How does the life change when you start making 200k or more base salary than 130k base?
Do you feel rich? Do you spend a lot more? Do you feel like now you don't really have to worry about spending on anything?
(Of course, buying a house might still be difficult, but what about others?)
What are the things that you couldn't do with 130k but can do with 200k?
- We make $400k+ in Boston area and don’t feel rich . One kid , on track for 2. We end up with about 200k post tax and 401k. Daycare is 2.5k/month , mortgage and property taxes 5.5K for an average home in a good school , Maintainence is another $500, college fund about 15k:year . Once second kid is here we will basically not be saving much outside of 401k and college funds . It’s because mortgage is so fuckingmuch
- 220k base after 7% 401k distribution is roughly 10k a month.
3k for one bedroom apartment, 7k for everything else.
At 130k base, I’d probably need a roommate or I’d have to live in a non-desirable neighborhood.
- New ORFM42Trust me. People live very well on $85k, take me for example. You also need to take into acccount RSU and bonuses. Make it $100k total.
Now, I don’t neccessarily need a one-room apartment. (Says ~1.5k/month on renting) => 18k a year. Food and everything else for another $2k => 24k.
Cash burn: 42k, 68k for investing imo is pretty good.
- WRra32, you're simply parroting what you've read from financial blogs. You've given no evidence to support your position and you've made wildly inaccurate assumptions about my financial situation. Super cringey.
If I can save 1 month+ of expenses every two months and also pay $3k/month, who the fuck are you to say I shouldn't do it?
- Here's a thought - why don't people who have no fucking idea what my financial situation is stop lecturing me about my financial situation.
I don't pay $3k in rent. I'm saying IF I DID, I'd still have $49k left over post tax, which is MORE than enough to live on and save a large sum of money.
Also $130k base is entry level in the bay area, and if you're still getting paid entry level money after a couple of years of experience, you're an asshole.
- SAP kimsooYou think too much. Rich means you earn a couple millions a year at least. Or you have property or deposits worth hundreds of millions. Engineer is just an engineer, still middle class.
- Salesforce Zed12I'm hoping to retire on $800k in the next few years. That's $32k a year at 4%. That's plenty to live on and I'll probably earn more doing something I love once I'm FIRE. BTW, that includes having my house paid off. Like WildGoose said, that's the definition of wealthy. The more content you are with less, the quicker you get to feeling rich. Plus, we're all already wildly rich based on the rest of the world.
- Dude - engineers are not middle class...
Don't you think it's a bit absurd to call the people in the top %1 of compensation in this country middle class?
True, as long as you depend on a salary to pay the bills you're not financially independent, but that has a lot to do with the decisions you make on how to spend the money.
- I accept your correction - it depends on whether you measure by household or personal income.
Top 5% personal income start at around 100k and almost all engineers clear that.
For an household this is 166k and I think most engineers reach that within a few years.
Still - even if engineers where in the 90th percentile or above they dont qualify for the middle class
- I’d like to hear how people avoid the higher taxes. Maxing out 401k and HSA are two obvious ways but what else can we do to reduce the total taxable income/tax bracket.
- Microsoft ujRW20Roth accounts grow tax free, but the dollars in the account are after-tax dollars. Traditional accounts grow tax free, but you pay taxes when you take out dollars from the accounts. You put taxed dollars into a brokerage account. These funds are taxed when sold (different rates for short term vs long term capitol gains)
- PTC Googler19I went from 130 in Philly to 220 in NYC.
I take a bus now rather than driving my Accord (which as a second car in NYC I could not afford and had to sell)
I live in a shittier apartment compared to one in Philly.
But ya.. the bank balance and savings increases. Maybe will be able to retire earlier.. But hard to keep lifestyle creep at bay... My wife now shops at Neiman Marcus and not at Marshall's anymore.
- Cornerstone 🤷🏿♂️🤷🏿♂️🤷🏿♂️Dave Ramsey hoo-rah aside, it’s important to reward yourself with something. You worked hard and that shouldn’t go unrecognized internally. Maybe it’s a new car, a nicer apt, etc.
But, do your best to avoid “lifestyle creep”. Don’t finance a crazy expensive car, or make financial decisions with long term impacts like becoming house poor. It will only restart the hedonic treadmill.
- With my family, lifestyle creep is real. It happened several times - our household income jumped 20-50% YoY, credit card debt started creeping up, had to sit down, review spending, make a budget. To be fair, kids were also growing and getting more expensive, but still.
Our household income is over 500k and we are still on budget, regularly saying no to things kids want, etc.
That said, I don't stress about unforeseen expenses like I did when I started. There is enough buffer in discretionary spending and large liquid savings.