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

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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 2:05 pm

EnjoyIt wrote:
Sat Sep 14, 2019 1:34 pm
Thank you for sharing a middle class suburban lifestyle in a VHCOL area and killing it for themselves. This post should be an inspiration to all those complaining how they have it sooooo tough on an income twice yours.
Goal33 wrote:
Sat Sep 14, 2019 12:04 pm
We make 250k+ and would probably not even qualify for a loan to live in your neighborhood, even though I can afford the 20% down. How does a teacher swing it on half? Short of having bought 10 years ago and dual income.


OP has made life choices that have created this life. Just take a look at all the OP expenses and compare it to yours? The only three difference should be, higher taxes, higher mortgage and higher property tax. OP pays their own health insurance premiums where most with a $250k+ W2 income would likely get healthcare from their job. Does that come out to $125k difference? I can't imagine it does.

Honestly, I personally would not pay the premium to live in that area, but I appreciate why people choose to.
Thank you. We live here largely due to family. My sister and her family are our next-door neighbors. My daughter gets to see her cousins daily. My mother, who is getting older and is not in the best of health, lives 5 minutes away and I can check on her often and she gets to see her grandkids all the time. My in-laws are 15 minutes away and watch our daughter a couple of times a week. They take her to activities like swimming and gymnastics (and generously pay for the lessons). When my wife worked, family support kept our daycare costs low as well. We love the weather here, our life is low-stress and enjoyable, there are lots of things to do, and I really like my job. It's definitely all about trade-offs. For us, time together and family are the most important things.

Sam1
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sat Sep 14, 2019 2:05 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.
This

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

Post by Nathan Drake » Sat Sep 14, 2019 2:06 pm

anonenigma wrote:
Sat Sep 14, 2019 2:04 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:02 pm

He also wouldn't have 180 days off every year...
To clarify, teachers work about 180 days per year, which is 36 full weeks. His 180 days off includes weekends and legal holidays.
To clarify, those in the private sector do not get off 16 weeks per year. Standard may be 3 weeks, with an additional 1-2 weeks of holiday/sick. He's getting 3x the amount of normal time off throughout the year.

And many have to routinely work lots of overtime.

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

Post by marcopolo » Sat Sep 14, 2019 2:09 pm

HEDGEFUNDIE wrote:
Sat Sep 14, 2019 12:10 pm
There are two Bay Areas.

The one for long time residents and the one for newcomers. The newcomers shoulder the burden of the infamous high housing costs, but they also tend to have the lucrative high paying tech jobs.

The long time residents have worked in “regular” jobs with “regular” incomes and aren’t exposed to market rate housing costs.

The long timers outnumber the newcomers by a lot. So if you want to describe what a “typical” Bay Area lifestyle is like, you should be describing someone like the OP, not a FAANG household making $500k.
I get your point, but people have been saying the same thing for several decades. Yet, newcomers somehow keep coming, make it work, and in a few years to a decade as one the "lucky" long time residents who bought "back when it was affordable".
Once in a while you get shown the light, in the strangest of places if you look at it right.

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 2:10 pm

mmmodem wrote:
Sat Sep 14, 2019 1:46 pm
Thanks for your post. I found it very interesting. Being a Bay Area native, I know that a middle class lifestyle on your income is neither rare or an exception for the folks living here. It is not due to you being fortunate buying at the right time as you've already pointed out that a person today can rent your home for not much more. There are still people replying saying you are lucky with timing on your home. :oops: that someone making your income cannot do the same today.

I moved out of the Bay Area about 2 years ago with an on and off again stay at home parent. We averaged around $130k household income. My home was bought in Milpitas in 2012. With 3 children we don't quite measure up to your level of savings but we did max out Roth IRA's every year and on some years maxed out my 401k. We also went on vacations with one newer and one older vehicle. I had a Prius and she drove a Hyundai. Our federal taxes were in the high single percentages and state was 1%.

I don't think there is anything rare about what we do except for our savings rates. Most middle class people in the Bay Area that I know of saved nothing outside of 401k matching. They have newer iPhones and BMW's. You know what is interesting? Here in New England, it seem to be the same. Just swap BMW for 4x4 pick ups.
Yes, I see it the same way as you. Controlling expenses by going through them carefully has been huge for our family. There are inexpensive alternatives which provide pretty good value in just about every spending category. My observation is that so many people work so many hours that it leaves very little time to stop and reflect on the choices being made.

Sam1
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sat Sep 14, 2019 2:15 pm

Brianmcg321 wrote:
Sat Sep 14, 2019 10:46 am
Unfortunately most people are just dumb. They think if they are not able to do it, then nobody can.

If you went to the Mr Money Mustache forum, you'd be chastised for not saving 90% of your income. You'd be mr spendy pants in your clown house and your cable and not riding your bike to work.
It’s not that people are dumb. Sure, many are.

But OP is able to live the way he is because he purchased a home in 2010. If he were trying to buy a home NOW he’d be in a completely different situation. Most likely he would need his wife to work and then he’d be paying high childcare expenses. Then he’d feel like he was swimming upstream.

He even said his home is valued at $825k now. How would be afford that on a 115k HHI? He couldn’t. He didn’t even originally put 20 percent down. His entire situation is a result of having lucked out with a home purchase in 2010. Yes it was luck because none of us have any idea what is going to happen with the housing market.

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 2:16 pm

Nathan Drake wrote:
Sat Sep 14, 2019 2:06 pm
anonenigma wrote:
Sat Sep 14, 2019 2:04 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:02 pm

He also wouldn't have 180 days off every year...
To clarify, teachers work about 180 days per year, which is 36 full weeks. His 180 days off includes weekends and legal holidays.
To clarify, those in the private sector do not get off 16 weeks per year. Standard may be 3 weeks, with an additional 1-2 weeks of holiday/sick. He's getting 3x the amount of normal time off throughout the year.

And many have to routinely work lots of overtime.
Retired English teacher here. I worked overtime pretty much every day plus weekends. Those papers didn't grade themselves. Teachers work 12 months during the nine-month school year.

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 2:20 pm

anonenigma wrote:
Sat Sep 14, 2019 2:01 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 1:42 pm
Cuzz35 wrote:
Sat Sep 14, 2019 12:34 pm
No medical expenses? Does your health plan cover it all?

I'm paying over 3x on insurance premiums with a high deductible plan subsidized through work. We hit our deductible every year which accounts for about $600 a month. Salary is similar to yours but I live in Atlanta, mortgage is half and RE taxes are a third. We save nothing. Our spending doesn't seem much different than yours but we pay more in taxes and healthcare. I also pay more for life insurance as we have three kids, one who is autistic.

But congratulations.
My employer offers health insurance but pays for nothing toward it. So, the employee share is 100% and the employer share is 0%. The cost to cover a family of three through my employer (with decent coverage) would be roughly $24k/year.

Per the rules of the ACA, if the employee's cost for the least expensive health insurance option available to cover only the employee (no dependents) is greater than 9.86% of the employee's household income (which is considered MAGI, not gross income), the health insurance offered by the employer is deemed "unaffordable." If that happens, the entire family becomes eligible for the premium tax credit. Otherwise, no one in the family is eligible.

The least expensive option my employer offers to cover only me is about $6600/year. If I keep our household income (MAGI) under $66k, we qualify for the subsidy. In 2020, the cheapest health insurance option to cover only me is dropping a little bit so I need to keep MAGI under $64k to qualify for the premium tax credit.

Additionally, by dropping MAGI below $64k, we also qualify for $400 for the Saver's Credit. Any additional income we earn is directed toward retirement accounts (traditional IRA can be funded until April of the following year) so that we can keep MAGI at a level we want. In 2019, the subsidy is around $15k.

We currently have the gold plan (Kaiser) on the exchange and pay around $200/month. Our out-of-pocket medical expenses are low and we do utilize a flexible spending account as well.

I like reading through tax stuff for some reason. I was an accounting major my first couple of years in college but decided to teach 5th grade instead. Switching to teaching is among the best decisions I've ever made as I really like my job, but I suppose I kept reading about taxes as a hobby (I should probably find something more interesting to do).
That explains why your (non-administrator) teacher salary is as high as it is. Amazing that you pay union dues for a union that hasn't negotiated affordable health benefits for you and your colleagues.

Presumably you are in CalSTRS? You mentioned Social Security down the road. Be sure to read up on the IRS Windfall Elimination Provision and Government Pension Offset.
The union voted to eliminate health benefits decades ago for a slightly higher salary at that time. They couldn't foresee the rapid increase in health costs coming at that time. The district refuses to negotiate for health benefits now. Currently, about 2/3 of employees get their health insurance from outside the district (either buy it themselves or get it through a spouse). So, it is unlikely that most of the teachers would want to get lower pay (and smaller raises in the future) in exchange for health benefits. It would come to making that choice since there is only so much money in the pot.

I have read up on the WEP and GPO. I will be affected as I have over 40 credits of social security. However, my pension should be big enough that it shouldn't be much of an issue for us. My wife will also get social security. Additionally, we're putting over $40k/year into retirement accounts each year. We're invested in a simple three-fund portfolio at low cost.

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

Post by marcopolo » Sat Sep 14, 2019 2:21 pm

Why all the hate?

OK, OP bought his house during a market downturn. So what, good for him!

You guys never bought a house/stocks/bonds at a fortuitous time?

The OP has also made some decisions that are good for his family (stay at home spouse, work to qualify for aca credits, etc.) that may be different than you would have chosen. That does not make them wrong.

Ron,
Well done, and best of luck to you. Thanks for sharing your details.
Last edited by marcopolo on Sat Sep 14, 2019 2:21 pm, edited 1 time in total.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Sam1
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sat Sep 14, 2019 2:21 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 2:10 pm
mmmodem wrote:
Sat Sep 14, 2019 1:46 pm
Thanks for your post. I found it very interesting. Being a Bay Area native, I know that a middle class lifestyle on your income is neither rare or an exception for the folks living here. It is not due to you being fortunate buying at the right time as you've already pointed out that a person today can rent your home for not much more. There are still people replying saying you are lucky with timing on your home. :oops: that someone making your income cannot do the same today.

I moved out of the Bay Area about 2 years ago with an on and off again stay at home parent. We averaged around $130k household income. My home was bought in Milpitas in 2012. With 3 children we don't quite measure up to your level of savings but we did max out Roth IRA's every year and on some years maxed out my 401k. We also went on vacations with one newer and one older vehicle. I had a Prius and she drove a Hyundai. Our federal taxes were in the high single percentages and state was 1%.

I don't think there is anything rare about what we do except for our savings rates. Most middle class people in the Bay Area that I know of saved nothing outside of 401k matching. They have newer iPhones and BMW's. You know what is interesting? Here in New England, it seem to be the same. Just swap BMW for 4x4 pick ups.
Yes, I see it the same way as you. Controlling expenses by going through them carefully has been huge for our family. There are inexpensive alternatives which provide pretty good value in just about every spending category. My observation is that so many people work so many hours that it leaves very little time to stop and reflect on the choices being made.
I strongly disagree. Fist off, are you really saying the current rent for your same house would be equal to the mortgage payment from a mortgage taken out in 2010? I find this hard to believe.

Most people have high real estate expenses. Or childcare. What if your wife demanded to work and didn’t provide you with free labor of childcare and whatever else she does for you? Suddenly you’d find yourself with a $2k per month childcare bill and other numerous expenses when you came home to say, a messy house and no food or dinner ready after a 90 minute commute. You’d also pay way more than $1,700 in income taxes!

You’re able to save because you bought a place in 2010 and have a stay at home spouse. I’m able to save because my husband and I both earn well over $200k and purchased a property years ago in a HCOL city.

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

Post by Nathan Drake » Sat Sep 14, 2019 2:23 pm

anonenigma wrote:
Sat Sep 14, 2019 2:16 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:06 pm
anonenigma wrote:
Sat Sep 14, 2019 2:04 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:02 pm

He also wouldn't have 180 days off every year...
To clarify, teachers work about 180 days per year, which is 36 full weeks. His 180 days off includes weekends and legal holidays.
To clarify, those in the private sector do not get off 16 weeks per year. Standard may be 3 weeks, with an additional 1-2 weeks of holiday/sick. He's getting 3x the amount of normal time off throughout the year.

And many have to routinely work lots of overtime.
Retired English teacher here. I worked overtime pretty much every day plus weekends. Those papers didn't grade themselves. Teachers work 12 months during the nine-month school year.
Casually grading papers is a lot easier and more flexible than the routine OT the private sector demands. If Teachers work 12 months during a nine month school year, some of these tech workers are working 24 months in a 12 month period.

And not all teachers are the same, some of it is self inflicted OT...I know plenty that do not hardly put in any excess hours into their teaching careers. They clock in and clock out.
Last edited by Nathan Drake on Sat Sep 14, 2019 2:24 pm, edited 1 time in total.

Sam1
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Re: Bay Area teacher saving half my income – why the doubt? (and asking more questions)

Post by Sam1 » Sat Sep 14, 2019 2:23 pm

marcopolo wrote:
Sat Sep 14, 2019 2:21 pm
Why all the hate?

OK, OP bought his house during a market downturn. So what, good for him!

You guys never bought a house/stocks/bonds at a fortuitous time?

The OP has also made some decisions that are good for his family (stay at home spouse, work to qualify for aca credits, etc.) that may be different than you would have chosen. That does not make them wrong.

Ron,
Well done, and best of luck to you. Thanks for sharing your details.
It’s not hate. It’s simply not that hard to live off of $115k when you don’t have any childcare expenses, barely pay any income taxes, and bought your home almost a decade ago before the insane home price appreciate in the Bay Area.

It would be like if I started a thread on how much I save. I can do so because we earn close to half a million a year and have an inexpensive mortgage. It’s not because I’m doing something amazing - we just make high salaries.

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 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.

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

Post by A-Commoner » Sat Sep 14, 2019 2:27 pm

Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.

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

Post by marcopolo » Sat Sep 14, 2019 2:28 pm

Sam1 wrote:
Sat Sep 14, 2019 2:23 pm
marcopolo wrote:
Sat Sep 14, 2019 2:21 pm
Why all the hate?

OK, OP bought his house during a market downturn. So what, good for him!

You guys never bought a house/stocks/bonds at a fortuitous time?

The OP has also made some decisions that are good for his family (stay at home spouse, work to qualify for aca credits, etc.) that may be different than you would have chosen. That does not make them wrong.

Ron,
Well done, and best of luck to you. Thanks for sharing your details.
It’s not hate. It’s simply not that hard to live off of $115k when you don’t have any childcare expenses, barely pay any income taxes, and bought your home almost a decade ago before the insane home price appreciate in the Bay Area.

It would be like if I started a thread on how much I save. I can do so because we earn close to half a million a year and have an inexpensive mortgage. It’s not because I’m doing something amazing - we just make high salaries.
They don't have childcare expenses because they chose to have one spouse stay at home. Different life choice. They could have higher income, along with higher taxes and child care costs with different choices.

You are saying it is not that hard to do. If you read the original post you might have seen that Ron started this thread specifically to answer several forum memebers that seemed to claim that it was impossible, and the OP was not be honest.

So, we have gone from calling him a liar to saying it's no big deal, or he just got lucky with timing. Sure seems a little hateful to me.
Last edited by marcopolo on Sat Sep 14, 2019 2:31 pm, edited 1 time in total.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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 2:29 pm

Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
Yes, we were definitely lucky. I never forget that. However, someone could rent our home for about the same as our overall housing expense. We pay $3100/month for housing and to rent our home would be $3700/month.

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

Post by marcopolo » Sat Sep 14, 2019 2:30 pm

A-Commoner wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.
Exactly. Well said.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Sam1
Posts: 474
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 » Sat Sep 14, 2019 2:31 pm

A-Commoner wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.
So I should have purchased a home in the Bay Area while I attended college on the east coast??

Topic Author
Ron Ronnerson
Posts: 1388
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 2:32 pm

marcopolo wrote:
Sat Sep 14, 2019 2:21 pm
Why all the hate?

OK, OP bought his house during a market downturn. So what, good for him!

You guys never bought a house/stocks/bonds at a fortuitous time?

The OP has also made some decisions that are good for his family (stay at home spouse, work to qualify for aca credits, etc.) that may be different than you would have chosen. That does not make them wrong.

Ron,
Well done, and best of luck to you. Thanks for sharing your details.
Thank you!

A-Commoner
Posts: 228
Joined: Thu Apr 24, 2014 7:17 pm

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

Post by A-Commoner » Sat Sep 14, 2019 2:35 pm

Sam1 wrote:
Sat Sep 14, 2019 2:31 pm
A-Commoner wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.
So I should have purchased a home in the Bay Area while I attended college on the east coast??
Yes. Any other questions?

Topic Author
Ron Ronnerson
Posts: 1388
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 2:45 pm

Sam1 wrote:
Sat Sep 14, 2019 2:21 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 2:10 pm
mmmodem wrote:
Sat Sep 14, 2019 1:46 pm
Thanks for your post. I found it very interesting. Being a Bay Area native, I know that a middle class lifestyle on your income is neither rare or an exception for the folks living here. It is not due to you being fortunate buying at the right time as you've already pointed out that a person today can rent your home for not much more. There are still people replying saying you are lucky with timing on your home. :oops: that someone making your income cannot do the same today.

I moved out of the Bay Area about 2 years ago with an on and off again stay at home parent. We averaged around $130k household income. My home was bought in Milpitas in 2012. With 3 children we don't quite measure up to your level of savings but we did max out Roth IRA's every year and on some years maxed out my 401k. We also went on vacations with one newer and one older vehicle. I had a Prius and she drove a Hyundai. Our federal taxes were in the high single percentages and state was 1%.

I don't think there is anything rare about what we do except for our savings rates. Most middle class people in the Bay Area that I know of saved nothing outside of 401k matching. They have newer iPhones and BMW's. You know what is interesting? Here in New England, it seem to be the same. Just swap BMW for 4x4 pick ups.
Yes, I see it the same way as you. Controlling expenses by going through them carefully has been huge for our family. There are inexpensive alternatives which provide pretty good value in just about every spending category. My observation is that so many people work so many hours that it leaves very little time to stop and reflect on the choices being made.
I strongly disagree. Fist off, are you really saying the current rent for your same house would be equal to the mortgage payment from a mortgage taken out in 2010? I find this hard to believe.

Most people have high real estate expenses. Or childcare. What if your wife demanded to work and didn’t provide you with free labor of childcare and whatever else she does for you? Suddenly you’d find yourself with a $2k per month childcare bill and other numerous expenses when you came home to say, a messy house and no food or dinner ready after a 90 minute commute. You’d also pay way more than $1,700 in income taxes!

You’re able to save because you bought a place in 2010 and have a stay at home spouse. I’m able to save because my husband and I both earn well over $200k and purchased a property years ago in a HCOL city.
My mortgage is $1810, property taxes are $840, HOA is $290, repairs and insurance are another $150 or so. This comes to $3100. A neighbor with the same home as ours recently listed their's for rent at $3700. The monthly outflow of cash is not that different. Though, of course, we're building equity.

My wife worked until a year ago. She wanted to spend some time with our daughter while our kiddo is still young. While she worked (Mondays through Thursdays), I often took care of our daughter. Being off 180 days a year, often while my wife was working, meant changing lots of diapers. I didn't see it as providing my wife with free childcare. We work as a team.

Also, we chose, on purpose, to live near lots of family. Our day care costs were in the $3k-$4k per year range for the first three years of our daughter's life when my wife worked. The cost was low due to our schedules and family support. We also utilized a flexible spending account. We tried to be strategic about it. Since an FSA for dependent care is limited to $5k/year, we kept our childcare costs below that amount. As you might have gathered, I'm not crazy about paying taxes.

There are many ways to achieve a goal. You can earn a lot. You can also cut expenses. I've chosen the latter because it allows for the most time off. I'm really interested in the concept of fleeting time. So, I've set up my life to maximize time rather than income.

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 2:49 pm

A-Commoner wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.
My best buddy at work, another 5th grade teacher, bought several houses during the recession (four in the Modesto area and one in Las Vegas). He and his wife are both teachers. While I personally prefer the stock market, he certainly lucked out way more than me.

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

Post by EnjoyIt » Sat Sep 14, 2019 2:51 pm

Sam1 wrote:
Sat Sep 14, 2019 2:31 pm
A-Commoner wrote:
Sat Sep 14, 2019 2:27 pm
Sam1 wrote:
Sat Sep 14, 2019 2:05 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.
This
The real estate crash in 2008 to 2010 that allowed the OP to buy at a low price was not some kind of secret opportunity that only he knew about. It was a widely known event that we all witnessed and could have taken advantage of. There was nothing stopping you, for instance, from buying a house in the Bay Area at that price bottom. Assuming of course that you were financially prepared to pounce at the opportunity. Saying it was due to “good fortune” is to devalue the preparation that the OP had put himself in to take advantage of the opportunity when it presented itself.
So I should have purchased a home in the Bay Area while I attended college on the east coast??
No, you should have put all your money into bitcoin when you were in college on the east coast.

Seriously though, what you should do is stop complaining about how lucky someone else is, and do whatever is necessary to be able to capitalize on an opportunity when the market allows it. Your time will come as long as you keep your expenses in check.

We chose to live in a MCOL area so that we can invest as much as possible in the market. The market has rewarded us handsomely over the years. The only reason why it worked is because we chose to live in a MCOL area. You make your choices and live with them.

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 2:52 pm

Nathan Drake wrote:
Sat Sep 14, 2019 2:23 pm
anonenigma wrote:
Sat Sep 14, 2019 2:16 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:06 pm
anonenigma wrote:
Sat Sep 14, 2019 2:04 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:02 pm

He also wouldn't have 180 days off every year...
To clarify, teachers work about 180 days per year, which is 36 full weeks. His 180 days off includes weekends and legal holidays.
To clarify, those in the private sector do not get off 16 weeks per year. Standard may be 3 weeks, with an additional 1-2 weeks of holiday/sick. He's getting 3x the amount of normal time off throughout the year.

And many have to routinely work lots of overtime.
Retired English teacher here. I worked overtime pretty much every day plus weekends. Those papers didn't grade themselves. Teachers work 12 months during the nine-month school year.
Casually grading papers is a lot easier and more flexible than the routine OT the private sector demands. If Teachers work 12 months during a nine month school year, some of these tech workers are working 24 months in a 12 month period.

And not all teachers are the same, some of it is self inflicted OT...I know plenty that do not hardly put in any excess hours into their teaching careers. They clock in and clock out.
Casual? You obviously haven't done the job. Try it, though you might melt.

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

Post by Raymond » Sat Sep 14, 2019 2:57 pm

Ron Ronnerson,

Thanks for taking the time to explain how you' and your wife have arranged your financial and personal lives while living decently in what many people (including me in a Dallas suburb ) would consider to be a very HCOL area.

Also:

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.

~ Judge Learned Hand

[Edit: see the following post]
Last edited by Raymond on Sat Sep 14, 2019 2:59 pm, edited 1 time in total.
"Ritter, Tod und Teufel"

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 3:00 pm

anonenigma wrote:
Sat Sep 14, 2019 2:52 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:23 pm
anonenigma wrote:
Sat Sep 14, 2019 2:16 pm
Nathan Drake wrote:
Sat Sep 14, 2019 2:06 pm
anonenigma wrote:
Sat Sep 14, 2019 2:04 pm


To clarify, teachers work about 180 days per year, which is 36 full weeks. His 180 days off includes weekends and legal holidays.
To clarify, those in the private sector do not get off 16 weeks per year. Standard may be 3 weeks, with an additional 1-2 weeks of holiday/sick. He's getting 3x the amount of normal time off throughout the year.

And many have to routinely work lots of overtime.
Retired English teacher here. I worked overtime pretty much every day plus weekends. Those papers didn't grade themselves. Teachers work 12 months during the nine-month school year.
Casually grading papers is a lot easier and more flexible than the routine OT the private sector demands. If Teachers work 12 months during a nine month school year, some of these tech workers are working 24 months in a 12 month period.

And not all teachers are the same, some of it is self inflicted OT...I know plenty that do not hardly put in any excess hours into their teaching careers. They clock in and clock out.
Casual? You obviously haven't done the job. Try it, though you might melt.
Yes, there are some lazy teachers that clock in and out. I know very few of those, though. Most are dedicated and hard-working. I'll briefly tell my story. As I mentioned earlier, I have an MBA. I was moving up the corporate ladder in my 20s. As I was approaching age 30, I went back to school to become a teacher because I wanted to do something I found to be meaningful. I didn't want to waste the time I have in this life and I really was not fulfilled at the company I worked for (though it was interesting work). So, I've been teaching ten-year-olds for the past 17 years. Even if I didn't need the money, I wouldn't retire. My days have a purpose and that's worth a lot. Many teachers I know feel the same way about helping kids learn.

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

Post by visualguy » Sat Sep 14, 2019 3:06 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am
My pension, which is expected to be about $100k/year around age 60 (with COLA and 100% survivor benefits) should pretty much cover our retirement expenses. We’ll also get social security and our house should be close to paid off by then.
This is great, and it changes the picture on your compensation radically for the better. As someone mentioned above, your pension is worth $2.5M+ that you don't need to save. People who make your salary ($115K) without such a pension are in a very different situation.

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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 3:07 pm

HEDGEFUNDIE wrote:
Sat Sep 14, 2019 11:17 am
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.
What % of current Bay Area residents have lived there since 2010 or earlier?

I’d guess 80%. Probably higher for homeowners and lower for renters.

Most Bay Area homeowners aren’t paying market rate for their housing. And when they form the large majority of the population, I don’t think you can call them lucky. You’d call the newcomers unlucky.
2010/2011 has been the absolute lowest for probably 2 decades. I bought a townhome in that timeframe for $500k and it sold a year or two ago for $1.4M. Unfortunately I sold it before that and "only" made $300k in 3 years.

It was a great time to get established in the Bay Area and lock in housing costs and low property taxes. It's much harder for those who have come in the last 3-5 years.

OP is doing well with their budget and managing expenses and saving to keep taxes low. He is living "smart frugal" and should be commended..

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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 3:11 pm

Ron Ronnerson wrote:
Sat Sep 14, 2019 2:05 pm
Thank you. We live here largely due to family. My sister and her family are our next-door neighbors. My daughter gets to see her cousins daily. My mother, who is getting older and is not in the best of health, lives 5 minutes away and I can check on her often and she gets to see her grandkids all the time. My in-laws are 15 minutes away and watch our daughter a couple of times a week. They take her to activities like swimming and gymnastics (and generously pay for the lessons). When my wife worked, family support kept our daycare costs low as well. We love the weather here, our life is low-stress and enjoyable, there are lots of things to do, and I really like my job. It's definitely all about trade-offs. For us, time together and family are the most important things.
Glad you have made it work out for you. Sounds like you have made some really smart choices (and had a good bit of luck.) Staying in the same house long term also keeps your property taxes moderated (in California.) Having a job you love, good work-life balance, and extended family nearby are priceless.

Your tax bill is very low now, but once you leave the accumulation phase and enter retirement it will likely be quite a bit higher. The fully taxable pension of 100K in 2019 dollars, no tax breaks for contributing to retirement plans, no child tax credit, and eventually RMDs will all send the tax piper to your door expecting to be paid. But then again you will have plenty of money to pay those higher taxes, especially given your house will be paid off by then (and you could even downsize). And possibly down the road you may have some opportunity to do well-timed Roth conversions and/or switch to Roth conversions.

I agree you are doing the right thing at the moment, given the ACA parameters, but if your wife eventually takes a paying job, she may be able to get low cost family coverage which could move the needle somewhat toward Roth.

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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 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.

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

Post by Nathan Drake » Sat Sep 14, 2019 3:16 pm

visualguy wrote:
Sat Sep 14, 2019 3:06 pm
Ron Ronnerson wrote:
Sat Sep 14, 2019 10:26 am
My pension, which is expected to be about $100k/year around age 60 (with COLA and 100% survivor benefits) should pretty much cover our retirement expenses. We’ll also get social security and our house should be close to paid off by then.
This is great, and it changes the picture on your compensation radically for the better. As someone mentioned above, your pension is worth $2.5M+ that you don't need to save. People who make your salary ($115K) without such a pension are in a very different situation.
He doesn’t get social security or a 403b type plan though. It’s kind of a wash

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

Post by Silence Dogood » 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).
Last edited by Silence Dogood on Sat Sep 14, 2019 4:20 pm, edited 2 times in total.

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

Post by wubdemil » 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?

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

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

Post by smitcat » Sat Sep 14, 2019 4:18 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.

"Just live on $60k per year and you can mostly avoid taxes. The choice is up to you."
No thank you - but congratulations on your choices.

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

Post by Silence Dogood » Sat Sep 14, 2019 4:18 pm

Sam1 wrote:
Sat Sep 14, 2019 2:57 pm

It’s kind of like how my husband and I both have wealthy parents who paid for our expensive colleges and wedding. We graduated without any debt. This is one of the many factors that allows us to save a lot. It’s not because we are both just soooo smart and made the right choices. I was lucky for the start for having parents who could write large checks instead of me taking out loans.
My parents are not wealthy and could not afford to contribute to my college expenses.

Nevertheless, my spouse and I have a high savings rate.

It could be confirmation bias, but I think we got the big decisions right.

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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 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.

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

Post by EnjoyIt » Sat Sep 14, 2019 4:32 pm

Silence Dogood wrote:
Sat Sep 14, 2019 4:18 pm
Sam1 wrote:
Sat Sep 14, 2019 2:57 pm

It’s kind of like how my husband and I both have wealthy parents who paid for our expensive colleges and wedding. We graduated without any debt. This is one of the many factors that allows us to save a lot. It’s not because we are both just soooo smart and made the right choices. I was lucky for the start for having parents who could write large checks instead of me taking out loans.
My parents are not wealthy and could not afford to contribute to my college expenses.

Nevertheless, my spouse and I have a high savings rate.

It could be confirmation bias, but I think we got the big decisions right.
Same with us. Tons of school debt, but we made choices that set us in the right direction to capitalize when the situation arose. I really don't understand Sam's animosity towards OP situation or life choices.

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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 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.
Last edited by dodecahedron on Sat Sep 14, 2019 4:36 pm, edited 1 time in total.

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 4:36 pm

EnjoyIt wrote:
Sat Sep 14, 2019 4:32 pm
Silence Dogood wrote:
Sat Sep 14, 2019 4:18 pm
Sam1 wrote:
Sat Sep 14, 2019 2:57 pm

It’s kind of like how my husband and I both have wealthy parents who paid for our expensive colleges and wedding. We graduated without any debt. This is one of the many factors that allows us to save a lot. It’s not because we are both just soooo smart and made the right choices. I was lucky for the start for having parents who could write large checks instead of me taking out loans.
My parents are not wealthy and could not afford to contribute to my college expenses.

Nevertheless, my spouse and I have a high savings rate.

It could be confirmation bias, but I think we got the big decisions right.
I really don't understand Sam's animosity towards OP situation or life choices.
+1

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 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:

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

Post by Silence Dogood » Sat Sep 14, 2019 4:48 pm

EnjoyIt wrote:
Sat Sep 14, 2019 4:32 pm
Silence Dogood wrote:
Sat Sep 14, 2019 4:18 pm
Sam1 wrote:
Sat Sep 14, 2019 2:57 pm

It’s kind of like how my husband and I both have wealthy parents who paid for our expensive colleges and wedding. We graduated without any debt. This is one of the many factors that allows us to save a lot. It’s not because we are both just soooo smart and made the right choices. I was lucky for the start for having parents who could write large checks instead of me taking out loans.
My parents are not wealthy and could not afford to contribute to my college expenses.

Nevertheless, my spouse and I have a high savings rate.

It could be confirmation bias, but I think we got the big decisions right.
Same with us. Tons of school debt, but we made choices that set us in the right direction to capitalize when the situation arose. I really don't understand Sam's animosity towards OP situation or life choices.
To be honest, I never had tons of student loan debt (only about $10K by the time I graduated). Instead, I delayed going to college in order to work for a few years. I then went to a community college followed by state university (while also working). It was difficult but I think it was worth it.

Glad to hear that you made the right choices for you!

I also don't understand the animosity...

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

Post by Raymond » 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
"Ritter, Tod und Teufel"

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

Post by EnjoyIt » Sat Sep 14, 2019 4:51 pm

Silence Dogood wrote:
Sat Sep 14, 2019 4:48 pm
EnjoyIt wrote:
Sat Sep 14, 2019 4:32 pm
Silence Dogood wrote:
Sat Sep 14, 2019 4:18 pm
Sam1 wrote:
Sat Sep 14, 2019 2:57 pm

It’s kind of like how my husband and I both have wealthy parents who paid for our expensive colleges and wedding. We graduated without any debt. This is one of the many factors that allows us to save a lot. It’s not because we are both just soooo smart and made the right choices. I was lucky for the start for having parents who could write large checks instead of me taking out loans.
My parents are not wealthy and could not afford to contribute to my college expenses.

Nevertheless, my spouse and I have a high savings rate.

It could be confirmation bias, but I think we got the big decisions right.
Same with us. Tons of school debt, but we made choices that set us in the right direction to capitalize when the situation arose. I really don't understand Sam's animosity towards OP situation or life choices.
To be honest, I never had tons of student loan debt (only about $10K by the time I graduated). Instead, I delayed going to college in order to work for a few years. I then went to a community college followed by state university (while also working). It was difficult but I think it was worth it.

Glad to hear that you made the right choices for you!

I also don't understand the animosity...
Baring catastrophic events, that is what life is, lots and lots of choices. Make the right big ones and you set yourself up to be successful. Choose poorly over and over again and life can appear to be unfair and difficult.

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

Post by wubdemil » 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.

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

Post by Traveler » 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?

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

Post by kevdude » Sat Sep 14, 2019 5:16 pm

marcopolo wrote:
Sat Sep 14, 2019 2:21 pm
Why all the hate?

OK, OP bought his house during a market downturn. So what, good for him!

You guys never bought a house/stocks/bonds at a fortuitous time?

The OP has also made some decisions that are good for his family (stay at home spouse, work to qualify for aca credits, etc.) that may be different than you would have chosen. That does not make them wrong.

Ron,
Well done, and best of luck to you. Thanks for sharing your details.
+1. I just don't get this, the hating that is. Many people wait for the market to turn, or level off, before buying a home. Many people buy the cheapest house in a nice neighborhood. Many people buy fixer uppers. People can make their own opportunities, or take advantage of opportunities presented to them. And, of course many people don't or choose not to. And then they complain. And hate.

Pacman
Posts: 181
Joined: Sun Feb 20, 2011 11:50 pm

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

Post by Pacman » Sat Sep 14, 2019 5:17 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?
Someone can easily choose to make less money & then owe less in taxes.

EnjoyIt
Posts: 3160
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 5:24 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?
Can you can ask for a pay cut at work to get down to OP tax level. You might even pay less living on living on $48k.

Topic Author
Ron Ronnerson
Posts: 1388
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 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.

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