As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material) richness.
For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household income could be considerably more.
By the way, the rising percentage of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S.
If you figure that people tend to marry others of the same educational level (more so now than in generations past), and if educational level is roughly correlated with income, then you can see how the gulf widens.
Whereas 50 years ago, when single-income households were the norm, a lower-educated fellow might bring in SALARY and a higher-educated fellow might bring in SALARY * 2. But now, with dual-income households, a lower-educated couple might bring in (SALARY * 2) and a higher-educated couple might bring in (SALARY * 2) * 2.
So, 50 years ago, there was one SALARY worth of difference between the lower-educated household and the higher-educated household. Nowadays, there is (SALARY * 2) worth of difference.
Surely requiring two incomes in a household is extraordinarily problematic?
Before, one partner could sustain the household and the other could stay at home and raise kids.
Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging?
And doesn't that mean that in real terms we're earning half as much?
As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of richness.
That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious.
However, if dual income households decide to spend their income on investing in a better house, what will happen is that it'll push house prices up - a finite supply of housing stock means there'll be competition for the best homes, so people will have to pay more for them. That demand side pressure will filter down the housing ladder and pull all the prices up. After thirty or forty years this will have had the effect on house prices that single income families just can't afford to buy. Further, it'll mean that dual income families have to retain two incomes, so parents wanting to stay at home when they have children simply won't be able to afford to.
This has already happened in the UK. Lots of pundits are predicting a crash because the first-time buyers can't afford to buy, meaning no one is buying the lower price houses, and that's going to pull the whole thing down.
Mind you, the pundits have been saying as much for about twenty years.
I think there are a couple of factors you're overlooking.
Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality.
Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second salary in the two-income family will be taxed at a high rate, on top of the first salary. Furthermore, physician's husband, who doesn't work, is available for full time child care. The nurse and dental hygienist have to arrange full time day care for their two young kids, which runs about $20-25,000k a year per kid in SF. And because they are a very high income family, over the "ultra-rich" 200k threshold, they don't get a tax break.
Even close to 100k, that second salary may have a marginal value close to zero once kids enter the picture.
That doesn't mean you shouldn't work just because the marginal value is low in the moment - eventually you get to come back up for air, and people who continued to work are often much better positioned to advance again. So there are benefits.
> "the growing number of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S."
That's a red herring.
When people talk about inequality as a serious economic problem, they're not talking about any discrepancy between households living off a salary or two. They're not even talking about the discrepancy between the ninety-nine and the one percent -- they're talking about the point-one percent and everyone else.
Consumerism. It convinces people that once they make $100k/year, they require a vehicle that befits someone who makes that much money. It convinces people that they require a place to live that compares to their other 6-figure earning peers. More, bigger, better -- the importance of those three things outweighs most everything else.
I grew up (and now live) in rural Appalachia. The "American dream" is defined much differently here. The American dream is owning a trailer and not having to live off of food stamps.
Let's ignore the absurdity of comparing a 1980 $100k/year salary to a 2014 $100k/year salary. In most areas of the United States, six figures is enough to qualify as well-off. Compared against the backdrop of abject poverty, six figures is certainly rich.
My wife's cousin was talking to her about a new job he landed. He was giddy with excitement, as he told her he was going to be "making bank." The salary was $22k/year.
My point is that "rich" is relative to your geography and your upbringing. In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat, with enough left over to provide security during times of famine
> There are a lot of ways to be frugal, but you can start with driving older (paid-off) cars and tracking your expenses to ensure that your family spending aligns with your values and goals.
So I guess being "frugal" means that you track your expenses and not live beyond your means?
> I grew up (and now live) in rural Appalachia... In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat..
I completely agree with everything you wrote. I grew up in a rural community, too. I see how DINKs overspend on things they "need" all the time.
However, something you're missing is the safety premium. Often it's not possible to live modestly in a safe, clean neighborhood with good schools within a reasonable commute distance of work (especially if both spouses work).
The long-term answer might include more telecommuting so people can live in Appalachia and still be productive, but that requires a big cultural shift and doesn't help all jobs and careers.
This comes up a lot. Sometimes they talk about a car, for a while there it was always a "plasma tv". Financial advisors, talking about middle class debt and financial struggles, would ask you, do you really need that "plasma tv".
San Francisco is probably an outlier, but with the median house price at 1.1 mil, and full time child care costs for two preschool kids at $40-50k a year, a plasma tv is a minor rounding error in the cost of living.
So while I agree with you about the TV, and the car, and the consumerism in general, I do think it may be a way to blame the middle class for not paddling hard enough toward shore as the ocean current carries them out around the rocks.
There is little clear thought about the range of options in major expenses. Most feel intuitively the range of "not enough" vs. "not necessary" without giving it the contemplation it deserves.
For example, we wanted features in rental living space commonly only found in condos or more expensive rental property.
We prioritized and ended up cutting almost 40% off our rental costs and got every feature we needed and wanted most (e.g. on a park, in-home washer/dryer, corner unit, two-story floor plan, super-close parking, neighborhood living near freeway, etc., etc.)
We gave up a lot of square footage (but met all storage space needs). Lower rent was a predicting factor that maintenance would be poor (but it's not terrible), neighbor likeability varyies more than we would prefer, etc. But it really feels like a complete win.
Managing smart auto maintenance in part by using mechanics on JustAnswer has allowed similar savings for our vehicles.
The article lists factors such as inflation, geography (the coasts are more expensive), kids, and healthcare, but not underlying reasons.
Some people want larger homes, more cars, bigger lifestyles (over-the-top weddings as an example), communication and entertainment (expensive cable, internet, and phone providers, just to start). And the allocation or misallocation of resources within the health "care" system is another reason that average income doesn't seem enough.
The few tips at the end -- live modestly, save a lot, and don't get hung up on status -- are barely a start.
The goal of "living the dream" is left unexamined or unquestioned.
I'm not sure why the article is so obsessed with this "six-figure salary" thing (which seems to mean exactly $100,000).
$100k 30 years ago after inflation is $288k now. Anyone earning $288k now is definitely rich enough to "live the american dream" (in the article they price that at $130k).
It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation
> "I'm not sure why the article is so obsessed with this "six-figure salary" thing"
Because people ascribe meaning to "large numbers" that are unmoored from the actual objective context and meaning of those numbers.
See also: people's penchant for using totals, sometimes even lifetime totals, to argue that certain projects (public or private) are too expensive/boondoggles/etc. They ought to be looking at ROI, rates, per-capita-rates even -- but they don't. Because they know the audience has attached emotional meaning to "millions" and "billions".
There's some justification for them using the 100k number. They bring up that child tax credits and health care subsidies are phased out around that point, as are IRA contributions.
> It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation
I nearly fell out of my chair laughing at this line. Crazy Austrian folks call the increase in the supply of money "inflation" but that's not what most people think of when you say the word. The vast majority of people would agree that "inflation" and "the CPI" are basically the same thing. The CPI is the Consumer Price Index. It is a measure of the cost of living as set forth by the BLS here in the US.
So what you just said is that the cost of living is going up faster than the cost of living! That clearly can't be true, so there's a problem. The actual cost of living is going up faster than the government's measure of it. Okay, that's better. But it's still problematic.
If the government's measure of the cost of living is going up slower than the actual cost of living then a lot of people are getting screwed. Anyone on a fixed income that's inflation adjusted like Social Security or a pension. Anyone buying a TIPS bond, anyone who gets regular cost-of-living raises so that their salary keeps up with their expenses, etc.
If the CPI number was accurate then all these things would be OK. But since it seems like it's not the fact that huge swaths of socioeconomic activity is tied to these indicators is really pretty tragic.
I think Carl Sagan captured the essence of why these kinds of things take forever to get found out:
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back."
I think they're poking the perception even today that people have. If you say to someone that you earn 100K they might claim that you're wealthy or rich, but the as the article states it doesn't automatically mean that anymore.
I'd agree with you that $288K makes someone wealthy or rich, but human perception and the reality aren't often one in the same.
You're confident that the problem isn't that inflation is being intentionally understated via the government having altered the CPI to mask inflation? (ie that the cost of living is showing the true rate of inflation)
The average global citizen also isn't paying American costs of living. My cousins in Asia are earning easily 10x less than I am in real nominal currency, but their cost of living is commensurately less.
Measures of wealth are just numbers until put in context of local costs of living.
Which addresses the reply to your post: $100K is wealthy in parts of the country, it's not wealthy in others. Getting paid $100K in small-town Idaho is a whole different ball game than getting paid $100K in SF.
The trick is that there are a lot more $100K jobs in one place than the other. What PhasmaFelis insists on calling "living beyond your means" is often nothing more than people looking for work.
Agreed. Title is bullshit, and the article does nothing to change my mind: if you insist on living beyond your means, then no amount of income will seem like enough. $100,000/year is not a free license to move to the trendiest neighborhoods in the most expensive cities and start collecting yachts, but it's still rich by any reasonable human standards.
Not it sure as hell does not mean one is "rich." It is, at best, an indicator of marginal affluence. It certainly is stretching the bounds of credulity to call it "merely" middle-class, though, and forget calling it "poor."
"Rich" means more than having a relatively high income. It means having the means to obtain in relative short order, or having already obtained, relative financial independence. An income of $100,000 doesn't qualify in most places. Such a person would be required to find some income if he loses his current source, and he would almost certainly suffer financially and take many hits to his credit during a period without income. This person isn't "rich" until he's amassed enough savings that he can weather such a period without significant risk to his finances or credit, which will take literally decades in most cases.
What if your job is in Manhattan where that means you are making negative income vs. your rent? And a good meal is ten times more than a beef soup shop in Taiwan? Or spending 2 hours every morning commuting into the city and back out on a bus to somewhere you can afford on $50k/yr? Is that still rich?
But it's just so hard affording a downtown condo while putting my kids through private school! I'm obviously living paycheck to paycheck exactly like the vast numbers of americans earning 2/3 or less of a living wage with no medical coverage, no paid time off, and spiraling debt!
Don't forget to take into account the massive amount of student debt people have now, and also the vast cost of living in larger tech centric cities such as SF and NYC. I'm not talking fancy apartments either, I'm talking regular standard 1 br apartments.
Just because someones income is a certain amount on paper it doesn't take into account other financial responsibilities that lower the amount you have leftover at the end of the month.
As the article mentions at the end, a big part of living within your means is reducing your spending -- and a lot of that has to do with recognizing what things are actually necessities. The chart of price increases mentions things like movie tickets, new cars, and private college tuition, which are certainly not necessities. Even high gas prices can be mitigated if you recognize the hidden costs of driving a fuel-inefficient vehicle long distances to and from work every day -- and that in many cases you're not forced to live so far away.
I recommend the Mr Money Mustache blog as a source of some decent advice about how to think more frugally and focus on early retirement: http://www.mrmoneymustache.com/
Investing more is certainly not a way to "stretch a six-figure salary." Not sure why they included that part. Investing in your own retirement (vs. a pension) is probably a big reason why salary money doesn't go as far.
Because we have to start with definition of what IS rich.
I want to think about it of as how many months/years I can live the life I'm living right now If out of a sudden I loose a job.
So being rich should be more about balance between earning and savings. And looking at those places like SF, how one can claim himself rich if 100k a year can barely cover cost of living there ( if can at all)
As someone who recently quit a six-figure tech job in SF... 100k/year does not "barely" cover cost of living. When I first got the job, I decided I wanted to live close to where I was working in SOMA, which meant paying quite a bit more in rent, but I never had any illusions that what I was paying for was a necessity of life.
Though I mainly picked it out for the location, it was easy to tell the building was built explicitly to cater to the wealthy (because that's the kind of building that's getting built in SF right now). When I first moved in, I felt everything about the place was conspiring to tell me, "Yup, you're a rich asshole now."
Even with that expense, I still had plenty of money. Even if you feel like you're too good to pack a lunch, and need to eat at a hip restaurant for every single meal, I have no idea where this "barely covering living expenses" is coming from.
A major cause of the increased cost of living in NYC, SF, Boston, SV is the "rent seeking" activity increasing cost of renting or purchasing a house through restricting housing density through zoning and through overuse of historic buildings designations.
Harvard Economist Edward Glaeser speaks of this. In these cities, the cost of housing is far higher than the cost of construction because politics is used to make wealthy landowners even wealthier at the cost to others.
How much of this is just personal perspective? What exactly defines being rich? $100k a year? $1m a year? More? Why go after being rich when you can go after being wealthy? If you have enough money generating assets that cover all your expenses, you're pretty much set. It's all about the cashflow.
You're rich because existence itself is shockingly improbable. Beyond that, you even got to be human, with a human mind, which as far as we know is the most expensive thing the universe has ever produced. Lucky you!
You're poor because one day you will lose everything and everyone you've ever deeply cared for. That's a shame.
Enjoy the few moments you have left. You will have a better chance at this if you stop comparing yourself to others in terms of the milliliters of 'comfort' you can or cannot afford within an OCEAN, a absolute carnival of delight available to all.
Yeah. I'm not an American but adjusted for inflation $100,000 in 1985 would be $221,508.36 today. That's pretty rich. You'd be in the top 5% with that.
When has this EVER meant that you're rich? It doesn't, never has, and never will. Even a 7-figure salary doesn't by itself make you rich. You are only rich when you've learned how to make money work for you and when you have the freedom to do with your time as you please. This automatically excludes any kind of salary making you rich. Salary and riches do not mix. It's the wrong mindset altogether. A high salary CAN be a good initial catalyst on your way to riches, but by itself will never get you there.
Is everyone on here a communist? Christ. The article is simple. The government uses it's hidden tax of inflation to steal the wealth of everyone and the media continues to (apparently successfully) fool people into thinking hard working wage slaves that make slightly over 100,000 are "rich". They are not. To make the equivalent of a 100k salary from 1980, you have to make 288k today. The government continues to print more money and this trend will continue until creating value instead of consuming it becomes what most americans strive to do. We have not reached utopia where everything is automated and work is an outdated concept. Yet, the "ism" of jealousy and envy, and perhaps more than a dash of laziness, prevents people from seeing the truth. Hating and taxing everyone that makes a living wage will not lead to prosperity. Yes I am talking about socialism. Although, most of the people on this site seem to lean more toward wanting full blown communism. Let the down votes commence.
Yes! It's about creation vs. consumption. We appear to be the only thing in the universe that has a choice about which of those two activities we want to be primarily engaged in moment to moment. It's a heady responsibility.
[+] [-] jawns|11 years ago|reply
For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household income could be considerably more.
By the way, the rising percentage of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S.
If you figure that people tend to marry others of the same educational level (more so now than in generations past), and if educational level is roughly correlated with income, then you can see how the gulf widens.
Whereas 50 years ago, when single-income households were the norm, a lower-educated fellow might bring in SALARY and a higher-educated fellow might bring in SALARY * 2. But now, with dual-income households, a lower-educated couple might bring in (SALARY * 2) and a higher-educated couple might bring in (SALARY * 2) * 2.
So, 50 years ago, there was one SALARY worth of difference between the lower-educated household and the higher-educated household. Nowadays, there is (SALARY * 2) worth of difference.
[+] [-] antihero|11 years ago|reply
Before, one partner could sustain the household and the other could stay at home and raise kids.
Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging?
And doesn't that mean that in real terms we're earning half as much?
[+] [-] onion2k|11 years ago|reply
That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious.
However, if dual income households decide to spend their income on investing in a better house, what will happen is that it'll push house prices up - a finite supply of housing stock means there'll be competition for the best homes, so people will have to pay more for them. That demand side pressure will filter down the housing ladder and pull all the prices up. After thirty or forty years this will have had the effect on house prices that single income families just can't afford to buy. Further, it'll mean that dual income families have to retain two incomes, so parents wanting to stay at home when they have children simply won't be able to afford to.
This has already happened in the UK. Lots of pundits are predicting a crash because the first-time buyers can't afford to buy, meaning no one is buying the lower price houses, and that's going to pull the whole thing down.
Mind you, the pundits have been saying as much for about twenty years.
[+] [-] geebee|11 years ago|reply
Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality.
Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second salary in the two-income family will be taxed at a high rate, on top of the first salary. Furthermore, physician's husband, who doesn't work, is available for full time child care. The nurse and dental hygienist have to arrange full time day care for their two young kids, which runs about $20-25,000k a year per kid in SF. And because they are a very high income family, over the "ultra-rich" 200k threshold, they don't get a tax break.
Even close to 100k, that second salary may have a marginal value close to zero once kids enter the picture.
That doesn't mean you shouldn't work just because the marginal value is low in the moment - eventually you get to come back up for air, and people who continued to work are often much better positioned to advance again. So there are benefits.
[+] [-] roc|11 years ago|reply
That's a red herring.
When people talk about inequality as a serious economic problem, they're not talking about any discrepancy between households living off a salary or two. They're not even talking about the discrepancy between the ninety-nine and the one percent -- they're talking about the point-one percent and everyone else.
[+] [-] ccallebs|11 years ago|reply
I grew up (and now live) in rural Appalachia. The "American dream" is defined much differently here. The American dream is owning a trailer and not having to live off of food stamps.
Let's ignore the absurdity of comparing a 1980 $100k/year salary to a 2014 $100k/year salary. In most areas of the United States, six figures is enough to qualify as well-off. Compared against the backdrop of abject poverty, six figures is certainly rich.
My wife's cousin was talking to her about a new job he landed. He was giddy with excitement, as he told her he was going to be "making bank." The salary was $22k/year.
My point is that "rich" is relative to your geography and your upbringing. In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat, with enough left over to provide security during times of famine
[+] [-] zoidb|11 years ago|reply
> There are a lot of ways to be frugal, but you can start with driving older (paid-off) cars and tracking your expenses to ensure that your family spending aligns with your values and goals.
So I guess being "frugal" means that you track your expenses and not live beyond your means?
[+] [-] humanrebar|11 years ago|reply
I completely agree with everything you wrote. I grew up in a rural community, too. I see how DINKs overspend on things they "need" all the time.
However, something you're missing is the safety premium. Often it's not possible to live modestly in a safe, clean neighborhood with good schools within a reasonable commute distance of work (especially if both spouses work).
The long-term answer might include more telecommuting so people can live in Appalachia and still be productive, but that requires a big cultural shift and doesn't help all jobs and careers.
[+] [-] geebee|11 years ago|reply
San Francisco is probably an outlier, but with the median house price at 1.1 mil, and full time child care costs for two preschool kids at $40-50k a year, a plasma tv is a minor rounding error in the cost of living.
So while I agree with you about the TV, and the car, and the consumerism in general, I do think it may be a way to blame the middle class for not paddling hard enough toward shore as the ocean current carries them out around the rocks.
[+] [-] QuantumGood|11 years ago|reply
We prioritized and ended up cutting almost 40% off our rental costs and got every feature we needed and wanted most (e.g. on a park, in-home washer/dryer, corner unit, two-story floor plan, super-close parking, neighborhood living near freeway, etc., etc.)
We gave up a lot of square footage (but met all storage space needs). Lower rent was a predicting factor that maintenance would be poor (but it's not terrible), neighbor likeability varyies more than we would prefer, etc. But it really feels like a complete win.
Managing smart auto maintenance in part by using mechanics on JustAnswer has allowed similar savings for our vehicles.
[+] [-] gshubert17|11 years ago|reply
Some people want larger homes, more cars, bigger lifestyles (over-the-top weddings as an example), communication and entertainment (expensive cable, internet, and phone providers, just to start). And the allocation or misallocation of resources within the health "care" system is another reason that average income doesn't seem enough.
The few tips at the end -- live modestly, save a lot, and don't get hung up on status -- are barely a start.
The goal of "living the dream" is left unexamined or unquestioned.
[+] [-] a_c_s|11 years ago|reply
That's a great definition of being middle class. I'd argue being rich involves having far more resources than that.
[+] [-] shawabawa3|11 years ago|reply
$100k 30 years ago after inflation is $288k now. Anyone earning $288k now is definitely rich enough to "live the american dream" (in the article they price that at $130k).
It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation
[+] [-] roc|11 years ago|reply
Because people ascribe meaning to "large numbers" that are unmoored from the actual objective context and meaning of those numbers.
See also: people's penchant for using totals, sometimes even lifetime totals, to argue that certain projects (public or private) are too expensive/boondoggles/etc. They ought to be looking at ROI, rates, per-capita-rates even -- but they don't. Because they know the audience has attached emotional meaning to "millions" and "billions".
[+] [-] jsabo|11 years ago|reply
[+] [-] msandford|11 years ago|reply
I nearly fell out of my chair laughing at this line. Crazy Austrian folks call the increase in the supply of money "inflation" but that's not what most people think of when you say the word. The vast majority of people would agree that "inflation" and "the CPI" are basically the same thing. The CPI is the Consumer Price Index. It is a measure of the cost of living as set forth by the BLS here in the US.
So what you just said is that the cost of living is going up faster than the cost of living! That clearly can't be true, so there's a problem. The actual cost of living is going up faster than the government's measure of it. Okay, that's better. But it's still problematic.
If the government's measure of the cost of living is going up slower than the actual cost of living then a lot of people are getting screwed. Anyone on a fixed income that's inflation adjusted like Social Security or a pension. Anyone buying a TIPS bond, anyone who gets regular cost-of-living raises so that their salary keeps up with their expenses, etc.
If the CPI number was accurate then all these things would be OK. But since it seems like it's not the fact that huge swaths of socioeconomic activity is tied to these indicators is really pretty tragic.
I think Carl Sagan captured the essence of why these kinds of things take forever to get found out:
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back."
[+] [-] Someone1234|11 years ago|reply
I'd agree with you that $288K makes someone wealthy or rich, but human perception and the reality aren't often one in the same.
[+] [-] adventured|11 years ago|reply
[+] [-] smackfu|11 years ago|reply
[+] [-] chasing|11 years ago|reply
Median household income in the US is about $50k/yr. The average global income is about $10k/yr.
[+] [-] potatolicious|11 years ago|reply
Measures of wealth are just numbers until put in context of local costs of living.
Which addresses the reply to your post: $100K is wealthy in parts of the country, it's not wealthy in others. Getting paid $100K in small-town Idaho is a whole different ball game than getting paid $100K in SF.
The trick is that there are a lot more $100K jobs in one place than the other. What PhasmaFelis insists on calling "living beyond your means" is often nothing more than people looking for work.
[+] [-] PhasmaFelis|11 years ago|reply
[+] [-] smackfu|11 years ago|reply
Using salaries is an especially terrible choice though. Disposable income is a much better match for what we think of as rich.
[+] [-] Iftheshoefits|11 years ago|reply
"Rich" means more than having a relatively high income. It means having the means to obtain in relative short order, or having already obtained, relative financial independence. An income of $100,000 doesn't qualify in most places. Such a person would be required to find some income if he loses his current source, and he would almost certainly suffer financially and take many hits to his credit during a period without income. This person isn't "rich" until he's amassed enough savings that he can weather such a period without significant risk to his finances or credit, which will take literally decades in most cases.
[+] [-] lnanek2|11 years ago|reply
[+] [-] zeflan|11 years ago|reply
[+] [-] osconfused|11 years ago|reply
[+] [-] ohhoe|11 years ago|reply
Don't forget to take into account the massive amount of student debt people have now, and also the vast cost of living in larger tech centric cities such as SF and NYC. I'm not talking fancy apartments either, I'm talking regular standard 1 br apartments.
Just because someones income is a certain amount on paper it doesn't take into account other financial responsibilities that lower the amount you have leftover at the end of the month.
[+] [-] DanAndersen|11 years ago|reply
I recommend the Mr Money Mustache blog as a source of some decent advice about how to think more frugally and focus on early retirement: http://www.mrmoneymustache.com/
[+] [-] smackfu|11 years ago|reply
[+] [-] vittore|11 years ago|reply
I want to think about it of as how many months/years I can live the life I'm living right now If out of a sudden I loose a job.
So being rich should be more about balance between earning and savings. And looking at those places like SF, how one can claim himself rich if 100k a year can barely cover cost of living there ( if can at all)
[+] [-] chrishallquist|11 years ago|reply
Though I mainly picked it out for the location, it was easy to tell the building was built explicitly to cater to the wealthy (because that's the kind of building that's getting built in SF right now). When I first moved in, I felt everything about the place was conspiring to tell me, "Yup, you're a rich asshole now."
Even with that expense, I still had plenty of money. Even if you feel like you're too good to pack a lunch, and need to eat at a hip restaurant for every single meal, I have no idea where this "barely covering living expenses" is coming from.
[+] [-] davidf18|11 years ago|reply
Harvard Economist Edward Glaeser speaks of this. In these cities, the cost of housing is far higher than the cost of construction because politics is used to make wealthy landowners even wealthier at the cost to others.
Rent seeking is a sign of market inefficiency.
[+] [-] rdudek|11 years ago|reply
[+] [-] dkitchen|11 years ago|reply
You're poor because one day you will lose everything and everyone you've ever deeply cared for. That's a shame.
Enjoy the few moments you have left. You will have a better chance at this if you stop comparing yourself to others in terms of the milliliters of 'comfort' you can or cannot afford within an OCEAN, a absolute carnival of delight available to all.
[+] [-] lilsunnybee|11 years ago|reply
[+] [-] NoMoreNicksLeft|11 years ago|reply
[+] [-] adventured|11 years ago|reply
Median and average price of a home nationally is up about 50% (even worse in hot markets)
US Dollar is down about 50% against the Swiss Franc
US Dollar is down about 40% against the Canadian Dollar
US Dollar is down about 30% vs. the Euro
Gasoline is up over 200%
Oil is up ~350%
Gold is up 300%
Silver is up 300%
Cotton is up between 60% and 100%
Corn is up 100%
Average cost of a new car is up 40% to 50%
And so on
A $30k salary in 1990, is now roughly equivalent to $60k to $75k today. Six figures just doesn't buy anywhere near what it used to.
[+] [-] jahnu|11 years ago|reply
[+] [-] john61|11 years ago|reply
[+] [-] brightsize|11 years ago|reply
“A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do.”
[+] [-] sgt101|11 years ago|reply
[+] [-] knackers|11 years ago|reply
[+] [-] jdimov|11 years ago|reply
[+] [-] dpeterson|11 years ago|reply
[+] [-] dkitchen|11 years ago|reply