical liberal as hell company in a very expensive city. The level of hate/class superiority towards the unwashed masses from my co-workers is absolutely mind blowing. It is casual hate that shows up everywhere, every day in a unrelated conversations. If one was to do s/<who they talk about>/gay|minority/g they would be terminated on the spot. It goes all the way up the corporate latter. All of them are card carrying progressives.


I didn't realize how outright prejudice I was when it came to the stereotypical Trump true believer until after this election. It just never crossed my mind. I'm African American grew up middle class but I saw and interacted with plenty of poorer minorities but never poorer Whites - I went to a predominantly white private school, but by definition if they were at private school, they weren't poor.

Went into tech and only interacted with other white collar workers.

Of course I don't agree with Trumps demonization of "other" but I do see how he easily tapped into their resentment. People don't seem to realize how many Trump voters in middle America voted for Obama in 2008 and 2012.


Hillary Clinton had Donald Trump beat by millions in the popular vote. I suspected it was more or less the same conservative base, with Democratic voters less enthusiastic in rural/suburban America.


In the rules of the NFL team that has the ball longest is not the team that wins the game - team that scores does. Those are the rules.


I'm not sure that it's a bad thing that the electoral college is used for deciding the presidential election and that the senate isn't representational of the population. Even considering that "my side" loss twice because of it.

The needs of the least populous states - trump country -have been ignored in the national conversation for too long by both parties. Trump was just paying lip service to their needs and is actively selling them out. But no one else was even paying lip service.

I'm not part of Trump's core demographics - both a minority and part of the "liberal tech elite" but a lot of his policies will help me a lot more than they will help people who voted for him.

Yeah I'm ignoring the so called "moral majority", there is no hope for them. Hopefully changing demographics will continue to make them even less relevant.


It is irrelevant if rules are bad or rules are good. It is only relevant what the rules are at the time of the competition.

Rules can always be changed but it must be done before the beginning of the game.


I live in SF, work in tech, and do not share this experience at all. Not sure what environment you’re in but that’s far from ubiquitous.


I'm going to make an educated guess that you are not even noticing it because it is that common.


My office is extremely political in discussion topics. It would be noticed and not looked favorably upon.


That's not being a progressive. They can call themselves whatever they want but we don't want them.


I hear the same things in DC. Even (maybe especially) from people who work in government.


> Nobody seems to be interested in improving the situation

Plnty of us are interested. But people with enough money to pay for their own media, and their own politicans and party, they are really not interested.


I think it takes less than most of us imagine -- but more than most of us are capable of organizing.

If you wanted to build complexes to stimulate the economy, you'd probably need on the order of... $100M in buildings, and another $100M in endowments for operating expenses/grants/risky loans.

So 200M is a lot, but it's also only the retirement wealth of 100-200 upper-middle class families, of which there will be thousands per major metro (and perhaps a million or so across the US).

I think it's mostly a logistics problem -- in those million families, there are probably 10,000 that are interested in resettling to the middle of the country and would be willing to move half of their wealth into local investments on a generational scale (while keeping the other half in say, the market).

That means we could do 250-500 self-sustaining mixed-use complexes backed by endowments for operations costs, which is probably enough to target 50-100 towns.

The question becomes the organizational aspects of those people finding each other, building trust (between each other and with the involved communities), and finding the appropriate legal instrument to manage the money on that scale.

These are all much harder problems than finding money or media attention.


>Is there anything that can be done to improve the situation?

Yes, but it's all the things that "coastal elites" don't want to hear. The first two topics of conversation would likely be about trade and immigration policy. But it's hard to talk about either without being shouted down as xenophobic or racist. It's worth noting that Obama ran on a platform to renegotiate NAFTA during his first primary.


What evidence is there that protectionism and further raising of the immigration barrier would actually solve any of these problems?


Yes. The immigration barrier is simply supply and demand. Just as the H1Bs have been used to keep the wages of the American middle class down, so has the open floodgates of illegal immigration kept the wages of poor Americans down.

With regards to protectionism I don't know what more evidence you could need aside from the changes to the US economy brought on by NAFTA, which were all predicted. It's been fine for the economy as a whole, but we're not talking about things like the GDP. We're talking about the economic well-being of the people who used to manufacture things in the US. Watch carefully, because that is the sleight of hand that unrelentingly responds to any talk of protectionism. They talk about sound economic theory about how protectionism impacts things like GDP. Not the topic at hand.


There are only 85000 H1B Visas allowed each year. There are about 3.5 to 4 million developers in the US. If all of the H1B Visas allowed in the country were developers, it really couldn't depress wages that much.

As far as reigning in illegal immigration, there have been reports all across the country that farmers are losing money because they can't find enough people at any price who are willing to do farm work since the crackdown.


>There are only 85000 H1B Visas allowed each year.

85,000 NEW H1Bs are issued each year, they last 3 years and can be extended for another 3. So right off the bat that's as many as half a million. There is no issue limit on H1Bs for universities and non-profits. In 2012 alone, for example, the total number of H1Bs (normal + university/non-profit) issued was 135,530. It's safe to say there are far more than 85,000 H1Bs in the US.

>because they can't find enough people at any price who are willing to do farm work since the crackdown.

I suspect their definition of "any price" is very different than mine.


At any price that they could still harvest the food and sell it at a price that people would be willing to buy the food.


I suspect the consumers will get over it once hunger sets in. I'm not really sympathetic to the consumers who may lose access to artificially low pricing subsidized by policies intending to keep wages low amongst the poorest people in our country.


Poor people already often can't afford healthy food. What do you think happens when food prices go up because farmers have to pay 5x as much to attract labor? Yes there are farmers who are offering five times as much and still can't find reliable labor.

On the other hand, I'm sure overprocessed sodium filled food and fast food will become a lot more attractive than even what it is today.


>Poor people already often can't afford healthy food.

That's a serious problem, if only there was some way to raise their wages.

>farmers have to pay 5x as much to attract labor

Yep, there it is. Some of those poor people will transition to these new higher wages in farming. This will reduce labor supply in other sectors which will push wages up across the board. Rinse and repeat for other industries full of illegal immigrants: construction, maid services, etc.


That's not what's happening. Americans have alternatives to hard manual labor - welfare, "disability", food stamps etc.

https://www.washingtonpost.com/news/wonk/wp/2013/05/15/north...


If welfare and food stamps are better than performing farm labor then farm wages and working conditions clearly haven't improved enough yet.

I accept your data/claims at face value, that illegal immigration and temporary worker visas have suppressed wages of the poor in some sectors so much that even increasing the wage 5x is insufficient to attract native laborers. What we disagree on is whether or not that wage suppression is a good thing.


If welfare and food stamps are better than performing farm labor then farm wages and working conditions clearly haven't improved enough yet.

It's farm labor - how much can working conditions improve while you are actually doing your job? If I had a choice between making minimum wage and getting government assistance and doing back breaking labor at $20 an hour, I'm not sure that I wouldn't take the minimum wage job and make the commensurate lifestyle choices - roommates, public transportation instead of a car, or if I were so inclined being a part of the underground economy.

How many unemployed people are physically capable of doing that kind of work?


I can't speak to farming, but I know the going day labor rate, usually construction, for random (illegal) immigrants you can pick up at Home Depot is $20/hr minimum around here. So you'll certainly have to do better than that to get natives. Again, if $20/hr isn't enough, the market will adjust until it is enough.

Who cares whether unemployed people are capable of hard physical labor? Plenty of people in the country are capable, so farm wages will just have to compete against other sectors. And when it does, it will raise the wages of EVERYONE in those other sectors because people will leave for the higher wage farm work. This is the mechanism I keep bringing you back to about how it helps all the poor, not just the ones who take the farm labor jobs.


If everything costs more - especially a necessity like food, how does that not cause inflation and lead everyone Back to the same place? The whole food chain operates on thin margins so they can't eat the cost and reduce their profits.


If labor makes up 50% of the cost of a product, doubling the labor cost doubles the money the worker gets but only increases retail prices by 50%. This is still a great deal for the worker.

Why do you feel it's okay to bring in desperately poor brown people to do work that you claim Americans won't do at even 5x the rate we pay the desperately poor people? Why shouldn't back-breaking work bring in a wage that is competitive with the broader market? Why is it okay to flood the market with an over-supply of desperately poor people? Do you think it would have any impact on your income if we brought in 10s of millions of workers to compete against you in whatever you do for a living?


Because the alternative for the "desperate poor people" to getting poor wages is not getting any wages? Do you think they would be better off not getting anything?


So you want to help the poor from other countries at the expense of poor from your own country, which coincidentally benefits you in the form of cheaper produce. That's awfully generous of you.


How many of the native poor are competing for jobs in the fields? If food prices for me go up by 50% I might grumble, suck it up and pay for it. The poor aren't going to have any choice but to eat cheaper less healthy food.

And if food is more expensive to produce in the US because of labor costs, why would it be any different from anything else - the big companies will either start selling cheaper (less healthy) substitutes, or import it from places with cheaper labor.


>The poor aren't going to have any choice but to eat cheaper less healthy food.

As we've covered, repeatedly, reduced supply of labor will increase the wages of those poor you're worried about buying food. Based on the first google results I could find farm labor constitutes 10-20% of the cost of food. Even at the high end, if you DOUBLE the wages of farm labor the price goes up 20% but wages go up 100%. And this same principle applies to every sector where new farm labor is pulled from. Wages go up more than prices, so it's a net win. This is great for the poor worker, but bad for the wealthy worker who doesn't get raises due to this increased competition on the low end of wages. To the extent that the wage gap might be a concern of yours, this is one significant way to reduce the wage gap using market forces.

> the big companies will either start selling cheaper (less healthy) substitutes

Millions of new potential customers have extra money in their pocket to be able to afford luxury food products. Meanwhile there are far fewer impoverished people looking to buy food (migrant/illegal workers). So if anything, it increases the market for luxury goods and decreases the market for cheaper unhealthy substitutes.

>import it from places with cheaper labor.

This is only a problem if you believe 100% of the illegal and temporary work visa produced goods could be replaced with imports. Not only is that not true, but even if it WERE true, that doesn't say anything about other sectors predominately filled with migrant/illegal workers such as hotel maid services or construction. My house, in my neighborhood, is not going to be built by someone who isn't physically here.

I feel we've sufficiently covered the initial premise, which is that the policy I've described helps poor middle Americans. You might be able to debate the extent to which it would help them, or that this is good for the over-all economy/country, but it's undeniable that artificially increasing supply of labor in some sectors drives down wages for everyone in those sectors and in the labor markets that compete with those sectors.


I'm going to presume that your family has a combined income of 100k or more.

Lets engage in a very simple intellectual exercise:

remove all immigration restrictions and all protections that we have.

Do you believe that

a) your family in a short term would be better off/not different/the worse off?

b) your family in a long term would be better off/not different worse off?


Sweden is a good example of what happens in scenario b). The effects are immediate:

- shortage of housing

- ballooning social security budgets

- extreme long waiting times to get health care service

- a marked increase in crime, especially in certain categories (sex crimes, robbery, arson)

and long-lasting:

- taxes need to increase across the board with ~2% (in a country already burdened with close to the highest taxes in the world)

- costs for state pensions stand to double in the coming 20-30 years

- the real estate market will need to adjust to the new situation (oversupply in the high priced sector, a shortage in the low and medium price sectors)

- the labour market does not fit the education level of the new population. Available jobs require higher education levels than most immigrants have or can reach leading to high unemployment among immigrants. The extensive social security system and the related high taxation level takes away incentives - and in some cases actually presents negative incentives [1] - to go from state benefits to paid employment.

The situation in Sweden is made worse by the fact that the country officially does not mandate nor stimulate assimilation of immigrants into Swedish society while the native Swedish (and assimilated migrant) population do expect immigrants to assimilate to a large extent, leading to increased segregation [2].

[1] It is fully possible in Sweden to end up with a lower spendable income when moving from state benefits to paid employment, mostly due to the fact that those on state benefits often get extra benefits for specific purposes (e.g. housing costs).

[1] Sweden does not have a single monolithic constitution, instead relying on four fundamental laws (the Instrument of Government (Swedish: Regeringsformen), the Freedom of the Press Act (Swedish: Tryckfrihetsförordningen), the Fundamental Law on Freedom of Expression (Swedish: Yttrandefrihetsgrundlagen) and the Act of Succession (Swedish: Successionsordningen)). An 1974 amendment to the Instrument of Government act states that immigrants can choose to keep and strengthen their ethnic and cultural identity instead of assimilating into Swedish culture.


I'm not the person you asked, but I'll give it a shot.

In the short term I think I would be much better off. I don't believe enough people who can compete with me economically would be all that interested in coming here, and/or them coming here doesn't improve their ability to compete with me. However, I'd be able to hire poor people for slave-like wages to perform all sorts of odd jobs for me around the house. I'd have a maid, etc.

In the long term I would be much worse off. The influx of poor people from other nations would completely overrun our public infrastructure: public schools, welfare programs, etc. The reason why illegal immigration "works" for the upper-middle and upper class is because it's illegal. My taxes would have to go through the roof to pay for all of this.


> In the short term I think I would be much better off. I don't believe enough people who can compete with me economically would be all that interested in coming here, and/or them coming here doesn't improve their ability to compete with me.

This is where I fundamentally disagree - every single developer in the US making US salaries will lose to eastern european/Indian/Chinese developer moving to the US because they will accept lower salary. Not much lower, but 20-30% lower because for them it would be amazing increase in their quality of life.


I'm already the lead for an off-shore team. There's nothing special about me being in the US, I'm not local to anyone I work with. If they could find an offshore resource to replace me at a 20-30% cost savings they would do it in a heartbeat.


Well, the first is false and the idea of removing all restrictions was not under suggestion, so I don't see how this is relevant?


Ok, so we agree that some restrictions on immigration must exist?


Just read an article in Fortune mag. about a venture capitalist that's working to move more remote tech jobs to middle America.

I hope he succeeds. The more we share jobs/experiences/wealth/etc. the more we'll understand each other.


I'm one of those coastal elites. Early career, so ballpark around this salary. I have some student loan debt, but my portion of the rent is only $1,000 a month plus utilities (I split a place). I spend about $2,500 a month. And I sock away the rest (about $60k annually) into investments.

$100k still goes far in a high cost of living, coastal area. However, I drive a used car. I'm a renter, and probably will be for awhile. If I wanted to be a homeowner, a good portion of my retirement savings / investments would be going towards that.

If I decided to have kids, which would mean at least a place with additional bedrooms, plus additional health care coverage costs, etc., I could see it getting tight. I might have to compromise my retirement savings goals.

I don't have a lot, but I'm also a minimalist. And I realize that, income wise, probably 80% of society has it worse than me. I don't know how households earning around $50k would feel any semblance of having a future financially. Growing my savings/investments is the only way I feel like I'm getting ahead. Having any sort of typical American dream goal (house, kids, etc) would basically nullify my ability to get ahead, with the exception of building some home equity.


The difference between you and the 1987 version of you is that you are kneecapped from an earning power perspective.

Barring equity compensation that appreciates, you’re likely to grow your income until around 35. Then you plateau.

You’re also unlikely to retain companies or career skill set through to retirement. So you’re facing a crisis where you need to transition and maintain salary around age 40, where 1987 you would be entering peak earning years.

It’s a particularly vicious cycle as professionals marry late and have kids late, so when you’re scrambling to maintain your 401k to retire, you get hit with a big college bill in your late 40s/early 50s. If you invest unwisely and don’t have a home, you’re choosing to either retire comfortably or not pay for college.


Your children can always borrow for college. You can't borrow for retirement, so it makes sense to prioritize retirement savings.

I agree, though, that the purchasing power is nowhere near 1987 and that the plateau comes earlier. I suppose it's what makes saving earlier and saving more ever pertinent for the younger generation. If I can get to 200k before I plateau, I'd be happy. If I have a working spouse that makes at least 100k, I'd say we could probably keep the American dream alive for us.

At least via my 401k, there are few poor options to choose, thankfully. The worst you could probably do is pick a fixed income class (and get no growth) or go too risky with international funds (if you for some reason went 100% international). But the target-date funds and index funds provided (SP500, etc) are diversified and generally considered good investments.


If you're making that good already and working in tech, I doubt it will be hard for you to reach that target income. Keeping up with the latest technology, learning skills and delivering on projects has got me very far in my professional career, and I've worked with Senior Engineers who continue to do engineering and switch jobs (although perhaps less frequently since it means changing a lot of things).

I guess what I'm trying to say is: financially, you are likely to be OK, if you manage to have a spouse that will be a good partner and you both stay together while bringing up the kids (and that is a BIG IF). It get VERY dicey if you do split, in which case you have to pay for spousal and child support (I've seen this happen wayy too many times).

Which brings me to what has been my most important realization perhaps: be VERY VERY careful when you choose your spouse and how you combine your finances. I'm not saying that you spouse will be bad; but statistically it seems like there is a 50% chance that it won't work out, for whatever reason. This can ruin your finances. So spend some significant time and effort to try to make the right decision there. This is kinda hard when society emphasizes getting married and having kids ASAP.


Don’t forget that it was still common to expect to work at one company for most of your working life back in ‘87 and those companies often offered pensions


Fuck, I'm 40, did I plateau already?


I really cannot sympathize. My father raised a family of 6 making ~$30k/yr at his peak. Yes we struggled at times. Public school. Knock off sneakers. Cheap cost cutter food and small simple meals. Crap car. Etc.

When I started working in software I made way more money right out of school than my family ever made. And I developed a lot of bad spending habits as a result. After a few years I got my head on straight. Paid off all my debt, got disciplined about saving, and cut out unnecessary expenses.

It’s not that hard to live very comfortably on 100k. But you aren’t going to be eating out all the time, driving new cars, living in a gigantic mcmansion, etc.

Edit: My youngest sibling was born in 93. 30k in 93 is like 50k today. HALF of what the people in this article are living on. Give me a break! These people don’t need a raise or a hand out, they need a realistic budget.


> My father raised a family of 6 making ~$30k/yr at his peak.

When your father was working and you were growing up, $30k was worth more (perhaps much more, depending on how old you are) than it is now. His job probably had benefits and protections modern jobs don't have. What used to work for people increasingly doesn't work, in large part because benefits are disappearing, government programs and subsidies are being cut, and what's considered a "fair wage" hasn't tracked at all with how much things actually cost, especially on the coast.


Crap cars are also expensive as hell to keep running nowadays. Buying new or nearly new, if you need the transportation for your job, can be more economical. That wasn’t the case 40 years ago. That labor that his mom presumably put in is also not without monetary value - two working parents cost a fortune in childcare, and many people need both salaries to make the equivalent of what just one used to.


Really, any "mainstream" car made in the last 15 years is going to be quite good. I'm talking about Honda, Toyota, Nissan, Ford, etc. My newest car is a 2004 Honda with 230,000 miles. I bought it used when it had about 80,000 miles. It's been very reliable. I've likewise had a good experience with a 2002 Ford.

40 years ago, 100,000 miles was considered the practical life of a car. If it hadn't rusted out by then it had probably had a major failure such as a transmission or engine. The only advantage they had was being mechanically simple and easier to repair, but they needed more repairs and more maintenance than a car made in this century.


Agree, totally. We're living in an automotive 'golden age', where reliability, safety and performance are at all-time highs.


That's a falsehood people tell themselves to justify buying a new car. One of my parents' cars is a 2003 Acura. It's never needed anything but oil changes since we got it. Cars these days are much cheaper to operate than they used to be.


Totally true. Just about every reputable financial advisor says to drive used cars and run them 'till the wheels fall off.

Today's used cars are fantastically reliable, historically. (At least if you stick with 'Best Buy' recommendations.)


Hondas are notoriously reliable, but at a certain age things can start going wrong and if you need that car you can easily pay more than it’s worth to keep it running a few more months. It’s happened to me before, it just happened to my friend’s CRV. The problem is that they are a gamble.


Crap cars are a poor tax. They can't afford the lump sum payment for a nice car, so they basically pay the same amount or more but spread out over the life of their crap car.

It's not that they don't know it's a terrible financial move, they just don't have any other options besides high interest loans or not owning a car (which likely means not being able to get to


Completely agreed. House prices/rent and high child care costs are what have done our generation in. What salary do you need in Mountain View to afford a house? 400K?? It is nuts!


I completely agree with you. I used to be in a very similar situation. I made about the same amount of money (quite a few years ago when it would have been worth a good bit more than today). I had a very similar experience. I lived paycheck to paycheck with nothing extra in the bank. Any unforeseen expense generated significant stress. It was not a fun experience. I can totally sympathize and agree that it feels miserable. But I cannot agree with the implications this article is making.

I was able to turn my situation around, not by getting tax cuts or help from the government, but by changing my lifestyle and my idea of what I needed. That house that you think you can afford that sets you back 20% of your gross pay? You don't need it. Cut your residence costs to something reasonable like 10% of of gross pay and boom, you magically have a surplus of ~$800 / month. That $400 - $500 / month car payment? You don't need that either. Stash away four months of the savings we just got on our residence and buy a used clunker for $3200, drive that into the ground, and by the time that dies, you will have saved up enough money to buy a perfectly fine used car for cash.

I have an artist friend who lives in NYC on ~$30k / year. She even has a car, which is an expense that a lot of people in NYC do without. Even in this situation she has been able to consistently put money away into savings and investments because she manages her money well. It's not about how much you make. Your choices have far more to do with it than most people are willing to admit.


Three out of the four "people" on this list are actually families, not individuals. So that $100k isn't going towards a single person- it's going to anywhere between three to five people. At least one of them mentioned having medical debt. That is a rather huge difference than what you describe for your life.

The other person is making $100k in a very high cost of living area. He's living as you do- frugal, paying down debt, and living within his means. He does raise a good point though- $100k does not feel like the fortune and there is still quite a bit of inequity.


So to summarize you're basically saying to live within your means.


How long ago was that? What kind of cost of living area? You really can't take a number and use it to judge someone without taking into account so many variables. 40k in Texas would be about 80 in Cali. Due to inflation and other things that eat away at purchasing power that's much harder to raise a family or even oneself up on. Gone are the days of one person working and supporting an entire family like most baby boomers seem to still think is possible.

Of course the billionaires like it this way. They are destroying the middle class, but they keep the fighting at the lower ranks.

It's not the 1% that are the problem, it's the .01%.


>My father raised a family of 6 making ~$30k/yr at his peak

If you're in the US, how are your parents faring for retirement? Are you and your siblings helping out?


My dad retired and had a modest 401k. He also gets social security now. My mom works part time in the kitchen for the local school district. They are doing ok! I imagine they will come live with my wife and I when they are ready. I won’t put them in a home.


What about the rest of your siblings? Are they going to help?

I ask because my parents are retired, and they are nearing the age where they will need assistance. It's just going to be my sister and I when it comes time to deal with figuring out what we are going to do. My mother has been financially dependent on my father throughout their entire relationship.

I currently live near them and visit once a week, but I don't see how I can afford to stay in the area if I want to start a family of my own, unless I find a partner that earns around as much as I do so that we can clear $300k+ a year. Modest starter homes in a neighborhood with both decent schools and a commute time under an hour to where the jobs start at $700k.

My sister and I also have to figure out how we are going to deal with my mom's relatives, who currently barely want anything to do with her, but will be ready to take advantage of her once my dad passes (assuming he passes away first -- I'm quite sure he will), and she's the main holder of everything. I already saw it happen with both of my grandmothers, so this isn't just unfounded pessimism. Both sides of my family are full of shitty people.

I absolutely do not mind every single cent in their networth being used to care for my mother in old age. I do mind that money being mismanaged and wasted, especially if that results in her needing more than what was originally set aside by my father.


You should absolutely have an honest conversation with her about her finances and talk to both of them about at least informing you about any changes they wish to make before they make them. Old people are very impressionable, and there are some very shitty people out there who give bad advice. They also scare easily, so they might take all their money out of their accounts when the market starts to go down even a little.

Apologies, no harm intended towards older people, just have seen a lot of them get screwed over. e.g. my managers Mom had all her (late) husbands retirement money in a pretty great account which was sponsored by her husbands company. But her friend convinced her to take it all out and hold it in cash, which turned out to be really really bad advice.


If he did that then he had government support out the wazoo and free meals in the school as a child and all sorts of benefits.


Is that meant as a response to the questions about how his parents are doing in retirement? Free meals as a child don't usually help with that.


Yes we were on food stamps and WIC for several years when my two youngest siblings were born. Never on welfare. We got reduced lunch at school. It was about $0.50 if I remember correctly.

What’s the point though? If anything there are more benefit programs today than were available then. At $100k/yr you really should not be eligible for much benefit when you consider how much better you are doing than average.


Food stamps and WIC are welfare. What exactly do you think welfare is?


Usually temporary assistance, which is when you get cash is considered welfare.

Most people who understand this stuff don’t consider safety net programs like food stamps or WIC that way. The difference is that the Food stamps/WIC allow you to work, and most people on them do. “Welfare” requires you to not work in order to get a benefit.

The most vociferous disgust regarding people on welfare usually comes from people who you would consider to be on “welfare”.


That is a pretty ridiculous definition, and isn't even self consistent. With the exception of disability insurance and unemployment the majority of welfare programs (including where people just get direct cash) are income based (meaning people are allowed to work, but if their income rises above certain levels they lose some of the benefits).

Food stamps are exactly the same, as is the reduced price lunches mentioned. If his parents made more money they would lose access to those welfare benefits.


Perception is reality.

When the average redneck is barking about “welfare queens”, he’s not talking about food stamps, WIC, Medicaid or SSDI. Half his family is enrolled in one or more.

The difference with something like food stamps is that a “normal” working class two parent household can get some benefit. It doesn’t make a lot of sense, but that is what many if not most people believe when you actually ask them.

When well to do people hide their assets in trusts so they can collect Medicaid when they get old, they don’t consider that welfare either.


Yes. This exactly. We never received currency which is what most poor people understand to be “welfare”. In fact there is a bit of a hierarchy to these things and in school it was definitely way worse to be on “welfare” than food stamps. God forbid the kids at school found out you were getting welfare. You would be hounded about it. Food stamps not so much. Kids are savage to each other.


Okay, but you're not a child anymore. You should understand that you did in fact receive welfare.


The point is that the difference the extra income makes is less than it appears, and the risk is entirely on the shoulders of the 100k earner. Not only no benefits but more taxes and more stress because no safety net.


You’ll be downvoted for preaching frugality because many coastal-city HN software folk making six figure salaries are probably inimical to frugality: buying 3000 dollar bikes, luxury cars, eating at fancy restaurants, etc. in very anti-fragile way without saving with substantial cushion for rare adverse events.


Even if what you say about "HN software folk" (what do you and why are you on HN?) is true, I bet that you could not live on $30k/yr while building savings and supporting an average family, without relying on the charity of others. Particularly in a major metropolitan area in the US.


My great-great-great-great-great grandfather lived on $1/day! Stop whining!


As someone with a six-figure self-employment income, I can also say that cash flow is a very important part of the equation. If you take an appropriate discount for bad/unsteady cash flow (and few of us do), one is led to the conclusion that $100k+ in SE income can often afford one a ~$40k lifestyle at best, in terms of recurring expenses one can reasonably commit to and consistently afford.

That's something a lot of people on salary don't get. Back when I was on W-2 and had much lower compensation than I nominally have now, I had my ducks in a row, taxes paid, a positive savings rate, and good credit. That hasn't been the case since I went self-employed about ten years ago.

If someone were to divide my annual revenue (less expenses) by 12 and distribute it to me on the 1st of every month, a lot of problems would be solved. But because that's not how reality works, I take a bath in late fees, interest, overdraft fees, no access to credit due to bad rating, etc.

Some of those things are more avoidable than others depending on the choices one makes, but that's not the point. The point is that W-2 and SE income are not equivalent. Unless you've devised some compensation scheme that is substantially similar to salary as a contractor, you can't afford anywhere near a $100k lifestyle as a consultant earning $100k+. There are many days I'd happily trade places with folks who get a lower, but steady paycheck every two weeks for doing more or less one job.


It sounds like you are not budgeting appropriately for the amount and variability of your income. I just recently left the consulting game, but did so for nearly a decade. If you're truly interested in making a change I recommend reading The Total Money Makeover by Dave Ramsey.


I'd like to think I budget appropriately, though I'll admit I didn't always when I was younger; it's an acquired skill. But you try budgeting appropriately through a divorce and absurdly expensive custody battle.

But in a way, you're making my point for me; because $100k in SE income is not the same as $100k in W-2 income, it requires special budgeting considerations, to the degree that I'd benefit from reading a whole book about it. :-)


>But you try budgeting appropriately through a divorce and absurdly expensive custody battle

I did.

>But in a way, you're making my point for me; $100k in SE income is not the same as $100k in W-2 income.

Actually, I'm making the exact opposite point. The budget is the exact same. The budget is what forces you to not over-spend when times are good, so that you have plenty of money around when times are lean.


Well, indeed; what that adds up to is that it's safer (if perhaps unwise, that's debatable) to get closer to the line with a stable income than an unstable one.

Otherwise, it seems your advice is "live within your means", "spend less than you make" and "save for rainy days". Thanks, dad.


>it's safer to get closer to the line with a stable income than an unstable one.

No, it means you've failed to accurately assess what the "line" even is.

>Otherwise, it seems your advice is "live within your means", "spend less than you make" and "save for rainy days". Thanks, dad.

No, my advice was a specific set of principles and practices laid out within Ramsey's book which could help you to overcome the problems in your life that you were discussing. I was not promoting useless platitudes.


My point was that with greater volatility, a smaller portion of income remains sufficiently consistent, and thus the line will be lower and the budget will be smaller.


I don't think you would feel that way if you actually read the book and followed a real written budget. I know this because I've lived it myself. The only difference between variable income and static income is gauging the size of your emergency fund. Otherwise, your budget is identical.


Yes, but maintaining a bigger emergency fund implies spending less in other categories. :-)


Nope. Building an emergency fund implies spending less in other categories, namely retirement savings. But once you've made those initial, temporary sacrifices, maintaining the emergency fund doesn't cost any more just because you have variable income.


The article even touches on how everyone is trying to keep up with the Joneses instead of living within their means.

Everyone is in a different financial position but instead of recognizing that and living a life you can afford, people get jealous of what their neighbours have or their friends are doing and pursue the same lifestyle regardless of if they can afford it or not.

I do not sympathize with someone struggling to make ends meet on $100K a year. That is a ton of money and if you have debt and bills you can’t handle then unless it’s just a result of horrible life circumstances, it’s most likely your own bad decisions.


I don't mean to sound unsympathetic, but it would be nice to hear what is eating into their income so much.

My thought pattern here is that if you can't manage on $100,000 a year then you'll have the same problem at $200,000 a year, so on and so forth.


I'm a bit sympathetic to the idea that the American dream, when compared to the average paycheck, just doesn't add up for most people. I don't empathize with the poor financial choices folks make to place their expectations above their reality.


I guess I feel the same.

I'm very sympathetic to people who, when making decent financial decisions, are unable to meet their basic needs. Poverty / under-earning like that just creates a constant stress that is completely debilitating and unproductive. It has a real psychic toll.

It's just difficult for me to imagine not being able to make $100,000 work, save for a bunch of kids. But after all, those are somewhat of a choice as well.


$10k per kid per year preschool (minimum) is one thing I’ve heard. Really eats I into a salary.


in the Bay Area 100k pre-tax per family is close to poverty level. Unless you inherited/lucked out with a house, or settled for a perpetual rental, you will have to choose between shit school for your kids, with used condoms on the playground (I know because I lived in those places) or a 1.5 hour one-way daily commute. You can try to blame the 100k people for not moving to cheaper states, but who is going to do most of the work?


I read the article and I still don't know why these people can't live comfortably on $100k. It is never explained, and I have lived reasonably comfortably with a household income of <$100k in some of the mentioned locales. You don't have to be frugal, just not wasteful. It leads me to believe that it has more to do with life and lifestyle choices than income per se.

It is also hard to be sympathetic given that $100k is substantially higher than the median income in many of these areas, and while not wealthy by any means, many people living a little closer to the median have a pretty decent standard of living simply by managing their finances wisely.

I have many friends in this situation. Too many people refuse to live a lifestyle afforded by their income even though it would be pretty comfortable if they did. My lifestyle, which is far from austere and in Seattle, easily fits into $100k income (though I'd probably have to cut back on the luxury a bit if I had kids).


> "People feel like they haven't been getting ahead for a long time," says Jim Tankersley, who covers taxes and the economy for The New York Times.

I won't say this can't be true, but by experience casts doubt on trusting what people "feel".

For example, lots of people feel they struggle to attain homeownership. But homeownership rates are within 1% of what they were in 1980. Meanwhile, median house sizes have increased 50% since then (or 100%!, relative to household size).

Lots of people feel they aren't being paid enough. But median household income has increased ~25% over the past 40 years (50%, relative to household size). (Looking at household, not individual, child care has transitioned from one stay-at-home parent to one working parent + contracted child care and only the latter adds to "household wages".)

Lots of people feel that education is too expensive, but total scholarship money has exploded. In my home state of Florida, a 970 (Math + Reading) SAT and 3.0 GPA gets you a 75% scholarship to any state school. That is well within reach for most university-bound students. Or achieve a 1270 SAT + 3.5 GPA + 75hrs community service for 100% scholarship.

Lots of people feel cost of living is rising. And yet, there are 10% more people living in urban areas since 1980, which tend to be far more expensive than rural ones.

Sometimes I think all some people ask is to own a home and a couple cars in a good neighborhood with good schools in a big city, travel abroad, and go to private or out-of-state school for a few months salary of a hobby job (and obviously without ROTC) after buying the new $700 smartphone every year and continue that lifestyle into government-sponsored retirement. You know...do what their parents did, but without any of the drawbacks.

---

In reality, I suspect these feelings are grounded much more with keeping up with the Jones' (+ Facebook), rather than the objective quality of living.


There is a very relevant set of articles right now on reddit on this topic.

It started when an Austrian software engineer published his entire spending, and where every cent of his taxes goes, in this post: https://www.reddit.com/r/dataisbeautiful/comments/7h2idb/wha...

Other users, employed in all industries, quickly responded, some from Japan https://redd.it/7h99vj , Seattle https://redd.it/7h6bsr , Brisbane, Australia https://redd.it/7h9gpe , New York City https://redd.it/7has76 , rural TN https://redd.it/7hbhe9 , London, UK https://redd.it/7h9tjf , a Major in the US Air Force https://redd.it/7ha2q0 , and another one from Switzerland https://redd.it/7hbehc

There’s dozens more posts, I can’t link them all, you can find the rest at https://www.reddit.com/r/dataisbeautiful/ – but many of them show how people can live very successfully on low wages, and others yet struggle with much more money.


The article isn't great, but the audio snippets are a lot better.

I've posted this book a zillion times on HN, but "$2.00 a Day: Living on Almost Nothing in America" really changed a lot of my thoughts and feelings about what is going on in America today. Highly recommend reading it:

https://www.amazon.com/2-00-Day-Living-Nothing-America/dp/05...


The article would become useful with the addition of the budgets of each of the people/families. Without that it is hard to understand the individual problems, besides some generic platitudes. That is if one would want to find a way to succeed on 100k/yr and not just voice one's current issues.


I'm kind of disappointed by this article. As someone who makes a little over six figures (before combined comp.) in the Bay Area I expected to relate a lot to the individuals described in this article. Instead is just had 4 testimonials from individuals who weren't happy on a six-figure income, it failed to list any of the root causes either then a small jab at the tax code.


Yea I can agree that 100k is very much not what it used to be 10-15 years ago.. the main difference is that a “cheap house” in many areas that are doing economically well on the West Coast like Seattle, Portland, Bay Area, LA, are much more expensive than they were even before the 2008 crash.. so if you make 100k/year you end up with maybe 6k take home each month and if you mortgage is 3k/month, then spend saying 2k on fixed expenses per month then you realize you have very little leeway especially if you are trying to pay off student loans as well.. I think the combination of cities trying to get people to live closer by reducing investment in roads and focusing on density and local rail and bus systems has made it that it’s way more painful to live far outside the city.. so housing effectively is higher. Then the much increased cost of student loans compared to the past, you have a much greater set of fixed costs compared to people 20 years ago..


Yeah, it's a lot of "100K seems good until the debt piles up", and I'm wondering where the debt came from and why they're letting it pile up. And why people making half that wouldn't have the same debt with even less ability to manage it.


Student loans to earn that 100K a year.

Housing to live near a job that pays 100K a year.


Sounds like two have crushing debt. The family that's "struggling" on $100k in KC (really?) wants for "educational opportunities for her high-school-aged son," whatever that means, which somehow translates to "working overtime ... to make enough money to live on" (emphasis added). The last account is absent any useful info, just some "Keeping up with the Joneses" comments. It's a puff piece so that relatively well off, comfortable families can commiserate in the shared "struggle."


FYI I think $100,000 of income puts your household in the top 20% of earners in the US.


That doesn't mean anything, it depends on what the distribution looks like.


Oh so terrible, how can they even survive, really heartbreaking. Meanwhile the UN is investigating the extreme poverty in the US, you know the people that don't even have their basic human rights guaranteed by their hyper capitalist government.

https://www.theguardian.com/world/2017/dec/01/un-extreme-pov...


Without any kind of breakdown, this is really uninformative.

Is this due to housing cost? Student debt? Medical debt? Bad decisions? Good decisions that were invalidated by events? Who knows?


It would have been nice if they included anything about family size and details besides “kids”, budget, lifestyle, etc.


It’s kind of inconceivable that a family in Kansas City making 100k a year can’t afford more than one car. The article is super light on details. Do they have a super expensive house? Student loan payments?


A lot our missing the point. 100k/year is good but it takes just one major expense for that to set you back, put you in the hole, and usually leads to more interest, fees and spirals out of control.

"The report, put out by Pew Charitable Trust, includes the results of surveys conducted in 2014 and 2015 to see how Americans were coping with what are referred to as financial shocks—those one-off expenses that crop up from time to time. Pew found that in large part, Americans’ ability to weather financial shocks is partially dependent on something that Americans still struggle to accumulate: savings." https://www.theatlantic.com/business/archive/2017/04/savings...


>A lot our missing the point. 100k/year is good but it takes just one major expense for that to set you back, put you in the hole, and usually leads to more interest, fees and spirals out of control.

It really should not, if you've budgeted conservatively in the way that our grandparents generation did. For example, if you don't have 3-6 months of expenses in a savings account, short term disability insurance, long term disability insurance, and a term life insurance policy of 10x your annual salary, you're living a fairly high risk financial lifestyle. Again, if you budgeted the way your grandparents did you wouldn't have any debt except MAYBE your house, so a financial setback would almost certainly not result in more interest or fees, since you wouldn't be paying any interest to begin with.

You've accepted this false narrative that the banks have sold you on that being perpetually indebted to them is normal. It's not, from a historical standpoint. And you don't have to live that way.


I would just like to point out that using median income to define the middle class is part of the problem. That's really poverty today. In the middle ages when nearly everybody was a serf, would you use median income to define the middle class? Of course not.


We live in Dallas on about $185k/year cumulative. Despite $1200/mo in rent, >$1500/mo student loan repayments, $500/mo car payments and $1350/mo credit card debt (i’m aware of how dumb that was), we are living comfortably. My plan is to earn a $200k/year income in less than four years so that my fiancee can go back to school without sacrificng our current lifestyle.

However, we live in an apartment and don’t have kids.

There is absolutely no way we could do kids and a mortgage with this debt burden without life going to hell. Once that debt goes away, though? Not a problem at all...for one kid and a cheap house. ($250k house, which is what we wanted anyway, as we aren’t fans of big houses)


The middle class has been unfairly burdened with paying for the expenses of the entire country. The poor, unable to, the rich, unwilling to.

Tax breaks are at best a very short term proposition, and if the numbers are to be believed, the current tax plan only serves to widen the gap over time.

Unfortunately, many Americans have been convinced to vote against their best interests since in many places, D means Devil. Having a strong stance on hot button issues like abortion is more important than whether you will gut a union or make a fair tax code.

If it's an indication about how bad things are, a probable child molester has an actual shot of being reelected, simply because of the R next to his name. We are not selecting for the best candidates.


The middle class has been unfairly burdened with paying for the expenses of the entire country. The poor, unable to, the rich, unwilling to.

That's not really supported by the data. A more accurate summary would be "the poor, unable to, the rich, not numerous enough to". Raising taxes on the top 1% or the top 0.1% or the top 0.01% has very little impact on total revenues simply because you need to raise taxes 50x, 500x, or 5000x as much in order to extract as much revenue as you would get by raising taxes on the top 50%.


I mostly agree with you but I think you are a bit pessimistic about what the top 1% are capable of. IIRC they currently pay something like 40% of the income taxes[1] (which is more than the bottom 90% combined). That's kind of a lot!

1. To be are I think this doesn't include payroll taxes so it's a bit of a skewed number.


Confiscatory taxes on the wealthiest would bring in hundreds of billions. That's not "very little impact", the money could be used to massively improve the lives of millions.

Yes, there are few people, numerically, in the top 0.01%, but that doesn't mean their taxes are inconsequential. Otherwise you might as well argue that they should pay no taxes at all. Absurd.


Confiscatory taxes could bring in hundreds of billions of dollars... once. But you can only expropriate someone's property once.


Every dollar in the economy is spent and taxed many times. Taxation doesn't make money disappear.


Sure, but if you confiscate the wealth of the 0.01% then it's not in their hands anymore and you can't take it from them again.


The money would end up in the hands of somebody and subsequently it can get taxed again. You tax wherever the money is.


But then we're talking about raising taxes on people other than the 0.1% to fund whatever initiatives we're talking about which was cperciva's point. You can only get so far taxing the ultra rich.


The federal tax code is a highly unequal affair, and due to a system of complicated loopholes and itemized deductions, the wealthiest among us get the lions share of spending and deductions. While I agree that raising taxes by 500% on the rich is an absurd idea, it's really not asking much for the wealthy to pay their fair share.

These deductions and "welfare for the rich" basically amount to hundreds of billions in lost revenue.

This is well documented, NYT has a good run down: https://www.nytimes.com/2015/03/18/business/economy/taxes-ta...

If you're in the top 0.1%, the actual taxes you pay each year is a far lower percentage than the middle class would pay, due to this unequal system. The rich get richer, and use that money to rig the game further.

Just look at the current tax bill that was passed.


> If you're in the top 0.1%, the actual taxes you pay each year is a far lower percentage than the middle class would pay, due to this unequal system.

This is false. Paid tax rates rise progressively with income in the US.

https://taxfoundation.org/summary-latest-federal-income-tax-...

The NYTimes article that you link to doesn't really discuss tax benefits that are valuable to the top 0.1% so much as those that are valuable to the upper-middle class: the mortgage interest tax deduction, 529 plans, 401k/IRA deductions, various aspects of our health care law, etc are all extremely valuable to this group but small potatoes to those making $2M+ per year.


Paid tax rates rise, but the higher income classes don't make much of their money based on income tax. That's why it's unequal, their method of earning money is substantially different from the average person, and taxed differently.


This is also false. I don't know what evidence you think this is for this point of view but it just ain't so.


> The middle class has been unfairly burdened with paying for the expenses of the entire country

That is a common opinion, and one that is not justified by the facts.

About half of income tax comes from 1% of taxpayers.


Someone making $100k should easily be able to save $1k a month wherever they are living in the world and put it into a fund making at least 15% a year.

Here's some mind blowing advice - stop buying useless ornaments that do nothing to elevate you or enhance your life in meaningful ways. People have been hoodwinked into buying junk and stand there teary eyed wondering how it all happened and why they're so empty inside. How they went so far but did so little.

This years black friday/cyber monday sales were extraordinary - because people are idiots.

It's not a mystery. Make conscious choices in your life and you won't be a victim. Someone making 6 figures is the last person anyone should feel sad for.


What do people think about federal taxes (mostly) not being adjusted for cost of living? It serves as a disincentive for moving to the cities, but is that a good thing or a bad thing?


It's a good thing. Living is a high COL city is a luxury. One shouldn't get a tax break because of their particular luxury purchases.


Without taking a position on the original COL-adjusted tax question:

Living in a high-cost city isn't necessarily a luxury. Many people who do would prefer not to, but cities concentrate economic opportunities and that is why people migrate to them. This is why urbanisation is a byproduct of economic development pretty much everywhere.

Case in point: I lived in Atlanta for ten years and recently moved back to Athens, a small university town about an hour and some change east. There's no question that it's much cheaper to live here. But if I wanted an actual job in my field, I'd pretty much have to live in Atlanta - that's why I moved there in the first place.

I'm fortunate enough to be self-employed and to no longer care, as the vast majority of my customers are out of state. But make no mistake, there are vanishingly few tech job opportunities here - and this is a fairly educated college town.

And as we know, IT is fairly democratic in the degree to which it can be done remotely. But if you specialise in finance, entertainment, fashion, big law, aerospace, or a variety of other areas, there are certain places you more or less have to be. The American economy is eminently decentralised compared to that of most countries, but still - the cities have the lion's share of white collar, professional middle-income jobs.


Its definitely not a enough, even in a medium cost of living area. The biggest problem? Taxes. Of that 100k, 30-40K are taxes.

This is why lowering taxes is great.


I've only ever heard the term "coastal elites" from people the live near the coast and wish they were elites.


ThrowAway I live in Baltimore, MD. My salary is $100k flat (80k base + 20k bonuses). I would not say that I am king of the hill, but I am in much better position than majority of my friends, though. To be honest, I don't feel like it such a high salary.


This is an awful article. How is it at the top of ycombinator. There is no breakdown of any costs or what their living standard ACTUALLY is. These people could very well (and likely do) have spending issues. Eat out too much, buy too many gadgets, replace their car far too often, etc. Thats the problem far too often. Boo Hoo


I lived very well on $100k in the DC area. It's all about budgeting.


This is ridiculous. It's one thing to claim that 100k is "not enough" if you live in a high cost of living (which is still dubious, considering the median income in NYC is half of that.) If that's not enough for you in Kansas, the fact is that you're living far beyond your means.

I think it's telling that one family cited credit card debt like it's an act of nature instead of a conscious choice. And just because you qualify for a million dollar mortgage doesn't mean you should get one. Spend that big salary on a home near your workplace and sell the $40,000 SUV.

The sooner we wake up from the "dream" of being deep underwater in debt to fund an ecologically and economically unsustainable lifestyle, all the while just a paycheck or two away from complete ruin, the better off we'll be.


There's an irritatingly prevalent attitude that once you've moved to a high cost of living area (or were born there), you're forever entitled to stay there. That if you can't afford it, it's the fault of society and needs to be corrected.


I don't know if it's the fault of society, but it's fairly natural. Humans get attached to familiar places in which they grew up, in which they have lived in a long time, etc. They plant social roots.

I'm not saying that means people who can't afford to live in places like NYC or SF shouldn't move, just that there's a complex tension between economic theory and "messy" human reality.

The ideal rationally self-interested agent described in economics texts would just move from place to place in search of profit-maximising opportunities, but that's not what actually existing humans do much of the time. They have relatives, friends, aesthetic preferences, social obligations, religious beliefs, and other things that "do not compute" in mathematical models.


This ^^^^. I have lived in San Francisco for 25 years now. While I could reduce my cost of living dramatically by moving, I have spent my entire post-college life here. Nearly all of my friends and professional network are here, so I have approximately zero interest in moving, even if it would be cheaper, it would not be worth it.


And arguably wouldn't make financial sense. There's a benefit to being within driving distance of 900 of the world's top 1000 tech companies, or whatever it is.

You might be able to afford a better lifestyle on a modest paycheck in Sioux City, Iowa, but what happens when that company, the approximately ~1 serious tech employer in town, lays you off? In the Bay Area, you just go across the street.

Lest anyone think I'm a cheerleader, I live in northeast Georgia and have no intention of moving to the Bay Area. :-)


Well if you live in northeast GA (as do I) you know that a software developer with 5-10 years of experience can easily make $110-140K and that easily affords you to live in some of the nicest part of Atlanta.

True. We aren't around "900 of the world's top 1000" companies, but in the 20 years I've lived here, I've never found there to be a lack of development jobs.

As a single person, you could easily live comfortably in parts of metro Atlanta making 70K.


My impression of the top end of typical developer salaries in Atlanta doesn't quite go that high, but it's possible they're crept up since I last took a look.

I agree that metro Atlanta is not an especially high-cost area, though parts of it certainly are; ITP in general is getting overheated. I lived in Midtown for the better part of ten years and by the end of that, rents seemed on par with Brooklyn and Chicago, though I did have to upgrade from single-person housing on account of a short-lived marriage.

Nowadays, I've moved back to Athens. Where are you?


Forsyth County. I've lived in Marietta,Decatur, And Johns Creek before. And yes the salaries are accurate. This is from both my own experience as both a job seeker and a hiring manager (not really a "manager" more like a team lead who has hired contractors)

Salary.com is seems pretty much in line with my experience.


Not everyone wants to work for a huge corporation, where most of those jobs with the salaries that you cite are located.


I have only worked for a large corporation for two out of the 21 years I've been working. I'll never do that again.

Benefits may be better at a larger company but salaries are about the same.

Even so, don't complain that you can't live off of 100K. They are purposefully making lifestyle choices that the median household making 70K a year can't make.


> Even so, don't complain that you can't live off of 100K.

I agree!


> They have relatives, friends, aesthetic preferences, social obligations, religious beliefs, and other things that "do not compute" in mathematical models.

They compute fine -- most models are just "lying with math" by excluding the value of those things from their calculations.

It's not different than a friend who ignores those things when using words -- of course it doesn't make sense why you don't move if you don't account for the full value of where you are at present.

I think if we accounted for the destroyed social value that most of these economic models have inflicted, it would be the obvious massive negative that most people anecdotally tell. I think it's very telling how rarely you see these kinds of things modeled in economic theory despite how obviously part of the way humans value things they are.

Economics is merely institutionalized fixation on money, and produces precisely the psychopathic models you'd expect from that.


Well, fair enough. Either way, the effect is the same — those variables are excluded from discussions in an almost sociopathic way.


I agree, but poking holes in why they're excluded is important, because it let's you have this exchange --

"You can't argue with the math!"

"Well, hold on now, I think you left a whole bunch of things out!"

If you don't know where the problem in the math is, despite there being an extremely obvious problem, many people will ignore your objections. That's why they use math, to paper over their obviously poor behavior.

Being able to strip that bare is useful.


Aye.

It seems to me we'd do better taking an empirical approach and pricing in widespread psychological realities.

For instance, it's clear that one of the things people don't do very well with, especially as they head into middle age and beyond, is big downward adjustments in lifestyle. It just doesn't accord with the expectation of upward mobility and progression through life anywhere, least of all in the land of the American Dream.

So, even when economic circumstances get worse, their spending tends to remain stubbornly high relative to the quantitative reality. It seems to me sanctimoniously chiding people for that is not a constructive response. It's clearly what most people do, in some measure. The question is how to best deal with that systemically, if in any way at all.


Would you say the same for indigenous people around the world? That when they're "priced out" they should just get the hell out?


What does "indigenous" mean here? Are we talking about nations, as in the Navajo or First Nations? Because that's an entirely different discussion. For everybody else I'd say yes, with mobility comes displacement. The ethics of fluid global and national labor markets are also a separate discussion, and I'm assuming we're discussing the current state of affairs.


>Spend that big salary on a home near your workplace and sell the $40,000 SUV.

lol a home in downtown DC, where the MD guy likely works, is gonna set you back 2 million at least. you're not gonna find a 1br apartment downtown for less than 2k/mo.


I work in D.C., and there are tons of 3 bedroom houses around mine (in a good school district) for $300,000.


The median house price is $533,800. Not sure where you work, but that sounds like a pretty sweet deal.




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