800k household income - does not feel rich

poorkid1234 wrote:

before you call me a whiny rich guy, understand that 800k is actually 500k after taxes, which is 60k / month. that money disappears quickly.

wife and I are professionals and work extremely hard. we also have six figures of debt each from grad school, so 10k of that goes to servicing debt (principle and interest).

15k goes to our kids education (private school + 529 for 3 kids, ouch).

that leaves 25k left. where does that go?

10k to our mortgage in expensive as$ California - $2 million shoebox house

5k to entertainment (eating out, going to zoo, movies, etc with kids is NOT cheap)

3k to cars (loan, gas, insurance, repairs, etc)

3k to groceries

4k leftover for savings / retirement / investing. lol. how can you live off of 4k/month.

we are poor.

Move to FLA - they are passing a bill to help whiney white people like you.

It’s doable, but do you enjoy your life? Are a simple pleasures of life type of person? Assume you don’t have a partner or have an equally frugal one?

jecht wrote:

I live on 2410 net per month, it's doable. The key is not getting sick, shopping at Goodwill, no fancy meals, and no alcohol or very little.

If your house is payed of, it shouldn't be a problem.

poorkid1234 wrote:

before you call me a whiny rich guy, understand that 800k is actually 500k after taxes, which is 60k / month. that money disappears quickly.

wife and I are professionals and work extremely hard. we also have six figures of debt each from grad school, so 10k of that goes to servicing debt (principle and interest).

15k goes to our kids education (private school + 529 for 3 kids, ouch).

that leaves 25k left. where does that go?

10k to our mortgage in expensive as$ California - $2 million shoebox house

5k to entertainment (eating out, going to zoo, movies, etc with kids is NOT cheap)

3k to cars (loan, gas, insurance, repairs, etc)

3k to groceries

4k leftover for savings / retirement / investing. lol. how can you live off of 4k/month.

we are poor.

So many things wrong with this, where to start?

1) If your 800K gross turns into just 500K after taxes, you are likely getting a large tax refund each year, which you haven't mentioned.

2) 60K a month is 720K, not 500K, so which is it?

3) Assuming it is 60K a month, you said you pay 10K in student loan debt each month, plus 15K in kids' tuition plus college savings. 60K-10K-15K leaves you with 35K, not 25K. Maybe you meant to say 50K a month. Which is 600K a year, not 500K, but whatever.

4) If you have a $2 million house, do your kids really need to be in private school? Surely you'd be zoned for a decent public school.

5) 5K a month in entertainment? That's over 1K every week. If you and your wife work long hours to make that income, plus the kids have school, homework, sports, etc, there's not enough time in the week to even spend that much on entertainment.

6) 3K on cars? How many cars? Are your kids teenagers and driving as well? I suppose if all 5 of you are driving, that could add up, but you could take some of your 5K from entertainment and throw it at the car debt.

7) 3K on groceries? What are you guys eating? Even if you have 3 ravenous teenage boys, I can't imagine how you are spending that much.

8) You say you only have 4K left to live on, but this is after you've already paid all of your expenses, including entertainment. So you are already "living" just fine without this extra 4K. Even if you did use all extra 4K, that's 48K a year you are investing. Assuming your getting good returns consistent with the market, you'll be millionaires in no time. Plus you can also invest your massive tax refund you are likely getting, as mentioned earlier.

9) This whole story is likely fake, but in the off chance it's real, you need to update your w4, cut back on entertainment, and aggressively pay off your debts.

So many people are saying $3K/month for groceries is way too much. I beg to differ. I live in one of the cheaper parts of California, and I spend about $1K/month to feed two active adults. I don't think we eat anything extravagantly expensive and I save money on generic/store brands as much as possible. I can easily see $3K for a family of five in an expensive part of the state. We almost never eat away from home, so that $1K/month covers basically ALL of our food.

On the other hand, $5K/month for entertainment does seem crazy to me, and I agree that a $2M house, even in California, ought to get you into an area with decent public schools.

OP is rounding away several thousands of dollars a month with their math. Suggests lots of spending on other luxuries that they are too embarrassed to mention.

They are spending every cent of two huge salaries and thusly enjoying an outstanding quality of life.

Unclear what is so upsetting to the OP. Do you want to be stacking cash in your mattress too?

amkelley wrote:

So many people are saying $3K/month for groceries is way too much. I beg to differ. I live in one of the cheaper parts of California, and I spend about $1K/month to feed two active adults. I don't think we eat anything extravagantly expensive and I save money on generic/store brands as much as possible. I can easily see $3K for a family of five in an expensive part of the state. We almost never eat away from home, so that $1K/month covers basically ALL of our food.

On the other hand, $5K/month for entertainment does seem crazy to me, and I agree that a $2M house, even in California, ought to get you into an area with decent public schools.

Agree with this. We spend pretty close to 3k a month on groceries as a family of 4 (soon to be 5) and don't do anything too crazy. We shop at a Stop & Shop (not organic or fancy), don't drink and never really order out. $150-$200 of food per week per person really isn't that much money and is easily doable if you are eating sizable home cooked meals.

They say that comparison kills joy. Could it be that in our world, where even millionaires don't consider themselves particularly rich, the recipe for a joyful life is to stop comparing yourself to others? Imagine that your income is in the six figures, that you have your own house and still have a million dollars to spare. It sounds like, by all standards, life is good. Are you rich? Not. After reading an article on https://wealthyliving.com/money/soulja-boy-net-worth/, I learned that only those whose assets are $5 million or more view their financial situation as sufficient to feel confident about the future.

I can't say I agree with everything the OP says, but I do take exception to the comment on taxes. I am a real person who made $600k last year and paid $203k in taxes or 34%. I got $2500 back from the state and nothing back from the feds. There were major changes to the tax code a few years back and they significantly reduced the amount of deductions you can take on things like mortgage interest, charitable donations, and college costs. Even Business expenses have been tightened up. Throw in AMT (Alternate Minimum Tax) rules and you are basically stuck in the 30% range no matter what you do.

I'm not whining. I make a great salary and I'm willing to pay what I owe. But I do pay more in taxes than most folks even come close to making in a year, and I pay a much higher percentage of my salary than most folks do. I wasn't born into a super rich family, so most of my income comes from my Salary and not stocks or capital gains so I don't get those tricks either. I do however get annoyed when people chirp about the rich not paying their fair share? I sacrifice a lot and work 70+ hours a week to earn my salary. And I pay over 1/3 of it in taxes and get the same schools and roads and government services as everybody else who pay a lot less. I'm not looking for a thank you, but don't spit in my face while taking my money either!

How you make so much money? Own business or run investment company or something?

Call me old fashioned but I went to college on loans, got a job after where I worked for several years paying my dues, and that eventually led to them agreeing to pay for my MBA if I went at night (and worked full time during the day), and then worked my way up to Executive Vice President after many more years. I'm not in investments nor do I own the company. I just worked 65-70 hours a week for 30+ years, often missing important events for my family (birthday's anniversaries, sports events, etc) because I was out of the country. I made a lot of sacrifices to earn a lot of money. Work life balance wasn't really a thing for me which is sometimes the price you have to pay. I'm sure a lot of others have easier paths to wealth, but I've found that if you have the work ethic and strong conviction, you can get where you want to.

Almost anywhere. You’re still a whiny b*tch

So when it comes to finance, you're in a corner with that weird hat on your head.

Clever! I even said I was a Whiny rich guy. You really got me with that one.

And it's interesting, I've always found people are resentful of folks who do well in something through hard work. It so much easier to say "that guy makes more money than me because he came from money", or "that guy runs a 5k faster than me because he has natural talent". But its so much harder to say "that guy does better than me because he simply works harder and wants it more". Because then its your fault that you aren't achieving what you want.

I make no excuses, and have no regrets for everything I gave up to get where I am. People often ask me if money brings happiness, and in general it does. But everyone has problems, and money isn't always the answer. There are a lot of folks who make a lot less than I do and are probably much more content in life. My only request was- don't happily accept my taxes but then complain that I'm not paying my fair share.

I can relate to this post. AGI the last 4 years has averaged out to around 850k but is probably closer to 1m now. We also have 3 young kids and live in a VHCOL area. Here is how our budget breaks out from a monthly expense/cashflow standpoint.

* Daycare = $6500 + 1 in public school

* Car = $1k (1 car bought cash, minivan has a loan on it)

* Groceries = $3000 (easy to do with a big family and running moderately high mileage)

* Mortgage = $13800 (3.2m home)

* Entertainment = $3500 a month (averaged out/including vacations)

* Other miscellaneous = $1000

Basically this leaves us with 1-2k of extra monthly cashflow to save or invest.

The kicker though is that we are pulling in probably 200-500k a year in bonuses and stock vests which we completely bank and invest. Every couple of years we all seem to get some sort of weird liquidity event which seems pretty common with people at this income bracket.

I would say that your car expenses are hilariously over the top. I can't imagine spending 3k on cars. That is also a lot of money on schooling but if that is something you value then I get it. Entertainment looks bad on the surface but if it includes vacations then I get it too.

In short, you definitely aren't poor but a big family in a VHCOL area is tough and while I am sure finances aren't a stressor for you I can certainly understand why you don't feel rich. I don't know how old you are or what your asset level is but I will say that once our liquid asset level got up into the mid to high 7 figures we did start to feel a bit more affluent.

Your expenses sum to ~350k/yr. Unless you're voluntarily paying a 60% effective tax rate then this math doesn't check out. Looking more like 150-200k of FCF a year.

Unless you mean that 200-500k of your AGI is in bonus+RSUs that you immediately save in which case you are saving at a very impressive rate and have only yourself to 'blame' for such conservative financial choices.

how much in 'liquid' assets do you have and how old are you?

Before this year, how much were your investments making per year?

mmmKay. So what have we learned? When you make a lot of money, it's easy to blow a lot of money.

This is hilarious.

(1) 4k a month for investing. So you’re investing $48k a year. That’s a lot

(2) $15k a month for 529 and education. Let’s say ONLY $3k of that is for 529. That’s $36k a year

(3) Mortgage is an investment but i won’t even count that. But I should.

(4) cars will be paid off. Let’s say $2k a month of that is for savings. That’s $24k a year

So, on the safe side, EVERY YEAR, you’re saying $48k + $36k + $24k= $108k

EVERY YEAR YOURE SAVING $108k

Over time makes you a multi multi millionaire

GFY