Where I come from, everyone wants to make MD/Partner, ether in law, finance, or consulting. More generally, MBA applications to top schools have been rising for years.
Besides, if 10x the median individual income isn't enough outside of SF/NYC, you got bigger problems.
10x the median income just isn’t that much. If you have three kids, money is still tight. I’m arguing that we are all making less and that startups are making people rich because they’re actually getting paid what they produced.
You are taking home (in California; approximately) net 7.4 times what people with three kids on the median income are taking home.
If you choose to live a median lifestyle, you can save 86% of your net income and therefore retire on it within 4 years.
The "live like the median person, bank 86% of your income, and retire in 4 years" strategy works well in times of abundance, where the median person has a decent life. Once people start expecting shortages - where the median person ends up dead, or unable to complete life milestones they desire like having kids - it becomes less feasible. I've seen a large shift in expectations over the last 1-10 years (depending on how far down the income distribution you were), where more and more people are realizing that bad things might be on the verge of happening.
You have a remarkably apt username
https://www.financialsamurai.com/scraping-by-on-500000-a-yea...
Sorry, describing an old boss.
Do they really though? That's really the owners getting paid that, not all the workers. And a lot of that is really valued on the potential rather than what was actually produced to that point.
"10x the median income just isn’t that much. If you have three kids, money is still tight."
That's about $400k, right? That seems like an insane amount of money (I'm not in the Bay area).
If you extend your reach to very far out areas - you can get a better home and your dollar goes further but you're sacrificing on commute and then you don't have a very comfortable lifestyle because you're commuting really far.
A very comfortable lifestyle for most people in tech would be: two luxury cars (bmw/mercedes/porsche/modelsx), good public schools, safe and pleasant to look at neighborhood to purchase a home in, short commute distance (<30 min), and the usual lake tahoe trips, one-two vacations abroad a year, plus the usual smaller vacations, etc. You're not doing that on $400k/yr in SV. If both partners make $400k/yr then sure. I'm skipping out on the nanny, private school, prepared meals, and so forth because I think that's going above and beyond.
People I know who are at $400k/yr (household) are not buying homes in the peninsula or - just generally - close to work.
In what way is this not "comfortable"? What is your definition of "comfortable"?
Like, I grew up in a 3BR, 2 car garage house that was <2000 SqFt. It was absolutely "comfortable". I had friends who were lower income who had smaller houses who were comfortable.
You're describing an inflated, luxury lifestyle. You even sort of admit it when you say "very comfortable lifestyle for most people in tech". That's not "very comfortable", that's "very comfortable for people who are already very comfortable". I feel like this is a sort of keeping up with the joneses thing: comfortable implies "more comfortable than the median person in your social circle, where your social circle is all tech people with 400K a year or more household incomes".
Like another way of putting this is that a 400K income should allow you to afford a nice 3-BR rental and kids and save money. If you don't have kids, 400K allows you to keep a luxury apartment in SF and another one in the south bay, you know, if you want to do that.
Exactly. I consider a "comfortable" lifestyle to be a 3BR house in a safe neighborhood, 2 reliable cars, 2 week+ domestic vacations/year, plus saving enough to give a nice cushion in case of emergencies / retirement.
I'm terrible with budgeting / saving and I was doing this working for a startup on a $120k/year salary. Granted, this was 10 years ago and housing has appreciated significantly since then, but still. $200k would be more than enough to enjoy this sort of comfortable lifestyle.
And I don't put renting in the "very comfortable" category. Nor do I put "reliable" cars or domestic vacations. Safe neighborhood? It's expensive - $2m expensive.
Do you have any real insight to the CURRENT housing market in the SF Bay Area? Housing is the big cost. It's more expensive to have a garage for a Porsche than the Porsche itself. I can literally go out tomorrow and buy a 911 but CANNOT afford to put it in a garage. That's how fucking ridiculous it is.
Yes they are. I know people who've gotten them. You can find a 3br/2bath single family home with a garage, for less than 5K/mo in SF, Redwood City, Palo Alto, and tons in Sunnyvale and Mountain View.
> I can literally go out tomorrow and buy a 911 but CANNOT afford to put it in a garage.
The 911 costs more than a year's rent on said 3/2 SFH with a garage. For many, it's more than 2 years rent. Yes, if you want to own a $100k car, you'll have to sacrifice in other parts of your life.
Show me the listings! https://sfbay.craigslist.org/d/apartments-housing-for-rent/s...
You're all ignoring the general sentiment anyway. Not like it matters. Cherrypick all you want. Beating a dead horse. People are so dumb here about COL - acting as if $200k is truly enough to "very comfortably" live here. Ask any engineer in SV if they want to just stay at $200k/yr household income (and they don't own a home and they don't have wealth) for the rest of their life and they'll say no.
Yes, because people want to be more than simply comfortable.
The area isn’t that bad except for COL. Once you’re rich, it isn’t that bad. So, just get rich. That’s the basics of it. It sucks but at least there is a solution for those that are ambitious enough. Can’t fix bad weather or jobs.
"People in other areas have jobs. People in SV have careers."
This seems a little over generalized and even pompous. There are plenty of people who have careers in other areas. Just as a single example, how about the financial developers in NYC, like at Jane Street? There are plenty of people who leave SV too.
People here keep nitpicking about the generality of statements I'm making. They're not getting the general vibe and the general vibe is the point. Just because you can cherrypick some data that says there are people with careers or people with PhDs in some other area does not mean that it is like SV. Surely you understand that?
Who the fuck would move here when homes are $2-3m? People who are dedicated. That's the difference. People talk about leaving the bay area to slow down or give up careers. They don't talk about leaving the bay area to start the next big thing. (Regardless of all the BS you see about X cheap-ass company moving to Y city)
I think it's more about people who want some sort of status or virtue signaling. There are plenty of successful start ups in other cities like Seattle, NYC, NOVA, Austin, etc.
I think the reason people are "nitpicking" is because the majority of people don't live in SV. So if anything, talking about dev salary and saying $400k is barely enough, one would have to cherry pick data from SV to justify that statement.
You're probably looking at a TCO of ~11k/month (mortgage, tax, & maintenance, and it's really more like 9.5-10k/mo after the mortgage interest tax deduction), which is arguably an unwisely large % of your ~20k post-tax take-home, assuming you're putting away a substantial amount into 401ks, but you're left with 9-10k/month, which means you can put easily waste whatever you want on luxury cars (as if you can't be "very comfortable" leasing a new Japanese sedan for under $300/month instead of lighting money on fire for the pleasure of driving less reliable vehicles).
But, I mean, you _could_ if you really wanted to. And still have enough money to travel internationally twice a year. And outsource whatever percentage of your cooking you want to takeout. I'm glad you agree that a full-time nanny would be stretching the definition of "very comfortable", and private schools seem superfluous if you're buying expensive real estate, since part of what it buys you is a spot in the local public school, and if you don't want that you can relatively trivially arbitrage it away by buying a cheaper house in a different zip code.
Is it possible that those people are making the arguably sensible decision to rent instead of buying, because the price to rent ratio in the Bay is truly absurd, and not everybody cares enough about "ownership" to spend an extra 20-30k/yr on it? That doesn't mean that they couldn't make the finances work if they had to, they just have... different priorities. Like putting an extra 20-30k/yr into the market.
The majority of people in tech do not work in Silicon Valley or even US tech hubs for that part. Friendly reminder entire continents across either side of the US coast by with less than 15% of that number and would live extremely comfortable lives with just the 100k that often gets tossed around here.
Is it a surprise that cost of living DIFFERS WILDLY based upon LOCATION?
You might want to take your own advice and re-read, since I wasn't talking about developing countries either. Or should we consider Western EU, Northern EU, East Asia all as developing countries?
They're talking about 60K being good enough on the east coast, and 100K being very nice on the east coast.
I believe the OP is talking about the owners of the startups.
The tradeoff here is that if you have 3 kids, you can't afford to work at or start a startup, because your income today will be less than at a BigCo. The number of startups that will pay you 10x the median income, today, is pretty low (they're all already unicorns, which means your upside is somewhat limited) and you need to be fairly senior anyway.
If I was to retire near him I'd be able to make a million last for a very very long time.
Whoever says 200k isn't a lot of money is full of crap. You can live very well off 70k in most of America.
Corporations are the boogeyman de jour but from personal experience, landlords / restrictive zoning / "anti gentrification" activists are the primary cause of my angst. I make more money now than I ever thought I would, but a truly staggering amount of it goes directly into my landlord's pocket.
Real-estate prices have no bearing on 'value' of the land or materials. The buyer is convinced that he will get that money back and then some from the next sucker to buy it off him. It a pyramid scheme, detached from real economy.
However, part of the way we got here is specifically due to neighborhood segregation and zoning laws. People don't like their housing going down in value, so they protest anything that might cause it to do so. Whether or not upzoning would actually harm property values is not material: the fact that people believe it to do so is enough to get them to protest increases in the housing supply. This means that every local government is blocking housing supply and working to keep prices high, which makes housing an artificially safe investment, and thus encourages infinite speculation.
This will continue until we break the idea that home ownership = retirement plan and that dense housing = cheap housing = crime. Once that happens, then it makes far less sense to speculate on real estate and we can start unwinding this long con. The reason why maximum mortgage amounts are so high is that banks can't lose - if the the debtor pays off their investment in full, then the bank wins; and if they default, then the bank repossesses a house that is likely worth more than the principal of the loan, so they win. There's no default risk - if that were to return, then banks would be more skeptical of who they lend to, and that would put start quenching demand.
And even if that were not the case, with real estate climbing 8% or more per year, they are still in line for a huge payday if / when they choose to sell.
The landlord is the scourge narrative bugs me. There are for sure a bunch of terrible land lords especially the huge soulless companies but there are a lot of little family operations that don't try and gouge their tenants.
I don't begrudging the ppl who bought houses for their good fortune. I resent when those people block new development in the name of maintaining "historical character" or whatever other invented excuse to keep their own property values high.
That's not a positive, isn't it? Back in the mid-1990s there were entry-level jobs with a career trajectory, you could drop out of college, join a school district as computer herder, move to a hosting company and get into systems programming and then go to work for Google and Facebook. (Hi Rachel!)
That doesn't exist any longer, nowadays everyone goes and grinds leetcode for months to prepare for interviews.
If you can manage to max out your 401k contributions from college graduation all the way until retirement, it would be hard not to have at least $4-5 million.
Is that even reasonable right now, for someone that graduates today? I have no idea. But it doesn’t seem like something that would be restricted to tech workers in the Bay Area. It might even be harder to do in the Bay Area than in Des Moines.
That literally places you amongst the richest 1%. Not metaphorically, literally.
A couple of years worth of saving is enough to give you passive income to never need to work again for food or shelter.
Utter bullshit.
>$150k is not even enough to buy a small home near your workplace in a lot of cities
Live within your means for 5 years, invest the 70k/y excess money into index funds.
You can live of dividends anywhere in the world that isn't a capital in a first world country. Without even losing money.
Literally the 1% pretending to be poor and living in worse conditions that janitors 50 years ago. Yeah, right.
Perhaps it stops at like $500k/yr?
It stops once somebody’s net worth is already so high that their annual income is irrelevant. Those are the real wealthy people.
This is just batshit crazy.
For another example, Dow Jones with dividends reinvested gives a 180% increase, i.e. you'd have to make 560k. Of course this is not really inflation, but it gives a sense of how much you're missing out on vs. asset owners (please correct me if this is massively wrong).
[1] http://www.shadowstats.com/alternate_data/inflation-charts
House prices are simply bonds tied to rent value and interest rate and affected by certain demographic trends. The all-told carrying costs of a mortgage right now are actually lower than they were 30 years ago, considering inflation (the principal might be higher and you don't get the tailwind of dropping rates to rebalance and whatnot, but it doesn't change the fact that houses are technically more affordable, not less).
Edit: Here's a graph of housing prices when adjusted for inflation & mortgage rates: https://realestatedecoded.com/the-shocking-truth-about-house... (although the down-payment is more unaffordable, yes, but you can generally buy things with as low as 3.5% down)
no way. It is so competitive here that buyers are inundated with all cash offers.
The craziness going on right now is due to several factors: (1) all time low supply due to pandemic restrictions/fears; (2) Work from home transforming housing values (single family homes a lot more appealing if you only work from the office occasionally); (3) Millennials aging into the housing market and boomers holding on to their properties (see 1) - also a lot of stock is now owned by investment companies / pension funds past 2008; (4) Housing is the safest way to take a leveraged short on the US dollar (which a lot of people fearing inflation want to do); (5) Capital flight from other countries like China (though that was more of a factor pre-pandemic) - real-estate is the only industry where anti money laundering provisions are severely watered down / non-existent.
Rents have remained low in my city but housing prices( which GP is talking about) have gone up over 30% last 2 years.
Its pretty easy to find a rental but almost impossible to buy a house here.
I wonder why the whole "secret inflation" theory seems so popular among techies, I see it multiple times a week on HN.
https://en.wikipedia.org/wiki/Goodhart%27s_law
Or how about https://en.wikipedia.org/wiki/Campbell%27s_law ?
Both of those are good and reasonable rules to describe the world, and something that is very intuitive. That is why a lot of people find government inflation stats suspect - even if they are measured correctly!
Housing, Health and Education.. these very basic needs have consistently outstripped official inflation numbers. Specifically on the US coasts. Correct me if I am wrong, but I believe the cost of housing is completely left out of that inflation number. Which in my opinion is kind of silly.
The formula for the index used considers substitutions. So for example, let's say Wool gets expensive, they expect you to substitute it for acrylic. If beef gets expensive, they expect you to substitute it for chicken or turkey, and so on. This isn't the reality people _feel_. For example, I for one, would realize I am no longer able to afford wool socks, and have to make do with acrylic socks. In essence, feeling poorer than I did before.
Now your criticism remains valid, to a slightly lesser extent, because if everyone gets poorer and trades wool for acrylic socks, they get replaced in the basket. Not to artificially depress inflation, but to reflect what everyone (now poorer) actually buys.
The issue is, obviously you need substitutions. The finance example is going to be horses, so let's go with that. Nobody buys or rents horses anymore. They are exclusively the domain of recreation. So having them in the index would be lunacy.
One measure people use is the "big mac inflation index", a PPP index. That one would tell you that inflation between 2010 to 2020 is about 76%, or indeed 5.8% per year average.
But that's how the FED chairman Powell (and all those before) will dress it up these days.
[1] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
The reason the Bay Area is so much more expensive than Tulsa, Oklahoma is because many people would much prefer to live in the Bay. Adjusting completely for COL ignores the reality that living in the Bay is, to some extent, a luxury.
I make less than $100k and support my family in an average area. It does feel like I'll work until I die. If I were making double that, it would be a huge difference.
Located in the Midwest USA
I guess it is about expectations about what you think you should have. I don't have a Tesla for instance.
Imagine thinking 150-200K isn't that much while there are millions of minimum-wage workers trying to survive on under $30K. (EDIT: And in some states, only $15K!)
No FAANG company even made the list for Entry Level on the Levels.fyi 2020 list: https://levels.fyi/2020/
People are getting “rich” from startups because they’re actually capturing the value of their labor, which I argue, used to happen at corporations.