No one feels rich

by SWVA Mom

This came across my LinkedIn feed and I thought it might make a good Totebag discussion starter.

Why Doesn’t Anyone Ever Feel Rich? (Or Even Happy?)

Totebaggers, do you ever feel rich? Or happy?

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223 thoughts on “No one feels rich

  1. DH and I had some very, very lean years during graduate school and early working. If I never see Oodles of Noodles again it will be too soon. So when the day came that I could go to the grocery store and buy whatever I wanted for the week, including the *premium* orange juice, I felt rich, and that feeling still hasn’t worn off.

    I still watch our money carefully and we live below our means, but I really truly delight in our financial security, and it makes me feel rich.

  2. “I still watch our money carefully and we live below our means, but I really truly delight in our financial security, and it makes me feel rich.”

    +1. It also helps to live in a low COL area. I would not feel as financially secure if I lived in NY or the Bay Area.

  3. As we have been talking to our HS DD, we have focused on the word “comfortable”. Will the career and/or jobs within that field along with prudent financial management allow you to be comfortable. Comfortable to one person can be had for $50,000 a year, for another it may be $100,000 or $1 million. What comfortable includes also varies from person to person. As a benchmark, she knows what her parents definition of comfortable acceptable requires in income level. We aren’t rich, but we are comfortable with out level of income and what that allows us to do – from the day-to-day amount of time spent with family to buying experiences to educating our kids.

  4. That was funny! And that’s why people like Cat still claim to be middle-class while buying $200 swimsuits for toddlers without consideration. (sorry Cat – don’t mean to pick on you personally – there’s plenty of that on here!)

    I do feel rich even though by “Totebag” blog standards, I certainly am not. I should be claiming to be “lower middle class” according to Rhett. ;) Like Lark, feeling financially secure makes me feel rich. Buying groceries without worry makes me feel rich. Forgetting that it is payday until I look at my bank account a few days later makes me feel rich. And there are some numbers that we’ve crossed in income, savings, and net worth that make me feel “rich” in a way too.

  5. I think for a lot of people the goal posts keep moving for what constitutes rich and happy (I know I sometimes fall victim to this). DH got a substantial pay bump last year and it was exciting but there were still attorneys complaining about the fairness of it all (even DH). I think in a lot of high income professions you just compare yourself to everyone else constantly. That and if you keep bumping up your lifestyle, it takes more and more money to be “enough”. I’m laughing also because we bought a pretty big house in 2011 (not enormous, but 3800 square feet) and I do complain that it’s too big to clean and will definitely downsize the next time we move.

  6. #FirstWorldProblems. :-)

    My definition of “rich” is when investment earnings are sufficient to support the lifestyle I want in perpetuity. The hardest part of that is avoiding lifestyle creep; we’ve been carpe diem-ing it more in the past few years, and I’ve discovered that, you know, I really like the carpe and the diem. But to be able to live like that full-time would require a lot more years of working and saving. And we don’t want to work until we’re 75-80 just to have awesome stuff for 5 years before we keel over.

    I think by any reasonable definition we are currently rich, because we could live indefinitely on what we have saved now, if we wanted to MMM it (and realizing that has helped, more than anything else, to shut down the crazy lady in my head who insists I’m going to end up eating cat food on the street). But we don’t want to be MMM — I just don’t like puttering and biking and DIY-ing that much; I thought I liked being cheap and scrimping, because that’s all I knew for 40+ years, but, you know, turns out I adore *not* having to live like that. So for now, the plan is to shoot for the happy medium — retire in maybe 10 years or so, with housing paid off, and enough $$ to do things like rent a moderate apartment in some European city for 3 months a year, visit potential future grandkids whenever we want, buy a season pass at Taos, and golf as much as we want. You just have to figure out what is “good enough” and be content with that vs. always looking out for the better thing around the corner. (not that I’m particularly good at that, but I’m working on it — conscious gratitude helps a lot).

    What makes me happy financially is, basically, when things go better than expected. If our income goes up just a little, or DH’s bonus is a little bigger than expected, that makes me happy — because I am looking forward to our future, and that extra little bump means we are just a little bit closer than I expected to be. I just found out I’m getting a small bonus this year, and I am inordinately thrilled (I was literally on the verge of tears yesterday), because it was completely unexpected (is for nonbillable work, which has never really been recognized before). We spent our last-minute celebration dinner debating what to pay down with the extra bit of $. :-)

  7. We are comfortably lower middle class but don’t feel “comfortable” in it because we have experienced and continue to experience job insecurity.

    In a way it helps that we have low mortgage payments. We do make purchases without a second thought, but that is changing from this month as we really need to step up our savings. I am taking inspiration from other totebaggers here who mainly eat home cooked foods to bring down our food tab.

  8. People gotta stop comparing their lives to the Kardashians! It is all about expectations. The Danes are the happiest people because of their low expectations. It is all about perspective but not having to think about money means you are rich in my book. I have no idea how much groceries cost, I just buy them. That is some serious luxury in my book. We are able to get the kind of medical care we need and choose the best doctor we can find if we need to. That’s rich. Heck, my pets get better healthcare than a good majority of Americans. That’s rich. I have everything I need and most of what I want. That’s rich.

  9. I also wonder how much of the poor-mouthing in the original article is just a knee-jerk “I don’t want people to think I’m so full of myself and better than them just because I have more money” — sort of like when you compliment a woman on her outfit and get “oh, this old thing?” Maybe the guy really does think his yacht is the best thing since sliced bread and feels like Gatsby every time he takes it out, but doesn’t feel like he can admit it to someone with a whole lot less than him at risk of being seen as a braggart.

  10. Retired fed. I feel financially comfortable with monthly pension and Social Security checks. My federal retiree health insurance is less than $200 a month. No need to touch my TSP in the foreseeable future. I am in good health. I love and am loved. I am content.

  11. People gotta stop comparing their lives to the Kardashians!

    I don’t think most people do that, it’s more that they compare themselves to their peers.

  12. I think LfB captured my thinking. Everything is always being reset based on ever-growing aspirations.

    I remember when I was 23 and earning $11k/year living at home taking BART to work every day. I had plenty of money…but then again I had very few expenses. I said to my naive self one day while waiting for the train “some of these people must be making $50,000/year; when I make that, I’ll be rich.” Hah! By the time I got there, surprise, surprise, the goalposts had moved.

    Today, from the other end of the looking glass, I know we have plenty of income to enable our lifestyle and allow us to save for retirement which is 9-12 years away, given moderate assumptions about investment returns.

    No serious income boosts are expected over that horizon, but on the other hand our mortgage will be paid off soon, so it’ll feel that way. Perhaps enough to shorten that time horizon.

    But that means we actually have to decide which Shady Acres location will suit us best! It ain’t gonna be here!

  13. We don’t make as much as the average Totebaggers, but I have been blown away recently thinking about how ridiculously fortunate we are to live in a relatively safe neighborhood, in a relatively well-maintained house with heat, AC, and running water, and most nights after the baby is asleep we are able to relax on the couch, eat a delicious dinner, and read/chat/listen to music/watch TV. I’ve been thinking a lot lately about the countless people in eras before us, and around the world and in this country today, who didn’t/don’t have these things, many of which are luxuries, which I so easily take for granted. So I wouldn’t say that I feel “rich” per se, but my contentment with what I have is at an all time high.

  14. A family that can’t readily afford the full cost of sending kids to an out-of-state flagship or a not-that-fancy SLAC can’t really call itself rich, and I hear lots of us on here sweating the college costs. I’m sure that’s part of why families who are well-off compared to the average American don’t feel rich.

    However, I do think we’re financially secure, and I’d say I’m happy. Or are you not allowed to call yourself happy if you gripe about stupid stuff? I don’t want to forfeit my ability to gripe about stupid stuff! Is it even possible to hold down a paying job without finding lots of stupid stuff worthy of griping?

  15. A family that can’t readily afford the full cost of sending kids to an out-of-state flagship or a not-that-fancy SLAC can’t really call itself rich, and I hear lots of us on here sweating the college costs.

    I wonder how overblown that is. If you’ve been putting away $200/month to cover in-state and they need to go to a SLAC or out-of-state flagship you may need to come up ~$25k. Put yourself on the payment plan and it’s ~$2000/month. Now, you were paying $1800/month for infant daycare 18 years ago when you were making 40% less so $2k shouldn’t be that much of a hit.

  16. Honolulu: I see your point about college expenses, but I also think that there are some mixed priorities involved. A lot of people I know could pay for college, if they decreased their lifestyle, but they don’t. They are happy with the nice car, the fabulous vacations, the nice house, and don’t feel the need to sacrifice these for the sake of their kids. To be fair, these same people are probably under-saving for their retirement, so they are screwing themselves as well as their kids.

  17. +1 RMS. I feel that way about private school around here which people start sending their kids to after ES. The alternative is a decent public middle school so why should I spend $25K per year per kid for private? But we’re not rich like that where $25K would be nothing, it would seriously impact our savings goals.

  18. I also think that college costs are so insanely high that it’s almost impossible not to sweat them, even if you have the money saved up.

  19. A lot of people I know could pay for college, if they decreased their lifestyle, but they don’t.

    I’m wondering if it’s also people with stable incomes. If you went to work for Exxon after college now you’re a manager making say $150k and your wife makes $100k as a government lawyer you’re used to taking home say $6225.13 every two weeks. In that case you’re going to think that paying $2k a month is going to be a huge burden. But, if you income regularly fluctuates by $50k you’ll know how little impact on your lifestyle that swing in income will have.

  20. “They are happy with the nice car, the fabulous vacations, the nice house, and don’t feel the need to sacrifice these for the sake of their kids.”

    But doesn’t that rather beg today’s question? If the point is “who is rich,” then I would submit that having to downsize you house/car and cancel vacations in order to fully fund your kids SLAC certainly does not feel rich.

  21. LFB,

    On the other hand, if you can cash flow college by easing up on vacations and keeping the GL550 a few years longer than usual, that would count as rich in my book.

  22. In talking to colleagues a fair number of people believe that their kids shouldn’t expect their parents to fund all the college expenses. If there are loans involved for the kids so be it. There are quite a few families here who have a SAHP which makes it difficult from the get go to afford anything other than in state tuition for their kids. They could afford a have a no loan situation or a college choice other than in state but that would mean giving up vacations, Christmas tech toys and the cool Under Armour and North Face.

  23. They could afford a have a no loan situation or a college choice other than in state but that would mean giving up vacations, Christmas tech toys and the cool Under Armour and North Face.

    Mom getting a job would also be a viable option especially when all the kids are in school full time.

  24. I don’t mean to hijack this into another affording-college discussion. My point was really what Houston said, “college costs are so insanely high that it’s almost impossible not to sweat them,” but our expectations haven’t caught up, and that’s going to have a huge impact on whether professional-class families feel “rich.”

    And that’s not even getting into health care . . .

  25. I feel rich compared to most people in America, but not around some of the neighborhoods in San Francisco! We are/were able to pay for college for our kids, which I think is a really great gift to give to them. I think we stay rich because we don’t “live rich” most of the time. We were lucky to buy our home when prices weren’t so crazy, and we didn’t buy more than we could afford. We take nice trips every so often. We don’t have a second home or a boat (any longer!). We did Catholic K-8 instead of private school – that saved us a bunch (tuition and lifestyle wise).

    This post and all of the comments are making me feel very grateful for all that I have (material and non-material things), and I am very happy for all of my blessings. Thanks for reminding me of this!

    Off topic – Max Zuckerberg sounds like a very old man – couldn’t they have given her a prettier first name?

  26. It is my turn to drive to hebrew school in the carpool this week. In order to get to the synagogue, I will drive through a neighborhood with one of the highest income by zip code in the US. Most of the homes are worth $1 – 15 million. The kids have noticed that these beautiful homes are always being renovated or torn down. Many are hidden behind long driveways or gates. There is one amazing hem that is visible from the street. It is a fabulous home, and the kids make up stories about who lives there and it has become a fun part of our ride to see the cars parked there etc. As the kids started this game when they were 7 and 8, it was more fun to make up stories. They are more interested in their phones now, but I noticed that this home is under renovation. I just wonder how much money you have to have to really take care of a house that size, taxes, maintenance for a roof etc etc.

  27. My first thought reading that article was that the author needs to find new friends. I don’t know ANYONE remotely resembling the people he describes, but I do know more than a few people who are content with their lives and financial situations.

    When we were in grad school, DH got a stipend that paid $1000 a month and we felt REALLY rich. Then in my first year at a law firm, my salary was higher than either of our fathers had ever earned, so we felt rich again. For about a month. Then the reality of student loans and car payments and rent in a major metro area made us feel poor. Especially compared to friends who were dual-lawyer couples or had no student loans. Fast-forward a few decades. Now we are definitely in the 1% in this rust belt city, but I still don’t feel “rich” because we could not live comfortably on our retirement savings. But I have no idea how much a gallon of milk costs, and only know the cost of gas because of the big signs at gas stations. I don’t look at the supermarket sale fliers, don’t use coupons, and don’t put items back on the shelf because they are too expensive. I don’t know how much extra we pay in auto insurance by adding a male teenage driver. Most people who live here can’t afford that ignorance that I take for granted. So, relatively speaking, I do feel rich, but not as an absolute. And certainly not compared to my friends who are law firm partners back in DC.

    Rhett has a good point about comparing college and daycare expenses. I can still remember the day I realized that I was paying more for a part-time nanny than the tuition at Harvard. Tuition has increased dramatically, but I always tell young working parents to treat their daycare expenses as a permanent part of the budget. If they can put aside even half that amount during the years between daycare and college graduation, they won’t need to worry too much about paying for college.

  28. “Mom getting a job would also be a viable option especially when all the kids are in school full time.”

    This is what my MIL did. Went back to work, and her salary paid for college for all the kids. She felt very rich when everyone graduated & she actually had the income to spend on other things! They had more kids than anyone on this blog too.

    What I’m taking away from this is – don’t keep moving the goalposts, keep the wonder alive at what you DO have, and don’t spend every raise/bonus that you make, and you’ll “feel” richer.

  29. I do not stay up at night worrying about it yet, but we are definitely not saving enough for college or retirement.

    I could go back to work and make enough after tax to pay tuition if the kids were going off to college tomorrow (and one at a time).

    But if tuition costs $120k/year each once they are old enough in 10-20 years, they will enjoy a nice career in the plumbing industry :)

    I’m kidding. Sort of.

  30. I feel rich. I just don’t think I am upper class. I can be strangely cheap about certain things, but it is because I want to be, not because there is any real need. My baseline is pretty happy, so I was happy living on $1000/month. Same level of happiness now, but things are certainly easier. I got married when I was an associate and my husband had the job he has now, so no lean years as a married couple.

  31. I am again with HM here. Finding out that my stepdad left a trust fund for the grandkids’ education almost directly coincided with my starting to feel rich. Even though we don’t plan to use it (hope to save it for my niece and nephew, who need it more), knowing it’s there is a huge psychological load off.

    So what are people’s “markers” — the life events that make you feel rich? I recognized a few of mine in the earlier posts:

    — My summer associate job my first year of law school ($5K/mo was WAY better than $5/hr and allowed me to save enough to fund my living expenses the following year).

    — Starting my first permanent job and realizing I was already making more than my mom ever had (then, like Scarlett, the bills/loans set in, and I retreated back to feeling poor for the next few years).

    — Going to the grocery store without a strict list/budget — holy cow! To this day, I don’t know that I’ve ever felt so free as the first time I did that.

    — Getting married (immediate DINK) and buying a townhouse that cost more than the “dream” house I had in my mind growing up (double-edged sword — couldn’t believe we could afford that, and couldn’t believe we could afford that).

    — First time I was able to write a check for a car.

    Others?

  32. “Off topic – Max Zuckerberg sounds like a very old man – couldn’t they have given her a prettier first name?”

    Is it the combination of the first+last? A kid my oldest went to school with from the beginning of time is called Max. Doesn’t seem like an old man’s name to me.

  33. I agree re: Max, I am not a big fan of the co-opting boys’ names for girls trend.

    Usually I feel rich at the end of every quarter when we get the quarterly income. If I start playing the comparison game with my clients or with our private equity friends or with the friends who have already exited several startups, then I feel poorer, but I try not to focus on that when I start to think about it.

  34. It’s true that sacrificing vacations and new cars to pay for college tuition can make you feel you’re not rich.

    I feel rich and happy, and partly it’s about expectations. But the fact is that I don’t have to pay attention to how much some things cost. Even so, today I became annoyed when I became so involved in chatting with the grocery store cashier that I forgot to use my coupon to save $3 on the ground meat I purchased. OTOH, it was a very nice conversation that cheered up my trip to the store so it was worth the $3.

  35. I think I started feeling rich when almost all of my purchase decisions started to be based on value instead of cost. Price isn’t the limiting factor for most things.

  36. Objectively, I know we are rich. We aren’t going on vacation this Christmas because our workers are leaving this year (it is their turn) and I didn’t get anything booked in time when I found someone who could be hear to watch things. I haven’t worried about the price of groceries in years, but I still remember that feeling when I could buy anything at the store. It was wonderful. We will fund the oldest’s college without much stress.

    However, I am worried that our current situation won’t last. Much of our income the past two years has been put in place on capital expenditures so decrease our expenses when the bad years come. I have a nagging fear we have just finished seven fat years and are not prepared enough for the coming lean years.

    Other markers of being rich…

    can donate uniforms/whatnot to the school with thinking twice
    can spend part of December reviewing charitable donations and deciding that we haven’t given enough.
    can buy several animals at the county fair just because.

  37. I don’t feel rich. I definitely don’t feel rich compared to my perception of the Totebag (or is it reality… how many of you are honest??).

    Oddly, I do feel rich in that I can handle the debt I’ve had trailing me for a number of years. Like, when I look at the amount of money we put towards debt (thank you YNAB), I always ask “how do we have *that* much money?” I’m sure for most of you it’s not a lot, but for me, it’s a substantial piece of my take home pay.

    I think I’ll feel rich when this debt is gone. At that point, I’ll be able to save more and fall in line with goals I’ve had for a while. So long as my house doesn’t flood again or something equally as damaging to my bottom line doesn’t happen.

  38. LfB – I had that exact feeling at the grocery store when I bought a $75 roast for Xmas a few years ago. :)

  39. on kids clothing, I find I get the value out of the target brand – not going to spend a fortune on something he will wear one season then outgrow it

  40. My husband turned our Christmas tree lights off last night when we were sitting in the room enjoying them because “we just used a lot of electricity having house guests last week” (and my sister likes the heat at 75 degrees so he’s making up for her excessively heating our house). But he’s planning on buying six bottles of wine for $1500 this week. It’s so ridiculous it’s comical. And I always feel guilty if I veer from my grocery list/go over budget and I know exactly how much a gallon of milk costs even though I really don’t need to keep track (just feels wasteful to me not to try to keep grocery costs down but that’s likely from growing up with my mother where saving money at the grocery store was very important).

  41. I confess to feeling car poor. I can buy myself a new vehicle but I just don’t want to see the money leave my account. I could finance it but then that would mean a payment instead of watching the same amount build up over time. So, I deal with it by looking at other people’s new cars including PTM’s future purchase.

  42. LfB, L, and anyone else who doesn’t look at the grocery store prices – ya… not there. Not that I worry we’ll starve, or that we can’t afford good quality food, just that I still like to make sure we’re on a budget.

  43. “Yes, when the decision criteria is do I really want this, rather than can I afford this.”

    That’s a good way to put it. Plus, when I know I can easily afford it then often I don’t want it so much. It’s so much easier being a minimalist when you’re rich.

  44. “Even so, today I became annoyed when I became so involved in chatting with the grocery store cashier that I forgot to use my coupon to save $3 on the ground meat I purchased.”

    Oh yes. My sister and I joke about this tendency we also share, probably as a result of growing up with extremely frugal parents. We also like to buy things on Amazon for “free” with our Amazon VISA reward points, even though money is fungible and taking the statement credit has exactly the same effect on the credit card payment.

    Although I won’t bother with coupons for particular products, I WILL use the ones that give you free money, if I come across them. Right now I have a CVS coupon in my wallet and I will make a special trip there to stock up on toothpaste or something so that I can get my $10 off. DH thinks it absurd and the rational part of me knows that it makes no sense to go to that effort to save $10 when I can’t bring myself to research new cellphone plans or auto insurance policies that might save us some real money.

  45. Fred – yes, definitely the combination of first and last. Max is great name for a boy (imo). The nickname Max for a girl seems like it should happen over time, not be a given name. Weird and maybe tote baggy of me, but I always think of Jean Louise Finch – that was her given name, and her nickname was Scout. I doubt they started calling her Scout as a baby – it was probably acquired over time.

  46. “Yes, when the decision criteria is do I really want this, rather than can I afford this.”
    I like this… but I also wonder if I need a sub-category of “should I get this”. Because yes I can afford it, yes I want it, but should I really pull the trigger? Why not save that money if I don’t need the item.

    Wine – as long as the lower class comes with wine I’m good!

  47. @Rhode — well, if it makes you feel any better, I was probably close to 45 when I stopped pretending I had a grocery budget. :-) Remember, I’m close to a full generation ahead of you. All the stuff that you are doing now really will make a difference over time.

    Ditto on the feeling rich when I paid off the last student loan. I expect a similar feeling when we get the mortgages paid off (my bonus is going to the last few grand we had hanging around on the HELOC from the big remodel).

  48. “but I also wonder if I need a sub-category of “should I get this”.”

    Well, THAT never changes. I still want many, many, many more things than I actually buy. Because if I bought everything I wanted, I’d be poor, just with more stuff.

  49. Rich? Being able to be warm all winter and cool all summer with the cost being entirely immaterial.

  50. Rhett – Oh, I hadn’t read that (I thought you were just coming up with a girl’s name when you mentioned it before!!). It is a nice feminine name, but still doesn’t flow. I can see her getting made fun of someday.

  51. ssk – she can join the likes of other celebrities.. their children are not made fun of because of the “cool” quotient Rhett mentioned on the previous thread. No Queen Bee would dare ostracize the offspring of the uber rich and uber famous.

  52. I think that some of you are much younger than some of the other Totebaggers that you think are rich. If you allow some of your savings to accumulate and with the power of compounding, real estate growth….you might be feel like some of the tote baggers that you perceive to be wealthier than you now.

    If I posted on the tote bag when I was the age of some of you, I would have been living in a rental apt, no car, and lots of student loans.

    I started to cross the threshold of having more assets when I paid off my student loans, and I finally started to earn more than monthly COL because I started to receive a bonus at work. I struggled for at least 10- 12 years, and I didn’t have a second income since I got married mid 30s.

  53. We just started feeling more flush this year through the combination of more salary and only one daycare bill. Childcare is not cheap!

  54. Definitely agree about the Queen Bees not bothering Maxima, but others (usually clueless boys) may.

  55. +1 to LfB and Lauren. When I was 30 I *dreamed* of having an entire $10K. Owned no property. Didn’t have any debt, but didn’t have any particular assets. Oh, I had a 12-year-old Toyota Corolla. Free and clear!

  56. The Queen Bees are just going to be more subtle in their work with a celebrity daughter, if she turns out to be shy/awkward/not a Queen Bee type herself. Not outright bully her so as to send her parents on the warpath, but instead to leave her feeling insecure and grateful for the Queen Bee’s inconsistent attentions so she’ll use her parental assets to the Queen Bee’s advantage.

  57. You all know DW’s and my story, but this thread has confirmed for me that financially, we’re really the inverse of many of you. We earn less than half of what some of you are taking home, but we had a comfortable income (and no debt) from the get-go.

    Thinking of LfB’s “markers,” when I was a senior in college, the “signing bonus” for acceptance into the nuclear power program was $10,000. You request to be interviewed, you get up around 4:30 am one morning and catch a bus into DC, spend all day in a waiting room as everyone cycles through at least two interviews with their engineers and a final one with the four-star, and he verbally tells you yes or no at the end of that one. If he tells you yes, there’s no declining after that, and they put an extra $10k in your paycheck that month. It was the week before Thanksgiving, so it was dark when I got on the bus in the late afternoon that day, and I felt like a very rich 22-year-old that day.

    A little bit after I got married, we sold a townhouse with about $120k in tax-exempt capital gains and parked it in a 6% CD. Now THAT seemed like a lot of money. A few months later, I was having lunch in the wardroom and people got talking about money. I was the only one who was married to a working spouse, and someone pointed out that I, a not-fully-qualified 24-year-old lieutenant (junior grade) had the highest household income of anyone there, including the captain. He was a bit incredulous at this.

    So we don’t earn a ton, but we hit the Totebag middle class at a relatively early point in our lives, and that was boosted by some good luck in real estate plus never having college or grad school loans.

    I wanted to thank those who gave me watch recommendations. I texted my brother for information on the Vivoactive, and he texted back to call him at some point, which I haven’t done yet. Work has been kind of busy. It’s ridiculous. ;)

  58. Does anyone have a watch recommendation for a 16 year old boy? I’d like to get him something nice, but not too nice.

  59. We’re a bit like Milo. Neither DW nor I had student loans, and our starting salaries were pretty good relative to our peers in other professions with just Bachelor’s degrees. I also built a good base because I worked full time while in a part-time MS program, leaving me very little time to spend.

    While our income is comfortable, we’re on the lower end of the Totebag distribution despite living in a high COL area.

  60. Houston, will your 16yo boy wear the watch? I notice a lot of young people, including some of my young colleagues, are not in the habit of wearing watches, and use their phones to tell time.

  61. “I still want many, many, many more things than I actually buy. ”

    Ya know, I’ve reached that point where I really do not want more things. Replacing things that we use frequently and are beyond their useful life, that’s ok. A thing that I don’t currently have but would make my life easier and I would use frequently, probably ok. But to add one more thing that gets used infrequently or has limited real utility…probably not ok. Just taking up space and using money I would rather spend on good scotch / dinner out / another experience.

    I have to motivate to spend some time, whether a big chunk one weekend day or 20-30min/night a few times a week to review and organize/(ideally) pitch stuff we just don’t use any more.

  62. I was very lucky not to have any loans – DH had about $50K. But unlike Milo, we live in a super high COL area and have a giant mortgage.

  63. Ironically, we are feeling a little more flush this year even though we are paying 3 college tuitions. Emptying the nest has meant seeing a substantial decrease in monthly expenses – we expected the grocery bill to go down, but did not anticipate the utilities going down as much as they have. We’re also not getting nickel-and-dimed with school fees – athletics, yearbook, T-shirts, etc. We updated our auto insurance to indicate the kids were “students away” and saved about $200/year/kid. We made a slight change to our health insurance that, come January, will save us $100/month.

    I just paid two tuition bills for the spring from our 529 plans. It’s nice to know the money is in there, but it’s hard to have saved up for so long and see it leave so quickly! We’ll also likely not have enough to cover all three kids for all 4 years, so some of our current “excess” is getting plowed right back into college savings. The rest is earmarked for retirement savings (Rhode – I love YNAB also!)

    I was a SAHM for 10+ years, and we got used to living on a single income. When I went back to work, all of my income went to savings – about 80% towards college and 20% to retirement (we were already saving a decent amount for retirement through DH and through an IRA I set up in my early 20s.) I expect when we’re finally done paying for college and my income can be used for “fun” we’ll feel rich.

  64. Houston — Timex Weekender. It looks nice, but it’s not so expensive that you’ll feel bad if he never wears it, or loses it.

  65. I agree with Fred

    ” I would rather spend on good scotch / dinner out / another experience.”

    substitute beer and wine for scotch

    I don’t buy many things. I already want to downsize our home again.

    A new car would be nice, but DH is a SAHD so not adding one at this time

  66. Finn: Unsure if he will actually wear it, so I don’t want to spend too much money. However, I’m old fashioned enough to think that everyone should have a watch.

    Rhett: Beautiful watch–would it appeal to a teenager?

    Maybe I can get him a smart watch that is not an Apple watch? I was thinking about the new Fitbit watch, but Fitbits have kind of a bad reputation of not being used after the first few weeks.

  67. Thanks Honolulu! That’s perfect! Simple, good looking, and classic.

    You guys are great.

  68. Ha! So I just looked at the prices of Fossil watches… I buy ours in an outlet store, so they are never this expensive… maybe the $60-80 range.

  69. Hoosier – I’m still trying to wrap my head around thinking like the YNAB program wants you to. Every 2 weeks, we sit down and do the “what do we need to pay with this paycheck” questions and budget until the money is gone. Invariably, somewhere around the end of the month/beginning of next month, I stumble. Have you succeeded in thinking like it wants you to? Any tips?

  70. Houston, does he have a proper wallet? We got one for our son this year and he was pretty jazzed to have a real man’s wallet.

  71. We were also luck enough to have very few college loans. I had none, and DH had a small one from grad school that we paid off our first year of marriage. Our goal was always to pay for our children’s undergraduate education, and thankfully that appears (so far!) to be do-able. While their financial aid packages have included loans, we are planning to pay those loans for them (subsidized, so no interest until graduation. Should be able to pay them off quickly with the money we had been contributing to 529.) The oldest graduates in June, and is applying to grad school in the hard sciences, which will be funded. He’s also applied for an NSF fellowship – fingers crossed!

    Houston – how nice is nice? Swatch has a wide range of styles in the $100-$150 range.

  72. Anon: He received one for last Christmas and is using it daily. It’s a great idea for a gift for a teen–boy or girl. Thanks.

  73. Oh the anon was me! If you are looking for ideas, my son and his friends are into these Vineyard Vine belts. They are pricey but I guess that’s how they accessorize. High school boys around here are into wearing khakis and “dressing” in school now. Don’t know what the deal is by your nephew.

  74. I am reminded of the Apostle Paul. “I have learned, in whatsoever state I am, therein to be content.” The rich people I know aren’t like the people in the article. At our simple wedding, I realized the uncles (both sides) sitting in our laundry room eating my homemade lasagna for the rehearsal dinner were all multimillionaires, but they were far too kind to hint that we should offer a celebration that exceeded our budget. And probably everyone knows we’re like the Milos, in terms of an early start to a moderate income, with a few more medical/job security challenges along the way.

    I have felt rich in the past year when we could choose prenatal genetic tests for Baby WCE without too much worry about cost, when we bought our new minivan, when I took 7 months of maternity leave and came back to work part-time while paying for full-time childcare and when I bought multiple sets of plane tickets for our family to visit Iowa on short notice. It is probably a negative cash flow year, but the ability to have a year like that is a blessing. I won’t have a baby or have my mom die next year.

  75. Rhode – I’ve been using YNAB since 2013, and I think I’ve got it figured out. DH doesn’t get it at all, but I’ve always been the one to manage the finances so he hasn’t needed to.

    If you’re having trouble at the end of/beginning of the months, does it have to do with how you’re classifying the income? (Are you budgeting December’s income in December or in January?) We’re a month ahead, which really helps. We also get the majority of our income once a month, which I think also helps.

    It is a really different way of thinking, but I’ve found it super helpful. Surprisingly, the biggest change is that it allowed me to spend without guilt both on small stuff like nights out with my friends and large stuff like renting a boat for a day when on vacation. I have a much better handle on what our money needs to do, and I know a certain amount is earmarked for specific purposes, so I know that as long as I’m within my budget on those specific items I’m not messing with the overall plan. (Not sure how well I’m explaining it very well, but pre-YNAB I was always worried about spending on anything because “we might need that money for something.”)

  76. Beautiful cutting boards from Oregon available here, in case you’re looking for a unique (well, unique for many states) holiday gift. I distantly know the business owner.
    coastrangewoodworks.etsy.com

  77. Houston, DW has a strap that allows here to wear hear iPod nano as a watch. I think she got it from Target.

  78. At a rest stop on the Ohio Turnpike just now, we walked past a group of Old Order Amish with two little boys. And a non-Amish driver. They all looked stunned and stressed even though the rest stop was not that busy, and I thought of the beginning scenes of the movie Witness. And wondered what was critical enough to require traveling by car on a snowy day.
    Then I saw them get into a van with “Shriner’s Children’s Hospital” on the side. Whoa. Cannot imagine facing a child’s serious illness in their circumstances. They looked so lost and sad. A reminder that I have nothing to complain about.

  79. WCE,
    I did not know that you lost your
    Mom. So sorry. Pancreatic cancer is a terrible illness.

  80. Part of it is classifying income – DH gets paid once a month at the end of the month. So on Nov. 30, I’m using his money to pay for bills that are due in the first 2 weeks of December. So it counts as November income, and I end up budgeting December bills in November. So, instead of budgeting by when bills are due, I budget by when the check is written. I get 26 paychecks per year, so a little more structured to when bills get cashed. One solution is to, next month, allocate the December 31st income as January income and then proceed and budget by when the bills are due. I don’t see how either method is different from the other, but it may just be the trick?

    DH and I are working together on this one – he doesn’t get the thinking, and is happy using his method of bill paying. His method doesn’t show us where our money is going, which is something I want to know. Like, should we really be thinking about how much we spend on nights out or frivolous things? It’s exactly like you said, “pre-YNAB I was always worried about spending on anything because “we might need that money for something.””

    I want to be where you are and aren’t quite there yet. I think it’s because that monthly I see red where we’ve overspent on certain categories, and that I’m having issue allocating income into the proper months. And I get upset when I see red on the budget – I feel like I failed. I have to remind myself that we still paid all the bills and will survive til the next month.

  81. I’ve related before a story about feeling rich, but I’ll repeat it again:

    Before DW and I moved back home, we’d come back to visit, and sometimes we’d drive up the hill where “the rich people” lived, look at the houses, and tell ourselves that some day we’d move back and live there. Then we’d have a good laugh.

    Fast forward several years. We move home, and we are able to buy a house on that hill because the housing market here is depressed, . We did feel “rich” then.

  82. I’m not sure I’ll ever get to the point where we are a month ahead, but as long as BoA doesn’t come saying we have no money in the account, I can be satisfied.

  83. “I’d say I’m happy. Or are you not allowed to call yourself happy if you gripe about stupid stuff?”

    Won’t you be unhappy if you’re not free to grip about the stupid stuff?

    Is that begging the question?

  84. Rhode, in my experience with YNAB getting to the point where you are paying this month’s bills using last month’s income (or money that has accumulated in your categories) is critical for making the method work. But it takes time to get there unless you have substantial cash on hand–you basically have to assign any unspoken for money each month to a “buffer” category until it reaches the equivalent of your combined monthly take-home pay.

  85. My husband works in oil and gas, and I am with a tech company. Both are having significant layoffs right now. So viewing it from the standpoint of losing one or both salaries for a period of time, I do not feel rich.

  86. I went back to read the OP’s article. His point is to criticize those people for not feeling “rich” as being somehow out of touch, and that’s supposed to be a bad thing. But the opposite can be pretty bad, too. Just look at all the lottery winners who took home something in the low seven figures after taxes, who were absolutely convinced that they were rich, and they were broke within a couple of years (you have to watch TLC’s “How the Lottery Changed My Life.”) Ditto to the professional athletes and entertainers who definitely think they are rich, and who surround themselves with entourages who tap into the money stream, and they go broke within a few years of the big salaries being cut off. Clearly it’s a double-edged sword.

  87. “However, I do think we’re financially secure”

    But couldn’t that change if you have, say, 3 kids, and all of them get into highly selective schools and don’t qualify for financial aid, and you end up shelling upwards of $1M for their Bachelor’s degrees?

    And grad school could further exacerbate that.

  88. “We did Catholic K-8 instead of private school”

    Do you have public Catholic schools?

    I thought about ignoring this, but in the spirit of edginess, I did pledge to get snarky about this sort of thing.

  89. On the other question, I am usually happy. I recognize the good fortune we have. I hope it continues!

  90. and you end up shelling upwards of $1M for their Bachelor’s degrees?

    Then you’d pay 1/3 out of savings, 1/3 out of cash flow and, since you’re into a worst case scenario, have the kids borrow the other 1/3. It’s hardly an insurmountable problem.

  91. “It’s true that sacrificing vacations and new cars to pay for college tuition can make you feel you’re not rich.”

    Such sacrifices for pre-college tuition can have the same effect.

    We like to travel with friends, and sometimes we feel not rich when we decline invitations to join them. OTOH, sometimes we feel, well, not rich so much as well-off, when other friends decline such invitations from us, or when we try to keep expenses lower than we otherwise would for the sake of others traveling with us.

  92. Milo I think you are right. I think the fact that most of us get basic math is why we don’t feel rich. Was just talking to a friend about Homeland and why someone would risk everything for $4 million – its not like you can live forever on 4 Million.

  93. “have the kids borrow the other 1/3”

    For kids that qualify for need-based aid, if grandparents want to help, this is where it makes sense, in paying off the loans, since that won’t affect the awards.

  94. “its not like you can live forever on 4 Million”

    Maybe not you, but I think I could live off of that for the rest of my life, especially since even if I stopped working now, I’d be able to collect social security when I hit 62.

    3% of $4M is $120k; I’m pretty sure DW and I can live on less than $120k/year if the kids are gone; the extra would be added to the principle to help offset inflation.

    It would be a slam dunk if we were to move to a low COL area.

  95. I could live forever on $4m. Especially if I moved back to where I am from (much lower COL than DC).

  96. the extra would be added to the principle to help offset inflation.

    Doesn’t the 3% withdrawal rate include an inflation adjustment? My understanding it the rate of return of a well balanced portfolio of stocks and bonds is assumed to be 5% with 2% going toward inflation.

  97. And since I can collect SS based on my work history, there’s inflation protection built into that as well.

  98. Finn – Haha, yes, they were private schools. I think of them as different from the “independent private schools” here that cost around $25-30,000 for grammar school now. When we had to make the decision it was $3000 for Catholic school versus $10,000 for Independent Private School (for Kindergarten!!!). Pretty easy decision.

    The school thing here (and where you are, too, it seems) is a big deal. Sometimes in conversation I see people start to have that glazed over look in their eyes when I mention where my kids went to school – they always follow up with some lame comment, almost a version of the “good for you” mentioned earlier. On the other hand, if I am with people who sent their kids to public school I sometimes get a little of the “ew, a religious school” vibe from them.

  99. “Then you’d pay 1/3 out of savings, 1/3 out of cash flow and, since you’re into a worst case scenario, have the kids borrow the other 1/3. It’s hardly an insurmountable problem.”

    Also, if you make $250K/year, your parental obligation to pay $1MM in published-rate tuition over 8 years for 3 kids is not going to be 100%. It’s going to be something less than that.

  100. “Mom getting a job would also be a viable option especially when all the kids are in school full time.”

    Rhett, it also depends on the skills and age of the SAHP. Getting a job is tough after a certain age is tough unless you’re in the governmental/K Street revolving door.

  101. The two comments above remind me of a calculation I did for a family I know.For household incomes over ~$100k, 45% of the second earner’s salary goes to taxes and 45% to a reduction in private college financial aid, leaving net 10% of the second earner’s salary to cover transportation and other costs of employment, such as transportation/childcare for children still at home during summers off. All numbers are approximate.

  102. ssk, are there a lot of schools that cost that much? It seems like some of the high schools I know of don’t charge that much. I just looked at Bishop O’Dowd, where a friend’s kids went, and it was only about $17k.

  103. WCE, that kind of math makes me think of retiring as soon as I can, rather than waiting until DD graduates.

  104. I can’t say much without being a spoiler but given the character’s age and the way in which he/she was planning to live, it doesn’t seem doable and certainly not worth the risk that was taken which could have him/her in jail for life and/or executed. I’m gonna need Bill Gates money to take that chance.

  105. Finn, have you run the numbers? I’m curious about whether I made an error. Two of the kids in question are in expensive private colleges that are not selective.

  106. Finn – Yes, the Catholic high schools seem to be about 17K now. The independent high schools look they are about $40,000 a year! I looked at University High School and Convent of the SH High School (only slightly Catholic these days) tuition on their websites.

    Some of the Independent grammar schools are at $30,000 on their websites (so I guess this year’s tuition).

    There are only a dozen or so of these schools in San Francisco, but I am sure they have their counterparts in the other cities and towns in the area.

  107. For household incomes over ~$100k, 45% of the second earner’s salary goes to taxes

    How do you get to 45% for the 100,001th dollar?

  108. 25% federal, 9% state (federal taxes paid not deductible beyond low limit), 7.6% social security, 5% child tax credit phase-out starting at $110k.

    So, arguably, the 110,101th dollar.

  109. RMS, are your numbers adjusted for up to 40 years of inflation, given the age range on the Totebag?

  110. WCE,

    25% federal

    With 2 kids you’re looking at 20,600 in deductions, throw in some retirement savings and mortgage interest and that 100,001st dollar is being taxed at the 15% rate for married filing jointly, not 25% as your taxable income will be below $74,900.

  111. Actually exclude mortgage interest they are taking the standard deduction. By my math the wife could make $5,400 a year before she’d be paying more that 15% federal.

  112. I don’t think they have mortgage interest and I’m not sure if they’re doing retirement savings. Primary earner’s income is in the $110-$125k range I think. Secondary earner’s income capacity in this area is around $12/hr.

  113. WCE,

    If they would use her $12/hour to increase their retirement savings there would be no state or federal tax due on her earning until their retirement contributions exceeded $28k.

  114. “Secondary earner’s income capacity in this area is around $12/hr.”

    With a DH earning six figures, she should stay home and/or work under the table. I could see an exception if the $12 per hour is the extra needed to fund a deductible IRA or equivalent–then the tax bite is moot.

  115. Not $28k. Their max retirement contributions would be $46k so as long as they put all her earnings into retirement she’d just be paying FICA.l

  116. Rhode – When you see red at the end of the month, do you adjust your budget to get rid of the red? (Users call it WAM, or Whack-A-Mole.) The idea is to NOT have any red – if you overspent in one category, you need to take the money out of another category to cover the overspending, just like you would if you had actual cash in envelopes.

    This is a huge difference from typical budgeting, where you see if you were “over” or “under” budget for the month but you don’t really make adjustments. At the end of each month, if you have categories in the red, you’ll have to find the money to bring them up to 0. Suppose you overspent your groceries by $50. Look at your other categories — maybe you budgeted $200 for gas but actually only spent $150. On the budget screen, you can enter “-50” in the gas category and then “+50” in the groceries category, and that would be the same as taking $50 out of the “gas” envelope and adding it to the “groceries” envelope. No more red!

    I adjust my budget numbers like this ALL THE TIME. Again, this is very different from typical budgeting programs, where you set your budget for the year and maybe change it once or twice during the whole period. (Some categories, like mortgage and taxes, I NEVER change, but many of the others are fair game for tweaking.)

  117. Rhett, our salaries were higher but between state, city, and federal income tax, I paid 45 cents in tax per dollar.

    We should move West!

  118. Hoosier- I haven’t done that. Probably because of the failure thinking. I can definitely think of it like the envelopes. I also like the Whack-a-mole image. And that someone who’s been doing this for 2 years still budgets like that! :)

  119. Hoosier- just went back through and got the envelopes to equal zero for November. We start fresh this week. The envelope-style thoughts resonate with DH because he does that already. Thank you for the insight.

  120. Finn – In parts of my state people classify schools as (1) public, (2) charter, (3) parochial and (4) private. While (1) and (2) are free, (3) and (4) charge tutiion. However, the religious group (church, synod, diocese, etc) with the affiliated parochial school often sees the school as part of its “mission” and offsets some of the education costs which lowers the tuition/fees paid by the attending families. Also on top of the offset, these school generally give a discount to families that practice that particular religion.

    That was all said to defend the statement of Catholic (parochial) vs private school.

  121. I get TB posts in my inbox, opened yesterday’s because of the topic. As several here deduced, I clicked through to the article and commented after the fact. Tonight I’m up late, online trying to get my mind to slow down so I can sleep, and decided to see what y’all had said. I do read Corprette, but never all the posts that blog puts up in a single day. (Three, I think) I comment there but normally under a different name, because I don’t want the drama and dreck from here to follow me over there (if you’re interested, there are several folks here who asked me at the time & can explain). I used my old name the other day because I had mentioned the adoption under that name before.

    On today’s topic: the amount of support money my parents provide is more than my former pre-tax income, but less than my mother thinks we need. I was happier and thus felt more “rich” when I was working, particularly when flying out to a conference. Now that I’ve applied for a few jobs, my parents are angry and threatening to cut off funds (which I won’t need because working) and not to visit, which would make me very sad, but would be their choice.

    As for budgeting/buying things without looking at price, I think the key is to know what works for you. I’ve always kept track of what portions of money go to what, and will reduce spending in a category when I need to, but instead of a line by line budget, I simply have a feel for how often I can do x and y, and at what level (inexpensive family restaurants or TB burritos but not the Mexican pizza, paperbacks or library books, Marriott, Courtyard, or Red Roof, etc). So these days my boy eats Mexican pizzas, but he may have to give them up if I go back to work. It’s not exactly not looking at the price tag at all (and honestly, who doesn’t know if the dresses they’re trying on are under $50, under ~$100, or $350 dresses?) but it prevents having to squint at every single payment and do math in your head. If I go overboard, I will pay careful attention and rein spending in tightly until I’m caught up, but then I’ll rejigger my “normal” categories so that it comes out even again. I recall one month when my son was three that payments came out differently than I expected, and we had $50 for two weeks, but a decently stocked pantry so we came out fine.

    Moxie, you have my hotmail address–drop me a line!

  122. saac – good luck on the job search, and honestly, congrats on simply taking the leap to go for it, especially since you’re doing so without your family’s support.

  123. SM – I hope saac and you are doing well. Good luck and the very best wishes on the job search. I don’t understand your parents’ stand on this, but I hope they come round.

  124. Okay, as of right now, the survey has 32 responses.

    How much do you need to feel comfortable?
    Less than $1M: 2
    $1M to $3M: 18
    $3M to $5M: 4
    $ Greater than $5M: 8

    How much do you expect to have:

    Less than $1M: 2
    $1M to $3M: 16
    $3M to $5M: 5
    Greater than$5M: 9

    Survey’s still open! I’m running around a lot today but I’ll update when I get a chance.

  125. Oh, and one comment in the comments section admonishing me for not adjusting for inflation. Hi, WCE!

  126. I agree with whoever commented that older totebaggers are more likely to feel rich and happy because we’re more likely to be closer to or have reached our financial goals. Plus, IIRC, older people in general tend to be more content. I’m pretty sure that when I was in my 30s or even 40s I did not feel rich.

  127. “Max is great name for a boy (imo).”

    Since my family has several men with that name, I would agree. :)

  128. Something that relates to WCE’s thread from a few days ago:

    “students will compete in the third annual “America’s Got Regulatory Science Talent” next week. The winning team(s) from the local competitions will travel to the Washington, D.C., region to present their proposals to the Food and Drug Administration early next year. ”

    Who knew?

  129. Hi Saac!

    I could live forever on the $4M, but it depends on the age/life stage. I couldn’t do that now and maintain my current lifestyle, because we still have mortgages and kids at home and college. But once that’s done, yeah. We will have permanent housing, with cheap carrying costs (luckily, we do not live in a high-property-tax area). We will have paid-for cars, no more office or kid clothes to buy, and more time for me to shop and cook at home — basically, as Fred said earlier, less “stuff” to need/want. My in-laws are in this situation — they retired in their early 60s with I think on the order of $3M(?), but the kids were fledged and everything else was paid for, and they live a very comfortable life in a very nice country club in Boca.

    That said, I’m totally with Moxie — no way I’d risk everything I have just to maintain the lifestyle I already have. OTOH, if we were bringing in $50K a year, that would likely look more tempting — heck, I used to religiously enter the Publisher’s Clearinghouse for a mere $50K/yr for 20 yrs. :-)

  130. Thanks to all who commented on my dilemma on the prior thread with DD being “uncool.”

    She left for school today in brand new “cool” sneakers – same brand and color but different design than the other girls, because she still is in preschool size range in shoes (and that way she’s not copying – good point, HM). And a new sportier outfit, but not brand name. She’s much happier, at least for the moment.

    Rhett, I still don’t understand why she wants to fit in so badly, but I’m less critical of her for it because of what you said. So you made a kid happier today :)

    Spoke to the teacher who will be watching out for her and have the social worker talk to the class in a generic way.

  131. Sky – that question was so upsetting the other day. Does she have at least one good friend who’s not in the cool clique?

  132. She had two close friends in last year’s class, but in September they were placed together in a class and dropped her.

    She has another pair of good friends in the neighborhood, but not in her class so they aren’t always at the same recess.

    DD still believes in Santa, and her letter to him last night had a postscript:

    “And Santa, you probably know this, but this is my friend Anne’s first Christmas without her Dad. She is sad. Maybe a few extra presents for her would help?”

    It almost outweighed her requests for infinity dollars and a statue of herself.

  133. Sky, our school honors requests from parents to place kids in the same classes as their friends in cases like yours. At least they used to. I hope your school does the same. Also, put me in the camp that’s a bit surprised that this is happening so young. The earliest I have known about was in 4th or 5th grade.

    “a statue of herself” lol! She’s given me an idea for my xmas list.

  134. I agree with posters who say they feel more comfortable now due to life stage. We still have college to pay for but have paid off our house, cars, have no debt and are building up our retirement savings. This is a big contrast from eight years ago when we still had daycare costs and a mortgage. We have at various times supported our families in that we have helped siblings get launched without touching our parent’s savings. In our families there have been no interest loans given to siblings and parents gave me an interest free loan for grad school that I repaid over time.

  135. My sister’s coworkers made an action figure that looks like my sister, so I think that was what DD meant. I think.

  136. “a statue of herself” – DD would like this very much. But being crafty I am sure she would want to construct one herself and get all her neighborhood friends to help. It reminds me of Huckleberry Finn, getting his friends to white wash the fence and making it look like fun.

  137. About a year or two ago, after what seemed like a dozen data breaches at major retailers, the federal government, and our health insurer’s parent company, I initiated a credit freeze. So I have the pins in our file cabinet in case we want a new line of credit, but for two people times three bureaus equals six thaws and subsequent re-freezes, all at a minor cost and hassle. We haven’t done it yet. What’s interesting is that the thought and hassle of this is a significant contributor to my mindset of what I will do if/when I need a new car. I’m much more likely to buy something used for cash.

  138. when I need a new car. I’m much more likely to buy something used for cash.

    I thought we established that used isn’t a deal anymore. Or did you just mean the truck to tow the boat?

  139. Rhett – no, the truck (Suburban or Expedition, I’m thinking) will definitely be very used. Additionally, I’m continuously reevaluating our previous conclusion that new is a better deal than used for my basic commuting car. I believe it was true in 2010. I think as we move further away from the credit crisis of 2008 and 2009, and we’ve seen new-car sales rebound dramatically, the used inventory has been re-stocked, and prices are now more reasonable.

  140. I just got caught up on the other thread re: Sky’s daughter. I was very similar to your daughter, Sky. And unlike some of you, I did care. My parents did buy me the clothes I wanted, and I think it helped. My dad also went crazy on the boys who tormented me. Basically threatened bodily harm on them (and likely meant it!). That mostly contained them. Wrt the girls, not much was done for me, but some things I think might help: (1) talk to the teacher for sure. I think schools are a lot better about containing this stuff now, (2) recess and lunch were always a terrible time for me because there wasn’t much oversight, so maybe have the teacher (or the monitor) keep very close tabs during these times. I did my best to get out of these things whenever possible (I would help the teacher with stuff, etc), (3) see if the teacher can get 1-2 other girls who are not part of the mean girls to include your daughter. Once I had a couple good friends, things became much more tolerable.

    I am sorry she is going through this :(

  141. Can I ask where the resistance to kids trying to fit in comes from?

    A while back we a discussion about a young man interviewing at a media company in Manhattan for his first post college job and what he should wear. Yesterday someone mentioned their son’s penchant for khakis and Vineyard Vines belts.

    New York media company:

  142. Rhett – I’m looking at used CR-V’s on Craigslist based on our discussion. When they’re still fairly new, they’re pretty expensive. Around 6 or 7 years old and 100k miles, they drop to $9k. But the amazing thing is that no matter what happens from then on, there is a hard floor at $5k that, apparently, a serviceable, running Honda with a clean inspection sticker, simply will not go below. It’s like a law.

    There’s an opportunity for arbitrage here. For an extra $4k, I could buy something five years newer with 75,000 fewer miles.

  143. I think we’d all agree that you don’t show up on your first day at Paulson & Co dressed like the first guy and you don’t show up on your first day at Managed by Q dressed like the second guy.

    Why would the advice to a kid, who has no say in what “job” they take, be any different?

  144. Milo – In your current financial position you could certainly afford something new for cash, too. Just move some money from one virtual envelope to another, and make the “payments” over a year or two back to the envelope that was raided.

    I do a lot of informal advising to near retirees at the middle class and low UMC level. As I have mentioned before, a lot of middle class and high working class people around Boston have rental real estate. I know nothing about planning for those choices. But for liquid investors I always suggest the following: 1. Work until your mortgage is paid off, your kids are educated (or if late something precludes that, put aside a special fund), buy a non splurge NEW car or cars, do any major repairs on the house (or set aside another fund for the upcoming roof or furnace). 2. Aim for $1M or more in additional liquid assets if you have no pension other than Social Security, as much as practical in Roth or after tax. This can be adjusted up or down for region and lifestyle. 3. Create virtual or actual buckets of investments/ready cash as follows: a) cash flow/income generation – if you can’t manage to live on the earnings from on 60% of your total plus SS you need to reduce your lifestyle or downsize/move to a low COLA b) LTC/inheritance/longevity c) highly liquid capital/emergency fund With leftovers you can splurge, buy a boat, maintain a second home.

    This seems like no brainer for the Totebag crowd not matter what your projected “number”. But I meet lots of people every day who are 50, educated, have a substantial mortgage, car payments, carry a balance on the credit cards some months, 2 teens, and maybe 100K in a rollover !RA. Many of them are like RMS’s friend who followed her hearts and did fun work, or there was divorce that restarted the financial clock, or they had illness/job loss, or they were women with their heads up their .. , excuse me, …in the clouds. They will figure out how to get by in retirement, usually by relocating to a low COLA and living very modestly. It can certainly be done.

  145. There’s an opportunity for arbitrage here. For an extra $4k, I could buy something five years newer with 75,000 fewer miles.

    Is the market irrational or is there a reason we’re not seeing?

  146. Milo,

    If a new one is ~23k and an 8 year old one with 111k miles is $10k then their depreciation is still basically linear.

  147. Rhett, she begged and begged for the dresses last year, and I bought them at the clearance sales because she loves them. (My usual per-outfit budget for her is $15, so $45 dresses are very special occasion only.)

    So I’m frustrated that (a) these girls have convinced her not to wear what she likes and instead wear what they like; (b) this has blown the budget; (c) $150 in dresses won’t be worn.

  148. Meme – I am always surprised by how little most people have in retirement – even partners at my firm (when I do their documents) or our high-spending friends who make 500-750k a year yet have nothing in retirement at late 40s.

  149. So I’m frustrated that (a) these girls have convinced her not to wear what she likes and instead wear what they like

    As much as I may love flannel shirts, skinny jeans and zip hoodies, if I get a job at Paulson & Co. I’m going to need to buy a new wardrobe.

  150. A new EX-L isn’t ~$23k, it’s probably a bit over $30k with a Costco/USAA price. And that $10k can be knocked down to $9200 for a quick cash buyer.

    The other thing is opportunity cost. That $20k staying in the market rather than tied up in a new car will really tilt the equation, especially as cars have become so ridiculously reliable. Also, I would not feel the need to carry collision coverage and, at least in my state, the personal property tax on the used car would be proportionally lower.

  151. “or our high-spending friends who make 500-750k a year yet have nothing in retirement at late 40s.”

    DW works for one of these guys. I see it as a form of job security for her. When you have a good thing going, the last thing you want is to work for some MMM type who’s ready to chuck it all on a whim. No, this guy’s got the big house here, always under some renovation, the place on the Eastern Shore, a couple of boats, a couple of early-20-something kids on the dole…

  152. L – as in, they literally have little to nothing in them, or they are just lower than what you would think?

  153. Milo,

    Also, don’t you drive 25k miles a year? At that rate and depending on how it was maintained by previous owners it could easily be dead in 2.5 years at 200k miles.

  154. “Why do you need the EX-L?”

    My frugality has its limits. :)

    Just kidding, sorta. I don’t need leather. But I do really like a sunroof, and alloy wheels add a touch of class over steel. So I guess that means EX, at least.

  155. I know I said it the other day, but I agree with Rhett re: the clothes. Yes, from the parental perspective, there’s a sense of “but if we give in, the terrorists win.” But if it makes my kid’s ride smoother, I don’t freaking care. It sounds like having the “right” clothes matter to her, so I’d follow her lead on that. Let her wear the pretty dresses other places.

    I still think MS would have been far less miserable if my mom had just bought me one or two freaking alligator shirts instead of choosing that issue as the focus of a lesson about the crassness of consumer culture and materialism.

  156. But when you’re in school , (assuming no uniform) that is the time to wear what you like vs having to conform to corporate job

  157. I don’t drive quite that much. It’s hard to say right now because I’m spreading it over two cars. This decision could be eight years away, so it’s just for hypothetical fun. A lot depends on what stocks do in the next eight years.

  158. Darn, I have been too busy yesterday and this morning to read & comment on my own post!

    S&M, Nice to see you! Email me if you need to vent about job search and parental support. I’m happy to report that I just celebrated my 1-year anniversary at the current job, and I made my 4th mortgage payment to my parents plus paid the real estate tax bill. :-)

  159. Milo,

    If you’re doing ~20k a year I bet that the cheapest option long term is to buy something new, meticulously maintain it and drive it till the wheels fall vs. buying something used with 111k miles where you don’t really know what it’s been through.

  160. Sky – sorry about the clothes. Not sure if my DD has peer pressure around clothes too, but now she only wears pants and shirts and no dresses any more (same age/grade).

  161. Cat – both (although the people with close to nothing are closer to my age). Some of them (like the older estate planning guys!) have more, but some are pushing 60 and have maybe 750K in retirement, which doesn’t seem like that much to me coming off 20 or so years of being a partner. That in turn makes me worry about the firm’s finances! ;)

  162. L,

    Being partners don’t they have an equity stake in the firm that gets paid out when they retire?

  163. Rhett – Could be. I wonder how much the mechanic-look-over is worth. Can he detect whether the oil was only changed once in 100k miles?

  164. L – interesting. Lawyers are usually so risk averse. I would have guessed that many of them squirreled away a lot of money.

    Rhett – they should get their cap contrib back with maybe a bit more, but I can’t imagine that it will make up for 30+ years of underfunding retirement savings.

  165. Rhett – A used car in VA is a lot less “used” than a used car in MA. InMyDay® we used to go down to Carolina to buy used cars.

    On the clothes/clique stuff, one of great advantages of eschewing a “people like us” life is that there are likely several groups to which a child can become allied. We encourage disadvantaged people who find a way to put their children in a community that illustrates wider and different life choices. We shake our heads when heartland folks don’t choose elite colleges for elite students because of the difficulty of fitting in. But we say, “good for you!” (close relative to “bless your heart”) to peers who choose to allow their children to live or be educated in a somewhat diverse milieu.

    None of this applies to an early elementary school kid who is being subject to racist taunting. I don’t know why everybody is talking about dresses. Call it what it is, even if the children themselves don’t have full understanding of what they are saying.

  166. Rhett – yes but it’s not like biglaw with a $1M cap contribution or anything! They generally get a draw every year (that is the “profits per partner” metric). We have one partner who is definitely the richest person in the firm – old Boston family, tens of millions – if I were him I would definitely not still be working.

    Milo – the partners’ parents? Not alive.

  167. Ditto Cat — you get your equity stake back, *without* interest. It’s not like owning stock. As I understand it, they need to have enough capital on-hand to cover one year’s operating expenses. Ours is pretty low, but I think the worst I’ve heard is a couple hundred grand — i.e., way less than a year’s salary for these guys.

    @L — I’d look at it like Milo: if they’re blowing everything they’ve got, then at least they won’t be retiring any time soon, will they? :-)

    My mom’s business partner is like that, although without that level of salary — he’s in his 60s and has basically nothing saved for retirement. Yet they bought a beach condo (my mom is a partner, because they had no cash for a downpayment!). . . . which they now have to rent out full-time to cover the mortgage. When they started their business, she set up their retirement plan specifically so that the company made a mandatory contribution so that he’d *have* to save something. It just doesn’t seem to occur to him that at some point he won’t be physically able to do all of the traveling they have to do for their clients.

    I just cannot conceive of that mindset.

  168. I know a lot of lawyers who spend a lot of money (and are still working in their 60s) and then I know a bunch who have saved so much money there is no reason for them to still be working. My husband’s team is mostly the latter – seriously frugal people. There was one partner he worked with early on in his career who ate PB&J sandwiches every day and would even bring his lunch to restaurants when the team would go out. He retired from his legal career early and became a high school math teacher I think.

    Sky – my oldest is in 3rd grade and I have heard of none of the mean girl stuff yet so it surprises me a little that it’s so young. My DD also does not care about clothes (I still pick them out for her) and seems a bit oblivious about all of that so it may be she just is not picking up on it.

  169. I missed some of the previous comments. Meme – we could afford it, but sometimes it’s fun to just see what value you can squeeze out of one option or the other. Especially for a second car. I tend to feel differently about the “family car,” but the one that wears the same path in the road to and from work every day is what I’m more inclined to see as purely a commodity with a cost to be pushed as low as possible.

    Rhett –
    “Is the market irrational or is there a reason we’re not seeing?”

    That’s what I’m kind of wondering. I don’t know. I’m sure there are all sorts of factors that play into it. Perceived reliability, obviously. At the lower end, many buyers are not in a position to be analyzing whether the $9k used car is a better long-term value than the $5k one because the cheaper one costs $150 a month and that’s what’s available.

  170. Rhett – Also, I’ve heard of middle class couples, above the buy-here-pay-here used car set, but below the Totebag level, who budget for two cars and to always have one payment. As soon as one is paid off, it’s the other spouse’s turn to get a new car. So if that’s statistically significant, it would dump a lot of 8-10 yo cars into the used market.

  171. Milo,

    The market should adjust for that shouldn’t it? A market as big and efficient as the used market isn’t really going to leave any money on the table I would think.

  172. Milo’s cheapest commuting option is probably a used Buick LeSabre with 20k on it.

    When he discusses this, I’m reminded of the Naval Academy/nuclear sub guy I know IRL who drove a Tercel with ~200k+ miles and the passenger door tied shut with a rope for years.

  173. My metric is $0.10/mile for off-the-lot acquisition cost for utilitarian cars, like commuters or kids cars. So, if you pay $10k for a used car, you need to get 100,000 miles out of it to achieve $0.10 that.

    We currently own 3 cars bought used:
    a) Mine: (02 E-class sedan) paid $11k, and I’ve put 66k on it….I will easily get another 44k out of it if I keep it rather than giving it to my youngest and buying something else for myself in the next year.
    b) Kid #1 (05 suv); paid $10.5k, 50k put on it in the last 4 years. Might get another 50k out of it, but he may opt for something else by then. Unsure of what he’d use for money.
    c) Kid #2 (11 suv): paid $16k just this summer. I doubt he’ll keep it long enough to put 160k miles on it himself, but maybe if he keeps it thru grad school the cost will go below $0.15/mile

    DWs 2015 Audi SUV bought new….never going to get below $0.25/mile. Ever. But not a fight I was willing to engage. But it’s not just utilitarian; it’s what we use for long trips. And it’s really nice.

  174. @WCE: Our managing partner commuted from Balt. to DC for years. He drove a total POS (probably 20-yr-old Accord or the like), banged up, no radio or anything, liability insurance only. Because he parked it on the street next to the train station. Always unlocked, in summer with the windows down — because he didn’t want to have to pay for a new window if someone broke in to search for something to steal.

    Our current managing partner drove, until maybe a year or two ago, a 1970s Volvo wagon. When one of our former partners bought the first-generation Baby Jag @20 years ago, it was a Big Deal.

    Needless to say, I am not particularly worried about the financial health of the Firm — our current debate is over how many months of 2016 rent to pre-pay based on 2015 collections. :-)

  175. WCE – That Buick is a good choice because I think GM is now better than the market gives it credit for, and the Buick sedan is more likely to be the proverbial once-a-week-to-church car.

    LfB – Your managing partner sounds like FIL. He parks his 11-year-old 4-cyl, 2WD, cloth-seat Highlander around downtown DC a lot, where the affluent just view dents and parking tickets as a minor cost of doing business (DC generates a scandalous amount of revenue from parking tickets). A few weeks ago, closer to home, a deer actually hit his car by bolting straight into the driver’s side rear door. There’s a huge dent that, it seems, he has no intention of repairing.

  176. @Milo — My first inclination was to laugh. Then I remembered the chunk I took out of my back bumper on the TL when I backed into a concrete stantion in my garage at work — a year and a half ago. . . .

    Which reminds me that that car will be DD’s car in a very short year and a half, so I’d better start paying attention to what I want my next car to be. I’ve had SO much fun fantasizing about for the past several years, but the thought of actually spending the $$ on a new one still nauseates me.

  177. “What’s interesting is that the thought and hassle of this is a significant contributor to my mindset”

    We have a bunch of stock from our previous employers, but those companies have been through a myriad of splits and spin-offs, and the thought of the hassle of computing the cost bases is a significant factor in holding on to that stock.

    We may end up disposing of it via some combination of charitable gifting and inheritance, both of which avoid this.

  178. “Work until your mortgage is paid off, your kids are educated (or if late something precludes that, put aside a special fund), buy a non splurge NEW car or cars, do any major repairs on the house”

    When your oldest kid is in the 8th to 9th grade is also a good time to look at this. Refresh cars as needed and do big home repairs prior to having to fill out financial aid forms.

    This is one of the things that got us to finally pull the trigger to get PV installed on our roof.

  179. WCE, I didn’t run the numbers. I assumed that since you had run them, they were reliable.

    But in thinking about it, your calculations seem inconsistent with my understanding of how finaid works. My understanding is that somewhere around 45 to 50% of your marginal disposable income goes into the EFC. So if 45% goes to tax, then 45 to 50% of the remaining 55% would go to EFC, which would be in the ballpark of 25% of gross. So you’d be left with 30% of gross to cover the cost of working, with whatever is left from that going to disposable income.

    And to Rhett’s point about it not being as bad for the first ~$23.5k if you max out your 401k and IRA contributions, finaid will include such contributions as income in the EFC calculation.

  180. Yeah. I drive the Mustang whenever it’s (a) above 50 and (b) not actively raining.

  181. “Always unlocked, in summer with the windows down — because he didn’t want to have to pay for a new window if someone broke in to search for something to steal.”

    I knew a guy who always parked his car unlocked for this reason– and still had someone break his window.

    After that, he started parking with a window open.

  182. Finn, that was what I learned to do when I lived in Manhattan. I’ve always carried it on down here, although it freaks people out too much when I leave my windows down.

    I got so irritated once in NYC when I left the windows up one evening. The lock had been jimmied off a few weeks earlier and was hanging from the door, so the door was clearly unlocked. Dammit! They broke the window anyway.

  183. Sky, on the dresses, could she wear them for non-school occasions sometimes? Not necessarily dressy ones, but ones you could present as special — family movie night watching a video together, family dinner when everyone’s eating together (I remember you’re often having two dinner times due to young children/ husband’s schedule). You can present it in a face-saving way for her as “I know you find the [sporty stuff] works better for you for school, but since you enjoy the [pretty dresses] why don’t you put one on for [trumped-up occasion]? We can take a picture for Grandma [Popo?] too!”

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