Is Six Figures Really That Much?

I find the fact that you are "not living paycheck to paycheck. But barely..." on 96k a year laughable. My wife and I live 60K a year (pre-tax)and are doing just fine. We have two vehicles, give generously to charity (10-15%, have date nights once a week, and are contributing to our retirement funds. Something is wrong with your spending. Instead of being so defensive, why don't you realistically look at your monthly spending and ask what you could cut. Account for every dollar. Every dollar. And you will be amazed at how you spend. It's not that there are big items, it's the little nickel and dime purchases that rack up. Shore up the little pleasures (like buying Starbucks every day) and you will find yourself flush with cash. The question is, are you willing to change your lifestyle in order to have more income in your bank account. Once you change your spending habits, it will be easy to live on 96K a year!

That's the reason why flame wars in the personal finance blogosphere are going to get ugly. There'll always be people who struggle on $X per year and there'll always be other people who live on two shoestrings and a can of beans and are envious of the $X per year people. The latter are going to tell everyone who makes above a certain level of income to stop whining, even without knowing the specifics.

It's not just about lifestyle, as another commenter pointed out. It's about inflation. I look to my own family as an example: My parents, who live well within their means, have been making roughly the same level of income (between $80k to $90k) for the past 15 years, and it's getting harder and harder for them to get ahead, even with both of their children grown up and out of the house. Everyone is feeling the crunch, you are not alone.

Middle class Americans are taxed to the hilt, and inflation is the "invisible tax" that devalues our currency over time while the rich stay rich, and the poor get poorer. The middle class is disappearing, and this post is just one more shred of evidence of our government's thievery in action. Six-figure incomes no longer buy what they once did because our government keeps printing more money that devalues the supply, then they tax us all and redistribute the wealth. It's a huge scam led by the Federal Reserve and it's leading our nation into ruin.

I think a lot of this has to do with people's sense of entitlement. Basic food, shelter, and clothing are necessities, but living the so-called "American dream," whatever that means, is something you have to earn. If you are priced out of your dream, the options are to earn more income or manage your expectations.

For example, if you find owning a house is taking up too much of your budget, you might consider moving into a condo. The purchase price will probably be lower than a single-family home, and building maintenance will be shared with the other condo owners. Also, don't pass on your expectations to your children. It's nice if you can afford to help with your kids' college expenses, but they will manage on their own if you can't.

You know, it's all relative. We 'struggle' to maintain our self-imposed budget of $250,000 a year ... yet our $2m home is paid off, I paid cash for my car (a very nice one indeed).

Yet, only a few short years ago we were living off my wife's salary and were actually $30k in debt. On my blog I talk about this, and what to do about it, but the point here is that it's NEVER enough until you actually know what it is that you want out of life and save/spend accordingly.

Honestly, doesn't it depend on where you live? I live in a nice suburb of New York City. Where you live directly affects the quality of the school district you send your kids to (assuming public school). Our town is certainly nice, but is nowhere near the upper levels in this general area (it's somewhere in the middle).

Starter homes here go for $450k and up. My home, which has 3 bedrooms and two bathrooms, 1400 square feet, on 4800 square feet of land, with no separate dining room, no garage, no basement and no family room, costs in excess of $500k. The taxes are over $8k per year as well. So, how is a family of 4, where the in-laws come to stay frequently, supposed to get by on less than $100k per year when the house itself is costing well over $3k per month? In addition, I usually work at home and this house isn't really big enough in that scenario. I don't have a private area to work, which is a problem. To get a house "the next level up" would probably cost over $700k.

That said, yes, we could move to a less expensive area and trade in our house for a mansion (or just get an equivalent house and lower our expenses dramatically). But our family and friends are here. Our children's friends are here. Our jobs are here. Our roots are here.

So, moving is not an option that we are interested in. It just means we need to make more money and that a low-six-figure salary, in this area, isn't putting you in the upper class.

Albert Einstein was correct ... everything is relative, and six figure incomes is no different. At a point when six figures reaches critical mass, and there is enough experience and expectations set for what is "normal", we begin to see things like this. Six figure incomes may be challenging for a variety of reasons, just like fix figure incomes are and seven incomes. We are what we eat ... in the case of our financial condition, we are what we spend.

I have written extensive comments in the FreeMoneyFinance entry this one refers to (under the name gtFMF) and I was almost shunned for stating that our $160k pre-tax income only goes so far.

I wholeheartedly agree with the writer of this entry, let's see if the rest of the readers do too.

"it's NEVER enough until you actually know what it is that you want out of life and save/spend accordingly."

I have figured out what I want from life, and it isn't "stuff." In a few months my car will be 20 years old and the only car my four children have ever known. Ninety-five percent of our clothing, bedding and household goods have come from the Salvation Army. Even before my husband died, I told him that even if I was a millionnaire I would shop at SA. When we must buy, it's second hand when possible.

We recycle and compost so much that we put out garbage every other week, thereby lowering that expense. We conserve water, lowering that expense. I read the newspaper on-line, eliminating that expense. We do not watch television and get movies from the library--no expense there. We get books and magazines from the library. We use everything to the last drop. I give away all that I can. Our drawers and closets shut because they are not crammed full. Our basement has only a freezer and some empty boxes kept for future use.

Our annual income for five is less than $40,000. People can't figure out how we can live on so little income and yet not "seem" poor. It's all about choices. I choose to want little. It leaves more time and space for relationships to grow and flourish, which is something I do want.

100 grand is a lot. and making six figures is still a lot of money.

you are talking about making half that each. that is why it doesnt feel all benzes and dinner out.

There are a couple of things going on here. One is that it is human nature to always feel that if only you had 110% of your current income, you'd be doing fine. Another is that the cost of living is different in different parts of the country.  These are very valid observations regarding the relationship between lifestyle and income. But they are not the reason I wrote this post.

The reason I put my  personal information out there on the web is to put a real life face and voice to the straw man argument of the latte drinking middle class family who can't seem to hold onto the riches that are pouring through their fingers. My credentials on this are impeccable. My husband and I started contributing the maximum to our retirement accounts in our early twenties. We saved up for a down payment on our first home, which we bought in one of the richest markets in the state, while we were still in graduate school, living on grad student stipends. I was 24. Between our retirement savings and real estate investments we have built up a very respectable net worth since then, which I am not going to share here, but some people retire with no more savings than what we have in the bank. All of that while making considerably less than we have in 2007. We are not going to draw down our savings to buy a mercedes, so the discussion is really about what we can afford while living within our budget.

And we are very frugal. We currently record every purchase we make, even a buck in a vending machine, so I can say confidently that there is no magical vortex down which our money is disappearing. Just the usual, housing, utilities, repairs, gas, food, clothing, a little bit of entertainment, but there are no unusually bloated categories. If we wanted to save more money, yes, we could move. That's not the point. The point is that when we are in roughly the 80 percentile of income in the nation, we still can't really afford the things that people think middle class familes are supposed to have. There's something very strange about that.

Thanks for the discussion, and keep it coming. I would be happy to answer questions about what our expenses are in individual categories. To answer one person's question, I live in Ann Arbor Michigan, which I would guess is probably a nice median in terms of cost of living. Nowhere near as expensive as the coasts, but much more than other communities in the midwest.

FMF, yes that is a good observation about single income vs. dual income. I expect the reason for it is that a homemaker adds a great deal of value to the family that otherwise would be spent on child care, cleaning services, housekeeping, and general chaos. 

Catherine Shaffer

Wise Bread Contributor

Definitely it depends on where you are living. In upstate NY, we have two cars (including one brand-new one as of 2006), one of us is a full-time student, we give away 10% of our income, we have a 1200-square-foot apartment, have two large-breed dogs, and save at least 25% of our income for retirement, future kids college fund and savings for cars and future house. No debt except for the credit card which is paid off every month. We are diligent about not eating out and unnecessary expenses, but other than that we live an awesome and I daresay luxurious life.

This is on one income, $35k pretax. But we live in a neighborhood with a median income of $13k so we are RELATIVELY RICH.

I have relatives in other cities like Chicago and Atlanta, and their expenses seem sky-high to me.

A question like this is very subjective because each person or family is dealing with different circumstances. I don't think Catherine was implying that you can't live making six figures, but making that amount should not be perceived as you are well off or considered rich.

If you live in big cities like New York, Los Angeles, Washington DC, Chicago, Boston, or any of the surrounding suburbs, I can tell you personally it is very hard to maintaining a decent lifestyle making 100k. If you have wife and kids you have to be on a very strict budget to make it work. I’m not saying making 100k is nothing to sneeze at, and those of us who make that should be fortunate and thankful, but it’s not what it’s crap up to be.

This is a really interesting discussion. I grew up in Dubai and visited India very often before I moved here at 18, and I was amazed at the standard of living out here. It's incredible how much Americans consume and what they consider to be basic necessities. I don't hold it against anyone, it's always harder to do with less than what you are used to, but in many other countries, paper towels are not basic necessities, you use and wash rags. Ziploc bags/containers/clingwrap/aluminun foil are not necessities, you use and wash non-disposable pots with lids. Basic cable, juice and soda, giant tvs - not a necessity.

So why should americans have to compare with living standards in the rest of the world? Because globalization was practically invented here, and now we're competing with the rest of the world. Those wages that are stagnating here? They're rising in all those countries that for decades were completely stuck. America, and the west in general, has had an amazing amount of prosperity in the last century, and now the rest of the world is catching up.

I live here now, and with the decline in average standard of living, it affects me too. I certainly don't want to see my wages stagnate or fall. But in the global economy that America has created and taken advantage of for years, I have to learn to accept that my competition is not just the guy next door, it's the guy the next continent over, struggling to feed his family too.

My wife and I are raising four boys on just under $40,000 a year. I think it would be VERY interesting to compare our two families' typical monthy expenses - not for the sake of who's better than who - but it might be enlightening to see what we consider needs and what we consider wants.

Just do what I did: trade in the kids for a Mercedes. It's totally worth it. In much of America, you can't have all the luxuries AND the big family at the same time on $100,000 a year. That's just inflation at work. $100,000 in the Brady 70's would be $300,000 or more today, which should be enough for MOST families to live that luxury lifestyle.

For those of you who are successfully navigating the choppy waters of 21st century personal finance: kudos. But Catherine's point is a good one. Many of us are working a lot harder, scrimping to a reasonable degree, and still feel as though we have to get by with less than people did even 20 years ago. There are several things wrong with our lifestyle and the cost of living. It's expensive to live today and most peoples' materialistic priorities are somewhat bent. I think everybody gets that.

If you are one of those folks who are patting yourself on the back, I'm happy for you. But there are a lot of people who have done their best and are still just getting along. I meet good people who are overwhelmed everyday. Many of them have done everything they knew how to do to be financially responsible and frugal. But all kinds of stuff happens in life.

Personal examples are never very reliable indicators of the state of the world. There are always exceptions on both sides of any argument. The national trend seems to be that people are working harder and feeling poorer. Why that is is worth discussing. Why you have managed might be a helpful example or a helpful suggestion but really tells us little from a global perspective. It might be a long way from the average experience.

Good for you. But give others a little slack. Walking in other' mocassins...yada yada.

If you see multiple comments from me...my bad. My computer was not very responsive.

I apologize.

These two statements are contradictory:

We are not living paycheck to paycheck. But barely...

some people retire with no more savings than what we have in the bank.

People living paycheck to paycheck have no emergency fund let alone enough to retire on at any age. They have no liquid assets. The truly struggling have hardly any assets at all. Some are lucky to have roofs over their heads; some are not that lucky.

Yes, it's true that $100k doesn't go as far as it once did, but as you are contributing heavily to your already significant retirement funds and own a house and two cars, I think it is really disingenuous to say that you are "barely" above living paycheck to paycheck. You're doing just fine.

I currently make 5 figures, and I really think 6 figures is the perfect american dream.

"Middle class Americans are taxed to the hilt, and inflation is the "invisible tax" that devalues our currency over time while the rich stay rich, and the poor get poorer."

That's something most people don't realize in this country.

I am a single male, and I make 45 K a year. i am 26 yo and live in Boston metro area. Now 45 k a year isnt cutting it for me. I live in an apartment with 2 roomates, we each pay 433 a month plus utilities. I have no car and no dependants. Now I am sure as hell that this is not enough money for me to live on. At times im down to my last 10 bucks for days and have to buy pasta and sauce to eat. I mean 45 k a year after taxes leaves little. I have 1 laptop an old tv and a good mp3 player. So whats the deal? Can I live? And i dont think I will bring children into the world on my budget. I feel that I cant even help with the rest of my family. My mom my little sister. I buy them things but I would like to provide more. I want to be well enough off to help my mother retire comfortably. so I will work harder and progress faster so I dont fall behind.

How good it is that people like contractor are so happy to remove themselves from gene pool by not having any kids. It will be nice when this sort of logic is finally extinct. It may come as a surprise to contractor, but most people still consider family, rather than the accumulation of wealth, the central point of life.

As far as the article goes, I think the problem is that we've always viewed six figures as "the goal". Inflation changed all that, but we're still having some trouble adjusting. Much of the discussion seems to center around phrases like "you might think that a family with a six-figure income would be able to afford...". We just have to redefine what a six-figure income is in today's society.

It might also be true that our expectations of a six-figure income were never all that real to begin with. We may have imagined a person making $100,000/year driving a mercedes-benz and wearing designer clothing and living in a huge house with lots of kids, when the reality all along may have been driving a mercedes-benz OR wearing designer clothing OR living in a huge house, etc.

At any rate, I think you are doing very well if you can see your debts being paid off any time soon, and if you're managing to save something. To me, there's no-one wealthier than that. Any amount of stuff you can accumulate beyond that is pointless.

I am a single mother of one and I bring home just over 96K a year, gross. I find that taking one or two "modest" vacations a year is ridiculous. My idea of a vacation is taking 5 days off and watching television, sleeping in and going to a matinee. Also, if one of my animals (I have 3 cats and 1 dog) were so sick it would cost me a $4K vet bill, well then it's good-bye Fido!

You are living outside your income...period.

I don't have credit cards. I have a 6 month emergency fund. I don't have payments on my two vehicles (they were both bought new in 2007) or any other debt besides my home. The vehicles, although brand new, are quite modest (stick shift, no remote key entry...air conditioning and power steering is about it - the truck doesn't even have carpet - it has the commerical flooring).

I can pay all my bills and have my retirement in place, and send my daughter to college. And, I do not live in a cheap place. My modest home was purchased for almost $300K.

I grew up on welfare and know what it is like to go without. You are spending way beyond your means, period. I consider myself lucky, and if you cut back on your spending instead of being "entitled", you'd be lucky too!

My partner and I made $110,000 last year and while we have made some gains, we have a long way to go. We live on Miami Beach and have not even owned a car in almost 13 years. He walks to work and my employer pays for my monthly bus pass. But my partner is a survivor of both AIDS and throat cancer and staying alive is and has been very, very expensive. Additionally, when he was given the AIDS diagnosis thirteen years ago, we were told that the "best possible outcome" was that he would live another 18 months. So, yes, we went a little nuts spending money and doing things like traveling and, yes, we took on debt. We're both very healthy right now and very thankful for it. The other part of the equation is that, even though we made that much last year, the year before that we made maybe $85,000 between the two of us and for many years before that $45,000 to $65,000. During those leaner years, his health insurance was dismal and the co-pays on his medications along with his premiums took up a disproporionate share of his income, so he had to rely on me. There are simply too many variables out there to judge and blame anyone who is struggling financially. And it's simply not helpful. I think any constructive advice is wonderful and any judging and blaming is simply cruel and lacking in humility. If you're lucky enough to be financially stable, terrific, but you shouldn't assume someone who is not is simply an irresponsible spendthrift. Life can be very expensive.

Catherine: You state "If it's not the dog, it's the sidewalk assessment, the roof, your transmission, a natural disaster, an act of God, a messy family situation that explodes expensively, a tax time surprise, a lawsuit, etc. These things, too, are part of everyone's budget, but are much harder to predict or control."

Let me point out to you that your family already makes twice the average in the USA and...

1. Animals get sick, especially as they get older. Pet insurance is a good thing. It's to be "Expected" that they need some care. If you don't have pet insurance, look into it, or having a "sinking" fund (retained earnings fund for those of you out there that are accountants). Put a budget line item in your budget of $50 per month, $100 per month (whatever you think is appropriate), AND DON'T SPEND IT, to cover this "Expectation". When the times comes, you'll have it or at least most of it.

2. The roof...and other household maintenance things like water heaters, air conditioners, etc. This is "Expected". All things wear out! Again, another line item in your budget THAT IS NOT TO BE SPENT EXCEPT FOR THIS, to take care of this when Murphy strikes. It is "Expected" that things around the house wear out. I've been there and done this with the roof and the airconditioner in a 3 year time span. I paid cash when Murphy came to visit me on this issue. When my 5 year old stove went out one day, I bought a new one at a scratch-n-dent for 1/3rd the cost. FYI: Roof and AC exceeded 12K. I had a $500 per month sinking fund for over 2 years when this hit.

3. Natural Disaster and Acts of God...insurance covers this for the most part. In my state, I pay about $200 extra a year for earthquake insurance. I live on the largest fault in the USA. Many of the readers here don't know that Missouri is more at risk than Southern California. Again, cheap insurance for another "Expectation". I have a 10% deductible for earthquake. I have the $30K set aside for this "Expectation". As for Acts of God, my dad died in 2002 with no insurance. It was "Expected" that he'd die one day, and my brother and I had saved up for it and handled it.

4. Messy Family Situation that Explodes Unexpectedly and Lawsuits...been there done that also. I spent $8K last year in legal fees. But, I expected it and put $500 a month (and continue to do so) into another sinking fund for those damned lawyers. I do not help relatives monetarily who can help themselves or who make bad decisions and expect me to bail them out.

5. Transmission...I gave up on automatic transmissions a long time ago. Not only do they do not last, they are also expensive to maintain. I drive a stick and it's nice to know I'll probably never see a transmission break down on me, and when my battery goes out (twice in the last 4 years), I can always get my auto rolling, pop it in second gear, and go buy a battery.

6. Tax "Surpises". There are no tax surprises. I earned $20K extra in 2004 that I knew no tax was being taken out of. I put 1/4 of it away in another sinking fund. When tax time came and I had to write a check for 4K, I just wrote it! Paying taxes is like death, it's "Expected".

7. Sidewalk Assessment...you knew this was coming in advance, didn't you? My dad had something similar happen to him before he died. Start another sinking fund to handle it and things like it. It was not "totally unexpected"! Fortuantely for dad, my brother was able to do most of the work for him - yeah for a brother that works in construction! I am sure you had months of notice before your government told you that your sidewalk was going to be installed....

I've met a millionnaire who is broker than I am. He's just broker at a higher level! If you don't have a budget and don't plan for life, then life takes you to the cleaners. I think you need to create a realistic budget and cut back on your spending. I make the same as you, so I know what you're bringing in..

I guess because I am a single mother and I have no one but my brother to lean on (we're the only 2 left alive in the immediate family) that I have had to learn to plan, plan, plan. I tell you what, I practically got money rolling out of my ears, and so should YOU!

I am glad some people are doing so well on less money than we. I don't understand all the vitriol and judgemental attitudes though. For one thing, we're not complaining. We're saying "I'm finally upper middleclass and all I got was this T-shirt".

Yes, what you do with your money really is about choices:

I frequently choose to pay more for local and organic food, I could shave my budget some, but it's a choice.

I also choose to live where I work. I used to commute and it chewed up far too much time and expense. I can even bike in favorable weather.

As for "unexpected" things, yes we have had lead time and been able to save for many of them. However, doing simple maintenance on a roof that uncovers decades old structual damage is "unexpected". I already know that the rest of my house roof has 4-5 more years, that I can save for.

Having your city decide to transfer sidewalk maintenance to homeowners and immediately assess your neighborhood is not completely predictable though.

Life is a learning process, you don't know until you know. First time through self-employment taxes can be a bit of a surprise.

For the record we are doing well, we do not live beyond our means despite complaints about expenses, and I would hardly categorize ours as a consumerist lifestyle.

I am enjoying the different perspectives from the posters. The regional perspectives, plus the urban/rural/small-city differences are especially interesting.

Spedie, I am glad your life is so perfectly predictable, and you are absolutely right about saving up for those "unexpected" expenses. The thing is, you have to get a little bit ahead in order to start doing that. If you are still paying off last month's unexpected expense, and this month your water heater explodes, you are going to have trouble squirreling that money away for future expenses. What you can do with your money today is a reflection of where you've been, and that includes past mistakes, bad luck, and simply where you started out in life, etc.

Also, there is such a thing as a tax surprise. You should have seen the look on our very experienced accountant's face as he broke the news. He had never seen anything like it and he ran the numbers over and over hoping he could get something different for us. The tax code is complex and sometimes it throws you for a loop.

I looked into pet insurance, and I found when I read the fine print that they all have limits not only on the maximum payout, but on the payout per "incident" and also on payouts for individual illnesses. Pet insurance would have covered about $200 of that $4000. Not worth it. Not to mention that our dog was already too old to qualify when it started to become available.

Catherine Shaffer

Wise Bread Contributor

Six figures really IS that much when you are making minimum wage.

Hi,
I completely "got" your point.
My husband and I, according to our 2006 tax forms, made $84,000 that year. I believed I was frugal (and by most peoples' standards, I really was). I shopped second-hand, we ate at home, did not have premium cable, etc. When we saw that number, though, we both looked at each other because "where in the heck did it all go?" And you know what, if you do what all of the "experts" tell you to do--put aside 10% for retirement, buy life insurance, set aside some for the kid's future, etc., well, that's what you get, I guess.

What happened to us was, my husband became ill and suddenly was not able to work any more. Our income went from $84,000 to about $40,000, with me working two jobs. I thought I had been frugal. But there are so many ways you can cut back when you have to. We are getting by, in no danger of losing the house, car, etc., but absolutely no wiggle room, because even though our income went way down, our bills didn't. That $40,000 a year is hard to come by in my area, and very hard to hang on to. We have a very modest 2-bedroom house, we pay $950/month for our mortgage on that, which was tiny when we were both working, but when there's just one of us, it seems huge. Our grocery bill (family of 3) is supplemented by venison and fish, our chickens and ducks, and our garden. Sometimes I think about that $84,000 a year and how frugal I've become now, and I think about how rich I would feel with that extra money now....when I thought things were tight then!

The really sad thing is, and this is what ties into your post, my dad worked for the same company for 25 years before he passed away. When he passed, I saw his last paycheck (in 1988), he made $49,000 a year. On that money, he supported my mom, me, my brother, a cat and a dog, in a house that was much nicer than what I live in now. We had cable TV, we had a new car. We never shopped second-hand. We didn't buy "generic" groceries, because my mom didn't really like them. But we weren't hurting at all. There was no struggle from paycheck to paycheck, like there is right now with my family. And people look at a family of 4 that makes $49,000 as nearly poverty-level these days. But back then, it was plenty of money for everything that a family needed, without having to make tough choices. When you put things into this kind of perspective, it's easy to see why a 6-figure income doesn't go as far as you would think.

Hello.

First off, I write this from a family of two, living happily but without savings on less than $17K a year after tax.

From my point of view this article is both correct and very ignorant. I understand completely the feeling of your lifestyle not being on par with the lifestyle expected of a six figure income. I do not understand this from personal experience, but I do understand it from knowledge of the human psyche.

Now, as have already been pointed out in a previous comment, you are seeing this from the completely wrong perspective. The expected six figure lifestyle does NOT include savings, pension fund, emergency funds, and so on. And it especially does not include charity. Instead it includes spending as much money as possible on appearances, big tv, fancy clothes, new cars.

Your six figure lifestyle centers around saving for the future, for the unexpected, and giving to charity. Ironically this means you live less today. Simply put, your choices have put you where you are, and if you want the six figure lifestyle of popular belief then it is as easy as just re-prioritizing.

I just found this blog today, and I thought I would look around because it talks about 'living large on a small budget', and 'frugal living'. You on the other hand speak about 'living small on a large budget'. I can understand your problem, but I laugh at the concept of finding this article on this site.

I am not sure of the ages of all the posters, as that will change the perception of the individual post.
When I was growing up in the 70's and 80's, 100k+ a year meant that you didn't have to make sacrifices in your budget. It meant that you could afford pretty much what you wanted when you wanted it. Rich, in the upper crust.
Now, in 2008 in the D.C. area, you need a combined family income of 280k+ to be considered "affluent middle-class", not quite the upper crust but close enough to use it as a comparison.
I, personally, make a little more than 100k. Life isn't hard, but it isn't a piece of cake either. In order to own a home, you need to be able to afford a minimum of 700k+ (and this is with the current housing slump in mind) in this area. Since I am fortunate to have a salary like this and I am the single source of income (my wife is a full time voluteer and student), I cannot qualify to own a home because of the single source of income. Not for a traditional loan anyways.
Can I make it on this salary? Yes, absolutely. Do I feel blessed to have this kind of a salary? Of course. Does this kind of salary buy you the kind of freedom that it did in the 80's? No, no where near close.

I think that the idea of 100k in the 80's would require 400~500k today to even begin to compare.

Cheers.

... here's why.

Um, contractor? See, there's a hole in your theory. While I'm relieved that you're not having kids, if everyone did the same, no amount of earnings now would enable you to pay for care as you age. I mean, I'm not even talking doctors. I'm talking getting your diapers changed.

So the really important part of this genius financial plan would have to be suicide before debility. How many good years would you voluntarily cut short in order to avoid being caught flat-footed by a stroke, say?

"You can never get enough of what you don't really need to make you happy." - Eric Hoffer

Great post and great discussion. I understand that this site concentrates on living frugally -- "living large on a small budget" -- but I'm just not seeing why that has to mean the same thing for different people.

First of all, the many suggestions that one should pick up and move to a less expensive area assume that the same job or the same salary will be available after the move. That won't always be the case.

But even if it were the case in an individual situation, I agree with the comments that you should be able to make the choice to live near your family, your friends, or your community. As a few other commenters noted, your financial goals shouldn't be a goal in and of themselves -- they should be a means to an end. I have a six-figure income, and I could move to a less expensive area. But for it to be a meaningful difference in expenses, I would have to move pretty far. Is it worth it to me to lose a few extra hours a day commuting so that I can save on my mortgage? Not even close. I have lofty financial goals, but I have no doubt that I would pay MORE if it meant I could get more time with my wife and kids. These are and should be individual choices, in my opinion.

Finally, we all have two ways of pursuing financial goals: cutting expenses and increasing income. I think it's a mistake to focus solely on cutting expenses.

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Relative? Think this term is overrated. It's called inflation.

The dollar is worth less and less everyday. Essentially instead of getting a raise your getting paid less everyday. Simple economics.

I grew up in a working poor family. I was able to attend Northwestern University on scholarships, grants and student loans, in addition to working two jobs the entire four years. My husband was mostly the same, though his family was more middle class than mine, and he also went to NU. Then I went to graduate school, earned a fellowship, and finished a master's degree. My husband has been underemployed at times and was out of work for 6 months last year when his company was bought out. We both work for state government as public servents, so our salary is in the low range for our occupations. We have one child and live in the city limits of Columbus, OH in an average house in an average neighborhood with city (not suburb) school district and taxes.

That said, it does require living frugally in order to "get ahead". We mostly live on one income (which helped when he lost his job). Until this very month, we did not have internet service at home and we had just one, 10-year old car. We just bought a 2006 Toyota and paid cash because we saved LONG AND HARD for that car. As it turns out, my husband will no longer be able to take public transportation to work because his office is moving well out of range of the bus service here starting next month, so we will need to use both of the cars, unfortunately.

We fully fund our Roth IRAs because we don't get 401(k)s being government employees, so we don't get any matching funds or anything. We pay 10% into our public pension funds, which is more than what is taken out of people's checks for Social Security. I am a union member, so I get union dues deducted. I take the bus to work and have my bus pass deducted pretax. I pay daycare pretax.

I am a coupon queen. I curb shop. I dumpster dive. I go to yard sales, rummage sales, thrift stores, I freecycle, use craigslist, and we reuse/reduce/repurpose everything possible. It's good stewardship and it's good on the pocketbook.

However, to do all this, no, we can't take vacations. We have had one vacation in the 6 years of marriage (and no honeymoon either). That was to Florida for 5 days. We've had some MAJOR house repairs (foundation, roof, sump pump, water heater, electrical). Major medical bills (I had to have two bones removed from my feet due to avascular necrosis).

I too wonder where we went wrong. It seems like we should be able to vacation to Florida or somewhere once a year, not once a decade. It seems we should be able to afford a house in a better school district or that has a foundation that isn't falling apart. I should be able to afford organic produce and dairy if I so desire. But to save for emergencies, pay cash for a car, fund my retirement- I can't. So I don't.

I'm not complaining about some things- I don't mind buying used and doing without some things. But I would like to be able to vacation more and have a home in a better location and in better condition. Unfortunately, the public (me included) doesn't want to pay higher taxes so us government employees can earn a moderate salary for our occupations.

six figures is such a joke. come here to manhattan, the average 22 year old fresh out of an ivy league university is making six-figures their first year working in banking or consulting. living in manhattan will change your views about income big time because of all the young people who are making a lot of money. most people wouldn't believe how many people here in their 20s are making half a million or more per year. six figures as in just needing to make over $100K is a joke, you can make that much just working in IT, but odds are you'll live outside Manhattan.

Money matters sour the heart, taint the jealous with even more selfishness. I enjoyed Catherine's article and took it in-the-balance. We each have our own lives and relative perspectives which aren't universal truths. We stand much to learn from each other.

I really liked Catherine's post. We (I, my friends) busted 10-12 years on post HS education (undergrad, masters, PhD etc.), and right now we all feel pretty happy that we make 6 figures and are in a profession (univ. profs) that is less prone to see layoffs. But Catherine's post made me pause and think more about what exactly 6 figures buys someone ... I agree with some of the posts here that perhaps developing/ continuing with some frugal habits may be very very useful, and that the mindset, that 6 figures means one is way past needing frugal habits, is outdated ... I think the big issue is location. A 6 figure salary in Detroit / Lansing etc seems a lot more than the same salary in Boston, Washington DC etc.... Many of us are rooted to an area (for very good reasons - family, spouse etc.) and hate to move ... I know many univ. profs will often relocate to a rural university just to improve cost of living (e.g. move from a Boston-based university to a Chapel-Hill based university). This seems a good strategy if one can get past moving, which is easy for some, difficult for others...

It completely, completely, completely depends on the location. Sry. That's just how economies function. I live in Arkansas. 6 figures is still pretty much all you can need here. In Malibu, California, it's gonna be different.

I can't imagine living on 100k
my step father brings in 159k and my mother 86k
they both work full time, we have an 07 cadillac cts, 02 ford f-150 super duty, and my suv the 04 ford explorer. new computers, new TVs, 4000 sq ft home, with imported wood, granite, and tile. a pool, hot tub, fire pit etc. we have lots of clothes to choose from from casual everyday, to formal wear for going to horse races and theaters. i get 100 dollars a month for lunch/breakfast at school, and i get about 50 dollars a weekend for "fun money" to spend on movies, food, clubs etc. my parents go out to nice restaurants, dinner clubs and jazz clubs most weekends where she can sport her 2.5 karat diamond ring. i am allowed to be in sports all seasons which cost about 200 dollars each, and i do specific training in the summer for about 400 dollars. speaking of summer, we just got two new four wheelers, for our renovated cabin on the lake. i also just got back from a school trip that involved going to new york for $1600 plus the extra $1000 in cash I was alowed for meals and shopping. i am also leaving for mexico in two days to enjoy some much desired heat haha. anyways we live in one of the wealthiest suburbs of Minneapolis. But then again I spose things could be more costly outside of Minnesota, but we seem to be doing just fine. i certainly wish the best for all of you who are struggling, and am giving kudos to those of you who are managing everything just fine! good luck to all of you (:

This blows my mind. No insulting, just how expensive certain regions can be. My wife and I have two children, and we do very well on 40K a year. It is crazy how expensive some parts of the country. In our parts, a six figure income is still doing very well

I live on $40,000 a year, I am 30 years old, and I have $192,000 in savings, a new mustang and I am 31 years old.

If you can't make it on $96,000 then you have issues.