People that make >$300k per year: What do you do with your money?

Vdfvfdvfdvfdvfdvdfvdvfs wrote:

Not very much, unless your wife also makes $300k.

You get to save a little when your household income is $500k+

The number goes even higher if you have more than 2 kids and/or if your kids decide that they want to go to an expensive College. You will already be sending them to a private school when you are at 500k+

It gets a little easier with every 100k, but then High School turns into Exeter... so you now need even more.

I don't know where the number is, but in my mind it's probably closer to $1 million+ in annual household income. Just saying that because I have not achieved that yet. Maybe the number is higher?

That’s weird, I reported HH income of $580k last year and don’t send my kids to private school.

Give much of it to the government to spy on Americans and kill innocent Muslims.

OK, I'll bite. Yes, I have a +$300k annual income, so I'll give you some insights. But first, how in the world are you spending $8 - 9k per month as a 30 year old with no kids? Are you in NYC renting a 2,500 sq./ft condo with two garage spaces? Does that include $3k in student loan payments? That is an eye-popping figure to me.

After taxes, I net about $13k per month. I get another $50K in company stock, so that goes straight into savings. My end-of-year cash bonus goes straight to savings as well.

Where and how I live is really the difference maker for what I will tell you. For me, I live in a really nice house that is worth about $650K. It is in one of the best public school districts in the state, so no private tuition. Real estate taxes kill me at $15k per year. Add insurance and utilities, and the occasional roofing or plumbing issue and the house costs me about $2k per month (without a mortgage payment). I drive really modest cars and keep them for about a decade (pay cash). Not much here. I take modest vacations (not quite Clark Griswold, but close). The stupid stuff adds up - baseball camp for kids, swim team, summer camps, clothes my wife thinks are "cute" for the kids (she does not work outside the home) - this will come later, but don't underestimate it. Add in $5 - 10k for charities.

Add all those things up and I can sock away +110k per year (including my stock). I think this is pretty good for my income. At this point, you can put aside the $15k per year in the 401K at work (or whatever the max allowable). You can set aside the $250k per kid in case they go to private colleges. You can easily fund retirement beyond the 401k and pay-off the house. Then, when you hit 50, you get restless. Do I quit early and take on a more meaningful career (non-profit management, teaching, etc.). Do I buy a ski house? Do I buy a hobby farm?

So, before you get to those existential questions, what do you do? If I was that fortunate at 30, I would:

1. Buy a reasonable house you can live in for 10 years (think about the school district for resale value, commute, etc.)

2. Pay off you student loans in an accelerated timeline.

3. Max-out the 401k, IRA or whatever tax-advantaged options you have available.

4. Learn investing for yourself (read the WSJ, Money, etc.) rather than relying on people selling you things.

Good luck and don't go wild, you never know what you'll want to do at 45. Having the savings makes more things possible.

I appreciate the advice. Yes we are paying off at least $4k per month on student loans, rent 1 bedroom for $1600 in a downtown area. I plan on saving as much as possible.

What I wanna know is how people live with less than 300k/year

Do you do a back-door Roth IRA?

I don't make $300k/year, but make $280k and here is my spend-

Mortgage

2 x Cars + Gas (big commute)

3 x Soccer Academy

Gym + PT

Wine + Restaurants

Travel 2-3 x year

If you're asking about whether you should do a backdoor Roth IRA when you're 30 years old, kid, you have no idea what you're doing. You shouldn't asking for financial advice on a internet forum anyway. Go find a good financial advisor and an accountant. End of thread. You're welcome.

Not sure if you only want to hear from individuals. Neither me nor my partner make $300K, but together we make about $370K.

We are older with no kids. Our expenses are pretty modest. We don't own a car (lifestyle choice, not trying to save money), and we don't have cable TV (use Netflix, iTunes etc to get the content we want to see). Our monthly housing costs are pretty low, and the home we own (worth about $900K) is rented out (we are living abroad for work), with rental income more or less covering costs for that house (mortgage interest, taxes, condo fees, etc) after taxes.

Our net worth currently grows at about $20k per month (mostly from income, not growth of investments). We have a mortgage on the house (about $500K) that we are more or less only paying the interest on. In addition to the house we have about $1M in investments, mostly in stocks (including a chunk of company shares with my employer). We are not rich (net worth about $1.4M), but our earnings (getting close to lifetime peak I imagine) give us a pretty high current rate of growth of our net worth.

We like to travel, so we feel free to spend what we like, when we like, to go someplace new. We donate a decent amount to charity. Beyond that and basic living expenses, most of our money is just going toward growing the nest egg to sustain a comfy retirement that will support living warm in the winter, and travelling as much as we like for as long as we are healthy.

I completely agree with all of midwest city's above advice. Counting bonus + stock, I also make $300+. My wife's salary is similar. Combined net worth, including equity in main home + vacation home, is in the $4M range. Middle age.

If you live a relatively modest lifestyle like midwest city and I do, then at some point you start prioritizing your time more than money. Sock away as much money as you can early on and don't blow it on stupid stuff like a boat that you never end up using, or other depreciating assets that don't give you a return on investment in terms of enjoyment. Before you know it, you'll be calculating how early you can retire and do whatever you want with your time besides work.

NYC, late 20s, bachelor

-Rent: $4k

-Car Parking space/insurance: $470

-Utilities/Cable/Internet: $250

-Gym Membership/Trainer/$300

-Booze/Restaurants/Dating/Concerts/Sports tickets: $3k

=$8k/month, $96k year

Travel: Varies a lot, some years $10k, some years $30k-40k

Charity/Family Stuff: $15k-$20k

401k/general Savings: $150k-$200k

Taxes are absolutely brutal, effective tax rate is 44%, marginal tax rate is around 54%

and yes, I did go sub 15 on the track, was primarily a 1500 runner

Double income, 2 kids, ~300k

In order of highest to lowest expense:

1.) Taxes will blow your mind (partially self-employed)

2.) Nanny

3.) Mortgage

4.) Tax-sheltered retirement (401K, backdoor Roth, etc.)

5.) Private school

6.) Travel

7.) Groceries & eating out

8.) Frivolous expenditures - shopping for fun, hobbies, etc.

Probably forgetting something, but that's the rough summary.

Slow Bro wrote:

Sara Palin wrote:

I have a hot wife, 14:11 on the track, and make $120,000 annually. I have no idea what I would do with an extra $200,000, so please keep the honest answers coming.

I have a $300,000 house 5 bed 2.5 bath, Mazda SUV. I could retire at 50 but won't.

Honest question - if this is true, why such a cheap house? I make $100k but my house is worth $750k (I obviously didn't pay that much for it).

Do you just live in a really affordable area or something?

I didn't think about that. For reference, I compared Cleveland to San Francisco. My salary would be equivalent to $400,000 there. I don't think of my house as cheap, and even though I could afford a $750,000 I would have to hire people to take care of it.

Sara Palin wrote:

I have a $300,000 house 5 bed 2.5 bath, Mazda SUV. I could retire at 50 but won't.

Housing costs are so different across the country. Where do you live? Can't even get a condo in some towns for that.

James Snyder wrote:

That’s weird, I reported HH income of $580k last year and don’t send my kids to private school.

What do you do to make that kind of money?

I'm just guessing. Unless you're a CEO, in finance, or own your own business I'm not thinking of many careers that pay that well.

How about people post where they live? General area.

How do you have a $650k house with no mortage. I bet most are paying at least $3000 a month for mortgage on that thing. But you save a lot so you'd be ok even if you weren't.

I agree with housed we need some ground rules

1) Where you live.

2) What your housing costs are

3) What you make

4) What you do

#4 isn't relevant but I want to know what everyone does to make so much.

Why would he be paying 44% of his income to taxes when the highest income tax bracket is 39.6% and that only applies to income over $418,400? His federal income tax will be more like 27% of his income.

As they said in Real Estate - location is everything. In a Midwest City (think Ohio Cs - Cleveland, Cincy, Columbus), Pittsburgh, Indy, StL.; $650k buys some really prime close-in suburban housing in prime school districts. In those cities, $300 -350k buys a nice big house in decent schools in the outer-ring 'burbs. Yes, you live in city that is a bit less exciting than an East or West cost locations, but at some point in your life, this may be a reasonable trade-off. If you want to own a house - look for a 15 year mortgage and then try to pay extra each month. You'll get there before you know it.

housed wrote:

midwest city wrote:

Where and how I live is really the difference maker for what I will tell you. For me, I live in a really nice house that is worth about $650K.

How about people post where they live? General area.

How do you have a $650k house with no mortage. I bet most are paying at least $3000 a month for mortgage on that thing. But you save a lot so you'd be ok even if you weren't.