They still have 7k a month to live on. I don't see the problem.
$2800 for loans.
$3500 for mortage and escrow.
$1300 for child care (both work).
$1000 for food and day-to-day living expenses.
$1000 for utilities, Internet, services and recurring expenses --- parking, commute, health care copay and (with most employers) dependent coverage, etc.
I get $9600. Survivable? Of course. You can clearly survive in America with a $2800/mo student loan burden offset by a $200k/yr income. But:
* It's not "comfortable"; for instance, they aren't putting away money to put their kid in college.
* It's not resilient; they're fucked as soon as one of them loses their job.
* It's not flexible; for instance, they might literally not be able to afford to have a second kid.
Now, they don't have kids, I get that. But the moral of the story was, their student loan debt load was so high they couldn't stay married. They're smart enough to make 200k/yr, they're smart enough to do this math.
It's doable, more than doable. I hate being judgmental or assuming more than I know from their situation but these people just reek of getting overextended and not being able to apply any discipline in their lives.
Then again, they're both law students and didn't read the fine print. Would you really trust a lawyer that did that? I wouldn't.
I still think it's ridiculous. I'm not going to go into a point by point rundown because it would take a lot of space and fork the argument several times, but basically I feel that if you ran these numbers by most Americans they would first laugh out loud, then get a little angry.
You seem to think access to top schools and a luxurious lifestyle are prerequisites for a marriage. Empirically, this is false.
That's looking at this situation WITH children. Once you take the children out, as was true with the original case, it gets even more ridiculous. They no longer have such a case for a mortgage and even if they do keep it, they can put away about 1500 a month by not feeding and babysitting a kid.
"One breath of scandal, and not only would the Giscard scheme collapse but his very career would be finished! And what would he do then? I’m already going broke on a million a year!
The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay out $21,000 a month for the $1.8 million loan he had to take out to buy the apartment…
Of the $560,000 remaining of his income last year, $44,400 was required for the apartment’s monthly maintenance fee… $18,000 for heat, utilities, insurance and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes. Entertaining at home and in restaurants had come to $37,000. This was a modest sum compared to what other people spent."
Another perspective:
UrbanBaby is an anonymous message board frequented by some typical New York UES/UWS mothers. Here they talk about not being afford private school on $400k/yr
DC = dear child, DH = dear husband
Again, they didn't die. They just broke up. And $2800/mo is a shitload of money, however you want to rationalize it.
My point was that they could comfortably go from 2,000/mo in interest down to under 1,600/month in three years. Interest is API / 12 per month so principle gives (1 + API / 1200) ^12 return per year. (1.01)^12 = 12.8% that's after taxes and powerful. They should also be making more money over time even as their debt is less of a problem and you feel good that debt is shrinking fast. Which should help the psychological situation.
Using 12% an extra 1000 down saves them 10$ in next month and every month after that it keeps compounding. At 1000$ per month over interest you pay down 12,700 in principle in one year (assuming you don't reduce your payment as interest drops). In 3 years they are saving 430$ / month, but assume they roll that savings into paying down principle in a ~9 years it's all payed off.
But, they don't need to wait that long, they just need to find the right cushion so they feel comfortable taking on more debt. Pay down 82k (saving 820/month) in 5 years and the world looks like a brighter place, your making more money, and buying a house might be a good idea. Don't want to wait that long, fine share a 1 bedroom, drive a used Honda civic etc and and all that debt just about GONE in 3 years.
Thank heavens I have no loans, just have to pay my wife's off....
Again, I don't see the problem.
* Commute distance, which will determine how often they actually see their children.
* Lease security; it is extremely traumatic to move a school-age child to a new school district, or even just a new school.
* School quality: the places with the best rental stock are not necessarily places with acceptable public school, or accessible child care.
Again: the article's claim isn't that a couple can't survive on 200k. It's that they couldn't stay married. I can see reasons why.