Trying to Live on 500k in New York City

I just heard a discussion on the radio of this article:  You Try to Live on 500K in This Town, which appeared in the NY Times recently. 

At first I thought it was more of a satire, who could possible not be able to live on 500k???  However when you start adding it up….

PRIVATE school: $32,000 a year per student.

Mortgage: $96,000 a year.

Co-op maintenance fee: $96,000 a year.

Nanny: $45,000 a year.

We are already at $269,000, and we haven’t even gotten to taxes yet.

This is taking “keeping up with the Jones'” to the next level (and beyond).  We live in a society where competitive consumption is the norm and comparing yourself to those of social equivalence is no longer good enough.


2 Responses

  1. I was wondering if anybody would post about this. I looked into the TARP business a little bit and the actual limitations that are placed on people are very small. The news reports as if everybody who receives TARP funding will have their pay capped at 500 thousand dollars. This is not the case, there are strict guidelines over who would receive the pay cap, and who wouldn’t.

    First, to be eligible for the executive compensation the company that you work for would have to have enrolled in the TARP program as needed “extraordinary Assistance” such as Citigroup and AIG.

    Second, the limitation would only apply to the top 5 executives within the company (as determined by pay after the president and financial officer).

    Third, additional compensation may be made, but only in the form of stocks from that company, that can not be cashed until the bank has paid the government back.

    Fourth, the compensation is not mandatory if the compensation packages are made public. So while officers may have a limited payroll, it only applies if that payroll is not made public.

    Fifth, it is not retroactive.

    These are some of the points that I saw within an article discussing the Executive Compensation rulings that I saw here.

    About living in New York though, When you think about it, NewYork is a very expensive place to live, but a the same time people can afford to cut back on the luxuries that they feel they are entitled to. I think it is amazing what this article tries to convince people of, that two vacations a year count as “living expenses” Or that they need to go to the gym ($12,000 year) so they will look good dressed up at a social function ($35,000 a year for 3 dresses). It would be really nice to afford those things, and it is a shame that they could not do this on $500,000 a year, but really, suck it up. By tightening your belt, working out by yourself, and wearing dresses you already own, and spending a vacation locally with friends and family you could save over $70,000 a year. Not including a nanny ($45,000 year), chauffeur $70-125,000 year). You can’t fault people for trying to educate their kids, or paying for garage space, but in case people are limited to $500,000 a year from TARP limitations, I am not very sympathetic.

    The article itself leaves me wondering what side of this the author is on, is he speaking against the TARP funds, or in support of them? I can not tell if he is being sarcastic or not.

    The problems within our society that makes a half a million dollars a year an unacceptable wage is how people are spending money. Everybody is more concerned about their social position, then economic stability. Everywhere people look they are bombarded with information that tells them to buy more, to achieve a luxury lifestyle. It is hardly a wonder that people spend all the money they make every year. Any solution to the problem begins with people saving money instead of spending money.

    I have a question to anybody who has a background with economics, could you describe the pros, cons, and likely effects of a progressive consumption tax? A tax that would apply to expensive luxury goods, or upon spending more then $60,000 year on material goods? a tax that increases the more your spend basically.

    Anyhow, there is some food for thought.

  2. Well it is all relative really. With an increase in salary comes increased spending. Someone who makes 30,000 buys all the same types of things, just at a smaller level. They still pay for a baysitter, but maybe in trade or substainially less money. Still pay for a gym membership, but only $75 bucks every few months rather than an hour. Still pay for a car, but it is a Kia and they drive it themselves.

    It is usually a slow process to achieve 500,000 a year. Through this process one slowly becomes aclimated to the spending habits of the rich which are the same as middle class, relatively.

    What us Western World populations need to learn how to do is stop spending. Stop buying new everytime something craps out on us. It is not necessary for us to have a toaster and a microwave oven and a car for everydriver and a bike that is nice and new and new skis and unfaded pants and a new coat every winter and a new book bag every school year and clean shoes and new dishware… Our precieved standard of living has been created by corporations and ourselves by being lazy enough to let them influence our desition making.

    I know how difficult it is to not “keep up with the Jones.” I fail at it all the time. Currently, I feel like I need a new laptop because mine is super slow, but if I can just step back and take a look at my situation objectively perhaps i will appreciate that I have a laptop at all. You know?

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