I disagree. 200k can provide for your family quite easily. People see rich as being able to buy a fleet of yachts for each member of their family.
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200k a year families claim they are "not rich"
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I disagree. 200k can provide for your family quite easily. People see rich as being able to buy a fleet of yachts for each member of their family.
Very comfortably actually.
Agreed, one disaster and the family could be hit hard.
To me rich is an amount that no matter what life throws at you you'd be able to weather it with no worries.
Drive reasonable cars that do not cost 80k, stop buying 800 dollars worth of wine, generally LIVE REASONABLY, and 200k will be able to weather whatever life throws at you.
Way back in the thread when I posted my household budget, I forgot a few big items like various insurances that we have to buy out of pocket. We have life insurance for everyone in the family, basic cost-of-burial policies for the kids, and larger payouts for the wife and I. She also carries a personal umbrella policy of $1,000,000 because she's a doctor and she might get sued. Malpractice coverage is paid for by the various facilities she works, but that's the only insurance that is picked up by someone else. We also have to buy our own long-term and short-term disability insurance and it is expensive. Plus our homeowners insurance. The annual cost for all of these insurances is around $8,000 a year.
I posted the above to make a larger point. The point is, there are so many variables and factors to consider when determining whether a $200k earner is considered rich.
There is an actual cost to being what some people in this thread consider "rich".
Between various taxes we pay (federal, state, municipality taxes, property taxes, auto taxes), paying for health insurance plus what insurance doesn't cover, plus other healthcare expenses, plus all the other insurances we must carry, plus continuing education expenses, roughly 55% of our income is gone right off the top before we even get to lifestyle choices.
So on a $200k income, the actual effective income that we get to use on lifestyle choices is less than $100k. That's certainly a lot, and better than most, but it certainly is not "rich" and our effective income is certainly a lot closer to the average median income than our net income is.
There are many variables to consider before labeling a $200k person as rich. What do they actually do for a living? A $200k small business owner, independent contractor, or self-employed person is going to have much more overhead in taxes and various insurances than a $200k earner with a full bennies package and various insurances picked up by an employer.
A death of the main money earner?
AbortedWalrusFetus
Member
I don't quite get this logic. Kids aren't THAT expensive. The yearly costs for raising a child are something like $10-15k. Even if you subtract $30k from their income, and put them at $170k, that is still triple the average household income.
I guess the argument can come from "what is rich". According to textbook definitions the rich are only the top 1% of the wealthiest people in the country. By that metric they aren't rich, I suppose, but I don't think that metric accurately reflects the differences in qualify of life of standard of living between, say, the top 10-15% of income earners and the rest of the country. For me you cross that threshold when you can easily commit more of your money to luxuries than you need to commit toward necessities. I think that's something that anyone making $200k/year can do.
Bulbo Urethral Baggins
Banned
200K is rich? Puuuuleeze.
This is how you can tell if you're rich.
If you ain't working something like that, you're not rich.
This is how you can tell if you're rich.
If you ain't working something like that, you're not rich.
I think having proper life insurance would cover that, at least in theory.
It would take some sort of prolonged severe sickness, permanent disability ( you can get insurance for this as well, but I think it's bought less frequently than life insurance ), or some irreparable hit to the house hold income. That would sink these individuals eventually.
Thanks to assurance, a family can get nearly as much money as before from the assurance company, plus you get help from the government. And yes, the assurance is mandatory for every employee in my country.
Marty Chinn
Member
Life insurance isn't cheap. It costs money and if you do, that is now a yearly expense that you deduct from your salary. Meaning you no longer have access to that money.
Depends where you live and what your situation is though doesn't it? Here, that would barely cost the cover of daycare. For a two income household, you need to pay for daycare to watch the kid. Now suddenly what if you have two kids? Double that. So now you're paying $20-$30k on daycare alone which mean that's about 50k of your salary gone just for daycare. We haven't even gotten to feeding, clothing, and other expenses of a kid let alone gotten to paying for a house and other expenses as a family.
AbortedWalrusFetus
Member
Now divide the cost of day care, something that you pay for ~8 years of your childs life by the 18-20 years that you actually care for them. It actually turns out that it falls into the $10-15k per year cost. Sure, the higher cost all comes at once, but you make up all of that money again once you don't need to pay for daycare anymore. But if you're spending $50k of your salary on daycare, it's probably going to be more cost effective for one of you to not work, or just work part time.
My wife earns 80% of our 195k income.
We carry a $500,000 life insurance policy on her at a cost of $1000/yr. Double that premium cost if we went for a million dollar policy.
If she were to die tomorrow, all $500,000 would do is buy me enough time to have a fire sale on everything we own, hopefully the house would sell quickly and me and the kids would have to start over somewhere else. It would be a drastic restructuring of everything in our lives. The old saying is true - sometimes the more you have, the more you have to lose.
We carry a $500,000 life insurance policy on her at a cost of $1000/yr. Double that premium cost if we went for a million dollar policy.
If she were to die tomorrow, all $500,000 would do is buy me enough time to have a fire sale on everything we own, hopefully the house would sell quickly and me and the kids would have to start over somewhere else. It would be a drastic restructuring of everything in our lives. The old saying is true - sometimes the more you have, the more you have to lose.
This is certainly an interesting topic and seeing the diverse opinions of the concepts of rich. My sister and her husband make roughly $200k combined. They own a $400k house and a single car, a Scion. They parent triplets and live in Southern California. They are by no means "rich". They also work 6 days a week and constantly put in more than 8 hours daily at the office. My other sister and her husband, same story statistically. 3 kids, house in the same range, 2 cars. Also, not "rich". They're not poor, but they're not willy-nilly spending frivolously either.
I'm unmarried make just under $100k, own a $250k condo in SoCal and drive a Volvo C30 (pre-owned). I also work a shit-ton of hours and don't even think I'm close to being "rich". I live in the Inland Empire, where housing prices are lower than most places in SoCal. Where you live, matters. It's not like we live in some fancy place in California. My neighborhood smells like cow most of the time and that's why I paid the amount I did for my condo. Sales tax in California is higher than just about every state in the US as well. Gas prices are higher, lots of factors involved in cost of living. I'm not lamenting my situation, I'm just trying to put a context on what a salary range can get you in a particular area. Sure, if I made what I do in some other state, my salary would have more purchasing power. But it's likely I wouldn't be making what I do in a smaller market. Salaries scale to the market the position is located.
To me, being "rich" is not having to worry financially. I only have 3 loans, my mortgage, my car loan and a timeshare for my annual vacation where I actually do more than just not work. I have little to no credit card debt and I STILL worry about my finances. I constantly monitor my bank accounts and budget. Your household making $200k annually does not require you to be fiscally responsible. But even if you are, it all depends on the cost of living to determine how well off you are in comparison.
I'm unmarried make just under $100k, own a $250k condo in SoCal and drive a Volvo C30 (pre-owned). I also work a shit-ton of hours and don't even think I'm close to being "rich". I live in the Inland Empire, where housing prices are lower than most places in SoCal. Where you live, matters. It's not like we live in some fancy place in California. My neighborhood smells like cow most of the time and that's why I paid the amount I did for my condo. Sales tax in California is higher than just about every state in the US as well. Gas prices are higher, lots of factors involved in cost of living. I'm not lamenting my situation, I'm just trying to put a context on what a salary range can get you in a particular area. Sure, if I made what I do in some other state, my salary would have more purchasing power. But it's likely I wouldn't be making what I do in a smaller market. Salaries scale to the market the position is located.
To me, being "rich" is not having to worry financially. I only have 3 loans, my mortgage, my car loan and a timeshare for my annual vacation where I actually do more than just not work. I have little to no credit card debt and I STILL worry about my finances. I constantly monitor my bank accounts and budget. Your household making $200k annually does not require you to be fiscally responsible. But even if you are, it all depends on the cost of living to determine how well off you are in comparison.
The discussion I was involved in, as I understood it, was could the 200k household handle the majority's of life's surprises on that income. I think the answer is probably yes. Because you can afford to be properly insured (Health, life, and possibly disability, I am fairly ignorant on the later though).
As for the comment life insurance being expense, of course that depends on a number of factors age and health being the most critical, but if you are in your 30's and are relatively healthy you can get a 20 year Term Life policy that pays out 500K upon your death in the US for about $50 a month for one person. That isn't cheap but it isn't expensive either. Probably less than the monthly cable TV bill for the people making $200k.
Just to restate I am speaking to a different argument than if these people are rich or not. I am talking about could you handle most, not all, but most of life's surprises financially.
Half of the person's monthly wine budget could buy into a fantastic life insurance policy.
You're going to fantastic lengths to justify the supposed hardships that these high-income citizens are having to endure.
Is that standard? That sucks.
AbortedWalrusFetus
Member
Yeah, I pay less than half that for a 30 year term at $300k, and I think they said it would only go up by $10/15 a month if I got the $500k.
What I mean by 'buy enough time' is that I estimate we could stay where we are at, albeit with cutbacks for probably 2-3 years. After that, the life insurance payout would be gone. The mortgage, property taxes, home maintenance and upkeep, and other expenses would eat that life insurance payout up quickly.
The best situation for us financially would be to try to get out from under the house as quickly as possible (it's a 350k house).
that1dude24
Member
coming from a family of four with a combined income of a fifth of 200K living in one of MN's largest cities -
you guys are crazy
you guys are crazy
David Incorporated Esq.
Member
$500,000 / 36 months = $13,888.89 per month.
You're telling me you guys have almost $14,000 in bills a month? What?
AbortedWalrusFetus
Member
Or you could pay off the house so you reduced your interest payments to zero and still have $150k left over. Then you'd have $4000 a month for three years. That's still double what my bills after mortgage cost.
mr stroke
Member
A normal world?
We make 200k a year(wife and I)
and are FAR from rich. We have a decent house, drive average cars, and have enough money to invest and go on an anual vacation.
Even if you haven't paid off any of your mortgage, you'd be able to buy your house outright and still have three years of an average American household income left over.
This is our plan if something unfortunate would happen to either me or my wife.
ThLunarian
Member
You're saying that a half million dollar windfall would be just barely enough to scrape by? That's asinine.
When you get that much money all at once, arguments about the area you live in become irrelevant. You could easily move to an area with a reasonable cost of living, buy a fantastic house for cash, get an awesome car, and put the rest to work in investments and you'd never have to work another day in your life.
Edit: I missed the part where you still owe money on your house. In that case, all you do is pay off your mortgage and put the rest into investments, and then you don't even have to move. You would probably still have to work, but since you wouldn't have a mortgage payment anymore you could get by easily.
David Incorporated Esq.
Member
Would you mind sharing what kind of money you're spending on your home, cars, etc.? Because there are plenty of people who do exactly what you say you're doing on a quarter of your income.
Marty Chinn
Member
Why are we averaging it out? We're talking a current annual income with that type of expense. How does 10 years from now somehow change the hit that is taking place now. In this economy, having a choice of working part time isn't something that you can just change to. Stay at home? Sure we discussed it but then our household income drops dramatically. What does that change financially though? Does one suddenly make me rich while the other doesn't even if the net result ends up being the same?
Health and disability are often supplied by someone's work benefits so that usually is taken care of. Even then, disability from a company can be peanuts. Life insurance also isn't that much from a company's benefits. It's something like 1.5 to 2x your salary which doesn't last for very long in some places. Certainly something that would hit someone hard if that ever were to take place. We recently looked into life insurance and it was by no means $50 a month for us. It was significantly more and we're in our 30s. The cost was just crazy that we had to reevalute it at the moment.
Are we still stuck on this misquoted quote? It's already been debunked awhile ago.
I see you've completely sidestepped the actual point of the statement; anyone with the income levels that are being discussed here should be more than capable of comfortably affording a sizable life insurance policy.
Once again, the vast majority of the population lives comfortably on a fraction of the incomes that we're discussing here. Your crocodile tears about regular, everyday expenses that everyone else deals with at a fraction of the income are really and truly wasted here.
BannedEpisode
Member
I grew up in an upstairs 2 room "apartment" with my single mother and my sister. I know we didnt make a lot. It kinda sets the bar pretty low for what I consider being rich.
AbortedWalrusFetus
Member
You average it out to an amount that accurately reflects the yearly costs of raising a child in the US, which comes out to be $10-15k per year across the period you will have to raise them. Any expenses that are weighted toward one end will either be saved for, if they come at the end, or made up for if they come at the beginning over the duration of the liability. It's long term financial planning.
David Incorporated Esq.
Member
Poor people? Quit smoking and buy healthcare, idiot!
Rich people? Jesus life is hard, do you know how much life insurance costs these days?
This is a rage inducing thread, let me tell you what.
I think you and I are having two different discussions.
Regardless, just out of curiosity what was the rough range of the quote you received per individual? $50, $100, $150 per month? How much coverage was is $200k, $500k, 1 mill?
The hilarious thing about the old couple is that they totally could afford a merc, but for some reason they love re buying the same damn car every three years.
I really need to get some life insurance. But being a smoker with a family history of heart disease that shit is expensive. If it was $50 a month for a $500k policy I would already have it lol.
And set for life with a $500k policy? Some of you guys have really warped notions of how far that would go supporting a family.
And set for life with a $500k policy? Some of you guys have really warped notions of how far that would go supporting a family.
AbortedWalrusFetus
Member
Even a million dollars in investments will not make you set for life. $500k certainly won't. I just don't think someone who owns their house outright with another $150k in the bank really has all that much to worry about unless they are spending vastly above their means.
Deified Data
Banned
All judgement aside (I couldn't care less how much they make), I know a few families like this. Rich as fuck, but they're just "every day people, trying to get by". lol, no you're not. I'm not sure what it is about having money that makes some people ashamed to admit they have it. I sure as hell wouldn't be.
I would still have health insurance - 1300/month, health care costs, child costs, day care would go up substantially from about 500/month to about 1000 a month or more. I work part time and take care of our 2 year old and he would need full time day care because I would have to get a full time job. I'd still have $6000 a year in utilities for water, electric and gas, sewer. Expenses for 1 automobile, insurance taxes, and fuel. Food costs, clothing, school expenses. Plus funeral expenses off the top for my wife and the very cheapest funeral you can get around here is about 10-12k. These are just the expenses off the top of my head. If I put pencil to paper and detailed it out, I have no doubts that a $500,000 life insurance payout would get eaten up quickly in probably 3 years, maybe could stretch to 5 years if I stayed in my current home.
Pretty much the same for me....
My Dad wasn't paying child support either and we got by on her income alone.
It's a matter of perspective...
Marty Chinn
Member
Honestly, I don't remember. We looked into it almost a year ago. I have the quote somewhere around the house, but it was something that when we went in, we assumed we'd have a plan, but when we walked out we were surprised at what it was going to cost us and decided to put it off for now.
But averaging it out isn't a fair representation because your household income isn't guaranteed 10 years from now. It would be like saying, it's ok to spend 110% of your income now because in the long run it works out in your favor. That doesn't help someone who doesn't have the funds currently to cover the upfront costs. Hell, that's the fallacy of the whole housing market wasn't it? You can't afford it now, but it'll pay off in the long run.
I'm not denying comfort; I'm denying rich. Just because people get by doesn't mean that makes me rich. How much debt are they entering? How much debt do they currently have? How much are they saving? How much are they putting away for the kid's college? How much is needed because of having kids? How much much is someone paying because of an area with higher living costs? It's not a black and white issue.
Ya, no kidding. Someone thinking they're set for life cuz of that really needs a wake up of reality.
AbortedWalrusFetus
Member
Millionaire != $1M income/year
Millionaire = $1M Net Worth.
If I kept my expenses the same, but increase my income to $200k, I would be a millionaire in ~10 years.
Particle Physicist
between a quark and a baryon
That is generally what happens when you spend money on things. It's not like you don't get anything out of it. I don't understand this defense. Looking at all the budgets people posted in this thread, they are not outlandish at all (barring some in the OP), but they are still spending lots of money on things most people cannot afford. Just because they spent the money and don't have it on hand to spend on frivolous things, doesn't mean they aren't getting any perks of the high income.
Marty Chinn
Member
Don't forget the taxes.....
The point is if you have to buy insurance to offset the scenario of a loved one dying because of the burden that their sudden loss of income would impose, you still end up having a similar purchasing power in the end. That's a part of the cost of living aspect. It's not like they're spending on some fun item. Again, I point out the situation of if an income is 150k and yet they have to spend 50k for daycare vs someone who has a 100k income and doesn't, is that first person really richer? I'd argue they are not.
mr stroke
Member
sure-
We live in an average middle class neighborhood in CA
Mortgage -$3000
Cars- 2 Hondas-(paid off, no payments)
After 401k, investments, health care, cable/internet, energy, gas, and insurance, it really isn't a whole lot of money. While far from poverty it is definitely middle class. We have some disposable income to go out to dinner/movies or buy the occasional game or pair of jeans, but again its FAR from rich.
AbortedWalrusFetus
Member
You wouldn't spend 110%. You would do things like cut down your vacation budget to zero, decrease your savings and retirement investments for 5 years, etc. Then, when the money frees up, you make up the money deferred from savings and retirement investments at that point.
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