Mainstream financial analyst breaks down how tough life can be, even when you make $500,000 a year
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One of the great mythologies of unregulated, late-stage capitalism is the aphorism “A rising tide lifts all boats.” It is decidedly not true. Some of the least sympathetic figures in our current economic climate are well-to-do individuals who are not supeMainstream financial analyst breaks down how tough life can be, even when you make $500,000 a year
One of the great mythologies of unregulated, late-stage capitalism is the aphorism “A rising tide lifts all boats.” It is decidedly not true. Some of the least sympathetic figures in our current economic climate are well-to-do individuals who are not superrich and definitely not ultra-wealthy, but bitch and moan about how average they are. The median annual household salary is somewhere just above $60,000; but the cost of living has risen, as have the costs of health care, and no one can afford to save anything. Almost two-thirds of Americans cannot afford to handle a $500 emergency. You have the freedom to look at and own almost anything! ...sorta “Economically conservative” Americans, in their Ayn Randian delusion, believe that they are one big payday away from leaving behind all of their economic worries. Unfortunately, while there used to be something like an attainable middle class to aspire to, those days are over. In fact, as the Financial Samurai website explains, a big problem for people making “10x the median household income” in big cities like New York City is becoming intoxicated by “big bucks,” only to find themselves living “paycheck-to-paycheck” and “scraping by.” According to the Samurai, a couple with two children, making around $500,000 a year, have a lot of expenses. This is not a hypothetical couple; according to the Financial Samurai, they are “a real couple who shared with me their financial details to anonymously share with you.” The Samurai sets the net salary of this family at $278,400. This is after the maximum contributions to both adults’ 401(k)s are met, and a 40% effective tax rate is applied. From there, here are a few of those expenses. Child care for two children: $42,000 Food (including twice monthly date nights): $23,000 Mortgage: $60,000 Home maintenance: $5,000 Property taxes on $1.5 million home: $20,000 The list goes on, with gas and car payments for a BMW and an SUV. There’s $18,000 for three yearly family vacations. There are student loan payments, because you don’t become a lawyer making $250k in your 30s without a little bit of fancy school and the debt that comes with it. The Samurai also includes charity donations and lessons for the kids in music or sports or dancing. A modest amount is also spent on clothing for everyone—$9,500. In the end, this couple is left with a paltry $7,300 each year to do with as they please. Read more