Bay Area teacher saving half my income – why the doubt? (and asking more questions)

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ladycat
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by ladycat » Sat Sep 14, 2019 5:55 pm

I'm curious about 2 things:
You said you'll receive Social Security. But there's no Social Security deduction in your expenses. Is that from non-teaching employment?
And I'm guessing you don't pay CA SDI (disability) since you have "Long Term Disability Taken from Paycheck: $30" as an expense.
Last edited by ladycat on Sat Sep 14, 2019 7:24 pm, edited 1 time in total.

MathIsMyWayr
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Location: CA

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by MathIsMyWayr » Sat Sep 14, 2019 5:57 pm

Sam1 wrote:
Sat Sep 14, 2019 2:09 pm
Pinotage wrote:
Sat Sep 14, 2019 12:07 pm
Good for you OP!

I agree with other posters that it is eye opening how different tax liability can be.

$1,700 per year federal and state combined???? :sharebeer
Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.
This is the design of a progressive tax system. If you are lucky enough to have income well over the max. fed tax bracket, you may end up paying close to 1/3. I am just stating the fact, not an opinion. The Clintons paid $3.24 million in federal income taxes on an income of $10.6 million in 2015, 31% rate.

student
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by student » Sat Sep 14, 2019 6:00 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 5:40 pm
Traveler wrote:
Sat Sep 14, 2019 5:12 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:09 pm
Pinotage wrote:
Sat Sep 14, 2019 12:07 pm
Good for you OP!

I agree with other posters that it is eye opening how different tax liability can be.

$1,700 per year federal and state combined???? :sharebeer
Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.

Just live on $60k per year and you can mostly avoid taxes. The choice is up to you.
This is a bit flippant, don't you think? Surely you understand that we have a federal income tax, not a federal consumption tax. I make 1.6x your income but pay 21.5x your income taxes ($37K vs your $1.7K). And apart from income taxes, I spend only $48K. How can I possibly have such high taxes when 48 is less than 60?
You’re right. That did come across as flippant and I apologize for my tone. I think I was getting a bit defensive because there were some comments made about how I am not paying enough in taxes. I didn’t write the tax code and agree that it has some quirks (to put it mildly).

To all: I’m at a kid’s birthday party now and will respond later this evening if you asked a question.

I greatly appreciate everyone’s input. Thank you.
I just want to say again that it is great for you to give the details. Your posts are courteous. You are paying less tax but it is based on existing laws. Nothing wrong with that. Similarly, the board is full of people asking for steps to do backdoor Roth IRA and I don't see anyone complain about that. Congratulations on your success.

stoptothink
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by stoptothink » Sat Sep 14, 2019 6:53 pm

wubdemil wrote:
Sat Sep 14, 2019 5:09 pm
stoptothink wrote:
Sat Sep 14, 2019 4:28 pm
wubdemil wrote:
Sat Sep 14, 2019 3:45 pm
OP - why do you save that much if you are fairly certain that your pension and SS will cover your expenses in the future?
SS will easily cover our living costs in retirement, but we prefer to save as opposed to spend because the increased stability provides more for us than a bigger house, fancier car, or eating out every night.
You are right to save as much as you can if your income is very unstable. OP, on the other hand, is a (tenured?) teacher with fairly predictable income, hence my question. OP seems to be a very thoughtful person with good planning skills. I wanted to learn if he has plans for the leftover money at the end.
Both our incomes are very stable, what's your point?

Broken Man 1999
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Broken Man 1999 » Sat Sep 14, 2019 7:17 pm

wubdemil wrote:
Sat Sep 14, 2019 3:45 pm
OP - why do you save that much if you are fairly certain that your pension and SS will cover your expenses in the future?
OP is in mid-forties, but pension is at age 60. Lots can happen in 15 years. Better safe than sorry.


Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Pomegranate
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Pomegranate » Sat Sep 14, 2019 7:31 pm

Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:

anonenigma
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anonenigma » Sat Sep 14, 2019 7:35 pm

dodecahedron wrote:
Sat Sep 14, 2019 4:35 pm
I will say that the teachers in this area (upstate NY Capital District region, MCOL) are generally not able to save half their income in one earner families and live a lifestyle comparable to the OPs (i.e., live in new construction townhome built less than ten years ago, two cars, cleaning service every three weeks, eating out regularly if modestly.)

Salaries around here are much lower than the OPs, health care costs are higher (but not sufficiently high to allow for ACA deals like the OPs), property taxes are some of the highest in the country, state income taxes are less progressive than in California.

On the other hand, this savings discrepancy is partly, perhaps largely, a measurement issue.

Teachers in this area contribute relatively little or in many cases nothing to their defined benefit pensions (unlike the OP), depending on how long they have been working. The school district bears all or most of the cost for contributing to their pensions, so really the ¨lower¨ apparent salaries that teachers here get are implicitly a type of saving because of those employer contributions. Also there are pretty generous health care benefits in retirement for public employees, including teachers, so again the lower current salaries that compensate for those future benefits can be viewed as a form of saving.

Furthermore, teachers here are paying into SS as are their employers (which seems not to be the case for the OP), and that could be viewed as a form of implicit saving as well.
For reference, CA teachers pay 10.25% into CalSTRS but nothing into SS. Retiree health benefits are rare - I’m very fortunate to have them. It’s part of total compensation - proposed by a visionary superintendent when the district couldn’t afford pay raises to keep up with other districts in the county.

HornedToad
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by HornedToad » Sat Sep 14, 2019 7:38 pm

Traveler wrote:
Sat Sep 14, 2019 5:12 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:09 pm
Pinotage wrote:
Sat Sep 14, 2019 12:07 pm
Good for you OP!

I agree with other posters that it is eye opening how different tax liability can be.

$1,700 per year federal and state combined???? :sharebeer
Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.

Just live on $60k per year and you can mostly avoid taxes. The choice is up to you.
This is a bit flippant, don't you think? Surely you understand that we have a federal income tax, not a federal consumption tax. I make 1.6x your income but pay 21.5x your income taxes ($37K vs your $1.7K). And apart from income taxes, I spend only $48K. How can I possibly have such high taxes when 48 is less than 60?
It's because he's maxing out both 401k and 457b for $37k off the top line. I'm actually not clear why he is maxing both unless wants to retire early or just save on taxes since teacher pension will cover most retirement expenses.

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dodecahedron
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by dodecahedron » Sat Sep 14, 2019 7:45 pm

HornedToad wrote:
Sat Sep 14, 2019 7:38 pm

It's because he's maxing out both 401k and 457b for $37k off the top line. I'm actually not clear why he is maxing both unless wants to retire early or just save on taxes since teacher pension will cover most retirement expenses.
OP made clear above that he has extremely strong incentives to keep his MAGI low enough to qualify for ACA premium subsidies. He would face a huge cliff effect and much higher health insurance costs if he did not contribute close to the max to all his available tax deferred accounts. By keeping his MAGI low, he pays $200/month for a ¨gold¨ ACA plan.

Edited to add: Here is a quote excerpted from his original post indicating his reasoning:
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

By putting $50k+ into tax-deferred accounts, our MAGI becomes low enough that we qualify for a premium tax credit on the health care exchange that’s worth around $15k/year. My employer, a large school district, provides no health benefits. This is not uncommon in the region (a fact that surprises some). Health insurance is the reason that we are not contributing into Roth accounts at this time.

anakinskywalker
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anakinskywalker » Sat Sep 14, 2019 7:57 pm

student wrote:
Sat Sep 14, 2019 6:00 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 5:40 pm
Traveler wrote:
Sat Sep 14, 2019 5:12 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:09 pm


Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.

Just live on $60k per year and you can mostly avoid taxes. The choice is up to you.
This is a bit flippant, don't you think? Surely you understand that we have a federal income tax, not a federal consumption tax. I make 1.6x your income but pay 21.5x your income taxes ($37K vs your $1.7K). And apart from income taxes, I spend only $48K. How can I possibly have such high taxes when 48 is less than 60?
You’re right. That did come across as flippant and I apologize for my tone. I think I was getting a bit defensive because there were some comments made about how I am not paying enough in taxes. I didn’t write the tax code and agree that it has some quirks (to put it mildly).

To all: I’m at a kid’s birthday party now and will respond later this evening if you asked a question.

I greatly appreciate everyone’s input. Thank you.
I just want to say again that it is great for you to give the details. Your posts are courteous. You are paying less tax but it is based on existing laws. Nothing wrong with that. Similarly, the board is full of people asking for steps to do backdoor Roth IRA and I don't see anyone complain about that. Congratulations on your success.
I agree. Thanks Ron for sharing these details. The ACA info in particular adds a lot of value to this forum as it could help a lot of other people.

I also agree that your excellent life situation can help inspire many others. Congratulations on your good life decisions and wish you and your family the very best.

I also totally understand where Sam1 and others are coming from. The tax system has a lot of "quirks", as Ron put so well.

I'm glad that smart people like Ron are teaching our kids.

One thing I wanted to add: make sure you have good disability and life insurance. Also pay close attention to the pension system's sustainability. Those 3 are the only major vulnerabilities I could think of in your plan.

anakinskywalker
Posts: 383
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anakinskywalker » Sat Sep 14, 2019 8:00 pm

Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
Did you miss the part about churning credit cards for miles and points to cover most vacation expenses?

anakinskywalker
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anakinskywalker » Sat Sep 14, 2019 8:05 pm

dodecahedron wrote:
Sat Sep 14, 2019 7:45 pm
HornedToad wrote:
Sat Sep 14, 2019 7:38 pm

It's because he's maxing out both 401k and 457b for $37k off the top line. I'm actually not clear why he is maxing both unless wants to retire early or just save on taxes since teacher pension will cover most retirement expenses.
OP made clear above that he has extremely strong incentives to keep his MAGI low enough to qualify for ACA premium subsidies. He would face a huge cliff effect and much higher health insurance costs if he did not contribute close to the max to all his available tax deferred accounts. By keeping his MAGI low, he pays $200/month for a ¨gold¨ ACA plan.

Edited to add: Here is a quote excerpted from his original post indicating his reasoning:
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

By putting $50k+ into tax-deferred accounts, our MAGI becomes low enough that we qualify for a premium tax credit on the health care exchange that’s worth around $15k/year. My employer, a large school district, provides no health benefits. This is not uncommon in the region (a fact that surprises some). Health insurance is the reason that we are not contributing into Roth accounts at this time.
Correct. And he also said that this 403b and 457b money is earmarked for his kid's college expenses. Pay attention, people! (I'm channeling Phoebe from Friends here :-) )

Topic Author
Ron Ronnerson
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Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 8:34 pm

dodecahedron wrote:
Sat Sep 14, 2019 3:14 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:09 pm
Pinotage wrote:
Sat Sep 14, 2019 12:07 pm
Good for you OP!

I agree with other posters that it is eye opening how different tax liability can be.

$1,700 per year federal and state combined???? :sharebeer
Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.

Just live on $60k per year and you can mostly avoid taxes. The choice is up to you.
You (the OP) are, for the most part, not really avoiding taxes. You are just deferring them. Eventually the taxes will come home to roost, when your pension benefits and RMDs start rolling in.
That's a fair point and I have considered what you're saying. However, the benefit of the subsidy for health insurance is huge so maxing traditional retirement accounts seems to be the best move for the time being. Once I'm retired, my district pays for the employee's health insurance (but not for other family members). I may be able to slowly convert some of the money in traditional accounts to Roth at some point in the future.

If the tax burden is really high, perhaps I'll move to a state like Nevada and at least avoid potentially high California taxes. I'm hoping, though, that I'm in a position where taxes really aren't too big of a concern and I can just pay them without worrying much about it.

Anyway, I have some time ahead. For now, I'm deferring as there is great benefit in doing so.

Topic Author
Ron Ronnerson
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Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 8:36 pm

stoptothink wrote:
Sat Sep 14, 2019 4:28 pm
wubdemil wrote:
Sat Sep 14, 2019 3:45 pm
OP - why do you save that much if you are fairly certain that your pension and SS will cover your expenses in the future?
Why not? Believe it or not some people don't feel that spending more will improve their quality of life. We have twice the income of Ron and we spend less as a family of 4 (including full-time tuition for my wife and daycare for my son) and we have quite a bit more in retirement assets being nearly a decade younger. SS will easily cover our living costs in retirement, but we prefer to save as opposed to spend because the increased stability provides more for us than a bigger house, fancier car, or eating out every night.

Ron is easily one of my favorite posters.
I deeply appreciate that. I see things very similarly. The best things in life for me cost little to nothing. What I really want is time to enjoy those things.

Topic Author
Ron Ronnerson
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 8:37 pm

Silence Dogood wrote:
Sat Sep 14, 2019 3:45 pm
OP: I believe you.

I live in a HCOL area with my spouse.

Rent is about $2K a month for a one bedroom. We spend about $40k a year (including rent).
Nice!

Topic Author
Ron Ronnerson
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 8:53 pm

wubdemil wrote:
Sat Sep 14, 2019 3:45 pm
OP - why do you save that much if you are fairly certain that your pension and SS will cover your expenses in the future?
Several reasons, including:
-Due to the health insurance issue, keeping our MAGI low is very beneficial. If we go over the threshold, we would have to incur another $15k in health insurance cost. To get $15k in my pocket to pay that bill, I'd need maybe $18k-$20k in salary after factoring in taxes. Instead, if I direct it toward retirement, health insurance is mostly covered.

-We've been trying to catch up. My wife and I got married around age 30. We had a net worth of -40k (as in negative) at that time. It's now over $1M, Our salaries have never exceeded $150k. We're in a way better position now than we used to be and that feels good.

-It makes me feel secure. I like saving in case life throws some curve-balls.

-We like having options for the future. Perhaps I'll retire earlier or want to spend more money later or both. It would be nice to be able to send my kid to a great college as well.

-We feel really comfortable living the way that we are. We enjoyed life quite a bit and traveled extensively in our 30s. We went to the Greek Isles, Paris, Croatia, Ecuador and the Galapagos Islands, Costa Rica, Dubai, and numerous trips to Hawaii. It was a fun time period. We became parents at age 39. Our 40s look very different. These days, we do trips to Disneyland, hang out at the pool, and go to kids' birthday parties (just came back from one, actually). I wouldn't trade it for anything. We're just in a different phase of our life right now and our costs aren't that high for the things we'd like to do. So, I figure we might as well save what we can.

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Ron Ronnerson
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 8:54 pm

Broken Man 1999 wrote:
Sat Sep 14, 2019 3:59 pm
OP, you have made some really good decisions, and your lifestyle is your reward.

So far as feeling bad about paying few taxes, you didn't write the rules, and there is no reason to pay a dollar more than is legally required.

Most citizens practice tax avoidance, I certainly do. Tax evasion is not legal, tax avoidance is perfectly legal, and is practiced by tens of millions.

I always figured that a family who was supporting themselves is the type citizen that makes a strong community/state/nation. :thumbsup :thumbsup

Good luck in the future!

Broken Man 1999
Thanks, Broken Man 1999. I appreciate your comment.

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Ron Ronnerson
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:05 pm

Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
I'll try to pose it in a way so that hopefully you can see the other side. This past summer, my wife and I were both home with our daughter. I taught her to read in those three months by providing daily lessons. We went to the pool every other day. We went to Disneyland this summer too. We also went to the beach, the zoo, parks, and libraries. We visited with relatives, did jigsaw puzzles together, and went to the movies.

We did these types of activities every day as a family all summer long. While so many were rushing to work, we got time to spend together. Ask anyone on their deathbed what their wish is. It's rarely more money and almost always more time. Eating at Subway and driving a Corolla into the ground means I can spend time with my wife and daughter in my 40s. Life is about trade-offs and I make this one happily. Side effects include paying almost no taxes and having a net worth that increases quickly.

By the way, we traveled the world in our 30s. I've been to five continents and my wife has been to six. We're in a phase of life now where the best things don't cost much.

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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Grt2bOutdoors » Sat Sep 14, 2019 9:10 pm

Goal33 wrote:
Sat Sep 14, 2019 11:12 am
You bought your home at extreme low in 2010, otherwise you’d be commuting from Manteca to Silicon Valley.

There is an element of good fortune that is enabling your ability to live in tri-Valley Bay Area.
He gambled and is winning thus far. I can't say I'd recommend someone purchase a home for $500K and only put down $15K. On top of that, his perk as a teacher enabled him to access a program not available to the mass public which permitted both a low down payment and zero requirement to pay PMI. The lack of PMI saved the OP a substantial amount of money and that should not be discounted.

To put it bluntly, the OP exercised options not available to the general public. One should not characterize the OP as being typical middle class, there is nothing typical here: access to a generous pension (yes, he contributes $11K per year or roughly 10% of his annual income but for the average Joe to generate such a retirement benefit would require a terminal value of $2.5 million+, an annual $11K contribution over 30 year career if you are able to maintain one without a job interruption is not going to get you there AND an above average ability to manage your money properly with no state backed guarantee).

Timing: getting in at the market lows. Most will not get in at the lows simply because of timing - when they are joining workforce, when they have downpayment, when they are settling down, etc.

Tax benefits: paying only $1700 a year on an income of $115K, unheard of for average Joe. Average Joe does not have access to multiple tax deferred retirement plans outside of an IRA or 401K. In other words, Average Joes are subsidizing this OP's standard of living because they are carrying the burden of taxation due to enforced limitations on tax deferred savings, whereas OP has no such restrictions.

Good for the OP on taking advantage of options offered to him, but there is no comparison between the OP and average Joe in California or elsewhere. One can see why there can be doubt. I don't doubt it, its well known that in certain locations, certain workers have very rich benefits compared to other workers.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
Ron Ronnerson
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:15 pm

ladycat wrote:
Sat Sep 14, 2019 5:55 pm
I'm curious about 2 things:
You said you'll receive Social Security. But there's no Social Security deduction in your expenses. Is that from non-teaching employment?
And I'm guessing you don't pay CA SDI (disability) since you have "Long Term Disability Taken from Paycheck: $30" as an expense.
I have over 40 credits in social security as I didn't begin teaching until almost age 30. Prior to that, I worked in private sector jobs. My social security benefits will be reduced by the windfall elimination provision.

My wife will also get social security. While she is not currently working, she worked for many years. When our daughter gets a bit older, she may again go back to work.

All I pay for disability is what I listed in the list of expenses. At my work, we do have some other provisions which help in case of disability. All our unused sick time carries over to the next year. I have half a school year's worth of time saved (around 90 days). Additionally, teachers can sign on to donate a day from their sick leave bank to other union members who may need it due to a disability. I've donated to others in the past.
Last edited by Ron Ronnerson on Sat Sep 14, 2019 9:39 pm, edited 1 time in total.

Topic Author
Ron Ronnerson
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Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:18 pm

student wrote:
Sat Sep 14, 2019 6:00 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 5:40 pm
Traveler wrote:
Sat Sep 14, 2019 5:12 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:09 pm


Seriously. This is messed up. Our income is over 400k and we paid over 75k in income taxes.

So we make roughly 4x as much money and pay roughly 40x more in taxes.

Just live on $60k per year and you can mostly avoid taxes. The choice is up to you.
This is a bit flippant, don't you think? Surely you understand that we have a federal income tax, not a federal consumption tax. I make 1.6x your income but pay 21.5x your income taxes ($37K vs your $1.7K). And apart from income taxes, I spend only $48K. How can I possibly have such high taxes when 48 is less than 60?
You’re right. That did come across as flippant and I apologize for my tone. I think I was getting a bit defensive because there were some comments made about how I am not paying enough in taxes. I didn’t write the tax code and agree that it has some quirks (to put it mildly).

To all: I’m at a kid’s birthday party now and will respond later this evening if you asked a question.

I greatly appreciate everyone’s input. Thank you.
I just want to say again that it is great for you to give the details. Your posts are courteous. You are paying less tax but it is based on existing laws. Nothing wrong with that. Similarly, the board is full of people asking for steps to do backdoor Roth IRA and I don't see anyone complain about that. Congratulations on your success.
Thank you. It's funny you mention back door Roths. Sounds sneaky, doesn't it? I've always thought it interesting that no one says so! Anyway, I look at it the same way as you. I've read up on taxes because I was interested in the topic and it doesn't seem prudent to just simply ignore what I've learned. Thanks again for the kind words.

EnjoyIt
Posts: 2886
Joined: Sun Dec 29, 2013 8:06 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by EnjoyIt » Sat Sep 14, 2019 9:18 pm

Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by smitcat » Sat Sep 14, 2019 9:22 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 12:44 pm
HEDGEFUNDIE wrote:
Sat Sep 14, 2019 11:05 am
MarkRoulo wrote:
Sat Sep 14, 2019 11:01 am
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am
There was recently a thread about the cost to live a middle-class lifestyle in a VHCOL area. I posted that I’m a teacher in the Bay Area and my wife is a stay-at-home parent and we’re saving half our income. People began questioning how that could be but the thread was derailed and shut down before I could respond.

Here’s my post on that thread from the other day: viewtopic.php?f=2&t=290304&start=50#p4745967

I thought I’d answer some of the questions that were raised in response to my post and, to keep this actionable, ask for feedback on how to further improve our situation. I owe much gratitude to the people on this forum for providing guidance to us over the years.


Federal Income Taxes: $140 (about $1700 for the year)
California State Income Taxes: $0 (we itemize on state taxes and take 3 exemptions for 3 family members and this eliminates all liability)
I suspect that a lot of people are surprised that someone can have a family income of about ~$115K (almost 2x the median US household income) and still pay less than 2% total income tax (state plus federal). I know that this surprised me.
I am curious about this too. Not disputing it, but would love to see the math.
Here are the numbers:
Federal
Gross Income: $115k from work + $5k interest (from churning bank accounts): $120k
Above-line deductions: $59k ($12k for pension contributions, $2k for dental premiums taken from paycheck, $19k for 457b, $19k for 403b, $1k for health FSA, $6k for traditional IRA)
AGI: $61k
Standard Deduction: $24.4k
Taxable Income: $36.6k
Tax: $4k
Child Tax Credit (one child) and Saver's Credit: $2400
Tax Owed: $1600

California
AGI: $61k
Itemized Deductions: $21.5k ($10k property tax and $11.5k mortgage interest)
Taxable Income: $39.5k
Tax: $600
Exemptions for 2 adults and 1 child: $600
Tax Owed: $0

"Gross Income: $115k from work + $5k interest (from churning bank accounts): $120k
I am curious - how do you achieve and calculate the $5,000/year in churning bank accounts?

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by smitcat » Sat Sep 14, 2019 9:28 pm

EnjoyIt wrote:
Sat Sep 14, 2019 9:18 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.
Folks that have choices and make them knowingly will tend to make the ones that are best for them
When I see these posts on folks that 'do not 'need' XXX" it occurs to me that if they never experience the XXX they will never know how fun/valuable/ important that XXX is.
Over time we have been both without and with some experiences/items/funds/expenses and I can say it is easily an advantage to have many options as opposed to few,
YMMV

marcopolo
Posts: 2524
Joined: Sat Dec 03, 2016 10:22 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by marcopolo » Sat Sep 14, 2019 9:29 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 9:05 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
I'll try to pose it in a way so that hopefully you can see the other side. This past summer, my wife and I were both home with our daughter. I taught her to read in those three months by providing daily lessons. We went to the pool every other day. We went to Disneyland this summer too. We also went to the beach, the zoo, parks, and libraries. We visited with relatives, did jigsaw puzzles together, and went to the movies.

We did these types of activities every day as a family all summer long. While so many were rushing to work, we got time to spend together. Ask anyone on their deathbed what their wish is. It's rarely more money and almost always more time. Eating at Subway and driving a Corolla into the ground means I can spend time with my wife and daughter in my 40s. Life is about trade-offs and I make this one happily. Side effects include paying almost no taxes and having a net worth that increases quickly.

By the way, we traveled the world in our 30s. I've been to five continents and my wife has been to six. We're in a phase of life now where the best things don't cost much.
Good choices, Ron.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:31 pm

Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
We earn over $10k/year from credit card companies, banks, and brokerage firms by opening accounts and doing transfers. We spend about $6k/year on travel. $1k of that comes out of pocket (mostly for things like food and souvenirs). The rest is paid for by credit card companies.

Just as an example, my wife and I each recently opened two credit cards that offer $500 cash back bonuses if you spend a certain amount within the first few months. We will pay our two property tax installments of $5k each with our credit cards. This will effectively lower our property taxes from $10k to $9k for the year. Just about all our spending is put on new credit cards to earn bonuses. Our credit scores are in the 800s as we don't go crazy with this and open maybe three cards a year each.

Another example - We recently opened United credit cards and booked a trip to Maui for next summer. We used miles only and it is covering three round trip tickets to Hawaii (nothing out of pocket). We're going with my in-laws. They have a two bedroom timeshare and we'll stay there for no cost. We'll have to pay for food. We plan to buy stuff from Safeway and Costco and make our own sandwiches or get pizzas. Yes, it's a vacation and I realize that. However, people must make their own choices. I'm not going to Maui in order to eat it. The in-laws will also watch the kiddo while my wife and I take a snorkeling cruise together. The sunsets are lovely and free.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:33 pm

anonenigma wrote:
Sat Sep 14, 2019 7:35 pm
dodecahedron wrote:
Sat Sep 14, 2019 4:35 pm
I will say that the teachers in this area (upstate NY Capital District region, MCOL) are generally not able to save half their income in one earner families and live a lifestyle comparable to the OPs (i.e., live in new construction townhome built less than ten years ago, two cars, cleaning service every three weeks, eating out regularly if modestly.)

Salaries around here are much lower than the OPs, health care costs are higher (but not sufficiently high to allow for ACA deals like the OPs), property taxes are some of the highest in the country, state income taxes are less progressive than in California.

On the other hand, this savings discrepancy is partly, perhaps largely, a measurement issue.

Teachers in this area contribute relatively little or in many cases nothing to their defined benefit pensions (unlike the OP), depending on how long they have been working. The school district bears all or most of the cost for contributing to their pensions, so really the ¨lower¨ apparent salaries that teachers here get are implicitly a type of saving because of those employer contributions. Also there are pretty generous health care benefits in retirement for public employees, including teachers, so again the lower current salaries that compensate for those future benefits can be viewed as a form of saving.

Furthermore, teachers here are paying into SS as are their employers (which seems not to be the case for the OP), and that could be viewed as a form of implicit saving as well.
For reference, CA teachers pay 10.25% into CalSTRS but nothing into SS. Retiree health benefits are rare - I’m very fortunate to have them. It’s part of total compensation - proposed by a visionary superintendent when the district couldn’t afford pay raises to keep up with other districts in the county.
My district does pay retiree health benefits (but not for dependents). However, current employees don't get health benefits.

marcopolo
Posts: 2524
Joined: Sat Dec 03, 2016 10:22 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by marcopolo » Sat Sep 14, 2019 9:36 pm

smitcat wrote:
Sat Sep 14, 2019 9:28 pm
EnjoyIt wrote:
Sat Sep 14, 2019 9:18 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm


Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.
Folks that have choices and make them knowingly will tend to make the ones that are best for them
When I see these posts on folks that 'do not 'need' XXX" it occurs to me that if they never experience the XXX they will never know how fun/valuable/ important that XXX is.
Over time we have been both without and with some experiences/items/funds/expenses and I can say it is easily an advantage to have many options as opposed to few,
YMMV
It's also possible, they have the means, and have tried "XXX", and but did not see the value in it?

I agree having more options is always better.
Once in a while you get shown the light, in the strangest of places if you look at it right.

we1
Posts: 22
Joined: Tue Jul 30, 2019 12:24 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by we1 » Sat Sep 14, 2019 9:37 pm

What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by smitcat » Sat Sep 14, 2019 9:40 pm

marcopolo wrote:
Sat Sep 14, 2019 9:36 pm
smitcat wrote:
Sat Sep 14, 2019 9:28 pm
EnjoyIt wrote:
Sat Sep 14, 2019 9:18 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm


Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.
Folks that have choices and make them knowingly will tend to make the ones that are best for them
When I see these posts on folks that 'do not 'need' XXX" it occurs to me that if they never experience the XXX they will never know how fun/valuable/ important that XXX is.
Over time we have been both without and with some experiences/items/funds/expenses and I can say it is easily an advantage to have many options as opposed to few,
YMMV
It's also possible, they have the means, and have tried "XXX", and but did not see the value in it?

I agree having more options is always better.
Yes that is absolutely possible and true.
Based on some of the spending amounts in this post that would not be possible with most/many of the XXX's out there.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:48 pm

smitcat wrote:
Sat Sep 14, 2019 9:22 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 12:44 pm
HEDGEFUNDIE wrote:
Sat Sep 14, 2019 11:05 am
MarkRoulo wrote:
Sat Sep 14, 2019 11:01 am
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am
There was recently a thread about the cost to live a middle-class lifestyle in a VHCOL area. I posted that I’m a teacher in the Bay Area and my wife is a stay-at-home parent and we’re saving half our income. People began questioning how that could be but the thread was derailed and shut down before I could respond.

Here’s my post on that thread from the other day: viewtopic.php?f=2&t=290304&start=50#p4745967

I thought I’d answer some of the questions that were raised in response to my post and, to keep this actionable, ask for feedback on how to further improve our situation. I owe much gratitude to the people on this forum for providing guidance to us over the years.


Federal Income Taxes: $140 (about $1700 for the year)
California State Income Taxes: $0 (we itemize on state taxes and take 3 exemptions for 3 family members and this eliminates all liability)
I suspect that a lot of people are surprised that someone can have a family income of about ~$115K (almost 2x the median US household income) and still pay less than 2% total income tax (state plus federal). I know that this surprised me.
I am curious about this too. Not disputing it, but would love to see the math.
Here are the numbers:
Federal
Gross Income: $115k from work + $5k interest (from churning bank accounts): $120k
Above-line deductions: $59k ($12k for pension contributions, $2k for dental premiums taken from paycheck, $19k for 457b, $19k for 403b, $1k for health FSA, $6k for traditional IRA)
AGI: $61k
Standard Deduction: $24.4k
Taxable Income: $36.6k
Tax: $4k
Child Tax Credit (one child) and Saver's Credit: $2400
Tax Owed: $1600

California
AGI: $61k
Itemized Deductions: $21.5k ($10k property tax and $11.5k mortgage interest)
Taxable Income: $39.5k
Tax: $600
Exemptions for 2 adults and 1 child: $600
Tax Owed: $0

"Gross Income: $115k from work + $5k interest (from churning bank accounts): $120k
I am curious - how do you achieve and calculate the $5,000/year in churning bank accounts?
I use doctorofcredit.com to learn about offers. This is what we have earned in interest for 2019 (wife and I combined):
Wells Fargo: $1000
Citi Bank: $400
Capital One: $826
Ally Bank: around $10
Provident Credit Union: around $200
Orion Credit Union: around $700
US Bank: $1600
Bank of the West: $250 (expected by the end of next month)

This is all taxable money and since I want to keep our MAGI down, we will increase contributions to a traditional IRA account by an equivalent amount.

HEDGEFUNDIE
Posts: 3663
Joined: Sun Oct 22, 2017 2:06 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by HEDGEFUNDIE » Sat Sep 14, 2019 9:49 pm

Grt2bOutdoors wrote:
Sat Sep 14, 2019 9:10 pm
Goal33 wrote:
Sat Sep 14, 2019 11:12 am
You bought your home at extreme low in 2010, otherwise you’d be commuting from Manteca to Silicon Valley.

There is an element of good fortune that is enabling your ability to live in tri-Valley Bay Area.
He gambled and is winning thus far. I can't say I'd recommend someone purchase a home for $500K and only put down $15K. On top of that, his perk as a teacher enabled him to access a program not available to the mass public which permitted both a low down payment and zero requirement to pay PMI. The lack of PMI saved the OP a substantial amount of money and that should not be discounted.

To put it bluntly, the OP exercised options not available to the general public. One should not characterize the OP as being typical middle class, there is nothing typical here: access to a generous pension (yes, he contributes $11K per year or roughly 10% of his annual income but for the average Joe to generate such a retirement benefit would require a terminal value of $2.5 million+, an annual $11K contribution over 30 year career if you are able to maintain one without a job interruption is not going to get you there AND an above average ability to manage your money properly with no state backed guarantee).

Timing: getting in at the market lows. Most will not get in at the lows simply because of timing - when they are joining workforce, when they have downpayment, when they are settling down, etc.

Tax benefits: paying only $1700 a year on an income of $115K, unheard of for average Joe. Average Joe does not have access to multiple tax deferred retirement plans outside of an IRA or 401K. In other words, Average Joes are subsidizing this OP's standard of living because they are carrying the burden of taxation due to enforced limitations on tax deferred savings, whereas OP has no such restrictions.

Good for the OP on taking advantage of options offered to him, but there is no comparison between the OP and average Joe in California or elsewhere. One can see why there can be doubt. I don't doubt it, its well known that in certain locations, certain workers have very rich benefits compared to other workers.
The median household income in Pleasanton CA is $138k, and the median property value is $880k. So the OP has access to a few extra tax-advantaged accounts and a pension. He doesn’t have access to RSUs, ESPP, annual bonuses, a 401k match, and additional SS credits.

I’d say Ron is just about the splitting image of a median household in his area.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:56 pm

we1 wrote:
Sat Sep 14, 2019 9:37 pm
What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!
We could tap reserves if needed. Those include our emergency fund and Roth IRA contributions (not the growth but just what we originally put in). The total we'd have available to use is $170k ($50k in the emergency fund and $120k of Roth IRA contributions). We could also reduce expenses a bit. Thanks for the the thoughts on the HELOC as well.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 9:57 pm

marcopolo wrote:
Sat Sep 14, 2019 9:29 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:05 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
I'll try to pose it in a way so that hopefully you can see the other side. This past summer, my wife and I were both home with our daughter. I taught her to read in those three months by providing daily lessons. We went to the pool every other day. We went to Disneyland this summer too. We also went to the beach, the zoo, parks, and libraries. We visited with relatives, did jigsaw puzzles together, and went to the movies.

We did these types of activities every day as a family all summer long. While so many were rushing to work, we got time to spend together. Ask anyone on their deathbed what their wish is. It's rarely more money and almost always more time. Eating at Subway and driving a Corolla into the ground means I can spend time with my wife and daughter in my 40s. Life is about trade-offs and I make this one happily. Side effects include paying almost no taxes and having a net worth that increases quickly.

By the way, we traveled the world in our 30s. I've been to five continents and my wife has been to six. We're in a phase of life now where the best things don't cost much.
Good choices, Ron.
Thanks, Marcopolo. Much appreciated.

marcopolo
Posts: 2524
Joined: Sat Dec 03, 2016 10:22 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by marcopolo » Sat Sep 14, 2019 9:58 pm

smitcat wrote:
Sat Sep 14, 2019 9:40 pm
marcopolo wrote:
Sat Sep 14, 2019 9:36 pm
smitcat wrote:
Sat Sep 14, 2019 9:28 pm
EnjoyIt wrote:
Sat Sep 14, 2019 9:18 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm

Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.
Folks that have choices and make them knowingly will tend to make the ones that are best for them
When I see these posts on folks that 'do not 'need' XXX" it occurs to me that if they never experience the XXX they will never know how fun/valuable/ important that XXX is.
Over time we have been both without and with some experiences/items/funds/expenses and I can say it is easily an advantage to have many options as opposed to few,
YMMV
It's also possible, they have the means, and have tried "XXX", and but did not see the value in it?

I agree having more options is always better.
Yes that is absolutely possible and true.
Based on some of the spending amounts in this post that would not be possible with most/many of the XXX's out there.
That is a fair point.
Once in a while you get shown the light, in the strangest of places if you look at it right.

we1
Posts: 22
Joined: Tue Jul 30, 2019 12:24 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by we1 » Sat Sep 14, 2019 10:09 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 9:56 pm
we1 wrote:
Sat Sep 14, 2019 9:37 pm
What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!
We could tap reserves if needed. Those include our emergency fund and Roth IRA contributions (not the growth but just what we originally put in). The total we'd have available to use is $170k ($50k in the emergency fund and $120k of Roth IRA contributions). We could also reduce expenses a bit. Thanks for the the thoughts on the HELOC as well.
What I meant is suppose you’re in October and realize your MAGI is going to be $70k. You may become ineligible for the $15k tax credit that makes your health care plan affordable. Do you have a way to lower your MAGI to $66k to preserve the tax credit? Depending on how the tax credit works, it could make sense to lower your MAGI through incurring home related interest expense by drawing on a HELOC (even if you don’t need the money) so you can avoid losing the $15k tax credit.

we1
Posts: 22
Joined: Tue Jul 30, 2019 12:24 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by we1 » Sat Sep 14, 2019 10:25 pm

we1 wrote:
Sat Sep 14, 2019 10:09 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:56 pm
we1 wrote:
Sat Sep 14, 2019 9:37 pm
What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!
We could tap reserves if needed. Those include our emergency fund and Roth IRA contributions (not the growth but just what we originally put in). The total we'd have available to use is $170k ($50k in the emergency fund and $120k of Roth IRA contributions). We could also reduce expenses a bit. Thanks for the the thoughts on the HELOC as well.
What I meant is suppose you’re in October and realize your MAGI is going to be $70k. You may become ineligible for the $15k tax credit that makes your health care plan affordable. Do you have a way to lower your MAGI to $66k to preserve the tax credit? Depending on how the tax credit works, it could make sense to lower your MAGI through incurring home related interest expense by drawing on a HELOC (even if you don’t need the money) so you can avoid losing the $15k tax credit.
I see you had mentioned the $50k you have at 4% with Orion. Moving that to 0% checking is another option in case you want to try to keep your MAGI down below a threshold for the tax credit.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 10:44 pm

we1 wrote:
Sat Sep 14, 2019 10:09 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:56 pm
we1 wrote:
Sat Sep 14, 2019 9:37 pm
What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!
We could tap reserves if needed. Those include our emergency fund and Roth IRA contributions (not the growth but just what we originally put in). The total we'd have available to use is $170k ($50k in the emergency fund and $120k of Roth IRA contributions). We could also reduce expenses a bit. Thanks for the the thoughts on the HELOC as well.
What I meant is suppose you’re in October and realize your MAGI is going to be $70k. You may become ineligible for the $15k tax credit that makes your health care plan affordable. Do you have a way to lower your MAGI to $66k to preserve the tax credit? Depending on how the tax credit works, it could make sense to lower your MAGI through incurring home related interest expense by drawing on a HELOC (even if you don’t need the money) so you can avoid losing the $15k tax credit.
Okay, got it. We still have space available in our traditional retirement accounts. Despite the slightly higher fees, we max out my 457b and 403b but not our traditional IRAs. This is precisely for the reason you mention. If income is slightly higher for the year, we have until April of the following year to make contributions to traditional IRAs.

Other things I've considered include moving money to accounts that don't pay interest and not attending district workshops and having my pay docked. I get paid roughly $2k for attending three days of workshops at the start of every school year. I could just skip those. There may come a time where it makes sense to job share and go down to four days a week. This is common where I work.
Last edited by Ron Ronnerson on Sat Sep 14, 2019 11:36 pm, edited 1 time in total.

enclee
Posts: 49
Joined: Fri Apr 13, 2018 10:42 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by enclee » Sat Sep 14, 2019 11:13 pm

Great post, Ron. It’s hard to believe you’re catching grief about controlling your major purchases, minimizing expenses, and understanding tax laws.

anakinskywalker
Posts: 383
Joined: Sun Aug 24, 2008 8:20 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anakinskywalker » Sat Sep 14, 2019 11:15 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 9:57 pm
marcopolo wrote:
Sat Sep 14, 2019 9:29 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:05 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
I'll try to pose it in a way so that hopefully you can see the other side. This past summer, my wife and I were both home with our daughter. I taught her to read in those three months by providing daily lessons. We went to the pool every other day. We went to Disneyland this summer too. We also went to the beach, the zoo, parks, and libraries. We visited with relatives, did jigsaw puzzles together, and went to the movies.

We did these types of activities every day as a family all summer long. While so many were rushing to work, we got time to spend together. Ask anyone on their deathbed what their wish is. It's rarely more money and almost always more time. Eating at Subway and driving a Corolla into the ground means I can spend time with my wife and daughter in my 40s. Life is about trade-offs and I make this one happily. Side effects include paying almost no taxes and having a net worth that increases quickly.

By the way, we traveled the world in our 30s. I've been to five continents and my wife has been to six. We're in a phase of life now where the best things don't cost much.
Good choices, Ron.
Thanks, Marcopolo. Much appreciated.
Wow. Compliments from Marco Polo on your travels. Now that's something you don't see every day.

anakinskywalker
Posts: 383
Joined: Sun Aug 24, 2008 8:20 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by anakinskywalker » Sat Sep 14, 2019 11:18 pm

we1 wrote:
Sat Sep 14, 2019 10:09 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:56 pm
we1 wrote:
Sat Sep 14, 2019 9:37 pm
What levers do you have to stay within the $64-66k MAGI needed to qualify for the premium tax credit?

You may want to consider keeping a large, high interest home equity line of credit (HELOC). That way, you keep an option to pay some interest to the bank and lower your MAGI if needed to qualify for the credit.

Congrats on your choices working out so well!
We could tap reserves if needed. Those include our emergency fund and Roth IRA contributions (not the growth but just what we originally put in). The total we'd have available to use is $170k ($50k in the emergency fund and $120k of Roth IRA contributions). We could also reduce expenses a bit. Thanks for the the thoughts on the HELOC as well.
What I meant is suppose you’re in October and realize your MAGI is going to be $70k. You may become ineligible for the $15k tax credit that makes your health care plan affordable. Do you have a way to lower your MAGI to $66k to preserve the tax credit? Depending on how the tax credit works, it could make sense to lower your MAGI through incurring home related interest expense by drawing on a HELOC (even if you don’t need the money) so you can avoid losing the $15k tax credit.
That'll only work if you were itemizing. Ron said he's taking the standard deduction.

If he were itemizing, it would still probably be preferable to make a charitable contribution to a charity of his choice, than to try to owe a target amount of HELOC interest.

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 11:41 pm

anakinskywalker wrote:
Sat Sep 14, 2019 11:15 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:57 pm
marcopolo wrote:
Sat Sep 14, 2019 9:29 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:05 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm


Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
I'll try to pose it in a way so that hopefully you can see the other side. This past summer, my wife and I were both home with our daughter. I taught her to read in those three months by providing daily lessons. We went to the pool every other day. We went to Disneyland this summer too. We also went to the beach, the zoo, parks, and libraries. We visited with relatives, did jigsaw puzzles together, and went to the movies.

We did these types of activities every day as a family all summer long. While so many were rushing to work, we got time to spend together. Ask anyone on their deathbed what their wish is. It's rarely more money and almost always more time. Eating at Subway and driving a Corolla into the ground means I can spend time with my wife and daughter in my 40s. Life is about trade-offs and I make this one happily. Side effects include paying almost no taxes and having a net worth that increases quickly.

By the way, we traveled the world in our 30s. I've been to five continents and my wife has been to six. We're in a phase of life now where the best things don't cost much.
Good choices, Ron.
Thanks, Marcopolo. Much appreciated.
Wow. Compliments from Marco Polo on your travels. Now that's something you don't see every day.
Haha! That's true! :)

Pomegranate
Posts: 169
Joined: Mon Oct 01, 2018 4:42 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Pomegranate » Sat Sep 14, 2019 11:47 pm

anakinskywalker wrote:
Sat Sep 14, 2019 8:00 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
Did you miss the part about churning credit cards for miles and points to cover most vacation expenses?
Did you miss the part where I wrote down my airfare/hotel expenses?

Pomegranate
Posts: 169
Joined: Mon Oct 01, 2018 4:42 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Pomegranate » Sat Sep 14, 2019 11:53 pm

EnjoyIt wrote:
Sat Sep 14, 2019 9:18 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
You pointed out what is so wrong with so many people. This thinking that somehow you need to spend lots of money to have luxury and happiness.

Frankly, having two brand new cars, travel, eating out, living in an a local with perfect weather and 180 days off a year is very luxurious.

Sometimes you don’t realize how much you are missing in life until you have the free time to enjoy it.
You're mixing luxurious and happiness. A lot of homeless people live a happy life but I cannot name such life luxurious

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sat Sep 14, 2019 11:58 pm

enclee wrote:
Sat Sep 14, 2019 11:13 pm
Great post, Ron. It’s hard to believe you’re catching grief about controlling your major purchases, minimizing expenses, and understanding tax laws.
Thank you. Most of the comments have really been very positive and encouraging. I think some people might just be surprised by some of my numbers. I can appreciate that. There have been a few comments that are a little bit dismissive, in my opinion, and attribute our situation mostly to luck. While there is no doubt in my mind that luck was a factor (as it is in all our lives), my wife and I have made specific choices in order to set up our life in the way that we have. Hopefully, people will consider that with an open mind.

Pomegranate
Posts: 169
Joined: Mon Oct 01, 2018 4:42 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Pomegranate » Sun Sep 15, 2019 12:04 am

Ron Ronnerson wrote:
Sat Sep 14, 2019 9:31 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am

Two relatively new Toyota Corollas that were purchased with cash
Vacations: $100 (vacations are mostly paid for by churning credit cards for miles and points)
Restaurants: $250 (we go to inexpensive places like Chinese restaurants or Subway)
Clothing/Shoes/Hair/Nails: $50

We live very comfortably - drive cars that we bought new... enjoying some of life’s luxuries...
Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
. We're going with my in-laws. They have a two bedroom timeshare and we'll stay there for no cost. The in-laws will also watch the kiddo while my wife and I take a snorkeling cruise together. The sunsets are lovely and free.
I follow the same strategy with bonuses.
What you're saying - in-laws pay for timeshare + watch the kids. It's the same if I say 'Hey, I live a luxurious life having just $20k of income. Relatives just pay for the house, entertainment, kid's sports and so on. Everything is possible for this income!"

Topic Author
Ron Ronnerson
Posts: 1353
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Ron Ronnerson » Sun Sep 15, 2019 1:02 am

Pomegranate wrote:
Sun Sep 15, 2019 12:04 am
Ron Ronnerson wrote:
Sat Sep 14, 2019 9:31 pm
Pomegranate wrote:
Sat Sep 14, 2019 7:31 pm
Raymond wrote:
Sat Sep 14, 2019 4:51 pm
Pomegranate wrote:
Sat Sep 14, 2019 4:38 pm


Modern 'comfortable' life of 'middle class' and it's 'luxurious' life :oops:
Are you saying that his choices in cars, vacations and restaurants don't measure up to your standards of luxury :confused
Nope it's not about my standards but US middle class standards. Everybody who has 3 meals per day is living a really fancy and luxurious life compared to 60% of Earth population but standards are 'slightly' different in the US.
IMHO the most funny part of the list is $1200/year for vacation. The cheapest part of my vacation budget is $800 and it covers 1 week of camping and fishing ($0 for flights/hotels) so even for 2 weeks it will be way more then OP's budget. Still guessing how it can be labeled as 'luxurious' :oops:
. We're going with my in-laws. They have a two bedroom timeshare and we'll stay there for no cost. The in-laws will also watch the kiddo while my wife and I take a snorkeling cruise together. The sunsets are lovely and free.
I follow the same strategy with bonuses.
What you're saying - in-laws pay for timeshare + watch the kids. It's the same if I say 'Hey, I live a luxurious life having just $20k of income. Relatives just pay for the house, entertainment, kid's sports and so on. Everything is possible for this income!"
My in-laws are being generous and I know this. They are paying for the stay but we have to pay for flights, food, that snorkeling cruise I mentioned, and everything else. The flights are free due to credit card points. The food we eat on the trip will be inexpensive. That being said, I'll fully acknowledge, again, that my in-laws are being incredibly kind and generous. We're fortunate to live near them. Of course, that didn't happen by accident. We chose to find a house near them so they wouldn't miss their daughter or grandchild.

This past summer, we went to Disneyland. Our hotel as well as admission into the park for three people for three days was all covered with points. We drove down to southern California in one of our Corollas. We found ways to travel inexpensively and family didn't pay for any of it.

Also, I listed a bunch of expenses in my original post. We pay for all those things ourselves. My in-laws also invite us over for barbecues sometimes and I didn't include how much that lowers our food budget. My guess would be around 0.5% per year but I'm really not sure. My point is that we are probably paying for almost all of our expenses ourselves and your post makes it sound like generous gifts are what allows us our lifestyle.

Speaking of gifts, I also get gifts from my students' parents sometimes. They give gift cards around the holidays and it's very nice but it doesn't really move the needle all that much in terms of our overall financial situation.

Perhaps it's my fault in giving you the impression that gifts are a big factor in our travels. Sorry if I led you to believe that.

Green Street
Posts: 75
Joined: Tue Jan 02, 2018 5:00 pm

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Green Street » Sun Sep 15, 2019 2:10 am

Good job Ron 👍🏼. Life dealt you a hand, and you’ve played it phenomenally thus far. Haters are gonna hate 🤷🏽‍♂️. I find it funny when others say, oh no OP is doing this because of that and this, no OP is playing chess while you’re playing checkers. To answer your three questions, yes, the emergency fund is good enough, and you clearly have everything covered.
Searching Through The FiRE

Sam1
Posts: 453
Joined: Mon Apr 09, 2018 7:24 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sun Sep 15, 2019 5:38 am

Grt2bOutdoors wrote:
Sat Sep 14, 2019 9:10 pm
Goal33 wrote:
Sat Sep 14, 2019 11:12 am
You bought your home at extreme low in 2010, otherwise you’d be commuting from Manteca to Silicon Valley.

There is an element of good fortune that is enabling your ability to live in tri-Valley Bay Area.
He gambled and is winning thus far. I can't say I'd recommend someone purchase a home for $500K and only put down $15K. On top of that, his perk as a teacher enabled him to access a program not available to the mass public which permitted both a low down payment and zero requirement to pay PMI. The lack of PMI saved the OP a substantial amount of money and that should not be discounted.

To put it bluntly, the OP exercised options not available to the general public. One should not characterize the OP as being typical middle class, there is nothing typical here: access to a generous pension (yes, he contributes $11K per year or roughly 10% of his annual income but for the average Joe to generate such a retirement benefit would require a terminal value of $2.5 million+, an annual $11K contribution over 30 year career if you are able to maintain one without a job interruption is not going to get you there AND an above average ability to manage your money properly with no state backed guarantee).

Timing: getting in at the market lows. Most will not get in at the lows simply because of timing - when they are joining workforce, when they have downpayment, when they are settling down, etc.

Tax benefits: paying only $1700 a year on an income of $115K, unheard of for average Joe. Average Joe does not have access to multiple tax deferred retirement plans outside of an IRA or 401K. In other words, Average Joes are subsidizing this OP's standard of living because they are carrying the burden of taxation due to enforced limitations on tax deferred savings, whereas OP has no such restrictions.

Good for the OP on taking advantage of options offered to him, but there is no comparison between the OP and average Joe in California or elsewhere. One can see why there can be doubt. I don't doubt it, its well known that in certain locations, certain workers have very rich benefits compared to other workers.
Yes!!! What others perceived as animosity was simply disagreement that OP’s success isn’t simply a byproduct of benefits others don’t receive (special home purchase program, buying a house in 2010, spouse who wants to stay home, family providing childcare in the past, practically NO federal income taxes, etc).

Sam1
Posts: 453
Joined: Mon Apr 09, 2018 7:24 am

Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sun Sep 15, 2019 5:43 am

Green Street wrote:
Sun Sep 15, 2019 2:10 am
Good job Ron 👍🏼. Life dealt you a hand, and you’ve played it phenomenally thus far. Haters are gonna hate 🤷🏽‍♂️. I find it funny when others say, oh no OP is doing this because of that and this, no OP is playing chess while you’re playing checkers. To answer your three questions, yes, the emergency fund is good enough, and you clearly have everything covered.
Haters are going to hate? Yes it really does irk me that OP is benefiting substantially from other US taxpayers.

I make roughly 4x the income as OP but pay 40x the income taxes. And this is with me taking advantage of every tax deferred account available.

I get that it’s not like anyone is going to ask the government to pay more taxes and that he’s just filing his taxes per the law. So it’s not his fault but is of the system. I simply don’t think it’s anything to brag about. If he has so much money leftover to save and invest then why does he need to rely on other taxpayers for his healthcare? Clearly he doesn’t require a subsidy to make ends meet.

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