Six figure salary vs. $20K

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VictoriaF
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Post by VictoriaF » Sun Feb 14, 2010 4:44 pm

Triple digit golfer wrote:So what exactly do you eat?
Alaskan salmon, occasional organic chicken, organic produce (fruits, berries, vegetables), organic milk, organic nuts (walnuts, almonds).

I am spending large amounts of money on food and consider it well justified.

Victoria
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Post by livesoft » Sun Feb 14, 2010 4:54 pm

For lunch at home today I had a nice cheap organic salad that I practically made myself out of baby spinach, cherry tomatoes, baby carrots, mushrooms, dried cherries, dried cranberries, croutons, and dressing. I'm sure it had less than $2 worth of ingredients in it.

I don't go out of my way to eat organic because it isn't healthy, but sometimes it is very inexpensive. Dessert was homemade chocolate chip cookies and a large bag of M&Ms.

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alec
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Post by alec » Sun Feb 14, 2010 5:07 pm

Quick Q: Why wouldn't someone in this situation live with another person?

I mean, they've probably been doing it all through undergrad and grad/law school to save money. Why not continue for a couple of years? Virtually everybody I know right out of college or grad/law school does it. It certainly helps with the social life too and would help you unwind from your stressful job. :sharebeer
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair

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market timer
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Post by market timer » Sun Feb 14, 2010 5:10 pm

alec wrote:Quick Q: Why wouldn't someone in this situation live with another person?

I mean, they've probably been doing it all through undergrad and grad/law school to save money. Why not continue for a couple of years? Virtually everybody I know right out of college or grad/law school does it. It certainly helps with the social life too and would help you unwind from your stressful job. :sharebeer Virtually everyone I know that moved to NYC or DC right after school did it.
I actually have a roommate and still spend $2200 on rent for my share of a true 2br (very nice building). I know people who share a converted 2br in good areas for $1400, but that's only $200 less than the example.

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Post by gvernon » Sun Feb 14, 2010 5:15 pm

We can nit pick market timer's numbers all day, but I think his point stands: 100k is certainly not what it used to be, especially in high cost of living cities.

In addition, many (most?) 100k jobs have certain expectations that can increase costs (in his example, nice suits and shirts). And if you are friends with your co-workers, you are likely to socialize with other affluent people and do expensive things / eat at expensive restaurants.

All told, 100k can disappear quickly, and may not feel "rich". I can personally attest.

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alec
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Post by alec » Sun Feb 14, 2010 5:37 pm

market timer wrote:
alec wrote:Quick Q: Why wouldn't someone in this situation live with another person?

I mean, they've probably been doing it all through undergrad and grad/law school to save money. Why not continue for a couple of years? Virtually everybody I know right out of college or grad/law school does it. It certainly helps with the social life too and would help you unwind from your stressful job. :sharebeer Virtually everyone I know that moved to NYC or DC right after school did it.
I actually have a roommate and still spend $2200 on rent for my share of a true 2br (very nice building). I know people who share a converted 2br in good areas for $1400, but that's only $200 less than the example.
More reasons why I live in the DC area and refused to move to NYC. Middle class incomes just aren't enough to make it worthwhile.

btw - I don't think it's higher taxes that are the culprit. Taxes are pretty low historically. The low real wage growth of the last 30 years appears to be the main culprit.
Last edited by alec on Sun Feb 14, 2010 5:46 pm, edited 2 times in total.
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Post by GG » Sun Feb 14, 2010 5:42 pm

I agree with MT and understand the point, though I live in a much less expensive area.

If you think $100k isn't what it used to be - try getting married, havings 3 kids, buying a decent house in a nice burb close enough to the city, 2 decent cars, and have your spouse stay home. Even in a moderate cost city, you won't have two nickles left at the end of the month. (Edit: The only difference is the govt practically doesn't make you pay taxes in that scenario).
Last edited by GG on Sun Feb 14, 2010 5:56 pm, edited 2 times in total.

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Post by LH » Sun Feb 14, 2010 5:47 pm

Hey market timer, read the approach that the book "your money or your life" takes to the issue, its even worse than you put it out : )

I would reccommend the circa 1992 1999 edition, its a bit more focused on the financial issues.

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Post by gvernon » Sun Feb 14, 2010 5:54 pm

GG wrote:If you think $100k isn't what it used to be - try getting married, havings 3 kids, buying a decent house in a nice burb close enough to the city, 2 decent cars, and have your spouse stay home. Even in a moderate cost city, you won't have two nickles left at the end of the month.
Agreed. Although, getting married has actually saved me money (so far - hopefully she doesn't develop any bad shopping habits). Lower taxes, shared expenses, fewer extravagant bar bills, and excuses to not to go out or do certain activities.

That being said, we're DINK renter's right now, and things will only get worse from here once we have kids, buy that house in the burbs, and she decides she'd rather stay at home with the kids than work. I've ran some numbers - it doesn't look pretty.

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Post by market timer » Sun Feb 14, 2010 8:46 pm

LH wrote:Hey market timer, read the approach that the book "your money or your life" takes to the issue, its even worse than you put it out : )

I would reccommend the circa 1992 1999 edition, its a bit more focused on the financial issues.
I'll check it out.

Oh, and lest people think this discussion is just idle speculation (or worse, whining about just getting by on $100K), it is likely that I'll select option B sometime in the next few years. Not sure if that will actually mean $20K/year, of course. I never bought into the idea of suburban living and two-car garages. After thinking about this on the treadmill tonight, I realized it is not so much a question of money (I saved over $100K last year) but routine that kills me. I always feel more alive the first few months of doing something new. It's that hope for the future bringing new and unexpected twists that I want to maintain. Also, my gf of many years lives in a low COL country.

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Post by avalpert » Sun Feb 14, 2010 9:23 pm

market timer wrote:
I'll check it out.

Oh, and lest people think this discussion is just idle speculation (or worse, whining about just getting by on $100K), it is likely that I'll select option B sometime in the next few years. Not sure if that will actually mean $20K/year, of course. I never bought into the idea of suburban living and two-car garages. After thinking about this on the treadmill tonight, I realized it is not so much a question of money (I saved over $100K last year) but routine that kills me. I always feel more alive the first few months of doing something new. It's that hope for the future bringing new and unexpected twists that I want to maintain. Also, my gf of many years lives in a low COL country.
As long as you recognize this isn't about money, more power to you. I have traveled extensively in the third world (taking off long periods to do so) and it is the most rewarding experiences of my life. I have come to a balance that allows me to maintain those experiences and a more 'traditional' life with a wife and kids (I take at least one month long vacation a year plus 1-2 shorter trips and my annua diving trip over thanksgiving week to the Carribean). I intend to take another sabbatical in the next couple of years to take the whole family and a camper van across Australia.

The one suggestion I would have is find a way to test the waters first - if you can take a 6 month sabbatical but retain ties to your employment here. It is a very big lifestyle change and not everyone is enjoys it as much as they had thought they would. Also, most people I know who have taken off completely ended up settling into a 'routine' after a few years (be it abroad or in the states) anyway - I've met other who haven't some with unhappy lives as a result.

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Post by gd » Sun Feb 14, 2010 9:24 pm

It's an interesting thought exercise, but quite divorced from reality even if the numbers did work. There are lots of good reasons to do scenario #2, but finances aren't one of them. An expatriate who doesn't want to be there is not a pretty sight. Like buying a house, it's a lifestyle choice. The numbers come second. Your last post is much more appropriate attitude to approach it with.

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Post by MP173 » Sun Feb 14, 2010 9:51 pm

My son has a buddy that is 24 and graduated a couple of years ago from a good business school (not great) with a 4year degree and got a job on Wall Street. Decent, but not great starting salary ($65k). He lasted a year and moved back to Indiana.

COL was huge, $2000/month rent and very few meals at home. Why? He worked from 9am thru til when the job was done, often near midnight. He had to walk to his apartment in order to keep the travel time down. Further, no bonus for him and he walked out on the spot.

It just wasnt worth it for him.

He got a job with a boutique investment bank in Chicago, has a place on Randoph St. with a view of the lake and is making very good Midwestern money (actually better than NYC). Hours are shorter and he has a life.

I talked at length to him on two occasions about the job, living in NYC, and his expectations. It was something he HAD to try, but soon got it out of his system.

There are choices as to how to live your life. Market timer, I dont doubt your budget figures.

Ed

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Post by KyleAAA » Sun Feb 14, 2010 10:00 pm

Triple digit golfer wrote:No offense to you, but that's pretty meaningless. Even if those numbers are right (and I don't think they're even close to realistic), who wants to go teach English to a bunch of foreigners and work at a restaurant in a strange country? Please.
I think most people who've tried it would.

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Post by TheEternalVortex » Sun Feb 14, 2010 10:12 pm

California is a much nicer "high COL" area. You can rent for ~$1000 in pretty nice area if you just want a studio. Many jobs in the technology sector include free food, shuttles, and other perks.

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Post by market timer » Sun Feb 14, 2010 10:23 pm

avalpert wrote:The one suggestion I would have is find a way to test the waters first - if you can take a 6 month sabbatical but retain ties to your employment here.
Think I'd have to be quite valuable for something like this to fly, which I suppose is a good motivator to produce now.

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Post by market timer » Sun Feb 14, 2010 10:25 pm

gd wrote:It's an interesting thought exercise, but quite divorced from reality even if the numbers did work. There are lots of good reasons to do scenario #2, but finances aren't one of them. An expatriate who doesn't want to be there is not a pretty sight. Like buying a house, it's a lifestyle choice. The numbers come second. Your last post is much more appropriate attitude to approach it with.
Yeah, I presented the idea backwards. My original thought was this: suppose I could earn $20K/year overseas, how much would I need to earn in NYC to maintain the same lifestyle? The back of the envelope calculation was $100K. That number was pretty shocking.
Last edited by market timer on Sun Feb 14, 2010 10:26 pm, edited 1 time in total.

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Post by ausgenf » Sun Feb 14, 2010 10:26 pm

Five years ago I had two job offers for nearly identical jobs. One was in Boston, the other in Alabama. The job in Boston paid $130K/year compared to $104K/year for the job in Alabama. Yet the cost of living in Boston was nearly double what it was in Alabama. So, for us, moving south was a no-brainer. Probably the best decision of our lives in fact. My wife received an offer to relocate to San Francisco recently, but unless they offer 2 to 3 times what she makes now, there is no way.

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Post by Boris » Sun Feb 14, 2010 10:28 pm

This whole example is bogus. On the one hand you live in the "heart of the world" and spend extravagantly for pretty much anything you want, including cell phones, suits, dry cleaning, healthy food, etc. In another you're eating scraps from a restaurant, living in some 3rd world country and washing your clothing in a nearby lake. Yeah... you're better off with the latter. :roll:

The dilemma that you present is no different than this one: You Try to Live on 500K in This Town. It's complete nonsense.
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Post by avalpert » Sun Feb 14, 2010 10:38 pm

market timer wrote:
avalpert wrote:The one suggestion I would have is find a way to test the waters first - if you can take a 6 month sabbatical but retain ties to your employment here.
Think I'd have to be quite valuable for something like this to fly, which I suppose is a good motivator to produce now.
You'd be suprised (your company may actually have a sabbatical policy in place). When I first took a sabbatical and asked my employer to hold my job (among other concessions) I had been working there less than four years, was considered on a good trajectory but certainly not irreplacable. In any case, if you are going to do it anyway it never hurts o ask.

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Post by Jack » Sun Feb 14, 2010 10:45 pm

We've been through this before but the median household income in NYC is less than $50,000 -- that's about 4 million people. It's hard to feel sorry for a single person making twice that.

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Post by musbane » Sun Feb 14, 2010 11:12 pm

I'm having a hard time with all this.
Of course $100k isn't what it was. But back when it wasn't, you couldn't get it.
So we have a well educated, smart, hard working young man who's first job doesn't make him instantly rich. He has to hunker down for a few years, work hard, get the raises, and THEN he's rich.
What's new? I thought that was what it was all about. Not likely to happen at the third world restaurant OR scaled back $20k job.

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Post by MWCA » Sun Feb 14, 2010 11:24 pm

Pfft 100k is quite a bit. Two people can live really well and save a good amount each year. Plus take 2 to 3 weeks and visit foreign lands.

Absurd to think 100k isn't much these days.

Now if you want to raise Johnny and Susie Q along with that. Yeah it really gets cut back. But then again no law says you have to procreate.
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Post by market timer » Mon Feb 15, 2010 12:19 am

My presentation of this idea was confusing. Hopefully, the last couple posts make it clearer. It's prompted by two things: 1) a Valentine's Day Skype chat, 2) a life to-do list I put together over morning coffee.

I wrote down the following, not for right now, but eventually:

1. Publish a book
2. Write a column for The Economist
3. Teach in a business school
4. Start a hedge fund based on IRBLTG
5. Work overseas and become fluent in the language
6. And some goals for my current job

This has nothing to do with getting rich or earning $100K. The comparison was done to say, what's my downside risk if I fail (arbitrarily meaning earn $20K/year)? I presented this all rather clumsily, as I have no intention of working in a restaurant or teaching English. Those were just to give specific examples of trying something off the beaten path. And it turns out that failure is not so risky after all, with $20K being comparable to income in the range of $85-100K/year, thanks to the income-based loan repayment plan and costs of a professional lifestyle.

comptalk

Post by comptalk » Mon Feb 15, 2010 1:10 am

As a New Yorker who moved out of the city area to the subs, here's my breakdown in costs:

Health Insurance - 500.00
Mortgage/Taxes - 1700.00
Utilities - 495.00 (averaged)
Cable/Internet/Phone - 115.00
Cell - 92.00
Insurance - 215.00
Fuel - 100.00
Groceries - 250.00 (averaged)
Trash - 20.00
Water - 35.00
Misc. - 100.00
=========================
Total - $3405.00


Anywhere in driving distance from NYC is still expensive. Its just how it is.

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Post by jh » Mon Feb 15, 2010 1:22 am

...
Last edited by jh on Tue Mar 30, 2010 1:50 pm, edited 1 time in total.

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Post by NYnative » Mon Feb 15, 2010 2:27 am

[quote="Jack"]We've been through this before but the median [i]household [/i]income in NYC is less than $50,000 -- that's about 4 million people. It's hard to feel sorry for a single person making twice that.[/quote]

I fully agree with this statement. The majority of New Yorkers do not earn $100K a year and live decent lives. If you want to live in Manhattan, you pay the price. There are many nice neighborhoods in the other boroughs where it is a lot cheaper to live and the subway costs the same - just takes a little longer to get to the office. Plus you are saving a fortune in NYC by not having a car. $1K for a suit and 3 shirts? Suit on sale at Macy's - $150, shirts $25 each, ties $15. Of course that's with coupons, but they are in the paper every week. I can't even imagine how a suit and 3 shirts could be worth that much.

As to being an ex-pat and having low expenses, most of the places that are cheap are also pretty scuzzy. If you want to live in Europe, you will end up paying nearly as much as in NYC (especially with the value of the Euro). My suggestion would be to join the US military - as my old DI said - You get to go to far off beautiful places, meet wonderful friendly people, and kill them. Seriously though, I saw most of the world courtesy of the Army and have a paid for Masters to boot. The pay wasn't the best, but people were great and living costs were generally low. Plus you get a chance to serve your country and give something back. Retirement is a really nice package.

And yes, I was a New Yawker, grew up in the Bronx and went to CCNY. Wouldn't have had it any other way.

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Re: Six figure salary vs. $20K

Post by adam1712 » Mon Feb 15, 2010 3:39 am

market timer wrote:These are not exactly my numbers, but they are representative of many professional school graduates.


It appears that governments and colleges have sucked just about every penny of surplus out of education.
Or perhaps you could say that most professional school graduates have figured out a way to spend about every penny of their remaining surplus salaries. I bet nearly every person on this board would say that the average co-worker they work with spends almost everything they make. Only the breakdown and items change. If you're going to live where your co-workers live, drive what your co-workers drive, eat what your co-workers eat, AND wear what your co-workers wear, it's a pretty good bet you are going to spend about as much as you make.

There will always be bigger and better things to match the income of employees. And incomes will match the average geographical cost of living. Nicer homes in nicer neighborhoods with better schools. There's a reason organic grocers are in certain neighborhoods and Wal-Marts are in others. I don't think there's a job in this country where you can spend what your average co-worker does and have a nice chunk for retirement savings.

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Post by james22 » Mon Feb 15, 2010 4:19 am

Profession/education still trumps geography with respect to living standard, I'd think.

Search Inside for "plumber" (p. 109)

http://www.amazon.com/Spend-Til-End-Rev ... 1416548904

What do plumbers make in NYC?
25% BRK l 25% BAM l 8% SV (VSIAX) l 8% EM (VEMAX) l 4% FNMA/FMCC l 4% FNMAS/FMCKJ l 25% Stable Value

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Post by bluto » Mon Feb 15, 2010 4:57 am

Triple digit golfer wrote:
Am I the only one who couldn't imagine working 60 hours a week for the next 10 years for a grand total of $50K more savings?
Am I the only one who couldn't imagine leaving my friends, family, and everything I know for the next ten years just to work less hours in a foreign country where I don't know anybody or anything?
You have raised this point repeatedly, so I guess I'll share an observation.

I live in a foreign country - although it isn't because I can work fewer hours. After years overseas and living in two countries, I look forward to moving back home next year-but believe this has been an incredible professional experience, learning experience and life experience. I found out that 'everything I know' about myself, my home and the world wasn't that much.

You may be surprised that I have met THOUSANDS of expats doing just what you suggest is unimaginable.

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Post by burt » Mon Feb 15, 2010 6:05 am

Wagnerjb wrote:Move to Houston. Maybe your salary - for comparable work - would be $80,000 instead of $100,000. But your rent would be half. You wouldn't have any state income tax. Food and eating out will cost less too.

You show a Federal Tax of $19K. I think it is actually much closer to $10K.

I believe you have shown a pretty extreme example of living above one's means - the rent is too high and the eating out expense is too high.

Best wishes.
Now be careful...Houston is not a place where you want to gamble with cheap rent. Crime.

Yes, no state income tax but high property tax. Your rent reflects the high property tax.

burt

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Post by RMB » Mon Feb 15, 2010 6:59 am

burt wrote:
Now be careful...Houston is not a place where you want to gamble with cheap rent. Crime.

Yes, no state income tax but high property tax. Your rent reflects the high property tax.

burt
I wouldn't rate Houston as a particularly dangerous. Like any big city it has areas you probably would prefer to avoid, but in my opinion its relatively safe.

As far as property taxes go, they are high on a percentage basis, about 3% or so, but the underlying asset is still valued low enough that rents are reasonable. I think the OP's original rent number was $1600 a month. Half that, $800, will certainly get a decent one bedroom apartment in a safe area. Heck, if you are willing to live out in Katy I bet you could get a 2 bedroom for the same price.

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Post by FoolishJumper » Mon Feb 15, 2010 7:56 am

Triple digit golfer wrote:I'm talking about compared to being a professional in one's chosen field.

If I go to school for accounting, why would I give that up to go teach English to a bunch of non-foreigners in their own country and work in a restaurant and maintain the same standard of living that I could have here working in my chosen field? Doesn't make sense.
I can only talk of my experience, but I took intensive Spanish in Mexico two years ago and at the same time I was there, I met an American who was teaching English to locals at this school, mostly businessmen & wives/children of rich businessmen. He had both a JD & MBA from prestigeous universities in the U.S. He started working in a California law firm out of law school (he got his MBA first) at about 27/28 and never started paying his $300k+ of student loans. Eventually the loan holders were able to begin garnishing his wages. He went from making $X one month to making about 40% of $X the next month. He completely freaked out when he realized he'd be paying the banks more than he'd take home for the next 15 years, so he just stopped working.

He did a bit of traveling around the world, but he eventually ran out of money, so he started teaching English in Taiwan making about $2k a month. He absolutely hated it, so he decided he wanted to move to Latin America, as it was somewhere he really wanted to live. After living in Mexico for 10 months and making only $600 a month teaching English (he could have made more in a full-time job, but that was too "rigid" for him), he moved back to Taiwan as the money was too low in Mexico.

I spent some time chatting with the guy, and he wasn't anti-banks or otherwise crazy, he just had a phsychological problem with working more for the banks than for himself - he simply couldn't get himself to do it. He had no problem with never returning to the U.S. if that's the only way to not pay his loans back. He also didn't mind living with a lower standard of living, although he was likely happier than working 80 hr weeks as a lawyer for a big firm.

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Post by DennisRoche » Mon Feb 15, 2010 8:33 am

Comparing NYC to some 3rd world locale is truly apples to oranges. Better to compare earning $100,000 in NYC to $75,000 in Houston or Pittsburgh.

I believe your illustration will then show us something very important: We underestimate how much it hurts us financially to live in an area with high housing costs - unless our salaries are high enough to compensate. In other words, it's better to take the lower salary and move to area where a house costs $150,000 than pay $600,000 in NYC.

Fincancial considerations aside, however, NYC has its perks.

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Post by livesoft » Mon Feb 15, 2010 8:46 am

Life changes things.

When I was younger, I moved to Europe and worked. Sure I left some friends and family stateside, but I made many new friends and had many visitors from the States as well. This was before the days of the WW and Skype.

Then I moved to NY. I made a goal of saving/investing enough over the next 10 years such that my investments could replace my salary. I reached that goal ahead of time.

I didn't make a 6-figure income until I moved from NY to Houston.

But all this prognostication/dreaming by market timer et al. leaves out a major event in my life which affected all income, all expenses, and all future dreams: I got married. Indeed, I was married before moving to Europe. Two salaries go a lot further than one. Duh!

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Post by Boris » Mon Feb 15, 2010 9:00 am

FoolishJumper wrote:I spent some time chatting with the guy, and he wasn't anti-banks or otherwise crazy, he just had a phsychological problem with working more for the banks than for himself - he simply couldn't get himself to do it. He had no problem with never returning to the U.S. if that's the only way to not pay his loans back.
He didn't have a psychological problem with the bank "bankrolling" his education/expenses while he was getting his undergrad, law degree, etc? :roll:
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing." | - John C. Bogle quoting Shakespeare

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Post by comptalk » Mon Feb 15, 2010 9:02 am

600k is not going to buy you much in NYC. Maybe a hole in the wall. Just maybe...

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Post by dumbmoney » Mon Feb 15, 2010 9:35 am

SecretAsianMan wrote:Now, your numbers are also badly wrong when it comes to the international scenario. First, nobody I know that teaches English in poor countries pays taxes. Thus, that's $2.6K in your favor!
Unless you renounce your U.S. citizenship you still have to pay federal tax (if you owe any after taking deductions for foreign taxes, etc).
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.

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Post by Wagnerjb » Mon Feb 15, 2010 9:41 am

dumbmoney wrote:
SecretAsianMan wrote:Now, your numbers are also badly wrong when it comes to the international scenario. First, nobody I know that teaches English in poor countries pays taxes. Thus, that's $2.6K in your favor!
Unless you renounce your U.S. citizenship you still have to pay federal tax (if you owe any after taking deductions for foreign taxes, etc).
It may be that SecretAsianMan was referring to the US foreign earned income exclusion. As a US citizen, you can exclude a certain amount of foreign income from US taxation. I think it is in the range of $90,000. That doesn't mean you don't pay local taxes on that income though...

Best wishes.
Andy

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Post by SecretAsianMan » Mon Feb 15, 2010 10:10 am

Wagnerjb wrote:
dumbmoney wrote:
SecretAsianMan wrote:Now, your numbers are also badly wrong when it comes to the international scenario. First, nobody I know that teaches English in poor countries pays taxes. Thus, that's $2.6K in your favor!
Unless you renounce your U.S. citizenship you still have to pay federal tax (if you owe any after taking deductions for foreign taxes, etc).
It may be that SecretAsianMan was referring to the US foreign earned income exclusion. As a US citizen, you can exclude a certain amount of foreign income from US taxation. I think it is in the range of $90,000. That doesn't mean you don't pay local taxes on that income though...

Best wishes.
Virtually all money earned in third world countries teaching English is paid under the table. I have never known anyone in such situations to pay local or U.S. taxes (although it is possible if they work for a school or company that local taxes are taken out before they are paid, but it would be invisible to the teacher; I don't know of any place that would claim to pay you, say, $15/hr and then actually pay you $12/hr "after taxes").

SAM

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Re: Six figure salary vs. $20K

Post by market timer » Mon Feb 15, 2010 10:10 am

adam1712 wrote:Or perhaps you could say that most professional school graduates have figured out a way to spend about every penny of their remaining surplus salaries. I bet nearly every person on this board would say that the average co-worker they work with spends almost everything they make. Only the breakdown and items change. If you're going to live where your co-workers live, drive what your co-workers drive, eat what your co-workers eat, AND wear what your co-workers wear, it's a pretty good bet you are going to spend about as much as you make.
This is a great point.

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Post by market timer » Mon Feb 15, 2010 10:20 am

FoolishJumper wrote:I can only talk of my experience, but I took intensive Spanish in Mexico two years ago and at the same time I was there, I met an American who was teaching English to locals at this school, mostly businessmen & wives/children of rich businessmen.
Wow, very interesting that someone fits the scenario so exactly. Would be curious to know how many are out there. With a student loan database, you could get some fascinating insights into how indebtedness influences career decisions.

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Post by Radiohead » Mon Feb 15, 2010 10:22 am

I am glad medicine is fairly opposite of law and finance. In general in medicine you expect substantially higher salary (in my field up to 40-50% more), more vacation (again, up to 50% more), and a shorter time to partnership (1 year vs. 3+) if you live in a low COL area. This certainly varies by field, but the only area I can imagine you would make more in NYC then middle-of-nowhere, IN is a cosmetic based practice. Also, money on work clothes...what is a suit? :D
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Post by dumbmoney » Mon Feb 15, 2010 10:23 am

Wagnerjb wrote:
dumbmoney wrote:
SecretAsianMan wrote:Now, your numbers are also badly wrong when it comes to the international scenario. First, nobody I know that teaches English in poor countries pays taxes. Thus, that's $2.6K in your favor!
Unless you renounce your U.S. citizenship you still have to pay federal tax (if you owe any after taking deductions for foreign taxes, etc).
It may be that SecretAsianMan was referring to the US foreign earned income exclusion. As a US citizen, you can exclude a certain amount of foreign income from US taxation. I think it is in the range of $90,000. That doesn't mean you don't pay local taxes on that income though...
Ah, thanks for the correction.

The situation with Social Security tax is complicated - it seems you always owe it if you are self-employed; but if not self-employed, then it depends on the country. ( http://www.irs.gov/businesses/small/int ... 60,00.html )
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Post by FoolishJumper » Mon Feb 15, 2010 10:29 am

Triple digit golfer wrote:Am I the only one who couldn't imagine leaving my friends, family, and everything I know for the next ten years just to work less hours in a foreign country where I don't know anybody or anything?
I second what bluto said, as I've been an expat for 5 years now. I wouldn't give up any of it, as I've had incredible experiences both professional and personal. Not to mention my case where I make about 3x what my U.S. counter-part (M.S. engineering) would make, not to mention 3x as much vacation time and I pay no taxes on any of it! But I could have considerable debt (of which I have none), and commit strategic default and walk away from all of it while banking more money than if I'd stayed in the U.S.

I'll also raise a weakness of MT's original idea, in that one need not give up a $100k salary for a $20k salary in a foreign country. There are accounting, law, and management consulting firms (if we are talking about CPA's, JD's, and MBA's) that will hire the same individual for $60k instead of $100k in NYC. You may not be in London, but there are many "civilized countries" in which business need to hire professional firms with U.S. knowledge/experience. You'll certainly have a much lower cost of living, and you won't be "washing your clothing in a nearby lake" as some may believe, but you may hire someone to clean your house and wash your cloths for $10 a week! 8)

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Post by SecretAsianMan » Mon Feb 15, 2010 10:30 am

market timer wrote:
FoolishJumper wrote:I can only talk of my experience, but I took intensive Spanish in Mexico two years ago and at the same time I was there, I met an American who was teaching English to locals at this school, mostly businessmen & wives/children of rich businessmen.
Wow, very interesting that someone fits the scenario so exactly. Would be curious to know how many are out there. With a student loan database, you could get some fascinating insights into how indebtedness influences career decisions.
I knew a guy in China who owed money on undergrad loans. He didn't make any arrangements vis-a-vis an IBR plan; he just wasn't paying back his loans. He apparently wasn't living in China to get away from the loans; he just didn't think about it that much. The odd thing was that when he first left the U.S. his loan amounts weren't that high, so I'm sure he could have easily paid them off even on an English teacher's salary. He's been there for a decade now, though, so I would imagine the total is considerably higher.

Of course, this is also a guy who married his favorite prostitute (who also happened to have a kid from a previous marriage to a guy who died of a heroin overdose), so he wasn't exactly known for making great life choices. I feel bad for him if he ever decides to move back to the U.S., though. The loan amount could be a huge impediment by that time.

SAM

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Post by MarkNYC » Mon Feb 15, 2010 1:28 pm

market timer wrote:
livesoft wrote:the nytimes showed a tax return today. your numbers show way too high taxes. put some money in a 401(k) and an FSA to reduce the tax burden. do not pay so much rent. etc.
I've intentionally kept out the 401k because that just defers taxes to a time when the US financial condition will likely be in a far worse condition. The tax numbers are for a single person with no dependents or deductions.
If you want to analzye your cash flow, you cannot ignore the tax effect of 401k deferrals. With $100K gross and $20K into 401K, your NY tax is $7,100 which will be a federal deduction, resulting in federal tax of $13,500 on taxable income of $69,250 (I'll igore the Make Work Credit of $300). So total income taxes are $20,600 not $29,600. Add this $9K difference to your net savings of $15.7K and you have $24.7K left after essential (and comfortable) living expenses. Let's assume you spend $1,200/month of this on entertainment, etc, you still have $10k of savings to add to your $20K 401K savings. So on $100K you're living well in Manhattan and saving 30% of your gross, in addition to spending 12% of your income on student loan repayment. I don't see the problem.

For me, Manhattan's living expenses have 2 major hurdles: the cost of housing and the high state/city income tax. Not much you can do about the latter, even by living in the outer boroughs. Commuting has its own costs and problems. The housing costs can be mitigated depending on how much you're will to compromise.

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Post by Fbone » Mon Feb 15, 2010 4:29 pm

Commuting from the suburbs takes it's toll (pun unintended) also. While you may save a few dollars you lose valuable free time. My friends leave the house at 5:30am and return home at 7pm in order to work 8-4:30. No overtime. And do this while raising a family. It's not easy.

And the COL in suburbs has risen significantly in the last few years. At least in NJ it has.

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