How Much Does a Six Figure Income COST ? [Archive]

ApatheticNoMore

4-14-11, 2:30am

Let us assume a corporate style job. Let us assume your salary is 100,000 dollars. How much would this stereotypical six figure job cost you?

Taxes?

Unless you are using a lot of deductions, you'll pay A LOT in state and federal!!! However if you have a 401k you can shelter some there.

Clothing?

really depends. Doesn't have to be a lot. It depends on how visible your position is and thus how much image matters.

Lifestyle (bigger car, house, dinner parties, eating out, manditory company trips, etc.)

it depends. You might be assuming 6 figures is all management, yea management can earn that definitely, but so can very well paid non-management people (at least around here). Not the *average* corporate non-management person but ....

But noone needs to buy a bigger car, noone needs to buy a house (but if you really have the income ...). Much work doesn't involve dinner parties. Eating out is tricky because there is pressure on anyone at almost any job to eat out for lunch to maintain relationships with coworkers, but I'm not sure higher paid people really have it that much worse. They are probably less able to be the strange loner employee who eats their paperbag lunch alone in the park every day (that would be me) but :). There may be some company trips, and companies generally PAY FOR them, but if you hate doing them there is the non-financial cost.

Overtime?

Oh for that salary you'll probably do boatloads of overtime. Ha, you might be pressured to work a lot of overtime on less salary than that! In fact with overtime the norm it's almost an exception not to work it! But when you are up at that level it will generally be a baseline expectation.

Stress?

Depends, the overtime will probably be stressful. OTOH sometimes it's more stressful to be at the bottom of a hierarchy than further up.

As for people who enjoy it, yes some people really do seem to enjoy massive overtime and the whole thing. But really you either are a type A person or you are not ,and if you are you'll love it, and if you aren't ....

herbgeek

4-14-11, 7:18am

Its not at all uncommon for senior level engineers in the Northeast (and West Coast for that matter)to earn > 100K. We all know how sloppy engineers dress, with jeans and company issued Tshirts from former projects. And no one expects an engineer to have to entertain clients, in fact, they usually keep us away from clients because we tend not to lie or sugar coat progress. Yes, there is routine overtime, but you tend to be doing that with other engineers, and we know how to take breaks and throw nerf balls around. Stress? Well yes sometimes when management doesn't listen when we say something will take 6 months, and they promise the customer it will be done in 3 months, and then ride herd on us, and its still done in 6 months. But the work itself is often fun, and other engineers share our twisted sense of humor, and that counteracts some of the stress. In today's environment, a lot of people are being asked to do more with less, at least as an engineer there is some level of autonomy.

So I take exception to your generalization. :)

Kat

4-14-11, 10:16am

Well, I never made a six figure salary, but when I was part of corporate America, I found that we spent more on food. Going out because I was too tired to cook (or buying expensive convenience foods to cook at home), being persuaded to eat out with co-workers at lunch, etc. I also felt pressure for things like gifts for co-workers (we were all expected to pitch in around $10 or so serveral times a year plus did the Secret Santa thing) and buying from whoever's kid was fundraising at the moment.

That job "cost" me in terms of health (stress) and family (less time with them).

I feel it is only fair to mention that I am not cut out for a high-driven career. I know a lot of people who work where I used to and are very fulfilled and happy. It just wasn't for me.

jennipurrr

4-14-11, 12:09pm

Neither of us makes six figures, but DH and I have joked that we are glad to be in IT...we get a decent income without the pressure to buy a fancy car, house, etc...our joneses are a bunch of computer nerds! DH's best friend is an attorney and his lifestyle has grown to include all the typical trappings of a lawyer's life...he has a huge mcmansion, drives an expensive car, etc etc. I know its not required, but I do know he feels a lot of pressure to maintain a certain status.

pinkytoe

4-14-11, 12:28pm

My boss makes well over six -figures, easily 5x my salary. I have often pondered the differences in our lifestyles, expenses and salaries. He has a 2 mil house, travels and entertains extensively, and garners oohs and ahs over his illustrious achievements. In the end, I imagine he pays a huge amount for his lifestyle but it is all worth it to him because of the circles he runs in. I do have to say though that most folks earning the big bucks have very little free time and that is worth more to me than all the money in the world. In that category, I am far richer than my boss.

madgeylou

4-14-11, 7:38pm

i made over 6 figures for a few years. it's not at all uncommon for an early 30s professional in new york. i was able to save a bit, though i could have worked harder at it. nyc just has a way of draining your bank account. my 6-figure salary cost a lot.

between federal, state, and city, i paid almost 40% in taxes.
half of what was left went toward housing.
half of what was left after that went for utilities/cell phone/etc.

now that didn't leave me broke, but it did leave me with less wiggle room than you'd think. outside of having a really great (expensive) apartment, i didn't live a particluarly extravagant lifestyle. i wasn't buying $400 shoes or taking cabs every night or going out to spendy places all the time. but i did eat out a lot, and spent more on booze for sure. ;)

at this point i'm living on like 20% of what i was making when i had that job. my half of the mortgage is 10% of what my most expensive nyc rent was. somehow life still seems worth living. :)

Mighty Frugal

4-14-11, 11:44pm

6 figure incomes needn't be anymore stressful than others- in fact sometimes they are LESS stressful. And they needn't require any overtime. You can live a happy balanced life and still make a good income. Sure the tax is higher but our tax is graduated, so you only pay the max on a certain portion.

People who earn 6 figures-that's not really that much in these days. I guess I am biased because an annual report that I own shares in came out and man, those CEOs earn 3 million a year.....so 100k doesn't seem that much

Many people who earn a great income still dress the same way, live modestly-it doesn't have to take over your life

RosieTR

4-15-11, 12:50am

>Taxes?

One could put something like $16500 per year into a 401(K), if one owns a house the mortgage interest is deductible, most corporate employers would offer flex spending accounts for health issues and childcare, and any donations would also be deductible. Never mind a host of other more esoteric deductions (rental home depreciation, putting money in a fund for kids' college etc) so there's a reduced tax burden.

Clothing?

You could dress yourself in clothes from Goodwill or at least Ross/TJ Max, maybe Target. Unless people really notice your clothing. In that case, a few suits or outfits from a fashionable place once or twice a year will suffice though that might run into the low $1000s.

Lifestyle (bigger car, house, dinner parties, eating out, manditory company trips, etc.)

Only someone like a realtor really needs a super-duper car, and in that case it's probably tax-deductible. Company trips and business meals would be paid for unless it can't reasonably be construed as a business expense. In that case, it's a choice.

Overtime?

Lots of this in most jobs that pay over $100K, and many that don't. If you work 80 hrs/wk it means you're effectively halving your salary time-wise.

Stress?

Variable. My boss makes over 100K. He works all the time and there is some stress but I think he really enjoys it most of the time. Other people are different. I don't know as you can put a price on stress from a job: it really literally eats away at your well-being from your brain to your blood vessels. How much is that worth? But whether that's a cause or consequence of the job is sometimes murky.

ApatheticNoMore

4-15-11, 1:29am

6 figure incomes needn't be anymore stressful than others- in fact sometimes they are LESS stressful. And they needn't require any overtime. You can live a happy balanced life and still make a good income.

What would I need to do to land a 6 figure job without overtime? Because quite honestly I've seen overtime pushed at less than 6 figures (and why not, if an employee is salaried they can get overtime out of them for free). Honestly a much less than 6 figure (though still decent income) job with a guarantee of no overtime sounds good :) Really I'd like that and a short commute, but it's probably impossible. Could move again I suppose.

catherine

4-15-11, 9:14am

Yeah, one of the things I tended to disagree with with YMOYL (don't shoot me!!!) was the assumption that a corporate job automatically costs you more than it's worth to keep it. Not sure if that's what you're getting at here... is it that people think they are making a certain amount of money but the job costs so much they might as well get a low paying job with a lot less stress and time commitment? In YMOYL terms, that's because your real hourly wage is going to be significantly reduced because of the variables you've listed.

Not necessarily.

Mandatory on your list are taxes--but as others have said there are tax shelters for those.

Overtime is often part of the package and might be mandatory--but if you like your job and have autonomy, that might not be a negative.
In fact, research has shown that it's not overtime that stresses us out--it's lack of autonomy. So if you're working long hours, but you're calling the shots, you're going to have MUCH less stress than the person who is working fewer hours in a lower paying position but at the beck and call of others.

Of course, that's not always the case--for instance, I quit my corporate job because my boss was impinging on my autonomy (I was making 6 figures at the time) and therefore I had a LOT of stress. So I quit, now I'm my own boss, and I have almost no work-related stress (except for when I don't have a project in the wings)

As far as the other lifestyle-type things on your list, like clothes and cars--no, I haven't felt the pressure to keep up with my coworkers AT ALL. I've driven beat-up clunkers when my salary exceeded that of my Lexus-driving direct report. Who cares? In many professions you can get away with making your own purchasing decisions--maybe if you work in the fashion industry you have an investment in how you look. I've noticed real estate agents often have really nice cars for when they drive their clients around looking at houses. But those situations are the exception, not the rule.

Corporate also has benefits the offset to the positive any costs to you for working--like use of laptop computers, use of cell phones, and the obvious ones--healthcare benefits, retirement benefits, disability, and 401k matches.

So, making the case that high paying jobs are loaded with hidden costs just doesn't ring true to me at all.

Mighty Frugal

4-15-11, 11:04am

What would I need to do to land a 6 figure job without overtime? Because quite honestly I've seen overtime pushed at less than 6 figures (and why not, if an employee is salaried they can get overtime out of them for free). Honestly a much less than 6 figure (though still decent income) job with a guarantee of no overtime sounds good :) Really I'd like that and a short commute, but it's probably impossible. Could move again I suppose.

I know MANY people personally who earn 6 figure who do NOT work any overtime. RNs, Doctors, Corporate lawyers, business owners,as well as people that have worked their way up the corporate ladder. If you've been at the same company in a management role for 20 years, then it stands to reason (with yearly raises) you are earning a 6 figure income. And most managers (especially the middle managers)only work 40 hours per week. Plus 5-6 weeks vacay..and bonus.....

Stella

4-15-11, 2:37pm

Well, personally I am dirt poor, but my dad makes a 6 figure income.

Taxes? He gripes about this one a lot, but I'll be honest, I don't know what he actually pays.

Clothing? Dad's biggest clothing expense is for church. He's in IT, but it's at a bank, so not quite as laid back as other places. When I worked in IT we had a guy in our department who dressed like Jesus everyday and no one batted an eyelash. Dad wears slacks and button down shirts. Same thing he wears on his days off.

Lifestyle (bigger car, house, dinner parties, eating out, manditory company trips, etc.)
Dad drives a paid-for 2002 Saturn, lives (with us) in the same house I grew up in. It's not extravagent. He does eat out a lot, but I'm pretty sure he'd do that no matter where he worked. When he eats at home it doesn't cost him anything. We cover that.

Overtime? Dad works one or two nights a month. There are things he can't do with the system during the day when everyone is using it. Otherwise it's pretty much a standard 40 hour work week.

Stress? He goes through phases of being stressed out by his job. There is one coworker in particular he has issues with. That could be true at any job.

cdttmm

4-15-11, 6:33pm

In my former job, my six-figure salary cost me more psychologically than anything else. I worked from home, so unless I had to go out to meetings, I could dress however I wanted. Since I rarely met with the same "important" people more than once, I owned a few nice outfits (purchased at thrift stores) but that was it. I drove a paid for 2005 VW Golf. I never felt compelled to buy a bigger or more expensive car. Some of my direct reports drove more expensive cars than I did on less than half my salary. I could never figure that one out. Eating out consisted of ordering pizza for monthly staff meetings, which the company paid for. Sometimes when I was feeling lazy or stressed out I would order take out for lunch, but usually I just ate at home. But, I worked an average of 70 hours of week for about three years straight, with one 8-day vacation. The psychological toll was enormous. But I had my reasons for sucking it up and it paid off, financially, in the long run. And as an indirect result, I've learned how to build my psychological reserves in case I'm ever in that situation again. Now, I'm an academic. I currently make about one-sixth of what I made in corporate America, but I love what I do. But I planned for the change in my personal income and I also know that it is highly probable that I will make more in the future, so it's all good. And working as an academic means I get to: ride my bike to work if I want, dress business casual (in thrift store clothing), go home for lunch, and work 9 months out of the year.

So, as many others have pointed out, the cost of the six-figure salary is highly variable

Rogar

4-15-11, 7:13pm

I retired from a company that was not quite large enough to be a fortune 500. From my experiences there, I would say that clothing, cars, and houses for the upper incomes were mostly optional. Some of the higher paid enjoyed what they were doing and were talented, but lived a fairly normal lifestyle. I worked with high paid engineers who came to work in jeans and drove old beaters. Others were ambitious executive climbers who were motivated by the big money and lived it up. Though I think generally their lifestyles were proportionate to their income and probably in a relative sense similar to us plebes.

One thing that seemed pretty common for the six figure incomes was large amounts of overtime. I'd say a 60 hour week or more was typical.

In a big corporation, stress is a fact of life for most income levels. There are the routine belt tightening and lay-offs, positioning, backbiting office politics, and examples of poor ethics. Those in technical fields seemed to fair a little better on the stress scale compared to people managers and executives. Some of the execs I think actually thrived on the stress, but there was a place we called "the pineapple farm" where the upper executives would occationally be sent when they reached the edge on stress or alcohol consumption. Unfortunately, the plebes just had to buck up or move on.

If you are getting at the bottom line for high paid corporate types, you have to also consider that they often have very generous benefit packages. Good pensions, "golden parachutes", stock options, performance incentives, boondoggle travel, etc.

puglogic

4-16-11, 12:10am

I got an early education from working at Apple, where the then-CEO could be seen on most days walking around the campus eating his lunch, usually a peanut-butter-and-jelly sandwich. This was a guy who made over $2M a year, was under constant criticism, and yet in many areas he seemed unstressed and frugal. I thought to myself: You can DO that?

So heck, I dunno. I think it really depends on the person. I'll reach six figures one of these days, but I don't plan to "do life" in the same ways others in that class do. There will be some who are more/less frugal, some who are more/less stressed, some who are smarter/not-as-smart about taxes.....it just depends on your priorities, no matter what your income is. I certainly don't think it's a foregone conclusion that making more money costs more. It's just one possible choice of many.

SoSimple

4-18-11, 12:06am

I am close to six figures and never ever thought that I would ever earn this much in my life. DH earns less - could earn more, but his company is notorious for underpaying. In any case, I feel no obligation to have a certain lifestyle or dress a certain way - I am throwing everything I can into my 401k, IRA and savings because I don't know how long I'm going to be well enough to work. So I'll drive my Yaris, live in my inexpensive apartment, eat rice and beans (albeit organic ones) and watch my retirement savings finally get somewhere close to where I want them to be.

The job itself has it's stresses - I'm just not assertive enough to be a strong manager - but it's better in many ways than positions junior to mine: my staff have different stress but more of it. My biggest concern is the work hours expectation. I could quite easily work 80+ hours a week. I don't because that will get me pretty sick pretty fast (as it is I'm on my second bout of bronchitis in four months). I manage to keep my hours to around 50 a week. I've had far more stressful positions in the past for far lower pay (all my social work jobs, for example).

The worst thing about my current situation is that I'm working 750 miles away from DH. That increases our expenses (two places, flights, two cars) and my eco-guilt (frequent flights), but we hope to be back under the same roof by the end of the year. That in itself will help ease some stress! But that's not a function of my salary - that's a function of where jobs in my field happen to be located, and yes, it is a choice that DH and myself consciously made.

San Onofre Guy

4-19-11, 11:18am

I make six figures and I love my job! My expenses as a percentage of my income are much lower than people who earn half of what I do. My big problem? My mortgage payment isn't large enough at only $785 per month. Would I like to pay less in taxes? Of course, but I don't pay that much in taxes. I think people have gotten freaked out about taxes, they are not nearly as high as people think they are. I think my Federal was in the range of 11%, not bad considering all of the services I receive from the government. Now only if we could support our troops BY BRINGING THEM HOME!

maribeth

4-19-11, 2:39pm

In my experience among engineers, there is no pressure to spend money. It is a contest to see who can keep their cars running the longest, who can build the best computers out of swap meet parts and duct tape, and who can find the best, cheapest ethnic restaurants. If I wear a skirt or dress to work, everyone thinks I must be getting my picture taken.

In a way, it makes me feel guilty every time I decide to spend money on something rather than DIY. I have to remind myself that sometimes it is OK to spend money in the interest of time and convenience.

Spartana

4-20-11, 2:17pm

You can earn $100K a year, live in a tiny shared apt for $400/month, eat Top Ramen and oatmeal every day for pennies, drive a 10 year old compact car or ride your bike or use public transit, never work one day of overtime, wear jeans to work, max out all your tax deferred investment options to save on taxes, and save the rest. Or you can choose to live a million dollar lifestyle with every extravagence yuou can afford on that same $100K income by being deep deep in debt and just making the minimum payment on everything. So it's not the amount you earn - it's how you spend it.

And here in Southern Calif, even blue collar workers can make a salary of from $50k to $100K easily. My sister is armed security for a defense contractor and has the cushiest job on the planet. No OT, no fancy clothes, no dinners out or corporate expenses. She earns around $60K plus with no OT. With OT if she wanted it (she doesn't) she would earn well over $100K a year because it is often double time and a half or even triple time because they work 24/7 year round. And instead of spending that money she was earning, she choose to rent a room in a great townshouse for less than $400/month, drove a paid for vehicle, and saved, saved, saved! Maxed out 401K's and everything she could to reduce taxes. After a few short years she had saved enough to buy a condo with cash by the beach in SoCal and now only needs less than $1,000/month to live on for basics and fun stuff!

San Onofre Guy

4-20-11, 2:30pm

Spartana

4-20-11, 2:36pm

There is a book called "The Millionaire Next Door" that is similair to this topic. Basicly people who live very modest lifestyles but who have or had very high incomes and personal networth even if their lifestyle doesn't reflect that. Maybe they should do another anti-thesis book called "The Poor People Next Door" which shows people who, on relatively small incomes. live like millionaires with every luxury imaginable on mega-debt and absolutely no personal networth - and saw iot all crumble away.

Spartana

4-20-11, 2:45pm

A few weeks ago there was an interesting article in the LA Times about someone perhaps too frugal. The LA Times often does stories on people in financial trouble and it is shocking to read about how bad a mess people have gotten themselves into. This story featured a teacher in Moreno Valley who is in his mid 40's divorced with a huge net worth. He bought a number of condos during this real estate downturn and rents them out and seems to do quite well. he brown bags his lunch and the only time he eats out is the dollar menu at fast food joints. I forget the details at the moment but his net worth is huge considering his income. His problem is that he does suffer for lack of being able in his mind to spend money and to live a little.

I find myself suffering to some extent the same feelings. When I reach saving goals I have trouble parting with the money. In the past year we refinanced to take money out of the house to do home improvements and lower our monthly payment. I like the lower payment, but I still find it tough to spend the money to do improvements as I am hardwired to perform improvements out of normal income.

I think some people deny themselves things that give them pleasure because they just don't want to spend that dollar! But then others just like to live that way anyways - irregardless of income - and so their high monetary assets reflect that. I know people who accuse me of denying myself all the time. However, what they don't realize is that, for me, the way I choose to live has nothing to do with money in and of it's self. It's is the lifestyle I would live even if I had millions socked away somewhere. It just happen that the things I enjoy doing the most, are things that are free or low cost. So those are the thing I LIKE to do irregardless of money. It's a chicken/egg thing: Frugality and minimalism are my choosen state and, because that's how I like to live anyways, the money I earned got saved rather than spent. So I don't ever feel I'm denying myself anything cause I don't want anything anyways :-)! For instance if someone offered me a choose between an eveining of dressing up, fine dining, theatre, ****tails and dancing after or to spend the day riding my bike on the beach with a stop for pizza and beer - I'd choose the bike ride! Not because it's cheaper, but because it's what I would prefer to do. I think thats the key to a happy frugal life for me.

loosechickens

4-20-11, 4:34pm

I think there's also a THIRD way, the person with plenty of net worth, who lives the life of a millionaire without it costing any more than if they were relatively poor. I think of a friend, a retired Naval petty officer, single, who lives on a beautiful estate belonging to a famous athlete (he rents the carriage house for a minimal rent as he supplies security by living there since the sports hero is seldom there in the main house), in the hills overlooking Malibu. He pays about what he would pay for a studio apartment, has the run of the estate, and because of that, is able to live a lovely lifestyle on his military pension, and pursues a hobby career as an actor, without having to worry about making a living from his endeavors.

The BIG secret is figuring out how to live a champagne life, but not spend more than the person on the beer budget. I look back at some of the places we have lived and spent time in, and how much people often paid to vacation there, and yet, there we were, enjoying that beautiful life, but for pennies......

Spartana

4-20-11, 5:11pm

The BIG secret is figuring out how to live a champagne life, but not spend more than the person on the beer budget.

Yep that's the way to go if you LIKE the champagne life. I don't - too much hassle and work for Lazy Lindi :-)! I like to keep it small and spartan and easy. But there are definetly ways to live large without having to pay for those big ticket items. I find that you can rent very inexpensive but stunning vacation homes in the off season if you do it by the month rather than the week. Same with staying at resorts. It's sometime hard to find a little cabin by the ski resorts in summer than it is to rent some 6 bedroom gianormous ski lodge for the same price! A person could live the high life permanently by just renting places in the off season - Florida or the desert for 6 months in the summer, beach resorts for the other 6 months in the winter. Or housesit the Mansion like your friend for free or low cost. Hmmm.. maybe I could get into the luxury life after all! Nah, I'd have to do the cleaning and caretaking. Think I'll stick to my tiny budget digs instead.

San Onofre Guy

4-20-11, 9:03pm

Reminds me of the way Robin Leach used to close his show Lifestyles of the Rich and Famous, Champagne Wishes and Caviar Dreams! When I think back about that program, many of the rich and famous had pretty tame Lifestyles as compared to who would be on the program today. Pretty sad I say.

benhyr

7-6-11, 7:10pm

this was all pre-move to Michigan....

taxes: both maxed out 401(k) + mortgage deduction on a middle of the road house (mortgage for 250k house)... effective federal tax rate: 18.2%

lifestyle: Single car... 2006 Honda Accord. Bought new, financed for 6 months then paid off. We did end up eating out a fair amount just because. Both of us were just technical nerdy types so no trips, dinner parties, etc.

Overtime: Generally worked 38-40 hours a week. Sometimes 45 (rarely). 4 weeks of vacation + 2 weeks of paid holidays (me).. not nearly as generous for her (different employers). I took that job to get away from the previous 60-70 hour job.

Stress: Hardly. The technical challenges were fun and we had largely solved/avoided the people and political problems on my team. Work was even easier for DW at her job.

I do wonder why we moved sometimes :)

mm1970

7-9-11, 9:38pm

kitten

7-11-11, 12:38pm

So much about what Robin and Dominguez (Your Money or Your Life) said about this back in the day is so true for us. Our sitch isn't exactly like what you're posing in the question - neither of us alone makes six figures, but 100K is about what we make together. And it's been running through our fingers! We feel broke all the time.

My initial impulse is to say: You know, $100K isn't that much anymore! Especially in a high cost-of-living city like ours. We could do a lot better though.

We don't have lifestyle accumulation - we drive a horrible beater car, live in a one-bedroom apartment full of twenty-something students (we feel ancient), and we don't have expensive tastes or hobbies.

BUT -

We both hate our jobs, and have been self-soothing with unhealthy options (physically, mentally and financially). We realized a couple of days ago that we shot out of work straight to a couple of neighborhood bars every day last week, just from stress - and we've been doing it for months. We've been eating nachos and overdoing the alcohol, getting fatter and more broke each day. So we're going to change that. Our bar tabs were something on the order of $50 a pop, so we hope to start saving $250 a week or about $1,000 a month just by cutting that crap out! It'll be like getting a raise! (If we don't backslide)

Also, I've been depressed lately and I start shopping online when that happens. Some of my purchases are justified (underwear in a special size and fit that I can't find locally for instance), but a lot of my spending is mindless self-medication. If I'm going to spend the money, it would make more sense to find a therapist at this point. At least I'd get something out of it!

We have a condo in the city we moved from a couple years ago. Could never sell it, but my mother-in-law lost her house and needs a place to stay. So we're carrying both our rent and the mortgage on it, but it's within our means -and we feel better knowing it's made it possible for MIL to stay afloat. So an expense that's well worth it. Our mortgage was $110,000 and we've been paying on it for three years. It's so funny - we went to Chase originally for the loan, and the officer sneered at us for not wanting to get in debt deeper than that. "You can afford a bigger loan, you know," she said, and when we stuck to our guns she lost interest - and we stormed out.

And then the whole housing debacle happened. We still hate Chase! (grin)

Long story short - it can be expensive to make more money, but we think we know where the leaks are and we're taking steps to patch the ship. We live in Seattle, where you can spend insane amounts of money on everything, OR you can live cheaply. We're choosing to do the latter! Wish us luck! :)

kitten

7-11-11, 12:56pm

San Onofre, there's nothing wrong with being debt-averse. It's better to pay for what you need from your income than to get into debt. In the recent past, the received wisdom was that borrowing to improve your house was ALWAYS the right thing to do...but real estate is volatile and it's not a sure thing, etc. etc. We all know that now :)

Regarding the subject of the LA Times story, that guy is in a totally different category. It's possible he has some sort of mental disorder. It's kind of like hoarding, except the person hoards money. The guy apparently had a huge net worth (no debt) and STILL couldn't bear to spend money, even for stuff within his means. That sort of thing can be sad...more so if other people are involved. If the guy had children, for instance, and was depriving them of necessary things out of wrong-headed cheapness, that would be really bad.

But you're just saying you don't want to borrow on your house to make improvements on it, because you've always been allergic to debt. Hey, living within your means is a good thing! If it made you feel bad to take out that loan, it may be because the thought of what it will take to pay it back is giving you the willies. Many many people take out loans like that, and don't understand the terms and what it means, and how much they're actually going to have to pay back over time. But you get all of that. So you're way ahead of the game.

creaker

7-11-11, 2:01pm

Let us assume a corporate style job. Let us assume your salary is 100,000 dollars. How much would this stereotypical six figure job cost you?

Taxes?
Clothing?
Lifestyle (bigger car, house, dinner parties, eating out, manditory company trips, etc.)
Overtime?
Stress?

Right now I'm sitting in shorts, bare feet in front of my computer at home. I lost my desk at work a while back so I work pretty much exclusively at home. Overtime usually runs from 4-12 hours/week. No car, house I'd rather not have that needs a lot of work, no dinner parties, no eating out associated with work, haven't taken a company trip in years. If I needed a suit at this point I'd have to go out and buy one.

Taxes aren't too bad, but only because part of the divorce agreement was a sizable alimony payment for a few years.

susanne c.

7-23-11, 10:27am

My reaction to this was also to think that $100,000 isn't that much today. Honestly, we live a very middle class lifestyle and my husband makes about $115,000. He works in IT, at home, often in his pajamas, we buy new Hondas and drive them forever until they die, our house is a 1970's brick colonial with very little updating. I don't have granite countertops or tile floors, unlike just about everyone I know.
What we have had that other people don't is five children, and I have been a stay at home, homeschooling mom for 27 years. We put the three oldest through college, the fourth is in private high school. The two youngest were adopted, combined costs of their adoptions was around $50,000. We have no debt other than our mortgage, and we wouldn't have that except for refinancing to cover the last of the college tuitions. We did not want any of the children to start out in life with debt, so paid for undergrad and some grad school.

What has cost us a lot of money is partially supporting three adult children due to the horrible job market.

I think that the idea that a six- figure salary propels you into the jet set is a little outdated.

1tolivesimply

7-25-11, 1:41pm

Sorry, off topic, Creaker/Susanne, any ideas on where to look/apply so I can find one of those IT jobs working from home? (assuming I have the skills of course).
Thanks!

ApatheticNoMore

7-25-11, 2:06pm

Probably take skills and years of being a top performer in your field. If your there then sure go for it. I've only worked in and around I.T. all my life, I'm telling you many people are happy to have a J.O.B..

susanne c.

7-25-11, 2:17pm

Sorry, off topic, Creaker/Susanne, any ideas on where to look/apply so I can find one of those IT jobs working from home? (assuming I have the skills of course).
Thanks!

In my husband's case he has 28 years of experience as a programmer, systems analyst, IT manager, and project manager. He worked as a consultant for many years, full time pay for part time work, idyllic really except for high taxes and health insurance. One of his clients made him a great offer for a 4 day week, and a few months later closed the local office. That is how he ended up working from home. He does travel about once a month on business. The salary went up when they asked for a 5 day week. If we knew how to help someone else get a job like this our 24 year old with a master's degree and a really good brain but little ambition wouldn't be working for $8 an hour at BJ's. We are, as Apathetic no more said, really happy that he has a job. There were 3500 applicants for 60 full time positions. Unemployment or underemployment among recent college grads is running 25-30%. it is getting scary out there.

benhyr

7-25-11, 2:36pm

Sorry, off topic, Creaker/Susanne, any ideas on where to look/apply so I can find one of those IT jobs working from home? (assuming I have the skills of course).
Thanks!

Not either of those two... but in my case, as with all of my jobs, I landed it through a friend. Frankly, since age 12, every single job I've had has been through knowing someone at the hiring company. It really helps to bypass the HR screening process.

I've had two remote work jobs now and had interviewed for a third in there as well. I'm trading income for flexibility and working from home (in my case, I'm making less than half of my previous corporate gig) but it's been a decent trade.

eta. Of course, this was all part of the move to Michigan. Figured I'd better bring my own job with me. But, if I were to look around here, I highly doubt I'd get anywhere near what I made in Minneapolis. In fact, I did interview at one company for a similar position to the one I had except this one would require some international travel (prev job was no travel at all) and they were still about 25% lower on salary and benefits.

ApatheticNoMore

7-31-11, 12:42am

So job potentials with 6 figure incomes were being discussed with me (and I by no means have the job, it is early on). And yea that SEEMED like a lot of money to me too. And then I started REALLY THINKING about it .... It is contract work, what this means is no benefits, and so potentially: paying my own healthcare, no paid vacation, no paid sick days, and no 401k. Most of this is self-explanatory, I'd have to be cutting monthly checks on my own for some form of individual healthcare, and I'd take a pay cut to take a vacation or a sick day. But the no 401k with that high an income, it hit me, I'd get absolutely SLAUGHTERED!!! That kind of income with NO POSSIBLE WAY to tax shelter it!!!!! And in CA which basically has a 10% rate of state income tax (that goes right on top of the federal tax). Oh my, so much of that income would go to taxation it's not even funny.

Now it is hardly a case of "oh poor me, I'd never be able to survive on that mesely income". No, I'd survive all right. It is more a case of: I'm thinking this job is going to be super super super stressful, and if that is the case, is a 6 figure income WITHOUT BENEFITS, and thus much of it going to taxation etc. worth it? It's more like me wondering how much I have to be paid to work at stress central, a nominally high income or one that really is high on more than a nominal basis (ie high income plus benefits). To work somewhere low stress is a different story and I don't require the moon in pay and benefits for that. Heck there are part time jobs I'd do almost for a loss just for the love of it, but that is very much not what I'm talking about here :)

I don't know. I don't have the job, and for all I know I spend the next 2 years unemployed!! I sadly resigned myself to the potential of a long unemployment because I do realize what the economy is right now. It's merely something I am being considered for.

lhamo

7-31-11, 9:48am

Actually, I believe as a contractor you would be eligible to contribute to a SEP IRA -- limits there can potentially be higher than limits for 401(k) contributions.

But yes, a high salary with no employer-provided benefits does require that you figure out how much it would cost you to provide those things for yourself, as well as the extra time to manage them.

One of the reasons I decided to take my current position rather than going into consulting is that I knew I would have to charge such a high rate to match my take home that it would be hard to establish myself.

lhamo