Re:Please Don't Show Us Another “Typical Family Earning $270...
by jedberg on Friday December 22, 2017 @08:24PM
(#15992342)
Let's look bottom up. A typical house in my neighborhood is about 1800 sq ft, 3/4 bedroom, so enough to have say 2 kids. It's about 2.2 million to buy said house. So that's about $8000/mo in mortgage, assuming you somehow managed to save $400K for a down payment. You'll also pay about $2000/mo in taxes. So that's $120K/yr just on housing costs.
But my neighborhood is the "poor" neighborhood. Most of the folks who live here make about $200K-$300K a year.
Over in the $400K neighborhood, their houses are about 2000-2500 sq ft, and cost about $3.5M. Keep in mind the median home in the US is about 2200 sq ft, so these houses are right in line with the US median.
At $3.5M, assuming they can save a 20% down payment, they'll be paying $14,000/mo in mortgage and $3,000/mo on property tax. So that's $204,000 a year just on housing to live in a median size home with good schools.
Using your math, after taxes and 401K, that leaves $38,000 a year for everything else. Or if you skip the 401K, it's $78,000 in post tax money.
So like I said, you aren't hurting, but you aren't crazy rich either.
Let's do a simple budget for a $400K household. This puts you in the top 1.2% of incomes, nation-wide, by the way. Say, 40% of that goes towards income taxes (A bit of a high estimate, even, since taxes are progressive, there are deductions, your 401K isn't taxed, but whatever).
That leaves $240,000.
Two adults, so $40,000 goes to your 401K, no questions asked. It's the responsible thing to do. You're already saving as much as a median SF household takes home, but that's fine.
Two cars. You can buy a working car that will probably last you seven years for $10,000, or ten years for $20,000. Let's ammortize it at $2,000/year, with another $3,000/year in gas, insurance, oil changes, tires, etc.
That's $190,000 left over. Let's say you take two nice family vacations, for another $20,000 total. That's not living frugally, since you're spending more money on fun then what someone making your coffee makes in a year, but that's fine, you're definitely middle class.
Let's say you save another $50,000/year. Kids need braces, your car may get dented, you might want to order tex-mex every once in a while, you want to build that retirement fund.
You're left with $120,000/year in cash, to spend on food and housing.
If you can't figure out how to live on that, I hate to break it, but you're mismanaging your money. The median SF household lives on $77,000/year - that is BEFORE taxes. Half of them manage to raise at least one child on that. $400,000/year is completely out of touch with what normal middle-class people can spend. You don't need two Model Ss, Junior doesn't need to go to a top 5% elementary school, and you can probably make due without a two-week trip to Spain and another to Hawaii.