Scraping by on $150,000
Do you find it hard to believe a family with a six-figure income (Scraping by on $150,000) would have a hard time making ends meet? Or have you experienced that yourself?
I don't find it hard to believe at all! In the minds of the government a family like this is rich regardless of how disciplined their finances are. One of the things you failed to cover is how much of her pay is take home and how much goes to taxes. In this bracket, despite deductions for her children, this family is getting raked via federal, state and I'm sure AMT taxes.
Try shopping at Wal-Mart. How much is going toward retirement savings?
The family seems clueless. Living on $150,000 year with no child care expenses are easy. The family should easily be able to max out a 401(k) and fully contribute to a Roth IRA for both adults while also saving $100 a month per child in a 529 plan.
I can totally understand that in the NY metro area. I would think in their area of the country, they should be in good shape. I think we all need a reality check on expenses vs. income.
That is a joke, can't believe those people have jobs; give me 250k a year and I'll be a millionaire in less than 4 years! Yep, it is possible! I make it at $47k, 30% equity in a 1900 square foot home in the suburbs (which I just bought and is my first), have two cars, save about 12% of my income (which this year is up about 20%), and get a pension in 23 years and social security in 33 years.
So is America hiring a bunch of idiots?
Good grief!!! Before the husband lost his job, they had a quarter of a million dollar income. I should have such problems.
Sell the two properties, put the kids back in ballet & gymnastics, and I bet there's still going to be enough to turn the cable back on, too. Come on, this is really a little too obvious!
Give me a break!
Try scraping by on $15000 a year.
I don't believe this article is telling us the whole story. I find it hard to believe that someone with no child care bills, no credit card debt, non luxurious home in Nebraska, and they are living paycheck to paycheck? I find that hard to believe. There has to be something else to the story.
Get rid of that damned horse.
While the article doesn't give hard numbers, it's pretty clear that what's killing them is the investment in the two rental properties -- two additional mortgages, plus property taxes, plus upkeep, all without any rental income in return = major drain on finances.
$150,000/yr in a relatively low cost of living area like Omaha, MB, even with 4 kids, can easily finance a middle to upper-middle class lifestyle, with enough left over for retirement and college savings. This is especially true if all the income on one salary, so one parent is free to do child rearing, cooking, cleaning, etc.
They just made a bad investment. They either need to find a way of making the rental properties at least break even, or sell and cut their losses.
They need to get back to contibuting to that 401(k), rather than paying taxes and mortage on a bad real estate investment. Never throw bad money after good. . .
Something doesn't add up. Sell the properties and sell the horse, they eat money. Try eating in a few nights and brown bag your lunch, that's where you will see tremendous savings. Better yet invest in a crock pot.
It seems like there's something missing here. However, it's pretty obvious that something has to happen with the rentals; either fill'em or sell'em. If they're carrying three mortgages, I can see how things could be tight.
Well. I can understand. Taxes take up 25% which makes it a cash of 112K translating to a monthly cash of 9K. With 3 properties and mortgages and property taxes , i am not surprised at all.
I also find it difficult to believe that this would be a problem in that part of the country. In the NY metro area where I live, this is a real problem because of the high taxes, mortgages and the nasty effect of the Alternative Minimum Tax. And that is without any other properties!
This article needs to focus on the perils of bad real estate investing.
If the rental market is so soft, they should sell all three houses and rent for a while. That will free up some serious cash.
We live in the San Francisco Bay area, where the cost of living is probably at the top of the entire nation. Even here, $150k/year should allow you to live a decent life. Having trouble with that level of income in Nebraska without any credit card debt or a McMansion? That's unthinkable. Ether they're spending way too much on discretionary expense, or those rental houses are eating up huge chunks of their cash flow. It sounds like they need to dump those rental houses, despite what Kiyosaki may have you believe....
The family is still used to living like they have an income of $250k or even $150k. It's not easy to convince yourself that you don't need these "things". Cell phones, blackberries, HBO, named brand foods, high-test gas, house temperatures at 72+ degrees, movies in theaters.
The horse (thanks Mom) and the rentals are part of the problem, but their psyche needs to be changed as well.
Learning to cook, getting an extra freezer (for left-overs and bulk purchases), using spices, not flavored sauces. All save lots of money each month.
I've been there. Not quite at $250k/year, but a $100k drop, nonetheless.
My wife and I (DINKS...double income, no kids) don't find it hard to believe. We gross around $170,000 per year and literally live paycheck to paycheck. Taxes and insurance and stuff easily take 33%+ right away and a mortgage and two car payments quickly put a big dent as well. For those of you think we're crazy, try living in the Washington, DC, area and you'd be shocked at how fast your money goes.
Lesson for people thinking about investing in real estate: start with ONE SMALL rental property. If you dive in to the deep end, you will probably end up in over your head.
No matter what your income, budget as if you only made 80-90% of it. If you don't you end up in a situation like this one! Or at best you break even each month, but that won't pay for retirement or other goals.
I lost my $75k job two and a half years ago and started a cleaning business. My income last year was just under $20k. My lifestyle did not drastically change even though I have 9 kids to raise and we are a one-income family. This year I am back up to almost $40k and breathing a little easier. My big question for myself is where in the world did I spend all the money I used to make? I think these people are mostly suffering from adjustment after losing $100k per year, but with discipline should be able to eke out an existence with what is left.
I can sort of understand what they are going through. My wife and I aren�t too far off from $150k. We have a kid on the way and currently rent a crummy apartment in New Jersey (NY metro area). We have no debt and are saving for a down payment on a house.
We should be comfortably middle class on our income, but that just not the case. I have no idea how we will ever be able to join the rest of the middle class and buy a house; even a very modest fixer-upper. There is simply no way we can take on a mortgage, property taxes and child care and still have money to put food on the table.
In Nebraska though? It seems like they should be comfortable at $150k.
IF WE ARE IN GOOD TIMES NOW I FEAR FOR THE FUTURE IF WE GO INTO RECESSION. UNLOAD THE PROPERTIES WHILE YOU CAN,IF THEY ARE CREATING NEGATIVE CASH FLOW. GET RID OF THE HORSE (SORRY MOM). IF YOU CAN NOT MAKE IT ON A $150K IN NEBRASKA, THEN WE ARE ALL IN SOME SERIOUS TROUBLE. HOWEVER,THE GOVERNMENT SHOULD RETHINK THE AMT IT IS HURTING ALOT OF FOLKS.
Maybe someone should explain Midwestern values to these people. I live within 45 minutes of them, so our living expenses are relative. We pay roughly the same property taxes, also own two rentals, make less than half the money, and still manage to put away close to a thousand a month.
I agree with the other postings - something else is going on to drain the money. Stop whining about your priviledged income/lifestyle and do what the rest of America does - get another job.
Try living on $50,000 a year in the most expense county in the US.
Worrying about my 2 children every day, will they have what they need.
They seem like bright folks who are trying to live well above their means.
It's time for some tough love.
Sell the rental properties, sell the horse, and direct the additional cashflow to savings - allocated in some manner toward short term, education and retirement.
Even if they continue to want him to be a stay at home dad, they should be able to meet all their goals.
My husband has been without a job for 4.5 months now. My income is only in the mid $30k's. I feel NO sympathy for people who make 5 times what I make and can't live within their budget.
Not hard to believe depending on area. In the suburban Maryland area this is not a huge income if you are living middle calss. However, in Nebraska.... something needs to be looked at. I agree with other comments regarding the mortgages and car payments. These, in addition to food and gas, make up most of any families expenses. Likely the home(s) or the cars are the problem.
You bring up several good points; a few of which are: 1) little things add up, 2) the envelope idea is a good one and works, 3) communicate about the budget. I've been married for nearly 25 years and regardless how much my wife and I have made (and it's increased nicely over that span), we have always lived paycheck to paycheck.
We have a 401K, but not until recently have we taken full advantage of it.
Another point made in your article: "you spend what you make". I finally got my wife to visit a financial planner with me. The planner brought a few things to my attention (the envelope theory for exampe for gas, groceries, eating out, etc.), but overall, what I had been
"preaching" for years was verified by the planner. The great (or concerning)
thing was that my wife listened. We are still along way from living paycheck to paycheck, but we are saving
appx. 8% over and beyond what we were and I'm much happier now that my wife is part of the "financial team" and sees the need for saving and cutting back vs. spend, spend, spend (on non-essential things). Enjoyed the article and one last comment. It's time the husband goes back to work in your feature story.
I'm a single parent of two pre-teens living on 30K at year. I have no credit card debt and only my mortgage and car loan. After my mortgage, car loan and insurance, I take home $300 for TWO weeks. I have to buy groceries, pay the utilities and stuff for school (supplies and lunches). I manage. Not easily, but I do. My kids won't get their college paid for, so I push academics for potential scholarships. I think it is disgusting that they can't live on $150K a year.
The problem with these family are not their expenses but their "investments". I don't know why CNN did not focus the story in the actual issue (the rental properties) instead of lingering around the small expenses (phone, cable...). Their combined mortgages (house + 2 rentals) might be more than half their net monthly income!! They might be leveraged for 60 or 65%! Buying houses for rentals in the peak of a housing bubble is not a good investment when rentals are almost half of ownership specially in places like Nebraska. This family is not going to see a positive monthly cash-flow on their rentals in the near future (1 or 2 years)
This is a no brainer. Get rid of the rental properties (investment decisions should not be made with emotions!!). They should then use their income for investments that make sense. Max out a 401k and then begin automatically investing in other stock/bond vehicles. Today's mutual fund companies make it easy to sign up and automatically withdraw from your bank account. My wife and I have been doing it for years and now have a net worth in excess of $1.2M. I'm 47 and plan to work full-time for only 5 more years (we're currently investing about 55% of our income). Pay yourself first!!
Good article, and you had me going until you said to ask your boss for a raise. I am doing well by other peoples standards, but have not had a bigger than 3% increase in 8 years.
GIVE ME BREAK!
Stop all your complaining about high taxes. "High" taxes is not these people's problem. The U.S. has the lowest income tax by far of any industrialized country in the world. Taxes are not the problem. Anyway, the U.S. government is going bankrupt to pay for SS and the war in Iraq. And the government still spending far more than it's taking in.
Give me $150K per year, and I will show you how to get by, and have change to spare. My wife and I are getting by on a gross yearly income of $60,000. Perhaps we should start moving away from the "I want" and start living the "I am glad I have" life
I live in a suburb of Omaha and the only thing that is expensive about living in Nebraska is the property taxes. I think everyone can figure out a way to live within their means of income. 80% of Americans or more scrape by from paycheck to paycheck including my family. But we make it and don't complain. People need to know what they actually NEED to live as compared to what they WANT to live. What are we not being told in this story?
How about a follow-up article on a family getting by just fine on less than $50,000 a year?
We are living this same nightmare. However, we are actively trying to sell our second property to free up a bunch of money that is going out the door to mortgages, taxes, insurance, etc. As nice as it would be to have a rental, it doesn't make sense at the expense of saving for retirement and our kid's education. It is also WAY to stressful living paycheck to paycheck. Sell the rentals.
I live in a 2500sf house in metro west area MA on 150K a year household income. Wife is a part time nurse 50K per year full time mommy to a 2yo. I make 100K. we save about
Our mortgage is 550 a week but that�s a 15year mortgage.. will to be done paying by age 42. (32 now)
Neither of us drive nice cars. I drive a 99 Toyota pickup truck with 120K miles on it.
We save only 13% of my income now.. but I have been saving on average over 15% since age 22. Instead of going way crazy on 401ks I balanced it with paying off our debt and shortening our mortgage. My plan is to buy a second home for 20more years at age 42 and make it my primary so I can continue the tax deductions.
I consider us living an upper middle class lifestyle with 1 or 2 nice vacations a year. But we are definitely not rich.
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