Living paycheck to paycheck on $350k/year

[jp1]

Thankfully this isn’t my ‘problem’ and hopefully/probably? not that of any of us on this board. But I recently read this letter to marketwatch from someone who does have this problem and was fascinated by their obvious financial incompetence (blind spots? Keeping up with the joneses?). Curious about this I spent a few minutes with the googles and found stats along the lines of 20% of Americans who make incomes over $250k consider themselves to be living paycheck to paycheck. The letter writer doesn’t mention how much is going to 401k and other savings so we don’t know if it’s just small amounts or actual serious savings but I wouldn’t consider anyone who has $170k in car loans and is still able to save much to be living paycheck to paycheck.

https://www.marketwatch.com/picks/im...lp-01664544530

We live in a similarly expensive part of the country and have a similar household income but thankfully the similarities end there. Our mortgage for a nice home in a nice suburb is half theirs and we have only one, much smaller, car payment and no student loan debt. I broke free of the Parkinson’s law problem (spending will rise to meet increased income) well over a decade ago thanks to YMOYL and have helped SO to do the same since then. This letter writer should be on easy street. Hopefully he takes the answer to his letter to heart and finds competent advice to help him get off the financial roller coaster he’s currently on. As the sole bread winner in his household he’s just one medical disaster or job loss or divorce away from a lifetime of financial struggle despite having a great income.

[Tybee]

The car loans are insane. Maybe start there.

[ApatheticNoMore]

The electric vehicles have to be high end new Teslas or even more $. They aren't Chevy Bolts or Nissan Leafs, those don't cost anywhere near that. I can't really imagine a mortgage half that as I don't tend to see much of anything less than 3k a month.

[bae]

The car loans are insane. Maybe start there.

I believe in paying cash for automobiles.

[frugal-one]

I believe in paying cash for automobiles.

And, paying credit cards in full each month.

[happystuff]

I believe in paying cash for automobiles.

And, paying credit cards in full each month.

Ditto to both of these. We have also been using the snowball method to add to our savings. A small source of income started a couple months ago, as well as a cancellation of a monthly bill - both of those are going directly into savings. I imagine we will have to start thinking about what to do with the money when savings gets to be a more significant amount. However, I read a bit ago that Suzie Orman now recommends enough money to cover 12 months' worth of expenses in an emergency fund, up from her previous eight months' recommendation.

[ApatheticNoMore]

However, I read a bit ago that Suzie Orman now recommends enough money to cover 12 months' worth of expenses in an emergency fund, up from her previous eight months' recommendation.

I tend to think 2 years, because i'm pessimistic.

But to be realistic that long long stretch of unemployment I had only lasted 11 months, so 12 months would have sufficed. But it wasn't in a recession, in a severe recession who knows. I try to not end up unemployed too, but I've come to see it as not only something that sometimes happens regardless of what one does if a company is doing layoffs, but also a risk one takes on if one takes a new job and never knows what they are getting into (last time a horrible bully that bullied me out of a job). And sometimes it may make sense to take a new job anyway. I ended up doing more interesting work in the end since the job I left was the boringest dead-end job imaginable, but whether it was worth all that ordeal to get somewhere somewhat better eventually I have my doubts.

[mschrisgo2]

I can’t imagine having that much car debt - and his car insurance must be crazy high too- and I can’t imagine having ANY car debt before the student loan is paid off. Pure crazy, in my book.

[jp1]

The whole car debt thing is crazy. The fact that he mentioned ‘two electric cars’ makes it seem like he needs to signal to everyone how virtuous they are. They could have done that by getting cheaper model 3’s instead of model S’s.

As someone dealing with upgrading electric for a bathroom remodel and considering spending the extra to be prepped for an EV I’m fascinated by their priorities.

[ApatheticNoMore]

The fact that he mentioned ‘two electric cars’ makes it seem like he needs to signal to everyone how virtuous they are.

Only suppose you want to buy an electric car and be virtuous (and my next car may be, only I don't need a new car now). Okay, but Chevy Bolt and Nissan Leaf are on the market. Now there is some advantage to paying a bit more for an electric car for longer battery life (Leaf has at least two models I believe, so it probably is highly desirable to get the fancier one if you can swing it, as it has more battery life). But there is no reason buying electric cars to be virtuous needs to cost 170k. My partner considered an electric car quite seriously for awhile but it was the used Nissan Leaf market (which has disadvantages batteries lose some power over time), but well under 20k.