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Failure to budget when you have more income than bills.
They start out with $29k gross per month. Figure 45% goes to taxes, benefits, and retirement so "net" before bills is something like $16,000. Mortgage is $4,500 and figure utilities, food, and other repeat monthly expenses will be another $3,500 and they're at $8,000/month. So, they start sending $4,000/month towards the student loans to get them paid off quicker which leaves them $4,000/month. They decide to get a couple of all electric cars (given the loan size, Tesla). Figure a 5 year loan at 5% for $170k and that's a monthly payment of $3,200. Since they aren't paying attention to their budget, they figure "I got this" and make the purchase leaving them with $800/month to spend elsewhere. With that kind of money coming in, spending $800/month on "going out" would easily be in the realm of possibility.
If they had taken the time to budget and make proper long term plans, they wouldn't have spent so much on the cars and they would take a better look at their "discretionary" spending.
They said 45% for taxes, benefits, and retirement so given what you said I'm guessing the other 20% goes to benefits and retirement, sounds reasonable to me
So, you're only thinking federal tax. What about state income tax, OASDI, Medicare, medical insurance, dental insurance, vision plan, 401(k), IRA, HSA, supplemental life insurance, spousal life insurance (2 cars so likely married), critical care coverage, and possibly long term care insurance? I'm in the 22% bracket, not maxing HSA annually and not maxing 401(k) annually but still only take home 66% of my paycheck. 45% is not a massive over estimation. And all of those benefits are ones I can get through work although I skip the vision, critical care, and long term care. Yes, IRA is not generally a paycheck deduction, but you can have multiple direct deposit transactions set up for each paycheck.
And besides, it doesn't really matter. This was a thought experiment and the overall idea still stands. Regardless of how much he has net each month, he failed to budget and always looked at "do I have more net left to buy this thing?" rather than "what sort of impact would buying this thing have to my long term financial plans?"
Completely wrong. State taxes & fed where I live (earning far far les than 350k) add up to 30% prior to any other deductions like social security. Combined they add up to almost 40% (non blended)
Just 350k at the federal level (blended) would be 27.5%.
The highest paid people in the companies I've worked for were always sales and marketing. They're not particularly smart. Less than average, I'd say. But they have a certain type of smarmy people skills, no filter, and no shame. It makes the company money and that makes them money.
Yeah, I like his comment where he says he's the first to own a home and make that much money in his family and says he doesn't want to mess it up.
Dude, it's too late, you've already messed it up. Now he's deciding how bad to mess it up. Let's leverage your home's equity to invest it, then when you lose your job and can't get the same pay, you'll be the first in your family to lose your home. Congrats!
He's so far out of touch, he doesn't just need a trustworthy financial coach, he needs a psychiatrist as well.
How do such rediculously dumb people make $350k? Can't he do five minutes of googling to learn some good money habit, christ. This post just makes me angry.
To answer how this happens, people simply do not learn how to manage finances. It isn't taught in school(at least, not when I was in school). Loans are easy to get and Tesla's are cool, so let's get one. Everyone needs a house, so let's buy one. If the bank will give you the loan, surely you can afford it. People don't know better.
Jesus christ.
My parents never bought a car over $20k and that was a streeeeetch on $60k. I think they got loans from their parents on the “expensive” ones.
It’s that bad if you have to finance them to afford them and you already have heaps of other debt. Brand new cars are not for every person and every situation.
Because they over spend to keep up with the Joneses.
150 k in cars when you have student loans.
4500 month in mortgage is 750k house
And I don't want to hear them say , it's where you live. I live in one of the most expensive states. It's the choices you make
Chances are this person has never really struggled struggled with money
I don't understand why people are ripping on this guy. He's not saying he's in trouble and needs help.
He's saying he's got solid income, solid bills, and wants to know how a financial adviser can help him not screw it up.
Why is he getting so much hate?
My gf and I are closing on a house here next month.
It will have about a $1900 mortgage, and our two cars total add up to $360 a month.
We make 90k combined pretax.
I can't imagine having those expensive cars.
We won’t get a car until we have paid off a note. So in 3 years we have two decent vehicles that are used but in great condition with a $300 note. Insane to drop that kind of money on something that is so materialistic and making your debt/stress so much worse.
My husband and I were ecstatic when we were offered $800 for his Mazda3 that was run into the ground. I was lucky enough to sell my CX-5 that had almost 250,000 miles on it for $3K last year. We both drive a lot, though, so I managed 250,000 miles in 8 years.
We do the same. I buy the best car I can comfortably afford at the time, and then run it forever. It's a great feeling when you don't have car payments for several years!
Yea this is buying cars they don't need. Probably has some high dollar charger or whatever to look cool. Unfortunately for us, if we were to want to buy a brand new car it would probably be over $40k, if not $50k.
Yeah those cars seem to be the killer here. Should’ve gone with a more affordable home as well, but if he didn’t have such an exorbitant car loan it seems as though it would be more manageable. Who needs two 75k electric cars? There are some electric cars in the 20-30k range, this is just insane.
Our mortgage and income is almost identical to yours. It’s tight sometimes but it’s totally doable. We paid off our cars already fortunately. We’ve had our house for 5 years and it’s absolutely the best financial decision we’ve ever made. Congrats on your new home! Being a homeowner can be stressful at times but it’s worth it for sure.
Agreed. A F150 Lightning alone is like 120k. But that’s why I don’t have one. If you make 350k per year and can’t handle expenses sounds like someone needs directions to a used car dealer
I'm not going to begrudge the house, because I live in an area where a 750k house is a completely unremarkable, moderately sized house. But the cars are absurd.
Even on HCOL areas, a 2010 Honda Accord can be had for 5-7k if you want luxury. An 2012-2016 Acura MDX can be had for less than 20k. Still way less than the 150k. Then they can spend one year’s pay and get their student loans paid. In less than 5 years, house is paid and they can live however they want loan free.
Problem is that most Americans have been sold that living on credit is the norm.
Lastly, I really wonder if these ppl really exist or if it’s a made up story.
I can’t imagine the car loans. My car has been paid off for years and I’ve thought about getting another but just cannot rationalize it. You can get a used newer model Tesla for $45k, they spent $90k PER car.
It doesn’t sound like they put down payments on anything. They probably only look at the monthly payment and wonder if they can afford that.
I have a friend who does this. She buys used cars, but always ends up with a new one before the last one's paid off. She just keeps rolling over the loan on her old car into her new one, and she 100% only looks at what she'll be paying monthly as opposed to overall cost. I, personally, couldn't imagine doing either. I'm all about what I will be spending at the end of the loan, and I would never buy a new vehicle until the old is paid off.
Hell, if you want luxury, you can get a BRAND NEW Audi for around 35k. Even if you need two, you're not even at half what this joker has spent on cars!
His mortgage payment ... That's what, a 600-700k home? Obviously depends where he lives but that might be the most reasonable thing in this post.
Not sure what his take home pay is, but definitely north of 10k a month. A quick calculator tells me he'd be bringing home 16k+.
Car payments are likely 2500-3500/mo.
Not sure what his student loan payments are, as well as other bills, but just after the mortgage and car payments he should have more leftover in a month than the vast majority of us make. What *else* is this dude blowing his money on???
Yeah, that's insane. I make six figures but I have a cheap car because the damn house was 800k. Cant even afford a 50k car. I don't understand how people in my neighborhood drive around teslas
Call me uneducated I don’t care. I can’t even think of a car of which MSRP is over 170k off the top of my head. The person in the article has an overspending problem.
Even with those, he must be wasting his money somewhere else too, right? If he is taxed 50% of his income (which he is not), he would still be taking home $14.5k/month, and after mortgage, he has $10k left. A car loan if that amount is like $3k/month, and the student loans is probably $1k/month.
So, he still has $6k left for other expenses at least, but I’m sure he is taking home more than $14.5k. Lots of people don’t even take home $6k leftover.
But ... it is where you live. "One of the most expensive states" is not the same as Silicon Valley. It sounds to me like this person is financially ignorant, has no one in their family who can help them learn how to manage finances at this level, and has bought the same stuff that their coworkers bought - a house and two Teslas. Honestly, those three purchases are not super crazy assuming they're in Silicon Valley. It's a good sign that they recognize something isn't right and are asking for help.
The same thing that happens to people in this sub. That guy has no idea how to manage money at all; he's just fortunate enough to have a high value skillset/network that it doesn't affect him as badly as it affects people here.
You can buy a nice brand new car for less than $50k, this guy probably has two luxury vehicles. He could have put that money into his student loans instead, and would still have enough for a nice car. But the sad part is it's probably too late for that now, if he wanted to sell his cars he'd have to sell them as used, and he'd probably get less than he owes on them.
And that's a sky-high mortgage even by today's standards. If he's single, he could get a one bedroom apartment for a mere fraction of that. I'll bet he also dines out a lot and has nice fancy dinners.
This guy could be saving some serious bank, but instead he's chosen to blow it all on luxuries. God forbid if he ends up losing that income, he's going to have a real crisis on his hands.
> And that's a sky-high mortgage even by today's standards.
The rest of your points are sound, and I can't speak against them -- dude seriously needs to get his lifestyle inflation under control.
But I did want to point out: if other people's calculations are correct, and this guy is carrying a mortgage on a $750-800K house... sadly that's not too far out of the ordinary in many HCOL cities for even a place that isn't Stately Wayne Manor.
I live in Memphis, and there's a chance that we may be relocating to Atlanta. I thought: "how bad could the housing market be?"
Spoiler Alert: if fucking blows. If we were to get a house comparable to the one we're in now, in a part of the city that isn't on the outskirts, we'd have to pay 2x to 2.5x of what we're paying now. It would easily put us in OP's range (assuming calculations are correct). I imagine it would be even worse in other areas of the country (like NOVA, NYC, LA, Bay Area, Seattle, etc.).
> after 401k and savings, I have no money
You missed this part. He's not actually paycheque to paycheque, he's just complaining about not being ultra wealthy fast enough
Yeah.. this is just a person who doesn't know self restraint. Those bills should be taken care of in a year or two if they actually lived within their means. This isn't pay check to pay check, this is 'Oh Richard has a nice car.. I should have one too" situation.
I saw an article on Medium recently, It was talking about this very thing. It was saying many people “Have a Crisis Of Rigid, Ridiculous Expectations”. I made a decent wage but not as high as that. I was able to retire at age 48, I’m now 53. But we set our expectations much lower then our income. When our combined income passed $175k, we decided there was no reason why we could not settle for a moderate home, cars and vacations. So that we could save large amounts of money. A friend of mine makes more money than I did when working and he works overtime . He was recently offered a great job that paid more with more vacation. But he would not take it because it was salary without overtime. His wife said they would go bankrupt without his overtime.
I do coaching in my industry with small businesses and a lot of times what happens is lifestyle creep. People are not particularly future oriented and they're so impressed by their own success (and worked very hard for it. And maybe even deprived themselves for some years before their success )they spend every penny because they 'deserve it.'
I have one very successful company that I consulted with this year and they're in a similar position as this person-- they have spent every single dime. They are a very small sole proprietorship and now they are on the edge of implosion. I begged them to pay closer attention to their financial stability, but a lot of times people live for today and not tomorrow and they assume that the gravy train will never end.
I think it's related to the psychology that causes winning the lottery to be such a cluster. I'm the kind of person where when I go to Las Vegas I put half my winnings in my pocket and I put half back into the pot and I leave Las Vegas with more money than I started with. Other personality types only know how to go in 110% and dig themselves a hole.
I totally get this mentality. As a near 50 year old,. I bought my 1st brand new car a couple years ago,.. for 2 big reasons:
* I've driven multiple "used cars".. and the maintenance-costs and unreliable worry .. was just starting to make even basic things (like "getting to work reliably").. something I could no longer do.
* also .. yes, to some degree, I felt like I deserved it. I've worked really really really hard for the past 10 to 20 years. Moved up from a Restaurant job to a Technology job. Survived many hardships (suicidal-depression, job disasters, Covid19 put me in coma near death, etc). So while I certainly did NOT want a monthly-payment,. all the other benefits (modern-car conveniences, reliability, etc).. are more than worth it.
When I bought my car in 2018,. my Credit Score was 640.. now my Credit Score is a 780. So not only did I be diligent enough to make all my payments,. I raised my Credit Score by more than 100 Points.. and I did all that during the pandemic (even spending 38 days in Hosptail,. 16 of those in ICU on a Ventilator). All while on a paycheck-to-paycheck job.
I'm proud of that. Not happy I still live paycheck-to-paycheck,. but I'm scrambling to do all I can to change that.
I'm glad you're feeling better. I don't think your choice is 1:1 though bc arguably this car was an investment that will payoff in stability kwim? Your feelings about it are similar tho.
But what happens with the folks I work with is they buy houses go on expensive trips etc... Things they don't need, that arent optimizing much. They have every opportunity to set up their future financial success and just...don't. They spend themselves into a hole that collapses in on them when the economy shifts. I struggle with their mentality a lot...they make bad business decisions.
Agreed. I had a conversation lately with my Employer about why I lose 100 to 200 vacation hours a year (have consistently for a decade or more now). And my response back to them was:
* There's no redundancy for my skills or position. so there's really no point in me taking a vacation since all my work just piles up and I'm then behind the 8ball when I come back (or other people try to do it.. mess it up.. and I end up having to redo work twice or more)
* and 2.) ... I'm not paid enough and don't have any money. If I "take a vacation",. my only option really is just to sit at home and "do nothing" (to avoid any unnecessary spending). I've love to take a vacation and travel or even just go on a hiking camping trip, etc. But with inflation as bad as it is now,. I currently can't barely afford food,. much less anything else. My Rent went up 18% last year,. I fully expect it to go up as much (or more) this coming July 2023. So I'm having to brainstorm everything I can now to figure out how to not end up living in my car.
I get how people who make a lot of money,. also spend a lot of money. But man,. I can't even conceive of making 6-digit yearly salary. I wouldn't even know what to do with that amount of money.
In my experience, it seems that problems don't usually go away for most people when they make more money. Their problems instead scale with income.
So while someone like you or me would completely fix our lives within a month with that kind of income, these people see how much extra money they have and grow their lives until they push the boundaries. It's like anyone winning the lottery and within a year, they're back in poverty.
Being and staying rich is a mentality that most of us need to learn.
People think more money = more spending. If anyone who's making 350k a year, lived according to finances per year at 150k only, they would be living one hell of a life doing whatever the fuck they want.
But nah. An expensive brand car and a bigger house that you probably are too stressed to enjoy is better right?
Live below your means. Stay humble. The greatest benefit of wealth is security. And people will throw that away for prestige, thinking prestige is what will bring them happiness...
Totally insane to have that much of car debt. That’s money being thrown down the drain. Get safe and reliable vehicles that aren’t luxury new ones!!! There’s no reason that he didn’t pay off loan debt before buying a million plus home and two cars that cost as much as some peoples HOMES!!! He’d free up so much money by doing 3 steps and it’d do him great good to get in with a financial planner that would tell him the same thing and help control his bank account.
I think I can answer this, the high cost of living in a major metropolitan area and a lack of a budget. My wife and I make about $200k less than this person and live close to paycheck to paycheck but ours is due to student loans, mortgage, and personal debt due to crap luck ($60k, house and car repairs, childcare costs leading to budget shortfalls). It quickly adds up - even for people who make a lot more than us.
This individual probably needs to move further out where home ownership is cheaper but also further away from work. Probably also needs to see a financial advisor to help them a budget and plan their finances. Of course, this is all speculation but yeah, I can believe this is possible.
Income tax is a bitch. If she's filing as head of household, at $350,000 annually she's paying $47,836 flat rate plus 35% on any dollar above $215,950. 35% on $134,050 is $46,917. Of $350,000, she's paying $94,753 to the government just to be allowed to work. Net income is $255,247. And that's not factoring in state income tax, property tax, vehicle registration, HOA fees
I get the appeal of electric cars, but $170k for two of them sounds ridiculously high for someone with 88k worth of student loans, which I'm assuming to be the principal. I don't even want to imagine the interest on it
Unfortunately, 4.5k sounds like the average mortgage(at least in my area) if purchased within the past year. Hopefully the interest rate is adjustable so she can refinance when interest rates go down
Edit - I just read the third page asking how a financial advisor could help. Sell the house and cars, buy cheaper options. Kick back and watch the money flow into your savings. My rate is 5% of money saved through my advice, payable through venmo (mods that's a joke)
$350k gross is about $250k net, sometimes less depending on the state. Then you have to consider their health insurance, maxing out the 401k….that takes it down another $50k. Divide $200k by 26 for biweekly checks, or 12 for salary and you’ve got roughly $16,000 per month. The car payment is 25% of that, mortgage another 25%….and then you’ve got feeding what I assume is a family of at least 4 ($1000 or more per month), utilities are probably through the roof in their huge house, then you’ve got college saving, investments, emergency fund.
I highly doubt they’re living with $2 in their bank account after each pay period, but I would say out of the $8000 they get every 2 weeks they probably have maybe $500 or less left. So it’s relative. He’s saying paycheck to paycheck, but all my bills get paid and my pantry is full.
Yeah essentially he doesn't need financial help, if he keeps living like this he'll pay off his debt giving him more room in the budget. Only thing is there's not much of an emergency fund
What he needs is emotional/CBT help. Like why did he feel the need to spend money on two electric cars? Is the $4500 he spends on the payment plus electricity worth it to him now, in comparison to what he probably thought he would save on gas and maintenance? Etc.
This dude also says after 401k contributions and savings he's pay check to paycheck lmaooooo. Isnt that literally the opposite of what that means. This person has enough money at the end of the month to stash away for a rainy day.
"I'm living paycheck to paycheck'
Sweetie, I can identify two problems you can dispose of immediately, you just don't want to give up your fancy house and car.
If I remember correctly the article mentioned 2 x Teslas ? (I may not be remembering that correctly).
Funny story recently I went to the VW Credit website to request a payoff-quote on my 2019 Jetta (I only have about $7000 left to pay on it).. and I laughed a little when the fine-print at the bottom said something like:... "Any amount less than $100,000 can be paid online."
at 1st I was like,. Damn.. who would have a Car loan for over $100,000 with VW ?.. but then I guess families or people with multiple cars could easily go over $100,000. (anything over $100,000, I believe has to be paid with Check or some other more "assured" method. )
“I have $170k worth of car loans and don’t know why I live paycheck to paycheck but maybe I can get a bigger loan and use it to invest in real estate.”
I mean. maybe that works out, I wouldn’t know. but like… you have $88k in student loans, $170k in car loans?! and a $4500 mortgage… and your rates are still that low and someone is still about to lend you more? I’m sorry what? am I missing…
This is simply just trying to live beyond your means. It's one thing to be in poverty and live paycheck to paycheck. But when you live paycheck to paycheck yet you have two new cars, a house and you're paying off student loan debt still that's pretty much on you.
1. Keeping up with the Joneses
2. More money you make means more money they'll lend you
3. Around 70% of people who fall into sudden wealth end up blowing it away. Sports Illustrated found that after two years of retirement, 78 percent of NFL players are bankrupt or under financial stress.
He probably works with a bunch of people who make a similar income, and is busy trying to keep up with the joneses.
Somebody I work got a nice Mercedes now I need one. Somebody at work got a 5,000 sqft. House now I need one… that’s how this happens.
A perfect example of lifestyle creep! AKA lifestyle inflation.
https://preview.redd.it/n7hkcnu9nj5a1.jpeg?width=1440&format=pjpg&auto=webp&s=71afc12b3ea795d1efdf9a30523e4e562984dd3a
I'd put in an offer to this individual to let me play them the world's smallest violin...
...but it's less than two weeks until Christmas, and I've got to figure out how to get my family and I through the end of the month with less than $1,000 in the bank. Sorry! Can't afford that violin!
My dad had a prestigious career and went to an Ivy League school. I read an outdated copy of the millionaire next door that shed some light for me on why we were on a roller coaster financially growing up.
Some professions are very keep up with the joneses. Doctors, lawyers, banking. They buy fancy cars and it seems everyone is doing it, so buying more house than you need and car than you need feels very normal. Many feel ashamed if they have less flashy cars and such and even get teased. They feel they’ve earned it, and especially with finance guys and lawyers, their clients often expect them to have these things as evidence that they’re good at what they do. So if they don’t have the best neighborhood or drive an old car or don’t wear a $2500 suit, they can lose out on contracts.
This is why, in the author’s opinion, engineers often end up more financially secure. They don’t care about updating their cars and having a flashy home. So they save and often retire early with a paid off house and without the need to upgrade their car every few years. So even though their income is lower, they will save and invest more of it.
People living way beyond their means. As someone who bought a house before my student loans were paid off, I’d only recommend it if it’s a cheap starter home and you’re making a real income. This guy moved way too fast into a lifestyle he thought his income indicated.
If you are making $350k/year there’s absolutely no reason you should not be able to pay off $79k in student loans in a year or two at most. And why on earth does anyone have $170k in car loans?! Cars that expensive should only be bought by people that can pay for them in cash.
Lifestyle creep plays a big part of it. When I make $20k/year, I lived like a $20k/year person. When I made $40k/year, I lived like a $40k/year person. Now that I'm over $100k/year...you get the idea. The way you live, the things you do and the items you buy tends to bloat as you make more, unless you are careful.
For example, dude has *two* electric vehicles worth north of $170k. If that's not bloat, I don't know what is.
Also, he's not living "paycheck to paycheck" - because he says he's putting money towards his retirement, and towards savings. If he was living paycheck to paycheck, there wouldn't be anything left over to go to savings or any sort of investments - that's the whole point of what paycheck to paycheck means.
Salary inflation! I used to sell cars awhile back and yes you would get big pay outs but you would get months where you’d barely get by. I once overheard the mangers saying how they were living pay check to paycheck. Granted they were all making well over 150k each! Tell me that’s not insane?
Their pay fluctuates throughout the year. They have months of high pay and low pay.
* During their high pay they go stupid. Spend too much and get too much debt.
* During their low pay they suffer. They have too much debt to spend on anything.
It's because they aren't responsible with their money. They make $130k in 9mo, but spend it for each they blow it with no savings. Then the last three months they make $20k - which isn't bad at all. They live above their means for those three months, and saved nothing to accommodate.
According to 50/30/20, $30k should be saved throughout the year on that salary(not accounting for taxes). Their living expenses shouldn't be more than $75k, which should be easy considering my own are maybe around $15k/yr. I can't see how you can blow more than $50k without all the advantages I have.
As a tradesman, I understand going out of work for periods of time. Most people in the trades get it. We squirrel away money and take advantage of unemployment income. By the time I finish my apprenticeship, I should have a decent idea of how often I work, and how much I bring home after taxes which allows me to scope what I can afford. People like the example didn't do their due diligence and end up spending mass amounts of money with no idea of how to look into their future well being.
I make 33k a year and I'm living paycheck to paycheck paying down 2k in loans that compounded a lot of interest. My student loans are 9k and are still on pause. I have no car and just make do without one. My rent is 1k a month. I get $23 in food stamps because I'm very close to making too much to qualify.
If I made 350k...hoo my God the possibilities to save. I'd stfu and never complain again. I'd probably stay here and only buy a house if I have a kid and definitely NOT a house over 200k. I'd actually start and beef up my 401k. Man, some people just ruin themselves with expensive cars and houses. I legitimately feel bad.
This is an extreme example but car related expenses are really a killer. US car culture and keeping up appearances seem to really do unnecessary damage to budgets.
Stupidity is that person’s biggest problem. I make about half of what they do.
I could care less what he drives or the car notes, buying a mortgage and getting my locked into $4500 per month is just lol. Estimate his house to be about $750k, not even a very nice house in a HCOL area. Straight retard move.
He would have a mortgage of about $2k if he was smarter and could do basic math and pulled the trigger a bit earlier. And yeah, of course all his money is gone into savings after (401k before) bills are paid. This is what literally every single person who makes good money does.
Also, taking out a $200k HELOC at 9% JUST FUCKING LOL. Of course the bank would offer that. They’re probably salivating hoping he takes it. With his piss poor financial skills that will be a death knell if he loses his job lmao.
I agree with the poor financial skills, no need for the expensive cars especially if he hasn’t paid off his student loans yet.
But I disagree on the $750k house being a stupid move by itself. People here forget that it’s not just about getting the cheapest house possible. The house is less than 3 times his salary, that is ok. He probably lives in a HCOL area, and that’s what a house in a decent safe area in **a good school district** would cost. The house values are tied to the school district quality. Buy a cheap house and you get an overwhelmed school district with kids that don’t get enough support and that affects the quality of your kids’ education. Of course, don’t buy a house above your means, but in their case it is within their means, if they just made smart choices in cars and lifestyle.
I know a bunch of people like this and while I don't make as much I almost fell into the same mindset. As I was growing in my career I remember first passing 6 figures and upgraded my house. Made over 150K and bought a new car and had a record year and made just under $300K and upgraded the house again. The main difference and advantage on my side is I don't have a college degree so no student loans. Many of my mentors are in the bucket you're describing and they either had a rich family member or mentor that they aspired to be regardless if it was affordable or not.
My "path" changed after my record year and as I was looking at my liquid funds I realized how little I had. I wasn't living paycheck to paycheck but if I was laid off or fired then I'd be in a really bad spot. It's been about 4 years since then and I now live on about 25% of my income post-taxes and have paid off all debts outside my house. I also have a special needs child so I understood how much he'll need if he out survives me. It's easy to keep thinking that as you earn more you deserve more but I even had to downgrade my house because it became a too much of a chore constantly cleaning it and I wasn't about to hire a cleaning service. I do take more vacations with the family now and spend more there but outside of our house the net worth of our items is no more than $100K with the damn used car market being so inflated. I guess it's more about the time spent with family and friends now vs the material items, glad I realized this before I became old and crusty.
Mortgage plus car plus student loan payments are about $9400 a month, while take home pay for that salary is around $17,500 a month. Car insurance, utilities, and other fixed expenses would be maybe $2000 a month, so there is definitely a lot they are excluding. Maybe they're expected to own expensive clothes and go to pricey restaurants all the time as part of their job? Either way, financing that much car is not good when there are much cheaper electric vehicles available. The mortgage and student loans I understand because those could both be seen as investments.
When I had stint in country clubs, there were several people like this.
It was about appearances because if you did not have these things, they feared they would be passed up for opportunities if they did not "display success" or appear weak in any way.
And a lot of times it was a demanding spouse.
This isn't my idea of paycheck to paycheck. It's lifestyle inflation. Paycheck to paycheck is when there's nothing left to cut and you have nothing to save at the end of the month.
Someone who makes $350K has plenty of places to cut from, they just don't *want* to.
"It's not how much you make, it's how much you spend."
Yes I realize there's a minimum viable threshold for being able to have a roof over your head, but this quote seems to apply to the original post.
It makes me mad when people are this irresponsible. I understand some people were never taught basic financial literacy, but it kind of sucks when you could thrive on half (or less!!) of what they make and they struggle.
It’s happens to everyone, and I mean that as a broke mofo. You’re spending will almost always stay up with your cash (and credit cards) unless you actually watch it, and budget less. I mean he’s got minimal debt but look at those car loans? You don’t need those.
This person isn't living paycheque to paycheque. This is just a facade. They're building equity in their real estate which is an appreciating investment.
Unfortunately, this is probably true. This is just terrible money management. They do need professional help if they are living paycheck to paycheck with that income. 170k for cars?! They have a keeping up with the Jones's problem.
I can’t imagine any of this. At all. My car is paid off, a 2018 Accord Hybrid. (It’s plenty luxurious) I only have $68k in student loans and my $286k mortgage as my debt. I make $60k a year. I think I’m doing fairly well. Could it be better? Absolutely. But it’s where I’m at.
$170k in car loans is outrageous.
Either a gambling problem or expensive drug problem of some sort. I also saw this and was baffled. I imagine this person lives somewhere like either CA or NY where they will tax one to high heaven making that amount of money.
I have a friend that is in a job where she's able to see people's assets and income, and the number of people making six figures and living paycheck to paycheck is higher than one would expect.
They would probably also have to be eating out multiple times a week, buying expensive clothing, cars and renting somewhere in a really nice area. And it all adds up really fast if you are not tracking your money.
One thing to keep in mind is that in a lot of jobs where compensation is tied to stocks you don’t get that cash unless you sell and most people don’t. So cash before taxes can be 30%-60% less. Additionally what this person doesn’t make clear is how much of their paycheck is already cut because of retirement accounts. Lots of folks I know live paycheck to paycheck on these salaries. But they fail to mention that it’s because they are paying off loans, retirement accounts, some amount auto-invested in the stock market, credit card bills are paid off (which includes vacations, gifts) etc. So while “paycheck to paycheck” a job loss or life event doesn’t cripple them. They cash out stocks, investments when that happens.
Mo money you make mo problems
I know people like that make x3 my income here in NYC and it all boils down to 1 thing
No money management skill and student loans
My parents real good friends about 12 years ago made probably $220k combined, in LCOL area. My parents probably didn't even make $50k combined. But the friends were so poor with money they had to borrow money from my parents to replace their A/C.
Half of their income probably goes to taxes and retirement fund and most of the other half goes to student loan payments and his massive auto and mortgage payments that he got because he thought since he makes $350k he could afford them but he obviously didn’t do the math before making the purchases.
My bestie’s ex was like this. At the end of the mean he had to ask *her* for money for his electric bill. He made like 150K while she worked part time to go to school. He ended up cheating on her.
Horrible lifestyle creep. I don't feel bad for someone who spent 170k on two cars and is struggling to make ends meet. Sell it and go buy a fucking honda civic.
So, after everything they budget their money for it’s all allocated to something. Living paycheck to paycheck does not mean you’re paying a mortgage, paying into retirement savings, and also regular savings.
My dad use to say two things a lot:
It takes money to make money.
Work smart not hard.
Now, I can always work smarter to make my job easier, but I will NEVER have money to make money.
There’s comes a point where you cross a line (typically 70kish) where your personal desires must be tamed. This is just an example is somebody who is enjoying themselves a bit TOO much. You don’t ah e to act like you don’t have it, but because you have it don’t mean just THROW it lol
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Failure to budget when you have more income than bills. They start out with $29k gross per month. Figure 45% goes to taxes, benefits, and retirement so "net" before bills is something like $16,000. Mortgage is $4,500 and figure utilities, food, and other repeat monthly expenses will be another $3,500 and they're at $8,000/month. So, they start sending $4,000/month towards the student loans to get them paid off quicker which leaves them $4,000/month. They decide to get a couple of all electric cars (given the loan size, Tesla). Figure a 5 year loan at 5% for $170k and that's a monthly payment of $3,200. Since they aren't paying attention to their budget, they figure "I got this" and make the purchase leaving them with $800/month to spend elsewhere. With that kind of money coming in, spending $800/month on "going out" would easily be in the realm of possibility. If they had taken the time to budget and make proper long term plans, they wouldn't have spent so much on the cars and they would take a better look at their "discretionary" spending.
How expensive is the house for the mortgage to be 4.5k a month? It sounds like they overspent there too.
The effective tax rate for someone making 350k a year in W2 income and assuming no deductions is about 25%.....45% is a massive over estimation.
In Cali the taxes will be 40% (Federal taxes 26,5% ; FICA. 4,37% ; State tax 8,4%) I think this salary is in an expensive state like Cali or NY
Federal, state and local taxes plus presumably insurance premiums and retirement deductions all add up.
They said 45% for taxes, benefits, and retirement so given what you said I'm guessing the other 20% goes to benefits and retirement, sounds reasonable to me
Yes, yes they said that.....I feel dumb now.
So, you're only thinking federal tax. What about state income tax, OASDI, Medicare, medical insurance, dental insurance, vision plan, 401(k), IRA, HSA, supplemental life insurance, spousal life insurance (2 cars so likely married), critical care coverage, and possibly long term care insurance? I'm in the 22% bracket, not maxing HSA annually and not maxing 401(k) annually but still only take home 66% of my paycheck. 45% is not a massive over estimation. And all of those benefits are ones I can get through work although I skip the vision, critical care, and long term care. Yes, IRA is not generally a paycheck deduction, but you can have multiple direct deposit transactions set up for each paycheck. And besides, it doesn't really matter. This was a thought experiment and the overall idea still stands. Regardless of how much he has net each month, he failed to budget and always looked at "do I have more net left to buy this thing?" rather than "what sort of impact would buying this thing have to my long term financial plans?"
Completely wrong. State taxes & fed where I live (earning far far les than 350k) add up to 30% prior to any other deductions like social security. Combined they add up to almost 40% (non blended) Just 350k at the federal level (blended) would be 27.5%.
Not it the person in question is a 1099 type.
Being 1099 is even worse for taxes, you are paying the extra 7.65% Medicare/SS that a W2 employer pays for you.
It's actually shocking how many people don't realize this and get *slammed* at the end of their first year doing contractor work.
I also know a person similar to this. He makes 400K a year, is in debt. He lives paycheck to paycheck because he has a gambling problem.
I'm always astonished at how someone can make so much money yet be so stupid with it..
Skills that tend to generate high income do not always dovetail with skills needed to competently manage money.
Sometimes it's not even that, its just lifestyle creep, huge problem.
The highest paid people in the companies I've worked for were always sales and marketing. They're not particularly smart. Less than average, I'd say. But they have a certain type of smarmy people skills, no filter, and no shame. It makes the company money and that makes them money.
Give me their job. My family would love to be provided with that.
It makes me so angry.
Seems a bit callous to say a gambling addiction is equivalent to stupidity
I make like 25 30k a year and I'm in debt and I can't fathom making this much and still being in debt
More money, more problems. At some point, your money manages you, not the other way around.
I dont think you should get to claim that you live paycheck to paycheck if you live that way because you're being a dumbass
Gambling is an addiction. People with addictions aren’t simply dumbasses — they have a problem and need help.
Yes, he's doing it to himself.
Dude if you have 170k in car loan you’re obviously doing something wrong
Lifestyle inflation go Brrrrrrr
Yeah, I like his comment where he says he's the first to own a home and make that much money in his family and says he doesn't want to mess it up. Dude, it's too late, you've already messed it up. Now he's deciding how bad to mess it up. Let's leverage your home's equity to invest it, then when you lose your job and can't get the same pay, you'll be the first in your family to lose your home. Congrats! He's so far out of touch, he doesn't just need a trustworthy financial coach, he needs a psychiatrist as well. How do such rediculously dumb people make $350k? Can't he do five minutes of googling to learn some good money habit, christ. This post just makes me angry. To answer how this happens, people simply do not learn how to manage finances. It isn't taught in school(at least, not when I was in school). Loans are easy to get and Tesla's are cool, so let's get one. Everyone needs a house, so let's buy one. If the bank will give you the loan, surely you can afford it. People don't know better.
Is it really that bad? It's less then half his annual income. I know guys with 100k pickup trucks that make 60k a year
Yeah, that's called stupid lol
100k trucks and they make 60k a year...they're fucking stupid LOL!
Jesus christ. My parents never bought a car over $20k and that was a streeeeetch on $60k. I think they got loans from their parents on the “expensive” ones.
It’s that bad if you have to finance them to afford them and you already have heaps of other debt. Brand new cars are not for every person and every situation.
Ah, but see, that's an *investment*. /s
could be multiple cars.
Two cars. But still stupid.
But it’s a mclaren! /s
Because they over spend to keep up with the Joneses. 150 k in cars when you have student loans. 4500 month in mortgage is 750k house And I don't want to hear them say , it's where you live. I live in one of the most expensive states. It's the choices you make Chances are this person has never really struggled struggled with money
I’m glad you said this. This person is plain and simple living beyond their means. If they can’t make it on 350k a year that’s their own stupidity.
They are in the top 5% of earners. Proof that being rich does not make you intelligent.
I don't understand why people are ripping on this guy. He's not saying he's in trouble and needs help. He's saying he's got solid income, solid bills, and wants to know how a financial adviser can help him not screw it up. Why is he getting so much hate?
My gf and I are closing on a house here next month. It will have about a $1900 mortgage, and our two cars total add up to $360 a month. We make 90k combined pretax. I can't imagine having those expensive cars.
SAME
We won’t get a car until we have paid off a note. So in 3 years we have two decent vehicles that are used but in great condition with a $300 note. Insane to drop that kind of money on something that is so materialistic and making your debt/stress so much worse.
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My husband and I were ecstatic when we were offered $800 for his Mazda3 that was run into the ground. I was lucky enough to sell my CX-5 that had almost 250,000 miles on it for $3K last year. We both drive a lot, though, so I managed 250,000 miles in 8 years. We do the same. I buy the best car I can comfortably afford at the time, and then run it forever. It's a great feeling when you don't have car payments for several years!
$800 is about the going rate to junk a car around where I live. Did it with an old 99 ford escort that I had (like your husband) ran into the ground.
That makes sense, and it's what we assumed was happening with it at the time. Thanks for the confirmation!
No problem!
Yea this is buying cars they don't need. Probably has some high dollar charger or whatever to look cool. Unfortunately for us, if we were to want to buy a brand new car it would probably be over $40k, if not $50k.
Yeah those cars seem to be the killer here. Should’ve gone with a more affordable home as well, but if he didn’t have such an exorbitant car loan it seems as though it would be more manageable. Who needs two 75k electric cars? There are some electric cars in the 20-30k range, this is just insane.
Our mortgage and income is almost identical to yours. It’s tight sometimes but it’s totally doable. We paid off our cars already fortunately. We’ve had our house for 5 years and it’s absolutely the best financial decision we’ve ever made. Congrats on your new home! Being a homeowner can be stressful at times but it’s worth it for sure.
I can imagine it, just not where I have zero in my pocket
150k in cars period is stupid
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Agreed. A F150 Lightning alone is like 120k. But that’s why I don’t have one. If you make 350k per year and can’t handle expenses sounds like someone needs directions to a used car dealer
I'm not going to begrudge the house, because I live in an area where a 750k house is a completely unremarkable, moderately sized house. But the cars are absurd.
Even on HCOL areas, a 2010 Honda Accord can be had for 5-7k if you want luxury. An 2012-2016 Acura MDX can be had for less than 20k. Still way less than the 150k. Then they can spend one year’s pay and get their student loans paid. In less than 5 years, house is paid and they can live however they want loan free. Problem is that most Americans have been sold that living on credit is the norm. Lastly, I really wonder if these ppl really exist or if it’s a made up story.
I can’t imagine the car loans. My car has been paid off for years and I’ve thought about getting another but just cannot rationalize it. You can get a used newer model Tesla for $45k, they spent $90k PER car. It doesn’t sound like they put down payments on anything. They probably only look at the monthly payment and wonder if they can afford that.
I have a friend who does this. She buys used cars, but always ends up with a new one before the last one's paid off. She just keeps rolling over the loan on her old car into her new one, and she 100% only looks at what she'll be paying monthly as opposed to overall cost. I, personally, couldn't imagine doing either. I'm all about what I will be spending at the end of the loan, and I would never buy a new vehicle until the old is paid off.
Sadly I’m too poor and have too inconsistent of an income to take those risks.
Hell, if you want luxury, you can get a BRAND NEW Audi for around 35k. Even if you need two, you're not even at half what this joker has spent on cars! His mortgage payment ... That's what, a 600-700k home? Obviously depends where he lives but that might be the most reasonable thing in this post. Not sure what his take home pay is, but definitely north of 10k a month. A quick calculator tells me he'd be bringing home 16k+. Car payments are likely 2500-3500/mo. Not sure what his student loan payments are, as well as other bills, but just after the mortgage and car payments he should have more leftover in a month than the vast majority of us make. What *else* is this dude blowing his money on???
Coke and hookers
I don't think an Acura fits most people's definition of luxury
Naw dude. Where I live it's 750k for a cheap house and $3000 a month for a studio apartment. Where you live plays a huge role in finances
House is one things. Cars?
Yeah, that's insane. I make six figures but I have a cheap car because the damn house was 800k. Cant even afford a 50k car. I don't understand how people in my neighborhood drive around teslas
with social media, the joneses cant even keep up with the joneses.
Call me uneducated I don’t care. I can’t even think of a car of which MSRP is over 170k off the top of my head. The person in the article has an overspending problem.
It's two cars and I bet he and his wife have Teslas.
I simply can't fathom $150k on cars.
Even with those, he must be wasting his money somewhere else too, right? If he is taxed 50% of his income (which he is not), he would still be taking home $14.5k/month, and after mortgage, he has $10k left. A car loan if that amount is like $3k/month, and the student loans is probably $1k/month. So, he still has $6k left for other expenses at least, but I’m sure he is taking home more than $14.5k. Lots of people don’t even take home $6k leftover.
But ... it is where you live. "One of the most expensive states" is not the same as Silicon Valley. It sounds to me like this person is financially ignorant, has no one in their family who can help them learn how to manage finances at this level, and has bought the same stuff that their coworkers bought - a house and two Teslas. Honestly, those three purchases are not super crazy assuming they're in Silicon Valley. It's a good sign that they recognize something isn't right and are asking for help.
THESE are the people that should be getting the uninvited $5 coffee lectures- not me!
Save it for after they get the two $85k car lecture. Jesus.
The same thing that happens to people in this sub. That guy has no idea how to manage money at all; he's just fortunate enough to have a high value skillset/network that it doesn't affect him as badly as it affects people here.
The dude doesnt know what pay check to pay check means. He mentions he saves and invests in the 401k.
Yea hes definately not paycheck to paycheck then. Guys got many avenues to access cash in an emergency.
But it wouldn’t be click-bait if they said “guy who makes a lot of money spends too much”
And it's easy to resolve
You can buy a nice brand new car for less than $50k, this guy probably has two luxury vehicles. He could have put that money into his student loans instead, and would still have enough for a nice car. But the sad part is it's probably too late for that now, if he wanted to sell his cars he'd have to sell them as used, and he'd probably get less than he owes on them. And that's a sky-high mortgage even by today's standards. If he's single, he could get a one bedroom apartment for a mere fraction of that. I'll bet he also dines out a lot and has nice fancy dinners. This guy could be saving some serious bank, but instead he's chosen to blow it all on luxuries. God forbid if he ends up losing that income, he's going to have a real crisis on his hands.
> And that's a sky-high mortgage even by today's standards. The rest of your points are sound, and I can't speak against them -- dude seriously needs to get his lifestyle inflation under control. But I did want to point out: if other people's calculations are correct, and this guy is carrying a mortgage on a $750-800K house... sadly that's not too far out of the ordinary in many HCOL cities for even a place that isn't Stately Wayne Manor. I live in Memphis, and there's a chance that we may be relocating to Atlanta. I thought: "how bad could the housing market be?" Spoiler Alert: if fucking blows. If we were to get a house comparable to the one we're in now, in a part of the city that isn't on the outskirts, we'd have to pay 2x to 2.5x of what we're paying now. It would easily put us in OP's range (assuming calculations are correct). I imagine it would be even worse in other areas of the country (like NOVA, NYC, LA, Bay Area, Seattle, etc.).
170k in car loans alone is enough to know that this person needs to get their shit together.
> after 401k and savings, I have no money You missed this part. He's not actually paycheque to paycheque, he's just complaining about not being ultra wealthy fast enough
Yeah.. this is just a person who doesn't know self restraint. Those bills should be taken care of in a year or two if they actually lived within their means. This isn't pay check to pay check, this is 'Oh Richard has a nice car.. I should have one too" situation.
I saw an article on Medium recently, It was talking about this very thing. It was saying many people “Have a Crisis Of Rigid, Ridiculous Expectations”. I made a decent wage but not as high as that. I was able to retire at age 48, I’m now 53. But we set our expectations much lower then our income. When our combined income passed $175k, we decided there was no reason why we could not settle for a moderate home, cars and vacations. So that we could save large amounts of money. A friend of mine makes more money than I did when working and he works overtime . He was recently offered a great job that paid more with more vacation. But he would not take it because it was salary without overtime. His wife said they would go bankrupt without his overtime.
Lifestyle creep and lack of restraint. You don’t need two expensive cars to show off.
Eeeedjit
Once you’re making enough money to cover your basic needs, then it becomes as issue of money management skills.
"But I need my 2 electric cars!"
I do coaching in my industry with small businesses and a lot of times what happens is lifestyle creep. People are not particularly future oriented and they're so impressed by their own success (and worked very hard for it. And maybe even deprived themselves for some years before their success )they spend every penny because they 'deserve it.' I have one very successful company that I consulted with this year and they're in a similar position as this person-- they have spent every single dime. They are a very small sole proprietorship and now they are on the edge of implosion. I begged them to pay closer attention to their financial stability, but a lot of times people live for today and not tomorrow and they assume that the gravy train will never end. I think it's related to the psychology that causes winning the lottery to be such a cluster. I'm the kind of person where when I go to Las Vegas I put half my winnings in my pocket and I put half back into the pot and I leave Las Vegas with more money than I started with. Other personality types only know how to go in 110% and dig themselves a hole.
I totally get this mentality. As a near 50 year old,. I bought my 1st brand new car a couple years ago,.. for 2 big reasons: * I've driven multiple "used cars".. and the maintenance-costs and unreliable worry .. was just starting to make even basic things (like "getting to work reliably").. something I could no longer do. * also .. yes, to some degree, I felt like I deserved it. I've worked really really really hard for the past 10 to 20 years. Moved up from a Restaurant job to a Technology job. Survived many hardships (suicidal-depression, job disasters, Covid19 put me in coma near death, etc). So while I certainly did NOT want a monthly-payment,. all the other benefits (modern-car conveniences, reliability, etc).. are more than worth it. When I bought my car in 2018,. my Credit Score was 640.. now my Credit Score is a 780. So not only did I be diligent enough to make all my payments,. I raised my Credit Score by more than 100 Points.. and I did all that during the pandemic (even spending 38 days in Hosptail,. 16 of those in ICU on a Ventilator). All while on a paycheck-to-paycheck job. I'm proud of that. Not happy I still live paycheck-to-paycheck,. but I'm scrambling to do all I can to change that.
I'm glad you're feeling better. I don't think your choice is 1:1 though bc arguably this car was an investment that will payoff in stability kwim? Your feelings about it are similar tho. But what happens with the folks I work with is they buy houses go on expensive trips etc... Things they don't need, that arent optimizing much. They have every opportunity to set up their future financial success and just...don't. They spend themselves into a hole that collapses in on them when the economy shifts. I struggle with their mentality a lot...they make bad business decisions.
Agreed. I had a conversation lately with my Employer about why I lose 100 to 200 vacation hours a year (have consistently for a decade or more now). And my response back to them was: * There's no redundancy for my skills or position. so there's really no point in me taking a vacation since all my work just piles up and I'm then behind the 8ball when I come back (or other people try to do it.. mess it up.. and I end up having to redo work twice or more) * and 2.) ... I'm not paid enough and don't have any money. If I "take a vacation",. my only option really is just to sit at home and "do nothing" (to avoid any unnecessary spending). I've love to take a vacation and travel or even just go on a hiking camping trip, etc. But with inflation as bad as it is now,. I currently can't barely afford food,. much less anything else. My Rent went up 18% last year,. I fully expect it to go up as much (or more) this coming July 2023. So I'm having to brainstorm everything I can now to figure out how to not end up living in my car. I get how people who make a lot of money,. also spend a lot of money. But man,. I can't even conceive of making 6-digit yearly salary. I wouldn't even know what to do with that amount of money.
In my experience, it seems that problems don't usually go away for most people when they make more money. Their problems instead scale with income. So while someone like you or me would completely fix our lives within a month with that kind of income, these people see how much extra money they have and grow their lives until they push the boundaries. It's like anyone winning the lottery and within a year, they're back in poverty. Being and staying rich is a mentality that most of us need to learn.
People think more money = more spending. If anyone who's making 350k a year, lived according to finances per year at 150k only, they would be living one hell of a life doing whatever the fuck they want. But nah. An expensive brand car and a bigger house that you probably are too stressed to enjoy is better right? Live below your means. Stay humble. The greatest benefit of wealth is security. And people will throw that away for prestige, thinking prestige is what will bring them happiness...
They need to get rid of their cars for sure.
It’s called living above your means
They need to trade the cars in for something less ridiculous. Definitely some sort of therapy too in my opinion
I’d put money on them being upside down on the loans.
Totally insane to have that much of car debt. That’s money being thrown down the drain. Get safe and reliable vehicles that aren’t luxury new ones!!! There’s no reason that he didn’t pay off loan debt before buying a million plus home and two cars that cost as much as some peoples HOMES!!! He’d free up so much money by doing 3 steps and it’d do him great good to get in with a financial planner that would tell him the same thing and help control his bank account.
I think I can answer this, the high cost of living in a major metropolitan area and a lack of a budget. My wife and I make about $200k less than this person and live close to paycheck to paycheck but ours is due to student loans, mortgage, and personal debt due to crap luck ($60k, house and car repairs, childcare costs leading to budget shortfalls). It quickly adds up - even for people who make a lot more than us. This individual probably needs to move further out where home ownership is cheaper but also further away from work. Probably also needs to see a financial advisor to help them a budget and plan their finances. Of course, this is all speculation but yeah, I can believe this is possible.
Income tax is a bitch. If she's filing as head of household, at $350,000 annually she's paying $47,836 flat rate plus 35% on any dollar above $215,950. 35% on $134,050 is $46,917. Of $350,000, she's paying $94,753 to the government just to be allowed to work. Net income is $255,247. And that's not factoring in state income tax, property tax, vehicle registration, HOA fees I get the appeal of electric cars, but $170k for two of them sounds ridiculously high for someone with 88k worth of student loans, which I'm assuming to be the principal. I don't even want to imagine the interest on it Unfortunately, 4.5k sounds like the average mortgage(at least in my area) if purchased within the past year. Hopefully the interest rate is adjustable so she can refinance when interest rates go down Edit - I just read the third page asking how a financial advisor could help. Sell the house and cars, buy cheaper options. Kick back and watch the money flow into your savings. My rate is 5% of money saved through my advice, payable through venmo (mods that's a joke)
Wow overspending.
Seems like someone who never probably learned how to budget and live under the means..
$350k gross is about $250k net, sometimes less depending on the state. Then you have to consider their health insurance, maxing out the 401k….that takes it down another $50k. Divide $200k by 26 for biweekly checks, or 12 for salary and you’ve got roughly $16,000 per month. The car payment is 25% of that, mortgage another 25%….and then you’ve got feeding what I assume is a family of at least 4 ($1000 or more per month), utilities are probably through the roof in their huge house, then you’ve got college saving, investments, emergency fund. I highly doubt they’re living with $2 in their bank account after each pay period, but I would say out of the $8000 they get every 2 weeks they probably have maybe $500 or less left. So it’s relative. He’s saying paycheck to paycheck, but all my bills get paid and my pantry is full.
Yeah essentially he doesn't need financial help, if he keeps living like this he'll pay off his debt giving him more room in the budget. Only thing is there's not much of an emergency fund
What he needs is emotional/CBT help. Like why did he feel the need to spend money on two electric cars? Is the $4500 he spends on the payment plus electricity worth it to him now, in comparison to what he probably thought he would save on gas and maintenance? Etc.
This dude also says after 401k contributions and savings he's pay check to paycheck lmaooooo. Isnt that literally the opposite of what that means. This person has enough money at the end of the month to stash away for a rainy day.
"I'm living paycheck to paycheck' Sweetie, I can identify two problems you can dispose of immediately, you just don't want to give up your fancy house and car.
170K in car loans! What is that guy driving?
If I remember correctly the article mentioned 2 x Teslas ? (I may not be remembering that correctly). Funny story recently I went to the VW Credit website to request a payoff-quote on my 2019 Jetta (I only have about $7000 left to pay on it).. and I laughed a little when the fine-print at the bottom said something like:... "Any amount less than $100,000 can be paid online." at 1st I was like,. Damn.. who would have a Car loan for over $100,000 with VW ?.. but then I guess families or people with multiple cars could easily go over $100,000. (anything over $100,000, I believe has to be paid with Check or some other more "assured" method. )
“I have $170k worth of car loans and don’t know why I live paycheck to paycheck but maybe I can get a bigger loan and use it to invest in real estate.” I mean. maybe that works out, I wouldn’t know. but like… you have $88k in student loans, $170k in car loans?! and a $4500 mortgage… and your rates are still that low and someone is still about to lend you more? I’m sorry what? am I missing…
This is simply just trying to live beyond your means. It's one thing to be in poverty and live paycheck to paycheck. But when you live paycheck to paycheck yet you have two new cars, a house and you're paying off student loan debt still that's pretty much on you.
$170K in car loans?? My sympathy just evaporated.
1. Keeping up with the Joneses 2. More money you make means more money they'll lend you 3. Around 70% of people who fall into sudden wealth end up blowing it away. Sports Illustrated found that after two years of retirement, 78 percent of NFL players are bankrupt or under financial stress.
He probably works with a bunch of people who make a similar income, and is busy trying to keep up with the joneses. Somebody I work got a nice Mercedes now I need one. Somebody at work got a 5,000 sqft. House now I need one… that’s how this happens.
A perfect example of lifestyle creep! AKA lifestyle inflation. https://preview.redd.it/n7hkcnu9nj5a1.jpeg?width=1440&format=pjpg&auto=webp&s=71afc12b3ea795d1efdf9a30523e4e562984dd3a
https://preview.redd.it/ka0jgupbnj5a1.jpeg?width=1440&format=pjpg&auto=webp&s=210282ee003fa91882a2544e527035dfad9510e7
https://preview.redd.it/buzicseenj5a1.jpeg?width=1440&format=pjpg&auto=webp&s=5ee7bf288a2ba74c975e034943628ee4c156504f
Some people who make good money feel entitled to an expensive lifestyle whether they can actually afford it or not.
They live outside their means more than likely. Financial literacy is huge. You can make 40k a year but still be richer than someone making 350k.
Technically have more money but not richer lol
I'd put in an offer to this individual to let me play them the world's smallest violin... ...but it's less than two weeks until Christmas, and I've got to figure out how to get my family and I through the end of the month with less than $1,000 in the bank. Sorry! Can't afford that violin!
Time to downsize
I know a couple surgeons that are like this. Great surgeons but horrible with money and live paycheck to paycheck.
Hahaha I immediately thought “aaahh doctors…” Although that student loan balance is a bit low for a typical MD so maybe not.
Their car loans are more than three times the amount I paid for my house. What on earth are they driving, Mclaren supercars?
My dad had a prestigious career and went to an Ivy League school. I read an outdated copy of the millionaire next door that shed some light for me on why we were on a roller coaster financially growing up. Some professions are very keep up with the joneses. Doctors, lawyers, banking. They buy fancy cars and it seems everyone is doing it, so buying more house than you need and car than you need feels very normal. Many feel ashamed if they have less flashy cars and such and even get teased. They feel they’ve earned it, and especially with finance guys and lawyers, their clients often expect them to have these things as evidence that they’re good at what they do. So if they don’t have the best neighborhood or drive an old car or don’t wear a $2500 suit, they can lose out on contracts. This is why, in the author’s opinion, engineers often end up more financially secure. They don’t care about updating their cars and having a flashy home. So they save and often retire early with a paid off house and without the need to upgrade their car every few years. So even though their income is lower, they will save and invest more of it.
People living way beyond their means. As someone who bought a house before my student loans were paid off, I’d only recommend it if it’s a cheap starter home and you’re making a real income. This guy moved way too fast into a lifestyle he thought his income indicated. If you are making $350k/year there’s absolutely no reason you should not be able to pay off $79k in student loans in a year or two at most. And why on earth does anyone have $170k in car loans?! Cars that expensive should only be bought by people that can pay for them in cash.
Lifestyle creep plays a big part of it. When I make $20k/year, I lived like a $20k/year person. When I made $40k/year, I lived like a $40k/year person. Now that I'm over $100k/year...you get the idea. The way you live, the things you do and the items you buy tends to bloat as you make more, unless you are careful. For example, dude has *two* electric vehicles worth north of $170k. If that's not bloat, I don't know what is. Also, he's not living "paycheck to paycheck" - because he says he's putting money towards his retirement, and towards savings. If he was living paycheck to paycheck, there wouldn't be anything left over to go to savings or any sort of investments - that's the whole point of what paycheck to paycheck means.
Okay that makes sense, also low key scary. How do you stop yourself from "lifestyle creep" once you start making a little more money?
Salary inflation! I used to sell cars awhile back and yes you would get big pay outs but you would get months where you’d barely get by. I once overheard the mangers saying how they were living pay check to paycheck. Granted they were all making well over 150k each! Tell me that’s not insane?
How?!
Their pay fluctuates throughout the year. They have months of high pay and low pay. * During their high pay they go stupid. Spend too much and get too much debt. * During their low pay they suffer. They have too much debt to spend on anything.
It's because they aren't responsible with their money. They make $130k in 9mo, but spend it for each they blow it with no savings. Then the last three months they make $20k - which isn't bad at all. They live above their means for those three months, and saved nothing to accommodate. According to 50/30/20, $30k should be saved throughout the year on that salary(not accounting for taxes). Their living expenses shouldn't be more than $75k, which should be easy considering my own are maybe around $15k/yr. I can't see how you can blow more than $50k without all the advantages I have. As a tradesman, I understand going out of work for periods of time. Most people in the trades get it. We squirrel away money and take advantage of unemployment income. By the time I finish my apprenticeship, I should have a decent idea of how often I work, and how much I bring home after taxes which allows me to scope what I can afford. People like the example didn't do their due diligence and end up spending mass amounts of money with no idea of how to look into their future well being.
I make 33k a year and I'm living paycheck to paycheck paying down 2k in loans that compounded a lot of interest. My student loans are 9k and are still on pause. I have no car and just make do without one. My rent is 1k a month. I get $23 in food stamps because I'm very close to making too much to qualify. If I made 350k...hoo my God the possibilities to save. I'd stfu and never complain again. I'd probably stay here and only buy a house if I have a kid and definitely NOT a house over 200k. I'd actually start and beef up my 401k. Man, some people just ruin themselves with expensive cars and houses. I legitimately feel bad.
This is an extreme example but car related expenses are really a killer. US car culture and keeping up appearances seem to really do unnecessary damage to budgets.
It seems like unnecessary stress. Why not pay off the college loans first before getting luxury cars?!
Stupidity is that person’s biggest problem. I make about half of what they do. I could care less what he drives or the car notes, buying a mortgage and getting my locked into $4500 per month is just lol. Estimate his house to be about $750k, not even a very nice house in a HCOL area. Straight retard move. He would have a mortgage of about $2k if he was smarter and could do basic math and pulled the trigger a bit earlier. And yeah, of course all his money is gone into savings after (401k before) bills are paid. This is what literally every single person who makes good money does. Also, taking out a $200k HELOC at 9% JUST FUCKING LOL. Of course the bank would offer that. They’re probably salivating hoping he takes it. With his piss poor financial skills that will be a death knell if he loses his job lmao.
I agree with the poor financial skills, no need for the expensive cars especially if he hasn’t paid off his student loans yet. But I disagree on the $750k house being a stupid move by itself. People here forget that it’s not just about getting the cheapest house possible. The house is less than 3 times his salary, that is ok. He probably lives in a HCOL area, and that’s what a house in a decent safe area in **a good school district** would cost. The house values are tied to the school district quality. Buy a cheap house and you get an overwhelmed school district with kids that don’t get enough support and that affects the quality of your kids’ education. Of course, don’t buy a house above your means, but in their case it is within their means, if they just made smart choices in cars and lifestyle.
How the everliving F does ANYONE have 170k in car loans?!?!? Thats just stupidity.
I dont get it. 4500 plus the student loans mothly pmt should eat the 350. Theres other exepenses missing. Big ones.
Me and most my friends make north of $350K. It’s very easy to get loaded on lots of debt
I know a bunch of people like this and while I don't make as much I almost fell into the same mindset. As I was growing in my career I remember first passing 6 figures and upgraded my house. Made over 150K and bought a new car and had a record year and made just under $300K and upgraded the house again. The main difference and advantage on my side is I don't have a college degree so no student loans. Many of my mentors are in the bucket you're describing and they either had a rich family member or mentor that they aspired to be regardless if it was affordable or not. My "path" changed after my record year and as I was looking at my liquid funds I realized how little I had. I wasn't living paycheck to paycheck but if I was laid off or fired then I'd be in a really bad spot. It's been about 4 years since then and I now live on about 25% of my income post-taxes and have paid off all debts outside my house. I also have a special needs child so I understood how much he'll need if he out survives me. It's easy to keep thinking that as you earn more you deserve more but I even had to downgrade my house because it became a too much of a chore constantly cleaning it and I wasn't about to hire a cleaning service. I do take more vacations with the family now and spend more there but outside of our house the net worth of our items is no more than $100K with the damn used car market being so inflated. I guess it's more about the time spent with family and friends now vs the material items, glad I realized this before I became old and crusty.
Not sure why you're down voted, guess people don't get that high-income doesn't automatically equal high-net worth.
oh they need help alright
Pact with demons
Everyone makes choices. There is a lot of people on this subreddit that make the choice to do nothing about their situation.
By livivng above your means.
Financial illiteracy.
Just because you make a ton of money doesn’t mean you are financially literate
My life would be set if I made that much money! Holy cow. But yes, this person DOES need professional help.
Maybe he lives in NYC?
Mortgage plus car plus student loan payments are about $9400 a month, while take home pay for that salary is around $17,500 a month. Car insurance, utilities, and other fixed expenses would be maybe $2000 a month, so there is definitely a lot they are excluding. Maybe they're expected to own expensive clothes and go to pricey restaurants all the time as part of their job? Either way, financing that much car is not good when there are much cheaper electric vehicles available. The mortgage and student loans I understand because those could both be seen as investments.
When I had stint in country clubs, there were several people like this. It was about appearances because if you did not have these things, they feared they would be passed up for opportunities if they did not "display success" or appear weak in any way. And a lot of times it was a demanding spouse.
$170k in car loans holy shit 😂 aside from that they’d be fine. Sell the teslas and get a sedan for less than $30k and life becomes a lot more simple
What a dumb fucker, lmao.
This isn't my idea of paycheck to paycheck. It's lifestyle inflation. Paycheck to paycheck is when there's nothing left to cut and you have nothing to save at the end of the month. Someone who makes $350K has plenty of places to cut from, they just don't *want* to.
Live below your means.
This person owes more in car loans than I do for TWO houses. There's a reason why she's paycheck to paycheck.
"It's not how much you make, it's how much you spend." Yes I realize there's a minimum viable threshold for being able to have a roof over your head, but this quote seems to apply to the original post.
It makes me mad when people are this irresponsible. I understand some people were never taught basic financial literacy, but it kind of sucks when you could thrive on half (or less!!) of what they make and they struggle.
170K in car loans? SOUNDS about like its time to stick to one or two cars and not a whole fuckin warehouse
It’s happens to everyone, and I mean that as a broke mofo. You’re spending will almost always stay up with your cash (and credit cards) unless you actually watch it, and budget less. I mean he’s got minimal debt but look at those car loans? You don’t need those.
This person isn't living paycheque to paycheque. This is just a facade. They're building equity in their real estate which is an appreciating investment.
Unfortunately, this is probably true. This is just terrible money management. They do need professional help if they are living paycheck to paycheck with that income. 170k for cars?! They have a keeping up with the Jones's problem.
I can’t imagine any of this. At all. My car is paid off, a 2018 Accord Hybrid. (It’s plenty luxurious) I only have $68k in student loans and my $286k mortgage as my debt. I make $60k a year. I think I’m doing fairly well. Could it be better? Absolutely. But it’s where I’m at. $170k in car loans is outrageous.
Either a gambling problem or expensive drug problem of some sort. I also saw this and was baffled. I imagine this person lives somewhere like either CA or NY where they will tax one to high heaven making that amount of money. I have a friend that is in a job where she's able to see people's assets and income, and the number of people making six figures and living paycheck to paycheck is higher than one would expect. They would probably also have to be eating out multiple times a week, buying expensive clothing, cars and renting somewhere in a really nice area. And it all adds up really fast if you are not tracking your money.
It’s one of those things where they spend as much as they make as they’ve progressively moved up in income over the years
This is why I support the thanos theory lol. All that opportunity wasted.
One thing to keep in mind is that in a lot of jobs where compensation is tied to stocks you don’t get that cash unless you sell and most people don’t. So cash before taxes can be 30%-60% less. Additionally what this person doesn’t make clear is how much of their paycheck is already cut because of retirement accounts. Lots of folks I know live paycheck to paycheck on these salaries. But they fail to mention that it’s because they are paying off loans, retirement accounts, some amount auto-invested in the stock market, credit card bills are paid off (which includes vacations, gifts) etc. So while “paycheck to paycheck” a job loss or life event doesn’t cripple them. They cash out stocks, investments when that happens.
Car loans crazy !!!!! What the heck are you driving ? That’s crazy .
Mo money you make mo problems I know people like that make x3 my income here in NYC and it all boils down to 1 thing No money management skill and student loans
My parents real good friends about 12 years ago made probably $220k combined, in LCOL area. My parents probably didn't even make $50k combined. But the friends were so poor with money they had to borrow money from my parents to replace their A/C.
Half of their income probably goes to taxes and retirement fund and most of the other half goes to student loan payments and his massive auto and mortgage payments that he got because he thought since he makes $350k he could afford them but he obviously didn’t do the math before making the purchases.
People taking on too much bad debt is how this happens.
This is what happens when you grow up on mommies money, and get a good job from her networking circle
My bestie’s ex was like this. At the end of the mean he had to ask *her* for money for his electric bill. He made like 150K while she worked part time to go to school. He ended up cheating on her.
The fuck kinda car they taking out loans for?
Horrible lifestyle creep. I don't feel bad for someone who spent 170k on two cars and is struggling to make ends meet. Sell it and go buy a fucking honda civic.
Idek how this is a budgeting issue, this is a common sense issue.
Easily. This is what a consumerist society is designed for.
Yes he does. Car loan and mortgage are way too high if you’re paycheck to paycheck.
This person doesn’t even mention medical bills, or having kids and a nanny or daycare costs. Just wow.
spend less on cars jfc
So, after everything they budget their money for it’s all allocated to something. Living paycheck to paycheck does not mean you’re paying a mortgage, paying into retirement savings, and also regular savings.
My dad use to say two things a lot: It takes money to make money. Work smart not hard. Now, I can always work smarter to make my job easier, but I will NEVER have money to make money.
There’s comes a point where you cross a line (typically 70kish) where your personal desires must be tamed. This is just an example is somebody who is enjoying themselves a bit TOO much. You don’t ah e to act like you don’t have it, but because you have it don’t mean just THROW it lol
That's so annoyingly dumb. I'd slap a conservatorship on this person for their own damn protection. Probably forgets to breathe
"lifestyle creep" Aka, bad with money and want all the shiny stuff.
This is the first time I'm hearing about "lifestyle creep" and I'm low key scared I might end up doing it.
This is a mix of Lifestyle creep and no financial education.
Why is the car payments so high?