this post was submitted on 21 Mar 2024
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The term is HENRY. High Earner, Not Rich Yet. People making $100-250k are surprised to find themselves still living paycheck to paycheck, struggling to save for retirement or afford things their parents did like take a vacation, improve their homes, or having children.
They're not struggling to survive, but they aren't living a life of luxury without going into debt.
You're not looking at the cost of living. your actual income is usually irrelevant. you could be making $100-250k, it doesn't matter, if the cost of living (and being able to actually get to your job) is 95% of that income.
For example, my buddy moved to the UK from BA where he was making $8000/mo and living paycheck to paycheck and going into debt. they didn't tell him they would cut his salary down to $4500/mo until he actually got there. He had a panic attack, until his first set of bills arrived, and he realized he still had some 80% of his paycheck left for himself due to drastically lower cost of living.
Excuse me what? Someone earning that much money is only living paycheck to paycheck because their lifestyle is that expensive. And then it actually is their own fault for buying the 15$ Latte with a 30$ Avocado toast every morning, driving to work in their leased 100k $ car, while their wive drives her own 100k $ car.
Cost of living is not the same as the cost of one's specific lifestyle.
"Cost of living data includes the expenses incurred for food, shelter, transportation, energy, clothing, education, healthcare, childcare, and entertainment. A cost of living index tracks how much basic expenses rise over time and among different regions."
I get the concept. But realistically that would mean three things:
In a region where people make 250k a year for them to live paycheck to paycheck the cost of living would need to be somewhere around 4-5x higher than in an area where people would make 50k a year.
That would further mean that in the areas where people make 250k a year noone would exist that could afford anything less than that. So the grocery store cashier and the gas station clerk and the postman would all need to make the same money as google software engineers. That is clearly not the case.
And thirdly that means that either the people who make that much money living paycheck to paycheck are economically illiterate and dont grasp such simple concepts... Or which is far more likely, the quality of life in high cost of living areas is in fact so much better, that it is worth paying the extra.
Either way someone who can make 250k a year is choosing to life paycheck to paycheck by choosing to pay such expenses. They definetely have the means to work somewhere where the difference between cost of living and paycheck allows for saving signficant amounts of money over time. Claiming those people would be victims of the system who were forced to live paycheck to paycheck is simply not true. It is still very much their own choice.
People who work in grocery stores/gas stations in affluent areas typically commute from less affluent areas.
I've heard from actual coworkers who live in San Francisco, that even high paying engineering jobs have trouble making rent without roommates or dual incomes. Do they choose to live there? Yes. Can they move further away? Also yes. Do they want to commute 2 hours each way every day? Probably not. Add in taking your kids to school, and suddenly, the choice you think they had is really no choice at all.
Technically, we all have the option to quit our jobs, find a track of land in the middle of nowhere, and live off-grid, but do we? No. Choices aren't as simple as "find somewhere else to live".
But then why is it an acceptable choice for the commuting grocery store worker, but not for the engineer? There is a quality of living involved here that the engineer chooses to pay for, which the grocery store worker doesn't have.
Thats what i mean with unrealised luxuries. They claim to live paycheck to paycheck because their understanding of what a "normal" standard of living ist, is very different, from what "normal" people actually have as a standard of living.
This is not to say, that theses conditions are a good society or dont need changing. But who can get such an engineering job definetely chooses to have a quality of life that he pays all his paycheck for. If it wouldn't be a choice the grocery store workers wouldn't exist.
Everyone has their own definition of what an acceptable choice is.
My point is that cost of living is not a choice. It is the actual cost that it takes to live in a specific area. Sure, where and how i live are my choice. But that has nothing to do with the actual cost of living in a given neighbourhood. And when you average it out, it balances out those who are frugal and savvy with their money with those who live beyond their means.
To say that everyone who makes 250k/yr and is living paycheck to paycheck is fat on avocado toast, and 15$ lattes is oversimplifying it.
Unless you are forced to life in that area you are making a choice. And you are not forced to life there. It comes with trade offs. The trade offs are traded in the housing market. People fled the cities in the 80s to move into suburbs. Now people want to life in the city again.
And cost of living of course includes the coffee and toast. You see that in areas that are gentrified, forcing people who dont make the 100k a year to move away. Where before the coffee was 3$ it now is 15$. And someone is paying for that, otherwise the business would not work. So again people are making that choice. And the people with 100k make the choice actually forcing the hand of people who only make 30k and are literally forced out of their neighbourhood.
Of course then there is all the more compulsion to claim, that they had no choice but to gentrify and had no choice but to drive people out of their neighbourhoods. Because if the people with 100k weren't forced to do so, then they would need to take responsibility for their role in that market. Of course the main responsibility remains with the landlords who are happy to drive rents up and people out. But then again i doubt there to be many six figure engineers who are devout to left parties (in case of the US, the Democrats are not a left party by any outside standard.)
Working certain high earning jobs means that you are required to live within a certain proximity to the workplace and have a car for mobility reasons.
A 200k job could easily meen 4500 into condo mortgage monthly, plus a presentable car lease at another 1k. No time to cook would be 100$ daily for food. Incidentals, clothing, cosmetic healthcare, 10-30k yearly.
120k debt from schooling at 10%, means a payment of 12k a year pays interest, 36k a year would pay off the debt in a reasonable time frame.
Have you ever looked at the cost of housing in London, Manhattan, Seattle, or San Francisco? The people that you mentioned, the clerks and such, don't live there. They commute into the city from surrounding areas. A few years ago $180k per year in SF was listed by the government as poverty level. It's probably higher now. You're seeing the situation without realizing the problem. And no, the people making those high salaries usually can't just go live somewhere else. Their industries are region constrained, and if you are lucky enough to work remotely and move to a more affordable area, they often dock your pay. Just two comments up was someone saying their friend's pay was docked from $8000 per month to $4500 per month when they moved to a cheaper area, even though they had the exact same job at the exact same company. It is entirely possible to make $200k a year and not have a lot of money after your cost of living expenses, especially if you just started making that much.
That is plainly untrue
So where is that place, where the cost of living fully eat up a 250k salary, or even a 100k salary? And by eating up i mean actually living paycheck to paycheck, not as given in the examples enjoying many small luxuries that add up, but are not realised as such.
Considering less than 10% of American households earn above 250k I'd say not many (if any) for that range, but 100k a year? That is definitely not enough to live in some big cities in California. SF, LA, SD to name a few. I know New York is also very expensive at 100k.
Again, can't speak for 250k, 250k is still a lot of money in a year. It might not go as far as it used to, but it's still good money.
https://www.sfgate.com/local/article/under-100k-low-income-san-francisco-18168899.php
because the location where the job is, is expensive. and you can't commute in that far into the job, without raising the rents in the suburbs and gentrifying them, too. where high paying jobs are, the market realizes they can raise the cost of living.
Ok boomer.
Yeah, it does happen but because people spend too much on shit they dont need
Edit: I got a 6 figure job. Lived in a cheap shitty basement, rode a bicycle, and took public transportation to work (which was subsidized by the gov). After a few years I quit and had enough to mostly retire