How much $$ do these people make?

[ineedabrowninggold]

When I read all over the board that for savings you should max out your employer match, max out an IRA $4K/year if I'm not mistaken, and have a money market account, I wonder how much are these people making. DH and I between the two of us have $1250/month in payments, this does not included utilities, maintenance, insurance, taxes, food, gas, or savings. We bring home around $3K/month I save $200 per month in a plain savings account-easy access. I save $30/wk + match in 401, I must be lower in the middle class than I thought. Does everyone make a bunch more and I live in La-La land or are other peeps struggling with this too?

[TxQuiltGirl]

I can't speak for people on this board, but the people I know who are doing ALL of that are the ones who are both professionals, and bring in at least $150k a year. Many of them live on one salary and save the other.

[ineedabrowninggold]

Well thank you Quilty, that makes me feel better. I live in the sticks, and there are very few if any here making that kind of $$. I hope I am saving enough, though.

[Q]

I don't know either, I max my 401(k) though plus employer match, still working on the Mutual Fund, and never bothered with the IRA as I make too much money to get the tax benefit.

[TxQuiltGirl]

I don't know either, I max my 401(k) though plus employer match, still working on the Mutual Fund, and never bothered with the IRA as I make too much money to get the tax benefit.

<{POST_SNAPBACK}>

 

 

And there's your answer! LOL

 

I need to find a single man like Q to marry ... maybe THEN I could get ahead financially!

[ineedabrowninggold]

Yeah, I guess I hitched my wagon to the wrong train there!!Ha ha! Oh well I guess I'll explore that tax benefit that Q isn't using.

[Q]

I don't make much money believe me. That and my job position here is on a really fragile rope, with the threads slowly tearing apart. I'm single and its just me and no dependants, so I would have to make less that 40 a year to get that benefit. I am still trying to figure out if its adjusted income or your earned income used to figure out eligibility for that write off though.

[Skipper12]

I don't make much money believe me.  That and my job position here is on a really fragile rope, with the threads slowly tearing apart.  I'm single and its just me and no dependants, so I would have to make less that 40 a year to get that benefit.  I am still trying to figure out if its adjusted income or your earned income used to figure out eligibility for that write off though.

<{POST_SNAPBACK}>

 

Q,

 

Hi!

 

The info your looking for is in IRS Pub 590, page 14, Table 1-1. Here's the link: http://www.irs.gov/pub/irs-pdf/p590.pdf

 

Basically, if you single and you're modified AGI is under 45K, you get the full deduction.

 

Take care,

Skipper

[Q]

Yeah, so much for that idea, I didn't have that many credits for my tax return. Well next year its $5000 higher, and I decided to utilize some spending accounts, that and tuition might put me in that bracket. I wish deductions counted too, but that AGI though.

[Skipper12]

Well thank you Quilty, that makes me feel better. I live in the sticks, and there are very few if any here making that kind of $$. I hope I am saving enough, though.

<{POST_SNAPBACK}>

 

Hi Ineed,

 

I'm a NYC native that now lives in small (25K), quiet town in the Florida Panhandle. According to the Census Bureau, the average household income where I live today is $41K.

 

Most of the folks living in this area say that there is very little money to be made here, and that opportunities are very limited. Sorry, but IMHO that's really people's perceptions and not a true picture of reality.

 

I'll make 3 points:

 

1) There is a vast difference between having a high reportable income and being wealthy or "rich".

 

2) Percieving people's wealth by their visible possessions (big home, fancy new cars, and etc) and their activities (country clubs, expensive vacations, and etc...) can be very misleading since all of these things can be attained by using Credit.

 

3) Unless you have access to the details of a person's financial statement, it is very difficult to see if that person is truly wealthy or not. "Looking" wealthy and "being" wealthy are truly 2 different things.

 

Here's a true example. We met some friends of ours @ 2 years ago. This couple (of 30 years) had just opened a small business and were working 80+ hours a week each trying to make a go of the place. They had to declare bankruptcy 3 years ago (over an insurance issue), and drive what can only be described as a 15 year old "beater" pickup truck.

 

Hardly anyone's definition of "rich" folks, huh? Au Contraire! They also have built passive income streams of over 10K per month, own a working farm, and own 3 thriving businesses. They are financially capable of retiring anytime that they desire, but have not chosen to.

 

IMHO? One persons perception is not always an accurate picture of another persons reality. Hope that helps.

 

Take care,

Skipper

[54regcab]

"The millionaire next door" describes exactly what you just wrote.

[hegemony]

it is all relative; purchasing power parity is a better measure of income than just referring to income without adjusting for cost of living.

[pinkflamingo]

It doesnt matter how much you make, but what you DO with what you make and the choices you make in life. And yes, appearances and how people "perceive" you is very very deceptive.

Most of my clients are college-educated professionals and have quite high paying jobs. They drive new cars (that come with hefty payments) and dress very nicely. They have expensive hobbies and full social calendars. They live in nice houses filled with new furniture. And I often hear complaints about how they are broke.

My husband and I only graduated from high school, and for various reasons, did not attend college. Neither of us have ever grossed over $40k a year. We made the choice very early in our relationship, that we wanted to invest in real estate. For many years we only broke even, and chose the "unconventional" path in today's society of driving used, paid-for vehicles, hand-me downs and garage sale clothes most times for our kids, used furniture, less than name brand clothes when new. We had a goal we wanted to achieve. It has been far from an easy process. We dont eat out or go to the movies alot, we rarely go to the mall or do those "cool" things. We prefer to spend time as a family.

If you saw us on the street, you would most likely think we just get by financially. We drive 9 and 10 year old vehicles, most times wear jeans and t-shirts and live in a modest 2200 s.f. rambler. We also own investment property to the tune of $1.3M, of which about $900k is equity. My husband contributes the max to his 401k, and I work from home as a child daycare provider. Not a glamourous life by any means. Our adjusted gross income on our 2004 tax returns was just under $42k. Most of the people I work for have no clue about our investments, we choose to not share it with alot of people. Alot of people would be absolutely shocked, and I'm sure some would never believe it. It has come as the result of living a very low-key lifestyle for many years and making the absolute most of what we make. The real estate boom has helped tremendously too , and I'm extremely thankful we've made the sacrifices we have over the years to get where we are today. We've taken alot of gambles as well, but for us it's paid off big time.

Moral is, it's not always about HOW MUCH you make, but what you do with it.

[Skipper12]

"The millionaire next door" describes exactly what you just wrote.

<{POST_SNAPBACK}>

 

54,

 

The old Thomas Stanley book? Yes that book was well researched and clearly documented. I've read many other financial authors (Kiyosaki comes to mind) who say virtually the same thing.

 

I was an IRS volunteer for 12 Years + worked for H+R Block for 5, and repeatedly saw exactly the same things with the people I was doing Income Tax preparation for. It is simply impossible tell how wealthy someone is from external things (like homes, cars, or clothes). Pink Flamingo's personal story rings very true.

 

Today, we're in business buying up pre-foreclosures, rehabbing, and retailing or renting. Virtually none of the clients we have dealt with were what anyone could truly consider "poor", all simply had run into financial difficulties for one reason or another.

 

When we go to foreclosure auctions at the local courthouse, all bids are strictly for cash, and must be settled by the end of that day. When the cash bidding gets past 200K (that's 5 years income for the average family here), it's usually folks in plain clothing and not driving fancy cars, bidding 200K+ in cash.

 

Conventional wisdom about what people perceive "rich" folks to act like or be like is totally inaccurate.

 

Take care,

Skipper

[54regcab]

Yep that's the book

They said to not have a mortgage over 2X your annual income, but that's pretty tough in some markets.

 

I bet in 95% of forclosures peopel did a no money down deal and didn't have enough equity to sell the house. I seriously doubt anybody that put 20% down wouldn't try to sell the house and get their equity out. The very fact they had 20% to put down says something also ...

[jodyangel]

....When I read all over the board that for savings you should max out your employer match....

 

What does this mean Exactly. Max out your employer match. I honestly have no clue what that means.

[54regcab]

....When I read all over the board that for savings you should max out your employer match....

 

What does this mean Exactly. Max out your employer match. I honestly have no clue what that means.

<{POST_SNAPBACK}>

 

If your employer has a retirement plan (such as a 401K) where they match a portion of your contribution, you should contribute enough to get all of the free money that your employer will pay out.

[Izmunuti]

....When I read all over the board that for savings you should max out your employer match....

 

What does this mean Exactly. Max out your employer match. I honestly have no clue what that means.

<{POST_SNAPBACK}>

 

An example from a company I used to work for:

 

They would match 50 cents on the dollar what I elected to contribute, up to 6%. If I contributed 3%, they pitched in 1.5%. If I contributed 6%, they pitched in 3%. If I contributed 10%, they only pitched in 3%.

 

To max out my employer match, I would need to contribute 6%.

 

If your employer offers a match -- not all do -- it's free money so it's worth at least taking full advantage of it.

 

Iz

[Clarkfan2]

I have yet to max my 401k yet. I make around 35k but save over 30%. FY 05 Roth Contribution is maxed out, 10% ESPP, 10% 401k. I don't forsee myself maxing out a 401k for many years but do the best I can with the cards I am dealt. Technically I could drop the ESPP and contribute 20% to the 401k but think buying and holding at an immediate 15% gain will be better if I hold the stock long enough to get favorable capital gains. I like the mixed basket method better anyway. So it may be many years before I max a 401k yet I will still have substancial investments.

 

 

Clark

[maporsche]

I currently contribute 6% to 401(k) to get full company match. I have been saving up for my home/paying off debt for the last year, so currently this is my only retirement savings.

 

My home closes on 5/9. I have $5k in the bank that I won't touch and about $4k for my move-in. I now have $0 debt as well.

 

Starting next year I will contribute 10% to 401(k) for tax benefits, 10% to ESPP at 15% discount, 10% to a car replacement fund (used cars only), and 10% to my emergency fund until I get up to 1 year's expenses.

 

I currently make $45,000/year. I am 25 years old.

[54regcab]

I currently contribute 6% to 401(k) to get full company match. I have been saving up for my home/paying off debt for the last year, so currently this is my only retirement savings.

 

My home closes on 5/9. I have $5k in the bank that I won't touch and about $4k for my move-in. I now have $0 debt as well.

 

Starting next year I will contribute 10% to 401(k) for tax benefits, 10% to ESPP at 15% discount, 10% to a car replacement fund (used cars only), and 10% to my emergency fund until I get up to 1 year's expenses.

 

I currently make $45,000/year. I am 25 years old.

<{POST_SNAPBACK}>

 

What is an ESPP ?

[maporsche]

I currently contribute 6% to 401(k) to get full company match. I have been saving up for my home/paying off debt for the last year, so currently this is my only retirement savings.

 

My home closes on 5/9. I have $5k in the bank that I won't touch and about $4k for my move-in. I now have $0 debt as well.

 

Starting next year I will contribute 10% to 401(k) for tax benefits, 10% to ESPP at 15% discount, 10% to a car replacement fund (used cars only), and 10% to my emergency fund until I get up to 1 year's expenses.

 

I currently make $45,000/year. I am 25 years old.

<{POST_SNAPBACK}>

 

What is an ESPP ?

<{POST_SNAPBACK}>

 

Employee Stock Purchase Plan. I can buy company stock at a 15% reduction in market value, maximum of 8% of my salary/year.

[pokerguy]

IMHO, paying yourself first with some portion of your income is the most important thing an individual or couple can do.

 

The wife and I make sure all our CC's are PIF each and every month. Other debt such as our house, a small student loan, and our 1 car payment (at 3%) come behind contributing the max to our 401k's and our Roths. With employer matches this year we will be setting back $40K toward retirement during this tax year.

 

With a little help in the market and the discipline to do this for ten years, we should be well over a million in net worth prior to being 50. We are in year three of our plan and have over $150K in tax free/ tax defered savings.

 

It is not as hard as you think, you just need to learn to discipline your spending, start paying yourself first, and get away from the idea that it is "OK to pay the banks interest on their stupid credit cards". The banks will still be make plenty of money in merchant fees from every transaction. It makes me wonder if Tony Soprano is the CEO of Citibank?

 

Pokerguy

[radi8]

When I read all over the board that for savings you should max out your employer match, max out an IRA $4K/year if I'm not mistaken, and have a money market account, I wonder how much are these people making. DH and I between the two of us have $1250/month in payments, this does not included utilities, maintenance, insurance, taxes, food, gas, or savings. We bring home around $3K/month I save $200 per month in a plain savings account-easy access. I save $30/wk + match in 401, I must be lower in the middle class than I thought. Does everyone make a bunch more and I live in La-La land or are other peeps struggling with this too?

<{POST_SNAPBACK}>

 

You are doing better than most folk, who save nothing at all. Don't sell yourself short!

Sure, more is better. But you are ahead of the game already.

[maporsche]

When I read all over the board that for savings you should max out your employer match, max out an IRA $4K/year if I'm not mistaken, and have a money market account, I wonder how much are these people making. DH and I between the two of us have $1250/month in payments, this does not included utilities, maintenance, insurance, taxes, food, gas, or savings. We bring home around $3K/month I save $200 per month in a plain savings account-easy access. I save $30/wk + match in 401, I must be lower in the middle class than I thought. Does everyone make a bunch more and I live in La-La land or are other peeps struggling with this too?

<{POST_SNAPBACK}>

 

You are doing better than most folk, who save nothing at all. Don't sell yourself short!

Sure, more is better. But you are ahead of the game already.

<{POST_SNAPBACK}>

 

 

Radi8 is right....most people I know (85%) have very little in savings (less than $1000) and between $4000-$18000 in credit card debt (and even more owed on their cars). These are people who are making between $45,000-$100,000/year. They try to live like they are millionares. You are doing the right thing by saving. The folks I'm talking about depend on their jobs to maintain their lifestyle. If they lost their jobs, they'd be lost and drowning in debt. Soon (but never soon enough), your savings will entitle you to do the same w/o working.

 

Just because someone may appear to be in a better situation or further along on their plan should not discourage you. I didn't let it discourage me. If nothing else it motivated me to get to the same point.

 

Good luck, and good job.