“$250,000 is not rich … it’s actually close to poverty…”

Ok … so I couldn’t let this go without more than just the single line of commentary that I left on my last post because when I did just the tiniest hint of digging to see if there was more to the quote … anything, really … that gave it the slightest notion of not being just absolutely and hopelessly out of touch, what I actually found was this fun, little thread with several people supporting her general comments … despite being a couple of years before she even said them!

Granted, there were also plenty of people abhorring such a notion, but let’s talk about not those people who actually have the comprehension to grasp that the median household income in American is $50,000 per year, and yet $250,000 per year is A LOT MORE DOLLARS THAN THAT.

As a side note, more and more I find myself running out of ways to add emphasis when I’m talking about things that have been said on FOX News – go figure…

So anyways, here’s the link – http://www.thefiscaltimes.com/Articles/2010/12/07/Down-and-Out-on-250000-a-Year.aspx – and in it the author attempts to dissect the budget of a family of four making $250k per year, walking through all of the taxes that they pay and how things are pretty tight for them budget wise, and it wouldn’t be so bad if they’d just leave it at “having more money in the door means more money going back out,” but instead they start to break down specifics and that’s where people start to feel disconnected:

  • $5,000 for a house cleaner
  • $4,000 family vacation each year
  • $3,000 for “gifts / holidays / family celebrations”
  • $4,000 for the kids to go to “camp” (P.S. what “camp”?! Scout camp when I was a kid cost $100-200 for a week!)
  • $8,000 for kids’ college fund
  • maximizing 401k contributions

What the author, and a lot of people in this income bracket, fail to realize is that the reason people find this story disingenuous is because a lot of people don’t have the money for these things – period. I won’t even make the “poverty” comparison because frankly that’s just asinine, but the fact that they don’t get that people who are really broke don’t have a housekeeper because they can’t afford one, don’t go to Disney World each year – maybe once in a lifetime, don’t save for college – thus resulting in massive student loans that most college kids end up on the hook for, and don’t really have much for investments at all.

Adding up just that list of discretionary spending right there (including $17,500 if they’re truly “maximizing” 401k contributions), that’s a whopping $37,500 that they’re spending on things that most families in the neighborhood of the national average might do once in a blue moon, not every single year. In fact, it’s almost the entire median income of those families, so go figure a lot of people want to spit in the face of somebody who’s bringing in a quarter of a million dollars a year if they’re trying to claim that they don’t have any money!

Now I know that one of the primary arguments that was presented in the comment thread of that article is that people in more expensive areas like New York / DC / LA have no other choice because the cost of living is higher, real estate is more expensive, etc, etc…, and to that I’m going to call bullshit, too, because it’s still all a matter of perspective. There are eight million people living in New York City today, and yet all of them don’t make $250k a year … in fact, most of them make considerably less than that because the median average there, too, is still only $48,000. A person who makes $48k a year can’t afford an $800,000 house with $3,000/month mortgage payments, and they’re not all sleeping in cardboard boxes in Central Park, so there’s got to be cheaper housing available in the biggest city in the country.

It may not be housing that some people would refer to as safe and comfortable and the closest to quality schools, but it exists.

So I’m not buying the excuse that somebody has to have an $800,000 house in New York because that’s just what real estate costs there. Go to the neighborhoods that you refuse to visit at nighttime … or even during the day. Go outside of Manhattan and Staten Island and into the cheaper areas of the city. Or at least simply acknowledge that you choose to spend the money that you’re lucky enough to make on nicer housing because that’s important to you.

I don’t begrudge anyone their wealth until one of two things happens – they rub it in people’s faces, or they don’t appreciate the idea that some people … most people … earn far, far less than they do. The amount that we’re talking about is something that the average worker might see in 5-10 years of his life, and those people below the average like people stuck in minimum wage, part-time jobs might never see it in their lifetime. It’s very hard to visualize something that one person earns in a year when it’s the same amount that another might earn cumulatively over 5-10 years or more.

I look at it this way with my own finances – in 2013, my wife and I combined are in around the top 10% of earners in the country, which comparatively is roughly 7x the poverty level today. Reviewing our monthly budget, we don’t have a ton of cash leftover at the end of each month, but you can also look around and see that we’re living pretty comfortably, too. We take day trips to Disney World – a lot. We have two cars. We have a swimming pool in our backyard. We’re saving for retirement, although admittedly not as much as I’d like.

We don’t have a lot of free cash because we also have a lot of debt from college and those cars and various home improvements, plus trips to Disney aren’t cheap and those investments – small as they are – really do add up, but if push came to shove, there are plenty of areas where belt-tightening could take place before we would even enter the realm of being in trouble financially. Not real trouble, anyways.

I get the idea of someone making $250k not thinking that they’re “rich” because just like you or I, they still see celebrities and politicians and bankers who literally make millions of dollars a year, and think, “No – that’s rich!” And they’re right, but it’s also somewhat relative – to a person who only makes $30,000 a year, $250k seems just as outlandish as $250 million … who could imagine either amount when you’re just scraping to get by. And that’s why hearing somebody complain about not having any money after all of their investments and college funds and family vacations is so frustrating because it’s like they’re only comparing their checkbook balances at the end of each month to those of the median workers instead of considering all of the things that they actually spent their money on throughout the month to get down to $0 at the end.

The takeaway is really simple – if you make money, be grateful about it, and don’t gloat about it, whether you make $10k more than the guy next to you or $10 million. There are honestly times when I’m reluctant to write about having a pool because I know that not a lot of people have one … even in my neighborhood, there’s only one other … and I don’t want it to come off as bragging. But I do enjoy it and I feel that I’ve worked hard to make the money to afford it, so when I do I just try my best not to gloat about it and not make statements like, “OMG – I don’t have any money left!” after writing a check to the pool guy who helps make sure it doesn’t turn into a giant cesspool in our backyard each month.

Humility goes a long way with me, and I think if more of the top 1% – or even top 10% – in our country felt the same way, the overall perception that people have on wealth in America would be very different.

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