$75k is a decent salary in most of the US, but if you're in NYC or SF, even his 20% variance (bringing it up to $90k) just isn't enough. If you want to save money, buy a house in the future, and have money to do things, then $120k is minimum in Manhattan, and $90-100k in most of the rest of NYC. Yes, you can live very cheaply in NYC, but at the expense of time; I personally don't want to travel for an hour or more to get to an office, myself.
Saying that a salary is "enough" because that's where happiness flattens out is silly. Most people have no idea how to manage their money, stay out of debt, and prepare for retirement, so they're happy once their salary outstrips their immediate ability to spend.
Most people have no idea how to manage their money; therefore, $75k/year is probably an overestimate if you can soundly manage money. Besides... it's not silly; it's a generalization that (like all others) has caveats.
What I'm saying is that the metric of 'happiness' to determine whether a salary is enough or not is flawed. In most major cities, $75k is simple not enough to live well, save for major purchases, and put away enough money to retire. The reason that 'happiness' isn't good here is that most people don't understand how much they actually need to save for the short and long term, but rather look at their bills and extrapolate from there. In other words, it's happiness in the short term ("are my bills covered and am I able to go out to dinner occasionally?") at the expense of the long term big picture.
A lot of people end up married, and when you put two $75,000 salaries together, it can make living and saving much easier. Unmarried people in big cities often have roommates, which makes it much easier to save and pay off debt. When I first moved to the DC area, I had three roommates and paid around $500 a month in rent and had no car.
Let's also not forget that around half the people in New York do not pay market rate for their rent. Talking about income and rent in NYC is more complicated than this thread would lead you to believe.
And if you live in a major city, you often have significantly lower transportation costs. Yes rent is high in urban areas, but transportation costs are very low. The two should be added together to compare cost of living between two areas.
> And if you live in a major city, you often have significantly lower transportation costs. Yes rent is high in urban areas, but transportation costs are very low.
Eh?
MTA: $104/month, unlimited
Muni: $74/month, "A" pass
CTA: $100/month, unlimited
You can buy a car for $150/month, and call it another $200 for gas/insurance, so $350 total.
The rent difference is way more than $350/month for an equal size/quality place.
Then consider all the other costs of urban living, like high sales tax:
Your numbers are off in essentially every area. Car payment is $200-$250 a month, insurance is $100 a month, gas is $50 a month, and call it an amortized $100 a month for repairs and other expenses. In total, an average car costs $500 a month. And never mind the cost for parking. In contrast, passes for public transportation cost somewhere from $50-$100, _but_ you can usually get them subsidized and/or pre-tax. In Boston, I'm able to get an unlimited pass through my employer for $35 pre-tax a month and my car costs me $500 post-tax a month. In major cities, cars are strictly a luxury. Note, I bought one a few months ago and couldn't be happier, but I'm under no illusions: it is a luxury.
If you are getting a T pass for $35 then your company is just paying for a portion of it; some companies give it to their employees for free, but that doesn't mean it's free.
That said, a T-pass is $70/month and most people can pay that pre-tax. Still considerably less than car ownership.
I highly doubt the average car payment is anywhere near $150 a month. That's really low for even a lease, let alone actually trying to own it outright. And you're completely forgetting maintenance and repairs (oil, tires, batteries, lights, environmental checks, repairs). Even a modest car is probably at least $500 a month with everything added together, and from what I've seen, a lot of people can't make do with a modest car.
And then if you lose your job, you have no defined transportation expenses. Lose your job and you still owe all of that money for your car payment, insurance and whatever else.
And again, many of us are married. Needing multiple cars, gas, parking for two people (or additional cars for kids stuck in the middle of nowhere) starts to ad up.
$500/mo for a modest car? Wow, people on here have a warped sense of finances. $500/mo is a lot of car. My brand new car with all the bells and whistles is $380/mo and I'm very happy with it.
Instead of a new car, I could've used my down payment to buy a used car instead.
To clarify, I'm not saying $500 for just the car, but $500 for the car payment, gas, insurance and savings for future maintenance.
I think $500, when you factor in all of that, is a fairly modest car.
My wife and I have a Honda Fit that is paid off (I would call this a pretty modest car), and when a car reaches a certain point in its life, you may'll have more maintenance to pay for.
And yet this woefully imprecise factoid getsa resputtered every 3 mmonths like it's some major revelation, even though it is completely obvious that everyone who can count can figure out how much is the cost of a middle class lifestyle plus retirement plus college for kids.
You guys are making the US tax code out to be much simpler than it is. The more you save for retirement, the lower your taxable income is. We also have deductions for mortgage interest and student loan interest. Our system is also progressive, so a lot of people making less money have very little taxable income. Maybe you make $90,000 a year and can't fathom how someone could live off of and save off of $75,000 a year, but the difference in your take home pay is not $15,000.
Yup. IIRC a former roommate of mine has a plan on how to get every deduction under the sun to the maximum amount and it is actually possible to pay no taxes on like $100k, but it requires putting something like $40k towards savings each year.
The takehome on $36k wouldn't even be able to cover my tiny (~180sqft) studio in Manhattan ($1700/mo), let alone a decent place. And that place was a steal. As I said, it's possible to live very cheaply in NYC, if you're willing to be far away from everything; I know people who travel an hour and a half each way to get to work, to save a few hundred dollars a month. I can't make that sort of tradeoff -- my time is just worth too much to me.
Edit: I should note, this is the primary reason I left NYC about 6 months ago. I'm paying all of $1400/mo for a large house in CT now, and working from home. Much as I love it, living in NYC is just too crazy.
The best place to live in New York City is actually New Jersey.
Hoboken and almost all of Jersey City are under 30 minutes from many Manhattan offices by the Path subway or bus or even ferry. Rent goes very roughly 25% cheaper than Manhattan for similar digs, everything from basement studios to ultramodern luxury towers. There's plenty of supermarkets and any other businesses you need. And access to the rest of the world via car or airport (Newark) is considerably easier from NJ. Bonus: NJ sales tax is less, and you dodge the NYC income and commuter taxes.
I've lived on the NJ Gold Coast and commuted to Manhattan for basically my entire professional life, and pretty satisfied with it. My 15 minute ferry ride is just long enough to decompress and relax without getting bored.
Whatever smelly downtrodden ghettoey reputation New Jersey once had is not at all universally true. Hoboken and downtown Jersey City are first-class modern neighborhoods. There's worse areas up into JC Heights and down to Bayonne, but by and large the region served by the Path is the equal of anything in Brooklyn/Queens.
This thread & the thread yesterday on cost of living in SF miss some vital, real-world data. Most people simply don't live like this. I worked 4 years in Goldman Sachs, downtown Manhattan. One thing every MD consistently told me was that only fools live in Manhattan proper. Every one of these MDs had multi-million net-worth, liquid even, & still took either LIRR or NJ Transit or lived in Brooklyn/Queens/Jersey City/Hoboken/across GWB & took the Path & A train & whatnot. I lived in Fort Lee in a comfy gated $900 1-bdrm & took a bus + the A train - very adequate.
Now I live in the Bay Area & take the BART & am able to land $1.5K 2-bdrm houses in the east bay very easily, stone's throw from the bart. When I hear my colleagues complain about the insane $3K studio rents in Nob Hill SF, I don't know what to say. Live in the burbs, wake up an hour earlier & take the BART. Nob Hill can wait.
Your best friend is the local realtor. Talk to her over a starbucks latte & she will tell you how the locals hack real estate.
People are happy to ignore questioning if living in the highest-demand locations in the entire country is really a reasonable and responsible use of money.
Apparently, irresponsible spending is only when others spend on things I don't value.
If you want walking distance to Bart, I'm talking concord, walnut creek, pleasant hill. on a lucky day, orinda or lafayette even. If you have a family & want a nice large 3 bdrm with small yard, you can get one for under 2K in nearby San Ramon and take the BART commute bus to the actual BART...I know tons of people who do this everyday. I actually considered doing that myself but was able to land a nice albeit small 2brm with walking distance to bart. If you don't mind an additional 30 minutes of car commute time to the actual BART station, it dramatically opens up possibilities...Danville is very nice.
8 results. Total. All are apartments (one is a duet, a couple aren't actually in P-town but are apartments nonetheless).
(edit: I'm not trying to dick with you here. I've just been searching for valley housing for a long time and have a good idea where certain cities land price-wise.)
Sheesh! And that doesn't even come close to what some people pay. NYC > Manhattan. It's insane! I live 10 minute bike ride from Manhattan, and pay just under $500.00 a month w/ two roomates (GF and best friend) for the first two floors of a brownstone, plus basement and backyard. I've had about four apartments in the past 10 years in this range in my area, it really does pay to live just a little out of the way! I do pretty well for myself these days and am stashing around 50% of my income away. I feel like people who pay some of these whopping amounts of money don't even get to enjoy the true treasures of the city, and money is tied to everything. Stressful.
The monthly take home on $36k in NY would be $2,250 [1]. So after rent you'd have $550 for groceries etc.
Sure, it wouldn't be a comfortable life, but definitely doable, especially without a car.
I agree with you on the commute though. I'm paying almost $1,800 for a one bedroom in Silicon Valley just to be able to ride my bicycle to work.
paying $1700 a month in rent on $36K would be total insanity. The general rule is that rent should be no more than 25% of your income.
On $550 a month after taxes and rent you'd not just have to pay for food (which can easily hit a few hundred a month if you aren't eating catfood), there is also:
- utilities
- clothing (employers appreciate this)
- transportation (the NYC subway is now $2.25 (going to $2.50?) a ride, or a monthly unlimited is currently $104, so there's 1/5th of that 550)
- phone bill (likely a very low end cellphone with limited use)
- laundry (coin op machines can run up $20-$30 a month), if you have dry clean clothes then this is quite a bit more
- medical ? does that $36K have health insurance as well? On a low-end insurance policy, the copay for a PCP visit is about $50, and if there's any kind of meds you need to take that can easily cost $50-100 a month.
- renters insurance ? in case your apt. burns down, it's a good idea
- any kind of occasional expenses that go over what's left, probably go on the credit card. So it's very likely there's 18-20% interest payments on a few thousand dollars going on at any given time as well.
$550 a month after rent is really not workable for an active, functioning adult.
$550/month after rent is totally doable. That's a good bit more than what my wife and I live on (per-person). This is possible, in that we do it, so how?
March through February of last year my wife and I were living with another couple (who we met via craigslist, both couples hoping to save money) in a three bedroom apartment in Somerville MA. Food was communal, and we took turns cooking. All numbers I'm giving are per person per month.
utilities+food+household goods: $110. This included heat, hot water, internet, electricity. AC only in one room, and only on a few very hot days. By cooking our own food and not eating out we saved a lot of money.
clothing+other optionals: $150. My wife and I each give ourselves an 'allowance' for discretionary spending. Clothing, eating out, cell phones, entertainment. Clothing we mostly buy at the local thrift store. They have good clothing quite cheap. I'd go down once a month or so to look through things for an hour maybe. My phone now is $30/month and has unlimited texts and data (via t-mobile) but at the time I didn't have a phone (preferred to spend the money on other things).
transportation: $60. Unlimited public transit pass. (This is now $70.)
laundry: We did our laundry with a hand-crank machine at the apartment. Not worth it; too much work. When we used to use a coin-op washer that was about $20/month for two people ($2/load, 2 loads a week) so $10. We would hang clothes to dry, which also makes them last longer.
renters insurance: not worth it. Better to have savings. If our apartment had burned down we wouldn't have lost much of replacement value anyway.
credit card: if we couldn't afford it we didn't get it. Credit cards are a trap.
medical: paid for by my work. If we were buying it on our own that would cost about $150.
This comes to $480 (counting the health insurance costs and laundry).
(We're still spending a similar amount, somewhat less now, but I don't have the data as well organized.)
Why are we living so frugally? So we have more money to donate to effective charities.
> medical: paid for by my work. If we were buying it on our own that would cost about $150.
where on earth would you get health insurance for $150, and you have no copays of any kind for doctors or medication? or you're fortunate enough to have no medical issues ?
I'm not advocating the decision to spend this much on rent on such a small salary, I was just correcting the claim that $36k wouldn't even be enough to pay for a $1,700 apartment.
Millions of people survive on less than $550 per month. Sure, you won't have your daily Starbucks, no cable TV, and your cell phone plan will most likely come from a low cost provider like Virgin Mobile. In a $36k job, you can probably get away with clothes from Kohl's or even the thrift store, and your apartment is probably not filled with expensive stuff so renter's insurance isn't that much of an issue.
At $20-$30 a month on coin-op laundry you are probably better off looking for full-service laundry that charges by the pound. Before I moved into a place with a washer/dryer of my own I was spending ~$10-$15 every two weeks (50 cents per pound) to drop a laundry basket full of cloths in the morning and pick it up perfectly folded later that day (took about 4 hours, but I would pick up in the evening).
full service laundry in new york city is always at least 40% more money than doing it yourself - which is logical since it's the price of the machines plus the service. I believe you might be comparing two different areas.
edit: some googling reveals 85 cents a pound is the cheapest and most are 90c-$1: http://centzy.com/nyc/laundry-10024 so about $20-$30 for your size of load, guess our loads are bigger.
Hmm, the cost of doing it myself (at the same place that did it for me) with coins, plus the cost of detergent, worked out to about the same price as having them do all of it. I assumed that cost of full-service and cost of machine-time and detergent would more or less scale together.
No, I'm not trolling, it's not illegal, and yes, that was a steal. It was in a convenient location (15 minute walk to work), first floor, and in a nice (if a bit dangerous at times) area. Since I know people spending hundreds more for a slightly bigger place (maybe 240sqft) in a less convenient area, it absolutely was a steal; most of the places around me were more like $2k/mo.
1700 for 180ft, is a price almost 100 per 10 ft. if they have 240 ft and they're paying "hundreds more" that should be about right - it's not a steal. it might be average, but not a steal.
I can confirm this because (a) I too lived in a tiny studio in a super convenient area for a while and (b) after shopping around for a while I can confirm that $1.7k in Manhattan is definitely a steal.
Why would that "wow" you. I'm confused by you. Many, many, people live in real poverty, live barely paycheck to paycheck, can only afford basically what is on the dollar menu. These people effect the average dramatically, and you think
"doubling" that average is like some amazing number that someone would be crazy to think is not enough? ... Kind of a "wow" for me too. :)
I'm not the person you are responding to, but I suspect it is a matter of what is "enough". I suspect living in Manhattan is unnecessary and it is 100% luxury.
Spending 1700 a month for a 180 sq ft studio seems beyond idiotic to me. 1700 is enough to cover the mortgage on a 380k house. 380k on a house = incredible mansion in 98% of America. In Nashville where I currently live (nice city btw) it gets you between 3500-5000 sq ft. In small town America it's even nicer.
Especially with the remote and work from home options these days it seems absurd to pay so much for so little. (I understand not everyone can work from home, but you don't have to live in Manhattan)
I understand your point but I don't think it is really a question of "enough" per se. The parent was saying "wow" as if it is just crazy talk to think you would need more than double the average where the average is brought down by people in extreme poverty. I don't think it's fair at all to imply that is somehow expecting or desiring some posh luxurious, whatever "bad" adjective is preferred, lifestyle. Let's be honest, if you have a family, you have desire for a middle class lifestyle, saving retirement, college funds, unexpected expenses, etc, $75K is not some amazing sum, even if you live the South East with cheaper living costs. Let's just be honest about that!
Once you're in the SF/NYC scene with your job, you are kind of stuck because there are no houses to buy for $380k anywhere around you. So the fact that $1700 could pay a $380k mortgage is irrelevant, because that purchase can't happen. Also, where did you get the $95k+closing costs=$115k cash down to get that $380k mortgage if you're making $75k or less?
> Once you're in the SF/NYC scene with your job, you are kind of stuck because there are no houses to buy for $380k anywhere around you.
There are lots of things available in NY outside of Manhattan. As for SF, there obviously isn't much in the city (28 foreclosures), but a quick search gives me 233 results inside of 45 minutes, and 940 inside of 60.
> Also, where did you get the $95k+closing costs=$115k cash down to get that $380k mortgage if you're making $75k or less?
1. You don't have to have 20% down to buy a house (maybe you should, but it definitely isn't a requirement.
2. I wasn't even considering downpayment, the houses I was talking about were < 380k total, so mortgage would actually be even less factoring in any downpayment.
3. That's the point. If you are making 75k you shouldn't be spending 1700 a month on rent either. If you want to live in Manhattan, get yourself an awesome job paying 250k+. Otherwise it's to me it seems pretty stupid to live in Manhattan. 1700 a month for 180 sq ft just seems bizarre and absurd. That's not a good deal.
> As for SF, there obviously isn't much in the city (28 foreclosures), but a quick search gives me 233 results inside of 45 minutes, and 940 inside of 60.
Believe me dude, there's nothing unless you want to live in San Leandro (hint: you don't) or don't care about the condition of the house.
> You don't have to have 20% down to buy a house (maybe you should, but it definitely isn't a requirement.
Granted, but then your monthly payment raises several hundred $$ because of PMI. Your original point was based on monthly payment, so this is a problem.
> 3. That's the point. If you are making 75k you shouldn't be spending 1700 a month on rent either....
Criteria - Within 60 mins of SF, < 380k, 2br+, 1ba+
Granted they are pretty much all foreclosures, so you'll likely have to work to find one in good shape, but there are 1201 results. And this is obviously not downtown, up to an hour commute, but still. I think I'd rather have a large portion of these than a 180 sq ft studio. Oh well, to each his own.
It wowed me because I have earned over 70k a year in my life and also have only earned 26k a year. I studied economics at university. I know what I am talking about. You must not ever have been poor. That is a good thing.
Here on hackernews 70k a year is almost working class. But I know families of 6 that live on 35k a year. So to read over 70k is not a lot of money to someone stuns me.
You are extremely out of touch with the day to day reality of most of New York. One hour commute is really the norm, and people making 60,000 a year are on average quite comfortable here, all throughout Queens, Brooklyn, the Bronx and Staten Island. 75k is really comfortable. Rents for nice 2 bedrooms are from 1300-1800 within an hour of the city in really nice neighborhoods.
I'm well aware of what people do, but it's something I would never do unless I had absolutely no other choice. With a one hour commute, assuming 48 working weeks a year, that's 20 days of your year that are burnt just getting to and from work! My life means more to me than money.
Do not assume that money is the reason for living an hour away from work. There are many reasons, including schooling, which is even more important with special needs children. I realize you didn't intend to say that, just making it clear however. =)
On that note, don't also assume that an hour long commute means an hour wasted. As someone who makes that hour-plus long trek every day, I've learned how to fill that time. I'm a big audiobook fan, and because of the commute, I'm able to commit to reading a lot more than I would otherwise.
On top of that, in the city, commuting becomes easier with public transportation. When I was living in Montreal, I could read more than just audiobooks.
I'm not saying it's for everyone, but those days aren't necessarily burnt.
My parents made maybe 40K and we lived in the Bronx in a comfortable neighborhood when I was in high school. It took me about ~45 minutes to get to school on the subway and I saw plenty of executive-looking people on the train.
The last time I saw this story it included the detail that the study authors specifically noted that this figure held in NY and other high cost areas. Their theory as to why that was true was that NY provided more of what was required for happiness (people, variety) for free.
At 90k in NYC you can easily cover a nice 3k / month 1br apartment and have ~2,000$ / month leftover which is enough to cover expenses and have solid savings.
No landlord is going to rent you a 3k/mo apartment on a 90k salary. Most require your gross annual income to be at minimum 40x the monthly rent, ie $120,000.
The whole point of living in a top-tier city like New York is to experience it and enjoy it. Living like an austere hermit isn't the way to do that in NYC, where so much of the scene revolves around putting expensive things in your mouth in front of other people. Maybe on the West Coast, where people can ride bikes without being ground to paste by ten ton trucks running red lights and walk down elegant boulevards that aren't carpeted with human waste, you can live frugally and experience a good life in the city. But not here.
Fair point. We definitely have more trash though. So much of it. Frozen great mounds of snow-covered hepatitis in winter, and stinking black fermenting vessels full of distilled evil in the summer.
Please. Everything here is either worse or better than it is everywhere else. That's why the whole of the rest of the world without any exception at all is in absolute awe of New York. :)
I don't know amount most places, but Archstone (http://www.archstoneapartments.com/) was willing to rent me a 3k apartment while I was making 70k. I had a roommate that was going to move in in a month, but they did not care when I was signing the lease. They also have apartments in NYC so the option is open.
At $90K in NYC you're taking home about $58,500, or $4875/month. Spend $3k/month on rent and you're left with $468/wk for everything else in your life. Half of that can easily go towards feeding yourself in NYC.
Hmm, according to www.paycheckcity.com 90k = $5,014.58 / month after taxes which is significantly more tax than I was expecting. However, if you think 33$ on food per day is necessary your clearly doing something wrong. Learn to cook or buy more normal food or something?
A big aspect of the NYC lifestyle is having very little space or stuff at home and living your life outside the home. Most New Yorkers don't have what anyone in the first world would consider a kitchen... at best you've got a two-burner stovetop, a toaster-oven-sized oven, maybe a microwave, a miniature refrigerator, a tiny sink, and a few square feet of counterspace. And one or two plates. Most of your meals come from the huge assortment of restaurants and delis that fill all NYC neighborhoods.
For many years I lived in NJ and worked in NYC, and I typically spent $20/day for a bagel and coffee in the morning and take-out lunch from a local shop. That's not exactly an extravagant lifestyle.
$33 dollars per day is not "wrong". A bottle of drink costs $4. Coffee or Tea? Egg sandwich? Noodle soup lunch special? $10 A few beers with friends? God forbid a date? Popcorn at the movies? Takeout indian or sushi? Oh and buying a steak on sale and freezing it at the same time..
Is there a law against bag lunches in NYC? Needs and wants are not the same thing. Refusing the acknowledge that is a big reason so many people with comfortably middle/upper-middle incomes can "barely make ends meet", since as their income goes up so do the "requirements" of their lifestyles...
Is spending 60% of your take home pay on an apartment commonplace in New York? I realize the cost of housing in NYC is very high but I guess I assumed most of the people living in the city were making more than 90k.
People usually spend half their paycheck on rent. It's not too bad considering you don't need a car, especially if you are a couple living together. In the rest of the US you'd each need a car which is easily $800/mo when you account for depreciation, maintenance, gas, insurance, and misc costs.
I tried to trick myself once I started making more than 60K by splitting my direct deposit into checking and savings. Now every raise I get goes directly into savings and I try to live thinking that financially i've been in the same place as I have been for a while. It works fairly well but once you get married, buy a house, and have kids things change quite a bit.
That all being said if you think that your salary correlates to your happiness then you're chasing the dragon.
This actually get's back to why a lot of high salary people have issues with retirement. Suppose your salary doubled between 40 and 50, well your retirement savings have not changed but there is a huge temptation to live a little. Soon retiring on your old salary starts looking like a huge hardship and you end up working even longer vs. that ever so tempting early retirement.
I don't make that much compared to many of the other people posting in this thread, but having an automatic deduction of some significant-but-manageable amount going to a separate account is definitely a nice trick to play on oneself.
I think this is best evidenced by my joy at payday. When I started out my website (about 13 years ago..), the first $25 payment really thrilled me! Eventually, I had bigger milestones. When I got to $100/month that was awesome! Then, we got even bigger.
Now, even an extra $3000/month gives me a nice feeling but nothing much to be honest.
I think money only goes so far. Once you're comfortable, it's only achievements and breakthroughs that can really make you happy.
Case in point: A blog that I started recently got it's first money (around $120, and I was overjoyed!) :)
It is enough as long as you can manage the following math:
Cashflow in (net) > Cashflow out (net)
It is that simple. Yes of course at $75K in NYC, your "cashflow out" variable needs to be lower than what it would be at $120K. So it is your choice. Make $75K in NYC but want to live in manhattan ? Sure, you can do that but your non-housing costs have to be significantly lower.
Master that formula for life and u r golden. I have been doing it for years. My income has seen significant changes over past few years (luckily positive) but when in confusion, I use this formula time and time. Also, I love to discuss this with my wife whenever she says "we make so much money. Why can't we buy X now"
funny but this is something that sounds so trivial once someone says it. Most people however overlook this simple formula because they use emotions rather than brain.
It's not about the salary, it's about how much you put away and how much you need to live on. I make about $80k after bonuses, not a whole lot in some places like SF or NYC, but I find that in Portland, I'm able to save 40-50% after taxes. I know that would change if I bought a house or had kids, but still.
Well, I'm hoping I'll be earning more by the time I have those things. And the reason I'm saving up right now is because I can. I rent a small studio, bought a 14 year old car etc. I'm guessing this will be the only time of my life when I can put away this much. I see many doing the opposite: getting a $1500 apartment and a new car when they get their first job.
Post-tax comes out to $46,800 a year in California, that's $3,900 a month. Which is great, but yea when you start thinking about a wedding in the future and kids college, you're left with $900 a month to save for those things, granted you don't blow it on vacations and other activites.
A sample monthly expense (doesn't apply to everyone, can be reduced by a lot by eating beans out of a can and walking 12 miles to work)
If you're paying
$1,000 a month in rent
$100 in utilities
$400 in groceries
$100 eating out
$100 clothing/supplies
$400 car payment
$200 gas
$400 student loans
$200 in credit cards
$100 in misc.
Here is an almost bizarre theory. When your salary crosses the average number your enjoyment of things that you can buy with money goes down drastically. You have much more appreciation of the used car that you bought out of college as the monthly payments pinched you a little. A good way for you to maintain that effect is to keep stepping up your lifestyle as your salary increases. Constantly buying a little more than you can afford. You can easily afford a Honda now? Buy BMW. Goes against conventional wisdom, but food for thought.
One could envision a business built on providing a convenient wrapper for this strategy, where you sell young professionals functionally equivalent copies of the goods they purchased as college students, but charge three times as much for them. This would let you signal to the young professionals that they have "made it. (They'd probably also tsk-tsk about college kids buying things which cost X. I mean, sure, college kids don't have 3X, but isn't 2X the absolute minimum to know that it is safe for human consumption? Oh, college kids...)
I hate to say this, simply because I spend so much there, but you pretty much just described http://fab.com/ Much of what's there is just high quality versions of minimalist furniture and decorations you'd see in Ikea or any dorm room in America.
You're willing to pay 20-30k more to very slightly prolong the "ooh shiny!" luster? Ridiculous. Keeping up with the Joneses is an exercise in hating yourself.
Debt is financial slavery. Assume it only when you must.
My question is, what are you doing 'enjoy[ing] things that you can buy with money'? Hasn't it been well enough established that things don't make you happy? The Greeks figured that out two thousand years ago, guy!
Let me tell you, I bought a used car just this year and I appreciate it way more because I didn't bankrupt myself to do so.
That's one of the things I do. Not generally with large purchases, but the $300 difference between a nice Dell panel and a Thunderbolt display is small and easily pays off in the "oh sweet, a beautiful new toy!" feeling that I get from it.
> When did a millionaire become a working class stiff?
1990s, so not exactly news to anyone familiar with inflation.
The expression is pre-1980s really. Put $1M in an inflation calculator for 1975, and you'll find that equates to about $7M now. It makes sense: You'd live very well off of interest from $7M.
As has been discussed elsewhere, this slides a bit depending on where you live and I've seen charts that list how much you need to make for your market to be happy enough, but that's not germane to the overall point.
It is ultimately true that money and things can't buy happiness. Life experiences, friends and family have a far greater affect on happiness. Going on a memorable vacation, for instance, will do more for your happiness than remodeling your home. There are several reasons why increased money doesn't necessarily make people happier:
# Making more money often requires more time and responsibility. Neither tends to make people happier. If you have to spend more time working to make more money, you might be happier making less because you'll have more time to spend on your hobbies.
# People tend to spend more money the more money they make, often in ways that don't make them that much happier. Making $150,000 a year? Time for you to buy a house fitting of a man who makes $150,000 a year! Even though, you might be happier living in a smaller, simpler house and a bigger house and mortgage means you may not be paying a lower percentage of your income towards housing. Or you might be happier with a smaller mortgage that doesn't require a $150,000 a year job to support (it's harder to find high paying jobs, which makes the threat of losing them more stressful).
# One of the great keys to happiness and longevity is friendship. If making more money requires you to spend less time with friends and making friends, it won't make you happier.
As for me, what would make me happier financially? Not having a mortgage would be number one. Well, wouldn't making more money help that? Yes, but the temptation for a lot of people would be to just get a bigger, more expensive place.
This is why you'll find households in the 90+ percentile will mortgage payments late into life. Instead of paying off their mortgage faster, they get bigger houses, do remodeling and spend more and more on their houses. My wife and I might get a slightly bigger place when we have kids, but we'd like to be mortgage free by the time kids go off to college.
Let's be honest, no matter where you live $75K isn't much. Even if you live in cheaper areas, it may not be poverty but it's certainly not happiness inducing wealth. Let's be serious.
I completely disagree. I'm making $27k and that's more than enough to keep me happy. Sure, there's some niceties that that I could pick up with a $48k salary that would ease some stress, but I'm certainly not living like a miser. I'm seeing Joshua Bell in concert next week, my fiancee and I have two cars, and the we go out to eat regularly.
Honestly, if someone can't be happy with $75k, I can't imagine that $75M would fix it.
To prevent anyone from asking, yes, I'm living in the US.
I don't want to upset anyone or anything but $27K is in the ball part of poverty. I'm glad you are happy that's fine -- everyone is familiar with the idea that money is not the only way to happiness. Simply because you are happy is not really much an indicator, let's be honest. I don't want to call you out, it's not my intention. Some people are perfectly happy to live an acetic lifestyle with no money in a mountain in Nepal. Perhaps you are similar in mindset, that's perfectly OK. But that's neither here nor there; it's anomaly. Because you both have cars doesn't speak to much; we don't know how they were paid, how old they are what happens if their's transmission, whatever. To compare $75K with $75M is almost hard to take seriously.
Wow. I am always blown away by these sentiments. Ten years ago, in school, I lived, quite comfortably, on $1000 per month. That is $12K per year (you don't really pay taxes when your income is that low). I did not have a lot of spare cash, and I would not have wanted stay on that level forever, but I was comfortable. I never worried about paying for food or rent, and I could go out occasionally. When I got my first job at 40K, I felt wealthy.
I am now living on 80K in a city that is more expensive than New York, and I feel almost filthy rich:
P.D: Despite what some can think, in Colombia the middle-class live well, no starvation or stuff like that. More or less US 14K/Year and you can live with other 3 persons in a very good place. If move to a town, then we are talking about be one of the "rich" guys around!
P.D. "Rich" is something like upper-class in USA. Obscene-Rich (jets, las vegas condo, etc) are very few....
Before admonishing everybody to be serious, did you bother to even skim the article? The study didn't claim that $75k is a lot of money, or that it will pay for all the yachts and hookers and coke a man's heart could ever desire.
The study claimed that money only correlates with happiness up to around $75k. Beyond that point, the correlation between additional money and additional happiness dwindles. In other words, if the study is to be believed, your notion of "happiness inducing wealth" is entirely backwards. The true happiness-inducing wealth is that first $75k that lets you provide the basics for yourself and your family.
The money beyond that point, which affords you a fancy car or the luxury of living comfortably in SF, apparently does not make most people happier. At least, not to the same extent as that first $75k.
I think the point is, if you're not happy with $75k, there's a good chance you won't be happy with $150k, or $300k, since the source of your unhappiness is probably not money related.
Median household income in the US is $52,762. $75,000 is roughly the 70th percentile. $75,000 is A LOT of money.
It amazes me how skewed peoples views of income are here at HN. Most of us live in a fantasy land of $100+k jobs, stock options, acquisitions, etc. We are UNBELIEVABLY lucky to be in the position we are in. But the vast majority of the country is in a completely different climate.
I think the point is wealth does not induce happiness. If you are unhappy when making $75k and think you will be happy when you become a millionaire you are most likely wrong.
So never mind that there are other studies which point to different findings. More importantly: the study finds that money above $75k has no impact on "Emotional Well Being = the quality of a person’s everyday experience such as joy, fascination, anxiety, sadness, anger, and affection" however at all levels more money improves "Life Evaluation = a person’s thoughts about his or her life (on a longer time scale)." How have we decided to call the first one "happiness" and not the second one? Maybe that's how the psychologists define happiness, but it's not the everyday meaning of the word as I perceive it. Granted, English is not my first language but I would say "happiness" includes both "emotional well being" and "life evaluation", and maybe even with more emphasis on the latter when contrasted with, say, "joy" which is the one that pertains more to the short-term states, isn't that right?
As a concrete not money-related example, parents of young children probably typically don't have very good "emotional well being" as defined above, but nevertheless by every account I've heard they're usually very happy, which means precisely their "life evaluation" is high.
Living in Ohio on about that now. If It wasn't for relatively giant student loan payments (stupid private school... yes it was a poor idea), then yea... that's absolutely enough money for most places (not Boston, NYC, SF, DC, etc). The only real reason I'd like a bit more still is to offset those payments and allow a bit more travel.
It certainly might be enough, but I'd imagine that you are delaying the worrying and stress for your retirement when you realize you saved $100k over 30 years.
I am so tired of this argument, and the only people here in support of such a statement, I feel, are the young single and childless.
Take a divorce, child support, travel etc into account and I cannot live on anything less than $150K
Rent for a house with several children, for me, is $2300 for a two bedroom with a garage, yard and an extremely lucky addition of a very large play room.
I am REALLY lucky to have this place - as it would go for $3500+ if I move out....
The argument for less and less salary always sounds to me like peasants justifying their fealty, though at the same time - we should not be decrying arbitrary pay brackets - but demanding more fair pricing for all the tings that are required to survive and thrive.
I honestly thought you might be kidding at first, but it looks like you are serious. The vast majority of people who have divorced and pay for 2 kids are making far far less than $150K and they aren't starving to death. Only about 5% of households in the US make more than $150K/year; if you feel like you are scraping by with that much income then you must be buying a lot of things that you don't actually need.
I don't buy anything I don't need. I pay cash for everything and have no debt. But with a $2000 a month child support bill, full medical, $2300 rent, ~$500 in other bills, etc, I do not have much left at all after all my basic expenses.
People think $150k is a lot on paper - but when you add everything up, it is not actually a lot.
I'm sorry but I'm really not convinced. Even given all of that, if you are making >$150K then you are still pulling in probably >$3k / month in discretionary spending which alone is the same as the total pre-tax median household income in the US.
Half of America is literally paying for all of childcare, medical, rent, other bills and basic expenses with less than you consider necessary to cover your basic expenses and it isn't like there is mass starvation in the US. It simply doesn't add up to you being in hardship when you are in the top 5% of earners.
Assuming a 40% tax rate (overestimating) and the expenses listed here, that leaves 2700/mo spare, still a good bit, but:
That 2k/mo child support payment is what's insanely high(that's rent for an entire family!). Most families don't have to deal with it, and, further, get by with significantly less money spent on their children, assuming they run the numbers and figure out an appropriate budget.
My parents with three kids supported us on $75,000 combined. And I'm sure this math plays out the same for the majority of Americans--even in NYC and SF. Trust me. You don't need $150,000. You're doing it wrong.
My parents raised my sister and I for 20 years on a civil servants salary (30-90 thousand over the time period). One hour from Manhattan, only he worked, and neither of us had to take debt for school.
Once you cross the 70k mark, you can have almost anything you want. Sure, people can contrive lots of contra-examples in your replies. But the truth for real/average/majority of Americans is that level of income makes any toy/hobby/charity possible.
It also caries with it dental, health and disability insurance.
Being able to document 70k annual income offers almost unlimited credit if you have good credit and forgiveness if you have bad credit.
But at that level one is an expert and if you do not get your fair market rate it means someone is ripping you off so you want your proper pay just as a matter of fairness.
If you earn over 70k, benefits are always included. A few hundred a month employee contribution, but insurance is a non-issue. These benefits also include 401k of some sort, maybe even matching. If you don't work 1099, you acrue social security benefits.
I submit one can get over $500k of consumer credit based on 75k income and existing good credit. Not a home loan, consumer credit like a Sears card.
This is not too far from my own salary in a rural-ish area, my wife making half that as a teacher. We budget and manage our money carefully, and are indeed happy; we never disagree about money. When I was in major debt, I found I was constantly stressed and on the edge. Once it got paid off, I felt free. I have a mortgage and student loans (and a year left on a car note), but it's just a monthly payment with low interest. Even with a second child on the way, I don't feel worried; it won't be easy, but it's definitely manageable.
One of the biggest mistakes I make is seeing people save for their kids to go to college. Not only can you barely beat inflation (if not for the tax benefits), what happens when your child wants to major in Psychology? I treat college like an investment; for some careers it's appropriate, others not. If it's appropriate, then you should be able to take out loans that can be repaid in 5-6 years. If the career they want does not allow for that, then some better decisions need to be made. Nothing wrong with skilled trade these days.
My only worry (and it doesn't keep me up at night) is with retirement. I save probably 10% toward that, with 11% returns the past few years (I know, right?), but even at that rate I won't really be able to retire until my late 60s if I want any sort of decent life. I'm working now on trying to save more so that maybe I can retire earlier.
In the end, I believe unhappiness with money has more to do with debt than income. I'd imagine the results are skewed because people making $75k may also tend towards less debt. I imagine those making half that amount would be plenty happy if they had no debt to worry with.
Reading the comments on here, it's incredible how many on HN don't realise how privileged they are. $75,000 is a lot of money, even in NYC and SFO, and the people who think otherwise are probably single 20-30 somethings that insist on living by themselves. Traditionally, children lived with their parents, even after marriage, until they can afford to live on their own.
There are millions of people in America living in much less than $75k per year and doing just fine even in the big cities. (Otherwise, there wouldn't be a "bad part of town") My parents raised three kids on less and they now own a house and two cars. People in higher incomes forget that there is an entire other country of people who make much less money than they do. 72% of households in the US live on less than $75k. In Manhattan, median income is $65k! There is living breathing proof of people living below these numbers everyday. These aren't unicorns. It's not rich, but nor is it poverty, which is defined as $11,500 in NYC for an individual.
Truth of the matter is, if I made $75k, I'd have a $75k lifestyle. If made $150k, I'd have a $150k lifestyle. Even if I made $1M per year, I'd have a million dollar lifestyle and probably still feel poor. I'd drive a more expensive car, buy more expensive groceries, live in more expensive housing, eat at more expensive restaurants, wear more expensive clothes, have more expensive hobbies and take more expensive vacations. What this article claims is that past the magical $75,000 mark, we are as poor as we allow ourselves to be. Saving money and not building debt is very hard to do for most people. It's a fact of life that people like to live beyond their means. I know I do.
One premise the author stated is "cutting your spending rate is much more powerful than increasing your income". The idea seems to be that this both increases one's ability to save while also lowering the bar for current and future expenses. Many people could benefit from taking a hard look at their expenses and trying to find areas to cut.
That being said, taking this orientation has its limits. First, there is a floor to how much savings one can make on a given lifestyle. Additionally, the upside potential is limited if a lot of time and effort is spent on trimming expenses.
Some folks, especially the type of folks who frequent HN, have substantial opportunities to increase their income (e.g., through freelance work) that often suggest that increasing income is MUCH more powerful than cutting one's spending rate (I think patio11 has mentioned something like this). Often times the equivalent of one or two hours of tech consulting can cover the cost of many "unnecessary" conveniences that save one time and/or effort. Additionally, it's much more scalable -- that is, the upside of saving more of an increased income frequently has more upside potential than cutting costs.
Of course, not everyone can do tech work, and even tech workers will probably need to adjust their spending to a lower level once they are on "fixed income", but I think these lines start to stray from the central issue.
As for startups, I think a holistic approach to assets and resources needs to be considered. Specifically, often the scarcest asset is founder time, so spending money to save founder time is often an <i>extremely</i> prudent choice to make in terms of adding value to the company.
Call me paranoid but I always feel like these studies are being done to lay the groundwork to justify tax increases on the affluent. "You don't need to make that much, we've done research! $75,000 is all you need trust us, you'll be just as happy." Just a thought...
These studies just want to cram everyone in America into one cliche stereotypical lifestyle. Have you seen the the lifestyle of the Average Joe?
Diet of terrible, unhealthy processed foods and fast food. Chain restaurants like Applebees for a special night out. Overworked, with minimal employee protections and benefits. Limited traveling/vacation time. Living in isolated, distant suburbs with soul crushing commutes in traffic.
I'm not knocking these types of people, but I doubt many on HN would be content with that standard of living. For that lifestyle, $75k/yr is more than enough. But I would hate that lifestyle, so $75k simply isn't enough.
My problem with this - I need money to do stuff I like. And only making stuff makes me happy. Solution to this is to be paid via what I do to make myself happy. I am not there yet, but I will I am sure.
Well, at least he proved himself wrong by posting this link: "Yes, Money Does Buy Happines: 6 Lessons from the Newest Research on Income and Well-Being"
"Enough" perhaps for an average person, with average ambition (far below what it ought to be) and ability, living in an average house, in an average town. Which describes no one and nowhere.
Does this article talk about regional variance of cost of living? Saving for retirement? Raising kids? Or is it the quarterly blogspam repost of a poorly structured survey from many years ago?
Saying that a salary is "enough" because that's where happiness flattens out is silly. Most people have no idea how to manage their money, stay out of debt, and prepare for retirement, so they're happy once their salary outstrips their immediate ability to spend.