As for the house argument, you and I both know that the two are totally incomparable. Putting a roof on your head is a much bigger priority than buying an electric supercar. People need to pay for shelter. They generally can't afford to pay a lot for luxury cars. If you argument is true, why isn't everyone buying $63,000 cars? (Not to mention the millions of people who can't even afford homes.)

Your posts demonstrates everything that is wrong with class stratification in America. I don't think you or your friends who elected to choose Teslas over Porches know what it means to be "average."

That means this SF bay area laborer must give up a Saturday or Sunday afternoon every week, but it's hardly impossible "to afford" or a "massive tradeoff in quality of life." On the other hand, it's challenging to haul a few thousand pounds of mulch in a Tesla, I expect.

Oh, and the $600/mo assumes a $7100 down payment, which needless to say is far more than the average down payment on a car and is really more like what the average american puts down on a HOUSE. In other words: c'mon.

Not to mention the opportunity cost of that money. If you're making $25/hr in SF you do not have a high standard of living, especially when compared to your neighbors which, studies have shown, is exactly how we measure our own financial happiness.

Though you're right about the down payment, so let's assume it will be a used Tesla and therefore cheaper. And you're right about the relative comparison point. But these were rough numbers, remember, and not intended to be a detailed argument as much as a refutation of the impossible "to afford" claim above.

I'm really confused by "average, middleish class people who normally would have bought a porsche or a tesla" - is that a typo? Did you mean "would not normally"? If not, your idea of "average middleish class people" is really oddly out of whack.

Many people by homes because of a calculation that owning a home is cheaper in the long run than paying rent over that same period of time. Many people buy homes not based on such a calculation and simply because they have disposable income and owning a home is nice. Many people also buy homes based on neither financial decision-making nor disposable income, and I seem to recall this having some negative impacts on our economy a few years back, which may make it a poor analogy to why it makes sense to buy a Tesla (or a porsche?!) without disposable income.

Then go look up the real numbers.

I suspect you're in for a surprise.

You're either being disingenuous or your perception of reality and normality is really skewed.

You'll probably see the posts saying this to you as condescending, but if you can even think of purchasing a Model S you're in a very exclusive group of people.

When one tiny sliver of society (web engineers) simultaneously wields so much influence (as web companies do) and is so cut off from the reality of America (as you apparently are), it doesn't bode well.

Outside of a couple critical mass areas in the US -- I'm thinking SV, greater Boston, NYC (just because everyone there is in their own little bubble ;) ) -- it's just another job.

And if you're not in the US, I wouldn't even know where this sort of SV halo exists.

I grew up in a ~30k household in the 90's. Something I would call lower middle class. Upper middle class is probably ~70k-100k.

$100k does not go very far in San Francisco and Manhattan. Nobody making $100k in those places could reasonably afford a Tesla without severe over-spending (which they're welcome to do if they want to--whatever floats your boat). If you view the middle class as owning detached single family homes with yards, you would be lower middle class at best in those cities at $100k. If your spouse also made $100k, you could afford the crappiest single family home that was still livable.

But it's a really good salary in Denver or Houston; you could definitely find a nice house to buy and afford comfortably, though it might have a bit of a commute. If your spouse also made $100k, you could afford a nice home in any neighborhood with no commute.

And it might nearly qualify you as wealthy in a small rural town of 15k people total, where you would never need to spend more than $150k on any house.

You know what else? Travel. Domestic and international travel is a LOT more affordable when you're making $100k in SF.

And a big one: Retirement. You sock away your SF salary for 40 years and then retire in a cheaper COL area with no state income tax.

The truth is, even here, $100k is a lot of money. It really is. It's not rich by any stretch, but it's certainly not average middle class living. It is frustrating that a couple making over $200k can hardly buy 1000sq ft house while staying inside 30% (of gross income) housing budget, a metric widely seen as "affordable housing." But still, on balance, that couple making $200k is doing very, very well.

And the truth is, there are a lot of engineers here that, with liquidity events (which might just mean vesting your RSU's in an already public company), are earning $200k a year. That literally puts you in the top 1% of wage earners. (But not in THE "1%" of course which is usually a term referring to net worth and not gross income. But still.)

Edit: The math is different of course if/when you add children to the mix. But I deliberately left them out, because in reality, it's just not a common lifestyle choice in San Francisco.

Small correction -- state income tax in CA is a big deal even if you're saving for retirement. And once you retire, you presumably won't care what the state income tax is.

Retirement savings goes into tax advantaged accounts like 401ks and iras. This is pre tax income. You pay the taxes at the end, when you're drawing from your accounts during retirement.

But for those people, taxes are immediate rather than deferred.

Actually, Roth IRAs are limited to $5000 a year per person, and once your income reaches ~$110k you can't deposit into a Roth at all. The vast majority of private retirement dollars are saved in 401k accounts that have have a cap much higher than in a Roth. Three times higher.

And actually, if you do the math (or just go read the math) you'll see that there is very little difference in your total retirement funds whether you use a pre-tax or post-tax account. This is because in a pre tax account you have the advantage of earning capital gains on the IRS's dime. The wisest choice is of course to use both if you can. Though many many people living in this area, due to income restrictions, cannot.

Anyway, I intended my reply to you as just honestly informative. I'm happy that you now are informed, but there was no reason to say "uhh, i mean a roth. yeah. a roth."

My reply was in the context of the $100k earner mentioned earlier, who would not be restricted from contributing to a Roth. Our hypothetical young tech worker is going to expect his or her real salary (and tax rate) to go nowhere but up as the years roll on. It's not bizarre to imagine this person might choose Roth rather than traditional for individual savings, independent of any 401k they might be contributing to.

There is only one way to read your comment: "Small correction -- state income tax in CA is a big deal even if you're saving for retirement. And once you retire, you presumably won't care what the state income tax is."

You didn't qualify that! You added a "small correction" that was anything but. And yes, you got me, I didn't realize that for 2013 (possibly 2012?) the Roth limit was increased to $5500. Still not much stacked against the $24,000 I saved in my tax deferred accounts last year.

Listen man, i'm not one for silly debates on the internet, so go ahead and have the last word. But If you're going to add a "small correction" that is not really a correction, you should expect some disagreement.

Perhaps what you really meant was "That's true, unless you chose a Roth IRA as your only form of retirement savings. In that case, current tax rates matter and future tax rates don't."

That still glosses over the fact that I'm talking generally and you're talking about a specific, somewhat rare scenario. But at least it's accurate. As it was, had I not replied to you, a casual reader would've read my post, then yours, and walked away assuming that retirement savings is taxed at your current tax rate, in your current state of residence, when in reality it's just not so.

And, yes, of course I'm aware that a Model S is the same price no matter where you buy it, to a first approximation. The point is that housing is so expensive in the Bay Area that you can actually end up having less disposable income left over for your car than someone making $20k less than you on paper in a much cheaper city and in a state with lower (or no) income taxes (Washington, Texas, maybe a few others?). If you don't believe me, you need to just sit down with a calculator that will do taxes and everything, look up comparable rents, and do the math. You sound like you might be surprised.

Consumer goods like cars and laptops and TVs will cost the same, to a first approximation, anywhere in the continental U.S. But in some coastal areas, you have real estate costs that are 20x that of cheaper areas with salaries/compensation packages that are generally not 20x higher. In central Pennsylvania towns the median household income, for instance, tends to be around $26K and the median house cost is $64K, meaning houses are 2.5X median income.

In Palo Alto, on the other hand, the median house cost is around $2.25M, and the median family income is around $160K, meaning houses are 13.75X median income. Part of this are older PA families who bought when land was cheap many decades ago and are grandfathered in with lower tax rates, but part of this is also people who are stretching their finances dangerously to be able to afford there. (Even though those $2.25M median homes are often smaller than the national average, measured by square footage.)

It's possible to make $100K in the SF bay area and be, in real terms, poorer than someone making half that in central Pennsylvania.

Population of San Francisco: 0.8 Million.

Population of Manhattan: 1.6 Million.

Population of London: 8.1 million.

Percentage of the world's population living in either San Francisco, Manhattan or London: ~0.0015%

Exactly what do you think an outlier is? If you live in one of those three urban areas, you're already a member of an elite class.

But I don't really understand why living in an expensive urban area automatically puts one in an elite class. The standard of living is not much better than other places for one thing--what you gain in diversity is lost in housing conditions. Also, it's not like $100k wages there are super rare. You don't need to be a 4.0 Ivy League graduate to score a livable wage in San Francisco. That's the starting salary for a lot of professions in cities like that, not just software developers. Police officers in the SFPD can make as much as a Twitter engineer fresh out of Stanford: http://www.sf-police.org/index.aspx?page=1655

Edit: I can't edit my prior comment. Time window?

I'm not crazy about percent notation. I find it confusing. I might have written it thusly:

> 0.0015 of Earth's population are living in San Francisco, Manhattan or London

I wouldn't buy a Tesla on $100k in North Dakota either. Maybe, if I felt like blowing through money, I'd get a BMW 3 series or Audi A4, both of which are still considerably cheaper than a Model S.

I was just pointing out that besides housing (especially owning) the cost of almost everything in CA is the same if you move somewhere where the cost of living is lower yet the salaries elsewhere are significantly less. So there is an opportunity to save a lot of money if you are willing to compromise somewhat on your living conditions.

I suppose it depends on whether you think it's important to own your home and/or you mind having roommates. When I first moved to CA I had severe sticker shock re: the rents so I rented a room in nice houses with other young professionals for the first 5 or so years I lived here.

If you can afford to spend the average household's entire annual income on a car coolness upgrade, then yes, you have disposable income to throw around, and no, you're not middle class.

Or sense. Or street smarts. That was the OP's point.