“People are stuck on this treadmill, working, working, working. They make $250,000, $500,000 a year and they don’t know where their money is going. They don’t have any savings. It is true but ridiculous.”
So the latest main stream media article that I read was all about how high-income earners in the Washington D.C. area aren't saving anything.
Boo hoo.
There is nowhere on this planet that a family making half a million dollars a year can't be maxing out their retirement accounts.
(Not to mention that all this excess is fueled by the theft of the American public through taxation.)
It just goes to show you that it is never about how much you MAKE, it is about how much you KEEP. Of course, those high earners can right their ship and quickly save a fortune – but almost all of them won't.
They are firmly entrenched in the “lifestyle” that living high on the hog will addict them to. Hardly anyone has the willpower to break free of it once they have had a taste.
While this whole article is light on details and seems like a paid advertisement, let's take a look at a few tidbits and see what is going on.
Food Expenses
Atwood said a family of four should spend about $1,200 a month — or $300 per person — on groceries. She has families of three or four members spending $2,000 and more each month.
I know grocery costs can vary a bit between the country, but this is just ridiculous. In my recent post, I stated that my family spends about $450 per month for two adults and two small children. I thought that this amount was still a bit too high and could do with a deeper look to try to save a bit more every month.
This “financial advisor” is saying that it's ok to spend 3X as much!
Not only that, but there was an example given of a family that spends $500 per month at McDonald's. “But when you have a husband and wife with high-powered jobs working 10 or 12 hours a day, who feels like cooking?” Was the excuse.
Come on. Do they think they are the only people who are busy? They think they are the most busy people in the whole world thus cannot make ends meet? Oh, I'm sorry you are so tired fucking over regular Americans to advance your special interests.
Please.
Life Expenses
“If the mortgage is $5,000 a month and day care is $3,000, and they have significant student loan payments, and they bring in $13,000, $14,000, $15,000 take-home, that leaves very little left over for the electric bill.”
So let's do the math. 5000 + 3000 = 8000.
That still leaves 5-8,000 per month for everything else. Based off these numbers, this is a family earning low 200,000s.
To pay $5,000 per month in a mortgage means the house was purchased for a cool million or so. I am guessing these people haven't heard about the rule to not buy a house that costs more than 3X your annual salary?
To have a very easy payment, you can follow my rule which is no more than 1.5X your yearly income. That way you can take out a 15-year mortgage and have it paid off quicker.
But back to the numbers, that is still up to 8,000 per month to pay the bills. You can't find a way to pay back your student loans, pay your utilities, cars, food, invest, and all the rest?
I call bullshit.
Plus daycare doesn't last forever.
My Takeaway
This reads like a field guide for "The Millionaire Next Door."
Let me point out to you some choice quotes from this excellent book.
“Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.”
“It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.”
“Great offense and poor defense translate into under accumulation of wealth.”
“How can well-educated, high-income people be so naive about money? Because being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.”
“Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.”
I could go on, but let's just say that if you want to understand this mindset then read that book.
So it really makes no sense to chase just a high salary. You have to account for what you will spend. You have to take into account the cost of living. Places with high taxes and high housing costs will just eat most of what you make if you don't think about the day to day stuff.
Plus, with those high-income jobs there is the push to “look the part” and that means flashy cars, suits, nights out, and more. All this will add up.
$50K per year in Iowa might get you the same lifestyle level as $80k in California. I know where I live in Arizona life is pretty cheap – that's why I am perfectly content here.
Also, this whole article smells like an ad posing as an article. It's pretty fishy.
The financial planner they interview charges $185 per hour and sells a budgeting software for $63 per year. She expects to gross over $200K this year.
Wow, $185 per hour! Where do I sign up to be a financial planner? I mean finances is easy-peasy to me. Does anyone want to hire me as a non-official money guy?
Here are some of her “top tips.”
- Prioritize. Try not to live each month to the very last dollar you earn.
- Spend less than you earn each month.
- Never say “might as well” when it comes to a purchase if you don’t have the money on hand.
- Make trade-offs for discretionary expenses. “Should we eat out? No, let’s use the money instead for Susie’s soccer camp.”
What sort of basic weak shit is this? And people are paying her $185 per hour to sort out their finances? No wonder they are broke and part of the 1%.
Guys, it doesn't cost that much. Here is a simple tip to save money every day.
Don't buy shit you can't afford.
Boom! Simple.
Here, they even made a video about it:
Let's end this on a nice note, here's another one for you.
This is symptomatic of society today. It infuriates me.
I'm setting up a business with no income and getting by OK on my meagre savings only to be told by someone I know, who has a good job as does his wife, bringing in over £100K per year, that he's really struggling with money. His problem is that he wants to drive a nice car, extend his house, buy designer clothes and go on nice holidays. To tell me that he is skint is quite offensive to me. With the money he earns I could live a very comfortable life and still put plenty of money into savings.
He's just one example. Most of the middle class in the west live their lives like this. I think there is an expectation that they deserve to live in luxury. When economic reality hits home at some point in the next 5 years I wonder how these people will cope.
Hey, I think the debt cycle has now started on the downturn. When interest rates rise, the belts get tightened, when belts get tightened people spend less. When people spend less, other people earn less. They earn less so they spend less and on it goes downward.
So yeah, the economic reality will be coming up soon enough.
Belt's tend to get tightened a lot faster than they get loosened. I'm guessing we are in for a shock rather than a slow decline.
That's such a good analysis, wow and actually that thing of the wealthy people not living in the neighborhoods that are considered for the rich, i had never looked into it that way. It's so right, i have noticed it.
Another mistake or disastrous belief most well educated people have is buying alot of shit in their houses, you know someone always wants to buy the coolest refrigerator or car the latest model. Or to go the most expensive hotels in the town to keep their job reputation in the society. The things we watch on t.v when they advertise samsung smart refrigerator and they make you believe that if you don't have it you ain't rich and so we have to have it.
From what you wrote above there, i understood another important thing
Living life as a minimalist.
The less the things you need to buy, the easier it is to invest your money or rather keep your money too.
Yeap, adopt the mindset that those things don't mean anything to you and your money is better off being used elsewhere in your life and you will find there are a lot of things you end up not wanting.
$300 per person on GROCERIES??? They'd better have gold plated packaging.
It's probably all because of that coffee that monkeys eat and then poop out. That shit is expensive.
This is actually true. Most time we don't even budget our expenses. Though I have a small income..I honnestly don't account from them...but these few last days I've been trying to see how far I can take the little I have and invest on them....this is still hard by now and I feel like may be I should start having a weekly list expense to reduce on the expenses.
How do you see that idea?
Moreover, @getonthetrain, regarding bto this statement,
Do you really feel like you really meet the family requirements? I mean children having all the necessities and then food, airtime, ....the reason is that I believe (though not yet reached there) that life is somehow expensive there. In Africa, you will be above the medium level of income with such a family number, but in the U.S I really don't think so.
Oh, we eat well and kids don't cost much in the day to day life. Only when you have to spend on extra seats on planes and tickets to events do they really start to hit your wallet.
Ahahaha.....true. I hope I'll be a good Dad as you, especially regarding to financial matter
Well, from what I gather from @getonthetrain he is definitely meeting the family requirements by implementing a smart Plan and thinking things through. So he can operate effectively on this level of spending.
That's a guess but an educated guess based on what I have seen here :)
It is one of lifes mysteries how highly educated people who are much better at math than I am (even though I'm highly educated as well), fail at third grade math when it comes to finances and investing.
Top tip:
If you can afford the $185 financial planner. Each time you feel like needing advice, take the $185 and instead of giving it to the financial planner, put it into an index fund.
Bonus point:
Forget you put it there. Check again in 20 years.
Boom!
How much do you charge for this information? :)
It is on the house, but the next one will cost you $185 for each starting hour. :)
If i make $500,000 Per Year I boosted your this post with all that money Haha great post @getonthetrain
Sweet! Go get that money then! :D
Sounds a bit like some of the people making a 5 figure salary in Singapore complaining. Oh, i got to pay my children's education, their other activities classes (music, dance, etc), loan for the car and housing, meals at the restaurants and holidays for the family. After that, the poor souls have not much money left. :-)
Those poor, poor souls
:D
Yep thinking the EXACT same thing. I, too, have my wife and two small kids. Well 8 and 9. But we are right at $550 per month for groceries .
Where the heck is $1,200 going to ? Let alone those others who are spending over $2,000 ?? Maybe they are getting high priced Lobster and caviar at the Store lol Who knows ?? But just ridiculous to me.
Thanks for the post @getonthetrain
Don't judge, it's going towards diapers... and booze, mostly diapers though. Oh yeah and condoms... so we do t have to buy more diapers...
Virtuous cycle, you understand right?
LOL
Oh, you know once you taste organic oranges hand harvested from the slopes of Bora Bora you can't go back. The guys at work might talk shit about your piddly one from Whole Foods.
Really liked your advice!!!
In the eyes of an European America is a consumer based economy! I don’t that there is another country in the world with some much debts for luxury goods! Still my 5 months in Missouri were great!
Wealth cannot be expresed by possession but by hapyness!
Oh yea, America has been molded into consumerism for sure.
But hey, if you can avoid falling for it all it does give the rest of us lots of choices, cheap secondary market sales, and convenience.
I feel a lot of this comes down to lack of education. We get taught who did what in 1805 but not how to manage our finances.
The most important education is your financial one.
I call it bullshit too :D
Great minds think alike
^^
Lolol
😂😂😂
"I like that. She's freaky right?! Ya go fer it!"
LOL
This happens so easily, even those of us who are frugal to begin with. Lifestyle creep is too easy if you are not vigilant. You can easily make your self service poor, cell phone, cable, internet, streaming video, stream audio, subscription services. That is all before the pitfalls of new cars and "upgrading " houses every 3-4 years.
Debt is easy to obtain, but gets harder to maintain.
Oh, lifestyle creep is in full effect at my workplace. Nobody understands the concept.
Good job deconstructing that nonsense. It's really important that people check this stuff out instead of taking it at face value! Verify verify verify
Added this book to my "to read " list, Have you check that other book called "rich dad poor dad"? I've heard ppl saying really good things about it|
Regardless of that just yesterday before going to sleep i argued with my parents because of something like this... they are 50-60 they have like 20 good years in front of them, and they have good cars, instead of buying new cars they should go travel and see the world, but my parents prefer to go and buy new cars like the new jaguar that is about to be released... i can't understand this, why buy a jaguar if they can just save half of that money by buying a much less expensive car, why buy a car that can go 250km/h if the speed limit is 120... I was even told by my father to stop putting money into investing that i'm going to lose it all, and that i should accumulate the money in my bank account ( what the hell is this mentality?! Why are people so scared of investing goddamn)
And i can't understand people that go to financial planners when everything they need to learn it's online!! I have my finances in check, ever since i was a kid i always wanted to accumulate money and spend as little as i could, and now with 23 it's like a habit for me! The only thing that changed is that instead of the money accumulating in my piggy bank it's being accumulated in the crypto market!
You should also check out that steembasicincome thing my friend!! I'll probably do a post about it but it seems pretty cool, a friend of mine already signed me on their bot with 1 share, hopefully i'll get more from some of my other friends
Yeah, I did see that PlayfulFoodie sponsored you for that.
I was thinking of doing a sponsoring post and handing out shares to people. What do you think?
If you got the SBD to spare then why not do it, the only thing that makes me hesitant is that the guy that owns the accounts can just power down and run away with all that cash, i don't know that much about the guy behind the project... Yes she was the one that sponsored me for that, she has been a great help for my steemit start, just as you have been :)
It's perplexing that people who deal with money on a regular basis and who are around so much wealth are so poor at managing it. They spend so much time playing the game, that at the end of the day, they don't have much to show for it. Granted, you probably have to buy a few more suits than the average person working that kind of job, but you shouldn't be broke. The videos were a perfect supplement to the article.
Pretty crazy that they can't get off the hamster wheel and think about what they are actually doing with their money.
Right?! Like wouldn't they want to actually take steps to make sure that some of what they are earning is going to be there for their kids? Or at least that if something happens to them or their job, that they would be able to survive for a month? They wouldn't have daycare expenses if they were laid off, but that's only going to help so much. It's really disgusting how little most people know about personal finance and how to "balance their checkbook." Most people don't use checkbooks anymore (thank goodness, because they always slow down the line) but they should still know how to tell the balance of their account and that it shouldn't be negative!
Rant over... for now. :)
I don't get how can people earning that much money are so bad handling their money?
They don't realize the monumental amount of stuff they could achieve by taking some of that money and investing it in promising industries?
America has so much wealth that the amount of people who is broke makes no sense! There is clearly a lack of education when it comes to personal finances because that is the only explanation I can find for news like that one.
Right. It's often those that immigrate to America who overtake those that have been born here.
Those that see America with fresh eyes can see the opportunity that abounds here still (even after years of decline) and take advantage. Those born here can see those opportunities and just go through life like everyone around them. If that means spending all you earn, no matter how much, then so be it.
You've done it again, hit the nail squarely on the head! It's such a mixture of emotions I feel when I see people throwing away their potential wealth: sadness, frustration, laughter and confusion.
I especially like this section you quoted from "Millionaire Next Door," “How can well-educated, high-income people be so naive about money? Because being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.” That really cuts at the heart of what wealth is. It is more about discipline than about being talented, smart, powerful, etc. Like you said, it's about what you KEEP, not what you EARN!
Acquire the wealth mindset and you will do well on any income level.
Acquire the consumer mindset and no income level will be enough.
What are their jobs if they earn that big? Do they have jobs? Or businesses?
They are higher grade government employees, lobbyists, and yeah probably some business owners.
Man, higher grade gov't employees... No wonder. That's terrible if they don't get to save!
Your post is golden.... i just follow your post... so kindly follow& upvote me thanks for sharing..
Try to save more before you think about earning more. Always helps.