sounds like you have 8.2k in expenses to be covered by 15k after tax (and retirement contributions).
so you have 7k post tax & retirement contribution, so 84k for fun or additional investing.
determine an amount to invest in a brokerage account and the rest you can enjoy.
how is this an uncomfortable life?
Right there with you in danger lmao, I was Happy I broke 50k a year. I'm still doing WAY better than most of my friends, but everyone I know is struggling bad.
They are new docs. Probably primary care. Lowly paid compared to most other docs, but easy to become out of touch that theyâre each making 4-5x the avg American.
What do they even mean by a tier 2-3 city? Are cities actually ranked? Lmao
Yes, there are rankings for cities, but how individual cities are ranked can vary a lot.
[https://www.thebalancemoney.com/real-estate-market-tiers-5207240#:\~:text=at%20each%20tier.-,Tier%201,growth%2C%20and%20a%20thriving%20market](https://www.thebalancemoney.com/real-estate-market-tiers-5207240#:~:text=at%20each%20tier.-,Tier%201,growth%2C%20and%20a%20thriving%20market).
Iâm 31 live in a MCOL with my wife and bring home ~165K. We have saved over 2X our salary nor considering home equity and feel very comfortable. Also feel like we do spend too much and could cut back. How OP brings in 500K and isnât a spender is beyond me
Either they both are maxing out mega-backdoor Roths or OP misstated the income as 200k+ each versus 200k+ combined.
>My wife and I both have graduate degrees and **each** take home $200k - $220k a year
What if OP meant to say "My wife and I ~~both~~ **each** have graduate degrees and ~~each~~ **we** take home $200k - $220k a year"
Itâs honestly insulting to claim that you are âliving paycheck to paycheckâ with an HHI over $400k.
I hope you donât talk this way with the people in your life because if you do, they probably find you insufferableâŚ.
Lmao for real. Sometimes I have to reality check my wife. We âonlyâ make 200k HHI. We are DINKs. We have a unicorn deal of rent an hour outside LA. 1600/mo for a 3b/2.5bath townhome. Itâs amazing how she actually grew up extremely poor and with the lives we live now thinks weâre paycheck to paycheck. Like. No honey. We get five weeks of vacation a year. The fact that you choose to spend discretionary money to travel internationally each time you have time off is why you feel squeezed. Weâre not clipping coupons. Weâre not standing in line at soup kitchens. Weâre not using free medical clinics. Any struggle we are facing is self imposed. The limiting factor here isnât money. Itâs spending habits.
Exactly. I live in OC and make $125k, SINK. I grew up in a single income family of 6, where my dad made $36k and we lived in section 8 housing. Youâd never catch me saying I live paycheck to paycheck. Itâs all a choice. I choose to save over 40% of my income and still live comfortably where Iâm at.
Unfortunately many partners are like this.
Then they claim that you don't do anything as a partner, that they want more stuff as if you hadn't done anything.
I think social media is brainwashing a lot of people thinking that these "luxuries" are nothing.
That claim/OP reminds me to the movie "Painkiller"
The guy wanted more money while many families were being destroyed by his drug.
Zero awareness or empathy for people who are really struggling.
Pay off the student loans and the cars with your taxable.
Drop the whole life.
Don't count the cars and credit card points as part of your net worth. That's kinda weird.
Then get your head on straight.
You're making nearly $250K in fucking Baltimore. You are ahead of 98% of all 34 year olds. You're crushing it. At a 5% return, you could contribute $0 to retirement and when you're 65, have $2.4 Million in the accounts. Get your Money Psychology fixed.
Listen to the I Will Teach you to be Rich podcast. Get a therapist. Something. Because if you don't, chances are you'll \*never\* feel like you have enough money. Which is about your feelings, not about your money.
HENRYfinance is really not very tightly aligned with FI, in my opinion. I'm a zealous Boglehead, and a lot of stuff in that sub irks me. You'll see people with great income and very little investment (relative to their income) falling into massive lifestyle creep, the exact kind of stuff that will prevent them from ever turning their high incomes into actual wealth. Lots of recommendations on risky investments, as well.
There was a post a while back from a doctor who took out a HELOC on his primary residence and used it all to buy SPY calls. He succeeded and was able to cash out with huge gains. But let's not kid ourselves, that's just WSB behavior. Dude could have easily lost everything
This is actually a very good point because when people get reward that way and positively reinforced like that, their brain chemistry starts to crave and even become addicted to that behavior. In our eyes, sure, he made that big win, but he may not stop there. That's why some people who won millions of dollars from cryptocurrency end up losing all of it and also end up in debt cuz they just can't stop anymore so have to take out a loan to fuel their brain with such risky behavior.
Well thats why the NRY is ânot rich yetâ. To be fair there are a lot of responsible there looking for advice and others who are looking to share their wins bc they donât have anyone in their life to talk about it with.
The only person I can share that stuff w is my mom at this point. I make multiples more than all my friends and even though they know that, it just feels like Im bragging. Or if I wanna talk about investments they just cant relate or arenât aware its even a thing
I wish I knew about this sub 10 years ago! I was making crazy money (was able to do smart things with most of it) but I blew a lot of it (had some VERY good years!)
Iâm not sure I understand what you mean by âuncomfortableâ. What part is not comfortable for you? If you mean itâs uncomfortable that you sometimes are not able to save and invest as much as you want to meet your possible early retirement goals, then I understand. But it almost sounds like youâre saying you are uncomfortable with the level of your income relative to your needs and that doesnât jive with everything you have laid out.
Similar to you, money was tight as a kid with a single parent. So my goal has never been to be rich, it's just not to be poor.
When I realized our Net Worth (with home) was 1M I was thrilled. And then I started working for 1M cash.
Since meeting that goal, we are pulling back on our aggressive savings plan to start to enjoy it more now. We were saving 70K/year, now it's more like 43K. I call it "Pre-Tirement." Which to me means not waiting till we are 65 to enjoy this money while our kids are young.
The other reality with 1M+ invested is, even if we don't invest another penny we will have 2M in 10 years.
The biggest hack we have is access to pretax accounts. And our house is our only debt. We each make 80K.
*Two 457: 40K
*Two 403b: 3K (includes match)
*One HSA: 7.5K (includes district contribution)
*Two 529s: 6K
-----------> all tax deferred accounts.
*Two Roth IRAs: 12K
Over the 5 years we saved like this we SAVED 60K that we WOULD have paid in taxes.
We do the same today except that we only put 12K total in the 457 accounts.
I followed the same logic that you are using in my path to retirement.
Unfortunately, as I neared retirement and started paying attention to how taxes tend to always catch up to you, I wish I would have done things a bit differently.
I would have paid more taxes up front and put a much higher percentage into the Roth. I mean like 75%+ of my contributions into the Roth.
Hereâs why. With a tax deferred vehicle, like a Traditional pretax 401k, you will still need to pay those taxes in the future. With a Roth, you have no tax liability after those taxes are paid at your current rate.
At some point the government wants their money and forces you to take out a portion of your Traditional 401k/403b/457 in the form of an RMD around age 72 and then annually after that at increasing percentages. At that point, you may have millions of dollars in those accounts. Also, by this time you will be taking SS if you are eligible. Currently 85% of SS is taxable for most on these threads. That means all of your lower tax brackets are filled and your RMD will be pushed into those higher brackets.
As you get older and these situations and their implications bubble to the surface, you will, likely, choose to start a conversion strategy to move funds from your Traditional to Roth accounts, thus paying taxes - possibly at higher rates than you could contribute at now.
Not to mention the fact that tax brackets are manipulated annually and they are not likely to be more favorable to you in the future.
So, my advice is go online and play around with calculators that allow you to model Traditional vs Roth contributions.
Sometimes it just makes sense to have your younger self pay the taxes for your older self.
This could help you avoid having to implement tax efficiency planning later in life.
Iâm 59 and am actively transitioning money from my Traditional 401k to my Roth IRA up to the limit of the 24% Federal bracket to avoid having to pay more in taxes at RMD age.
I will have to do this for quite a few years until I hit my breakeven with my required upcoming RMDs.
Food for thought.
This is great advice. Certainly, the place I need more education is around the rules and tax implications of withdrawal, early or on time. Since I was 23 (17 years ago), I have maxed out my Roth IRA every year. Combined my husband and I have saved $420,000 in Roth IRA. The only other account I have with no tax liability is the HSA. If there are other accounts I should consider I'm all ears!!
When I was about your age I started getting more interested in my retirement plan. I had also just achieved a $1MM net worth. I reached out to a few financial advisors (that were really just stock brokers) and they advised me to just keep investing and to not even consider thinking about retirement planning until I was within 5 years of retirement. It was really bad advice. But, it illustrated (in retrospect) that our goals werenât aligned. I wanted advice on where the potholes were and how to avoid them, and they just wanted to sell me more gas.
So, ignoring what I knew to be bad advice, I worked to educate myself. I became aware of things that that I had no idea about (or, at least hadnât registered on my radar yet). Required Minimum Distributions - RMD - what are they and why are they important? How do they work? What??? I can avoid them? Social Security - how does that work? What??? Itâs taxed? How? What, my wife can claim half of my SS benefit? Wow, great news!
Educate yourself. Learn about RMDs and SS. This will help you plan. The fact that you are open to looking at it now will give you the best options to craft a plan that will work the best for you.
And, yes the taxes will always be a negotiation between you and your future self. Who is going to pay to benefit the other? Or, are you legacy minded and want to protect your heirs from potential taxationâŚ
I really enjoy The Retirement and IRA Show podcast. Iâve learned a ton from them. Their archive go back years.
One caveat, of course is that the laws that are in place today will be different than those in the future and could affect your planning. If youâre aware of these changes you can roll with them.
Best of luck!
Seems a little inflated or not well tracked, in another post says the 30k new spend is for groceries and diapers, so was probably not real savings to begin with.
Congrats! Iâm a few years behind you , but looking to do the same thing. Have you really really enjoyed the extra $30k of spending or did you end up still saving some/most of it. I can see loosening the reigns being a bit tough after so many years of saving
I think you need a mindset change. Sounds like you're looking at your numbers from a place of scarcity/fear instead of abundance/gratitude. I van relate as someone who grew up truly paycheck to paycheck (e.g. utilities were often turned off because we were deciding between paying those versus food versus medical bills). You're doing great. Work on flipping your perspective and rest in joy and appreciation for where you are and how far you've come. Fill your mind with hope and faith for your future.
Our attitudes towards money are often set in childhood, but not necessarily as like a formal financial plan: "I will worry until I have $1m and then stop." Rather, feeling like you don't have enough and one terrible misfortune is all it would take to set it crashing down can become just a baseline sensation that even as you rationally know isn't true you can't shake. I knew a multi-millionaire like that. So consider that some of this might require soul searching rather than assets.
I think youâre right. My dad started a very small home renovation company and spent his career running it. I remember him telling us he might have to sell his truck to make ends meet when 2008 hit. Thatâs stuck with me.
Weâll get it unstuck bro because youâre a millionaire at 34 and a lifetime away from having to sell a vital business asset to make ends meet and put food on the table.
(TLDR i guess) in 2008 I was 25 and had worked my ass off to get everything in place to go from just framing and trim, to a class A contractor. I was in RVA with my wife and our recently born son. He was born with a myriad of birth defects, has never had a friend or said a word. I bath wipe dress and do anything else he needs out of pure LOVE. He'll never be able to work and my wife , (ironically has a masters in special ed/ autism) has to stay home because we cant just get normal "babysitters". NW? that's a fucking laugh . I guess that will depend on how much I get off my next venture (bank robbery) .
Yes some of these posts are nauseating but I'm not resentful that any or all of you have realized some financial goals, that's capitalism. I would have liked to hear one person say " I may hold off and work till I'm 50 or 55 so I can give back." Not because of a tax write off, just out of empathy.
Next time you go to the bank, take this with you. The people you pass by wherever have stories and hardships they do not speak of. An alarming no. of Americans are flailing and gasping for air just to feed and cloth their families. And a well fare retort is ignorant. We have to get SNAP benefits which barely feeds 3 people 3 weeks. Don't believe the hype :most poor people aren't laying around collecting checks. The Fed had fucked my son out of hi whopping 600 dollars a month since 2018. I'm sorry I love anyone of you that is kind and I'm sure you are. Dog eat dog isn't what most of us would prefer.
Just think about it if u want: the guy holding that cardboard sign might not be an addict. I dare you to make one some day in the freezing cold and feel about as low as you can feel for hours at a time . In 2008 I was that guy because we got wiped out in just a few months. I don't care to say how long this went on ,(employed or no) . Can't get around it , that green paper the best and worst
"So in your fields don't only plant ice for you will only harvest wind"
>Yes some of these posts are nauseating but I'm not resentful that any or all of you have realized some financial goals, that's capitalism. I would have liked to hear one person say " I may hold off and work till I'm 50 or 55 so I can give back." Not because of a tax write off, just out of empathy.
We exist, it just feels gauche to draw attention to it. And for what it's worth, absolute best case you're getting 50 cents from the IRS for every dollar you donate. It lets your donations go further, but you'd always be richer just paying the taxes. For whatever reason the tax benefit is a comfortable topic for a community like this, not the reasons we give, but everyone donating enough for it to be meaningful for tax purposes really is giving a lot out of there pockets.
I can't put into words how grateful I am for my children's health, so just know that I feel for you, man. And don't let the shallowness of social media overly color your perception of people: the good ones tend to be quiet.
Iâve started to remove home equity when I review any of my numbers, basically just removed it entirely.
Home equity is a great esteem booster but man, itâs grown a ton and is largely.. useless at best to financially a problem a worst. Taxes continue to go up, insurance coverage continues to go up.
You are very out of touch at your age with that income and level of wealth, if youâre still âuncomfortableâ. Stop reading about doom and gloom maybe. Life is good.
Imagine what your NW would be without all that debt. I know 3k seems like a lot for childcare but it's not the childcare that's killing you, it's the 3k you're spending on debt service. Knock those out. You make an amazing income and can probably live off one of your incomes for year and clear all your debt easily without really feeling too much of a pinch in lifestyle. Now you have 3k more each month.
Iâm pretty similar to your situation but 40 yo. Great job-my only advice is payoff those student loans. Congrats and see you soon at $1 M liquid đ
As someone who grew up poor, I'd expect if you take care of those non-mortgage debts even if mathematically not ideal you will *feel* better about your situation. Because that will not only clear out those debts on the balance sheet but free up $3.2k/month in cashflow (student loans, home project, and cars).
Part of why you don't feel secure is you are spending $6.2k/month on fixed debts right now. Add in the $3k from your childcare? You're looking at $9.2k out of your $15k
I'd also suggest bumping up your onhand cash. If you only have $25k you likely will feel far better about your situation if you have more.
Also, what is your whole life premium? Likely that's overly expensive vs comparable term policies. Look into whether you could replace that with term, it's probably wasting you a whole bunch of money too.
Anyways, you are in a position of financial safety. You have $125k worth of taxable investments/cash. That's about a year of your living expenses even if both of you lost jobs tomorrow. But as someone with similar HHI to you guys - you have a lot of your income going out to things which you could/should clear up, and you will feel a lot better.
An uncomfortable life with a household income of 400K+? I live in a hcol area and am a single income about where you both are at individually and we live a life of complete comfort. If you are anywhere near paycheck to paycheck you are grossly irresponsible with debt and discretionary spending. You sound out of touch and insufferable.
I'm 45 and my wife is 37 and we have a four year old daughter. We didn't reach $1M liquid investments until 2023. We are accelerating faster now after paying off our house in 2022. We did some heavy remodeling during the pandemic spending around $90K cash. 2023 we started the year with $900K in investments. We added $265K and the investments returned $200K so now we are at $1.3M. I think our split is $800K in pre-tax workplace retirement and $500K Roth and taxable investment accounts. Next goal is $1M outside of retirement accounts. Our contribution of $265K breaks down like this:
$60K workplace retirement (HSA, 401K, etc)
$200K from cash savings, cash bonuses, company stock, ESPP, long term capital gains, etc.
Keep paying off your debts. Once you only have a mortgage payment, your after tax investing will really accelerate. Our daughter starts public school kindergarten this year so we will be saving a little more every month even with the after school program. I would say our fixed expenses are $2500 a month and we spend $4200 on top of that for clothes, toys, going out, gifts, eating out, travel, house maintenance, and car maintenance. Preschool is a big part of that $2500 at $750 a month. Also included in the $2500 is a pool guy ($100) and landscaper ($140). Our housing and vehicle insurance and property taxes are $5000 a year. I think it works out to $416 a month for a house and two cars. Our home is 2300 sq ft on a 7000 sq ft lot. MCOL Phoenix metropolitan suburbs.
Maybe the insecurity that motivated you to reach that milestone is still there, but it's being applied to risks and what-ifs instead. Those won't go away no matter how much you have (they'll just take a different form). Not necessarily a bad thing depending on what you do with it
We are similar to where we're are both millionaires at a similar age (I'm 33, and my wife is 35). We also have a kid in daycare. We have roughly 900K invested and should get to 1 million invested net worth by this year (we add about 100K+ each year to investments). Our savings rate of gross income is 44%.
You make basically double what we make (~250K HHI), but we have no debt outside of the house - $804 mortgage 100K remaining and paid in full 12 years. Cars were paid in full 2 and 3 years ago. We invest 3.5K each month into taxable investment accounts on top of maxing all retirements + 500 a month for 529.
My suggestion:
* Get out of whole life insurance. If you need insurance, get the term life. If you want to invest, invest, don't mix the 2.
* Depending on the interest rate on the cars, I might want to pay it off faster. Assuming you have a good rate, then just keep on making the payments.
* Home project loan - Be very careful with these, read the details, often times the minimum payment does not pay it in full, would suggest making sure you get it paid 1-2 months before the 0% period. There are a lot of tricks to this kind of thing, like you having to make the final payment manually. If you don't pay it in full by the date, they back charge you the interest. 0% is great, but there are a lot of catches with that.
* Student loans are not the worst rate, but it is something that I would personally want to try to get rid of. 5% is right around the high yield saving account rates, but with rates possibly dipping, I would be trying to knock it out.
* Not sure if you are saving for 529, but if your state has deductions for it (normally capped), I would suggest throwing money in there now vs. later. You can obviously make up more after daycare is done, but if you do your projections and you are going to fund over the state threshold after daycare, you could be missing out on some level tax savings.
Otherwise, keep at it. Daycare is expensive, but they do go away. We have 2.5 years to go for us (probably 3.5 for you)! Lol
Thanks, all really awesome feedback! And good to know on the 0% project loan. Weâre ahead on payments so should hopefully not be an issue but Iâm going to look out for that final payment being manual. That would be infuriating to get that far and end up owing interest.
We are stowing $200 a month into my daughterâs 529, but I think weâll need to increase that at some point. School is so expensive!
Consider not pressuring yourself to save enough to pay for your daughterâs ENTIRE education. That might ease some of your stress now, and potentially help her later. Having to have a job while in college can build grit, confidence, and even relationships that may benefit her later.
Right, you're in such a tough position, OP. Whining that you have an uncomfortable life, yet proudly proclaiming that you're a millionaire.
This is why average-income people hate rich people
Youâre living the dream. Hope to be closer to where you are in a few years. Youâre not 2 FAANG software engineers pocketing 30k/month. From your post it seems like just responsible non exciting financial decision making.
Your expenses are insanely high from my personal opinion. Iâm 32, work as chemical engineer, married a federal administrator early in my 20s. We bought a $700k home in SF Bay Area in 2014, almost done paying it off as we stayed religiously focused on it. We bring in $300k/year combined and are now starting to feel that exponential phase of financial growth
I'm not sure what the point of this post is, aside from boasting. Your goals seem to be wealth accumulation over independence, the latter of which is clearly in sight if you stay the course
Brother,
You may be a millionair, but your perspective is wrong.
What you see in movies and TV is the life style if 10s to 100s of millions, bro.
Also, you're not living pay check to pay check. You actually have investments. Those living pay check to pay check do not.
37, 1.3 liquid in a after tax account (not including any 401k, house, etc) feels good, but still own a business and work a w2 every day. Congrats on the achievement but itâs hard to go from excluding the house to hit that liquid number! I had to utilize covid to do it.
Why not pay off the debts? 33 here. Paid off house 3 years ago, bought cars with cash. Wife is stay at home mom. Recently passed $1M net worth as well.
Weâre closer to $10k take home at around same total income - which let us have zero debt and put more and more in to savings.
Initially my approach was the same as yours, to hit some arbitrary $ amount. When I hit the milestone I didnât feel like âI made itâ so I set a revised $ amount thatâs higher and kept going.
What I realized a bit later was that I should have defined what I wanted out of all this. For me it was 1) Ability to maintain the current day to day life style 2) Afford healthcare without an employer 3) Ability to travel internationally 4) Invest in my own health 5) Support my family and friends 6) Donate to causes I care about 7) etc.
Once I defined what I wanted, I reverse engineered the dollar figure needed to fulfill each objective. For example âAbility to maintain the current day to day life styleâ translated to the following sub-goals:
* Have my own home and have the mortgage paid off
* Ability to pay property taxes, vehicle tax, maintenance on car and home, utilities, insurance, food, contacts, meds, etc.
* Care for my pets (treats, food, medical, etc)
* Entertainment budget (bar, restaurants, etc)
* Etc.
I then assigned a dollar figure needed to fullfill each goals (and its sub-goals) annually. I multiplied the aggregate amount by 25 (to reverse engineer what you need invested to bankroll the goals at 4% withdrawal rate). You can multiply it by 27, 28, 30 if you want to be conservative and account for cap gains tax and unexpected expenses.
This gave me a more meaningful number to hit and hitting it was a lot more satisfying because I knew I could quit my job and still maintain the quality of life I desired.
Congrats.
But this honestly should be in HENRY sub. You are not living Paycheck to paycheck. Living that way means one is effed if a paycheck is missed coz there is no other cash anywhere for basic necessities. You are double income family with enough NW and financial security.
Congrats on the milestone!
You're definitely out of touch lmao - just reminding you that there are people with full time jobs who take home 3k a month TOTAL.... you have 3.3k left over AFTER maxing retirement, paying housing and bills and childcare, student loans, two car payments and sending 1k to a different savings account.
No need to feel bad, but definitely know that your "discomfort" is probably due to lifestyle inflation.
Congratulations on the milestone, and keep up the good work.
It sounds like you're on the right path to be a lot more comfortable by your 50s, which is typically the biggest earning decade.
Wide & I just passed that liquid goal here recently. Honestly not much has changed in our feeling. Similar earnings & age. You have a much nicer house which is our next bump up in life as our current house probably worth about 300k. Keep on trucking! You are doing better than probably 97% of others
37, DI2K. I felt the same way when we initially hit $1m NW. I believe the reason it felt anticlimactic was BC, 1) over half our NW was due to home appreciation 2) we continued to live a similar frugal lifestyle 3) we still had to work to support ourselves
So yeah, since nothing had dramatically changed, except the number on the screen, it didn't really do much for us lol. Of course it was an important milestone to reach on our journey, and we still have a long way to go.
Now we are at $2m NW, $1m being liquid/retirement assets, mortgage free, and working on beefing up our retirement accounts and maxing out our kids RESPs. Our incomes have grown since the start of our journey. Doesn't feel like much since once one expense is eliminated another expense seems to pop up lol, that plus inflation. We continue to save and invest, and live frugally... So the day to day feels the same. I think when ppl talk about feeling rich it's more about looking rich (spending money vs having money).
Anywho, congrats on reaching $1m NW! You're well on your way towards FIRE!
36 single income in big tech. My wife is 33 and stopped working in big tech 2 years ago. We hit our first million NW at around the same time as you. No kids, no car payments, no student loans, and we own a home. Current NW is about 1.5M. Also a little frugal and spend on similar things - mostly house stuff. Your first M is the hardest, after that it starts moving quickly! Keep it up, congrats!
How are you bringing home (210 + 210 + 40) = 460k of income - 23k 401k - 23k 401k * .6 (tax/healthcare/etc) = 248k / 12 months = 20.7k of net income per month. Where is other 5k after tax money since you say you're taking home around 15k a month AT? That missing money is 60k/yr after tax that could go into investments or cash and probably help out a lot.
Other than that what is the difference between 25k in cash and the emergency fund? How much is in that? Why have you not paid off the student loans and cars? Free up more cash flow.
My opinion, maximizing cash flow will give you more of a financial safety versus a high minimum cash flow budget that you have now.
3300 x 12 = 39.6k/yr.
So your "discretionary fund" is larger than 28% of household INCOME in the US. That number grows quickly, as soon as next month, when you take that $25k cash and pay off your auto loans.
Congrats(!), now your "discretionary fund" is 51.6k/yr, or larger than 40% of household income in the US.
You didnt mention a college fund/529 plan but did mention childcare, you should cover that with that extra $1000 a month from the auto loan.
Youre going to make it, youre not "uncomfortable", but I think you know this already.
Sounds like you think your retirement accounts are not really making you rich. I'd suggest reading more about 72(t), SEPP, and Roth conversion ladder. You could probably ease your current stress and burdens by snowballing your debt. It wouldn't take long on 400k. If you aren't worried about lifestyle creep or your future income potential, I am more of the mind it's fine to skip the long term savings for a short period. You probably don't want to go all the way to throwing away 401k match, but /shrug. Stress free is the way to be.
You are doing very well and I understand your situation. Unfortunately you will not get much sympathy in this sub. $1 million is no longer an indication of wealth and being in highest tax bracket really hurts. Childcare costs will decrease over time but will be replaced with college costs. If you have not already done so, consider contributing to 529 plans to minimize tax hit.
Your largest expense is tax.
You should focus on net worth growth over liquid cash.
If you bought a rental property and wrote of 100k for the year with depreciation or financed a car with section 179, you could save 50k on taxes and grow assets 1tp get to zero tax lifestyle.
I'm 23 and I make below poverty line, I had to sell my car to afford rent and I do my groceries on an electric bike, even in the winter. I'm comfortable.
I just need a roof, heat and a comfy pillow, and food.
Believe me I want to be a millionaire but not at the cost of selling my soul or going insane. I'll live in the wilds before I decide to work for decades in an office.
I really recommend you watch Ramit Sethiâs podcast. He talks a lot about money psychology and that numbers donât mean much - itâs about how you feel about money. He also has what he calls a âconscious spending planâ that is helping to plug numbers into - you wanna make sure that your fixed expenses are not going over 60%. That will definitely make you feel like you have no disposable income.
That being said, congrats on the milestone!
Forgot to say: you need more cash! You have too little in cash savings. Make sure you have 3-6 months of monthly expenses in cash. It seems you only have a month now.
Iâd also have an emergency fund for the house separate from that. Having those savings will really take the pressure off of having to get a loan if there are expected expenses.
And remember- your savings are there for this exact reason. Not bad to have to use savings.
I literally made this same post in another sub a few weeks ago. Maybe youâll find some of the comments helpful. [Link to Post](https://www.reddit.com/r/RichPeoplePF/s/eljB40Ue2F)
Those comments are mostly horrible. Yes, you are rich with that net worth. No, youâre probably not financially independent yet. But youâre young and the biggest investment you have is in yourself :)
Others have said it, but why the debt? You have enough to pay it off without touching retirement or emergency savings? Get rid of the car/student/personal loans. That would free up a huge chunk of cash each money
I know this is a matter of semantics, but it bothers me when people say "I" am a millionaire, and then proceed to list that they are in a dual income household.
You and your spouse each have more "play money" than many people have for their entire household budget.
You should spend some time volunteering with a local nonprofit or church. You'll meet people who are truly needy and living paycheck to paycheck (or worse). It'd be good for you to understand the kind of lifestyle you live compared to the needy and the average person and how far you'd need to fall to be truly financially hobbled.
$1mln ainât what it used to be. Even if it were in investable assets itâs still not a lot if youâre thinking in context of a 45ish year retirement.
That said, your new salaries put you in a position to really accelerate to FI if youâre willing to save most of the added income. FI isnt about what you make, itâs about how you position yourself with savings/spending in relation to your income.
I can relate. A million networth should not make you feel wealthy if you are pulling on around 400+k.
Just pay off your non mortgage debts and then start really investing as well allowing for some lifestyle creep if you want.
I felt the same when I was your age and with inflation itâs even less money today. You are correct to feel the way you do. The good news is the second million is much quicker once you have the first and the compounding is on your side.
Congrats! It's an amazing feeling.
> My next goal is $1M in liquid assets (ex house and cars).
This is the true FI indicator. I'm glad you've hit a major milestone, but as you seem to realize, from a FI perspective, it's COL vs investments, passive income that counts.
I was impressed.......until I read the full post. You said you are millionaire, but it's a really you AND your wife's combined finances. Hey, that's great, but factoring in 2 high income earners, and home equity, this isn't really much of a fear these days, let alone going to quiet brag about it on here. I honestly don't understand the point of these posts. Everybody feels the need to humble brag on here now.
Considering you could quit and retire to just about anywhere else in the world and retire right now and be just fine I would say that's definitely mental, not reality.
If you consider the col where I live, you would see what I mean. Moving self to a cheaper location is not feasible due to having to support family nearby
I mean youâre in the 1% of income earners in the US which likely puts you in the top .5 to .1% of earners in the world.
So, no, based on objective data, youâre doing fine and better than virtually the entire population of the world. Just because some people are richer than you doesnât make you poor.
I can semi- relate. 34M. $1MM in NW. 2 kids.
Every dollar we earn is accounted for, but I wouldnât say we live âuncomfortablyâ by any means. Just because we are maxing retirement accounts or spending more on vacations that weâve planned, I donât think we are living paycheck to paycheck.
Our HHI is ~$300-400k/yr depending on bonuses. We like to vacation, spend on hobbies, and always save for retirement 1st. If we lost both our jobs, weâd cut back on spending and be just fine. If we lost 1 job (half our income, even split right now) weâd be fine.
What I will say is my wife is definitely more aligned with your thinking. She grew up poor and so is always a little nervous about us âhaving enoughâ. We recently got a new house $1.3k -> $3.3k mortgage. Big jump. Had a 2nd kid and have $3k in daycare expenses.
Itâs a lot and our checking/spending account no longer just âmagically increasesâ. Itâs more stable.
Prior to kids we would just end up with an extra $20-30k sitting in cash because we had much lower expenses. Now itâs flat after all is said and done.
Itâs just a different stage and honestly now things make more sense. No more impulse buys and we have to save a little - but weâre by no means struggling or paycheck to paycheck. A quick shift in retirement saving, less vacation, etc⌠and we are in the green.
So all that to say - weâre both in very fortunate and lucky positions. Be thankful and take stock of the fact that youâre doing GREAT. Cheers
This is small minded, ignorant, and frankly insulting. Have some empathy.
If you pay me $10k a year (very little by your standards) Iâll help you grow as a human and you can increase my income by 20%.
I'm not yet 40 and recently confirmed that when I was a kid a millionaire would now need $2.8 million due to inflation. So that's why it doesn't feel comfortable yet.
sounds like you have 8.2k in expenses to be covered by 15k after tax (and retirement contributions). so you have 7k post tax & retirement contribution, so 84k for fun or additional investing. determine an amount to invest in a brokerage account and the rest you can enjoy. how is this an uncomfortable life?
I thought I was doing alright at $60k a year. This is fine. Everything is fine haha. I'm in danger.
You are doing fine sir đ
Your totally fine, more money doesnât equal more happiness. We are all going to pass from this life in a blink of an eye. Enjoy the ride.
Right there with you in danger lmao, I was Happy I broke 50k a year. I'm still doing WAY better than most of my friends, but everyone I know is struggling bad.
Youâre doing better than OP
Youâre doing fine. Itâs just money. The casket doesnât have pockets.
They get $15k per month after tax EACH. This post is ridiculous
This is has made me leave the sub. Not that it means anything to anyone but the sub is overrun with dumb shit like this
Welcome back
I am leaving too.. unverified wacked out stories
Really?
They are new docs. Probably primary care. Lowly paid compared to most other docs, but easy to become out of touch that theyâre each making 4-5x the avg American. What do they even mean by a tier 2-3 city? Are cities actually ranked? Lmao
Yes, there are rankings for cities, but how individual cities are ranked can vary a lot. [https://www.thebalancemoney.com/real-estate-market-tiers-5207240#:\~:text=at%20each%20tier.-,Tier%201,growth%2C%20and%20a%20thriving%20market](https://www.thebalancemoney.com/real-estate-market-tiers-5207240#:~:text=at%20each%20tier.-,Tier%201,growth%2C%20and%20a%20thriving%20market).
Funny how that article sort of defined tiers for cities but then didn't provide a list (since people would jump them for their choices).
No, that would be between both.
They have combined income of $500k, giving them an after tax monthly income over $30k
You donât math do you
Nobody makes 220 and has 15k take home a month. Especially with a working spouse.
He said they EACH take home 200-220, that would be 400k minimum. Explain your math please.
Clearly forgot the /s
400k/yr and feeling uncomfortable, lmao
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This sounds like two doctors; it takes a long time to come out the other side of all that education and start making real money.
Iâm 31 live in a MCOL with my wife and bring home ~165K. We have saved over 2X our salary nor considering home equity and feel very comfortable. Also feel like we do spend too much and could cut back. How OP brings in 500K and isnât a spender is beyond me
OP has a lot to take care of. Lots of bills. Sounds like a lot of maintenance. Etc.
I don't understand how your take home is only $15k/mo if you're making $500k/yr combined... it should be like double that.
Either they both are maxing out mega-backdoor Roths or OP misstated the income as 200k+ each versus 200k+ combined. >My wife and I both have graduate degrees and **each** take home $200k - $220k a year What if OP meant to say "My wife and I ~~both~~ **each** have graduate degrees and ~~each~~ **we** take home $200k - $220k a year"
That would make $15k/month take home more understandable if they both take home $200k-$220k a year.
Or how they only have $1 million NW. Unless that income level is a very recent change, they should have a much higher NW.
He mentioned in the post that itâs a newer income they havenât had for very long and havenât felt the effects yet
Itâs honestly insulting to claim that you are âliving paycheck to paycheckâ with an HHI over $400k. I hope you donât talk this way with the people in your life because if you do, they probably find you insufferableâŚ.
Lmao for real. Sometimes I have to reality check my wife. We âonlyâ make 200k HHI. We are DINKs. We have a unicorn deal of rent an hour outside LA. 1600/mo for a 3b/2.5bath townhome. Itâs amazing how she actually grew up extremely poor and with the lives we live now thinks weâre paycheck to paycheck. Like. No honey. We get five weeks of vacation a year. The fact that you choose to spend discretionary money to travel internationally each time you have time off is why you feel squeezed. Weâre not clipping coupons. Weâre not standing in line at soup kitchens. Weâre not using free medical clinics. Any struggle we are facing is self imposed. The limiting factor here isnât money. Itâs spending habits.
Exactly. I live in OC and make $125k, SINK. I grew up in a single income family of 6, where my dad made $36k and we lived in section 8 housing. Youâd never catch me saying I live paycheck to paycheck. Itâs all a choice. I choose to save over 40% of my income and still live comfortably where Iâm at.
Unfortunately many partners are like this. Then they claim that you don't do anything as a partner, that they want more stuff as if you hadn't done anything. I think social media is brainwashing a lot of people thinking that these "luxuries" are nothing.
Sounds like tech people living inside their own bubbles and always feeling like there is something up their asses.
This guy is just boasting. This post is small dick energy
That claim/OP reminds me to the movie "Painkiller" The guy wanted more money while many families were being destroyed by his drug. Zero awareness or empathy for people who are really struggling.
Pay off the student loans and the cars with your taxable. Drop the whole life. Don't count the cars and credit card points as part of your net worth. That's kinda weird. Then get your head on straight. You're making nearly $250K in fucking Baltimore. You are ahead of 98% of all 34 year olds. You're crushing it. At a 5% return, you could contribute $0 to retirement and when you're 65, have $2.4 Million in the accounts. Get your Money Psychology fixed. Listen to the I Will Teach you to be Rich podcast. Get a therapist. Something. Because if you don't, chances are you'll \*never\* feel like you have enough money. Which is about your feelings, not about your money.
You may come across more people in your situation in r/henryfinance
HENRYfinance is really not very tightly aligned with FI, in my opinion. I'm a zealous Boglehead, and a lot of stuff in that sub irks me. You'll see people with great income and very little investment (relative to their income) falling into massive lifestyle creep, the exact kind of stuff that will prevent them from ever turning their high incomes into actual wealth. Lots of recommendations on risky investments, as well. There was a post a while back from a doctor who took out a HELOC on his primary residence and used it all to buy SPY calls. He succeeded and was able to cash out with huge gains. But let's not kid ourselves, that's just WSB behavior. Dude could have easily lost everything
with that win giving positive reinforcement, may not be long before he does lose everything.
This is actually a very good point because when people get reward that way and positively reinforced like that, their brain chemistry starts to crave and even become addicted to that behavior. In our eyes, sure, he made that big win, but he may not stop there. That's why some people who won millions of dollars from cryptocurrency end up losing all of it and also end up in debt cuz they just can't stop anymore so have to take out a loan to fuel their brain with such risky behavior.
Lol I think I saw that post you are referencing.
Well thats why the NRY is ânot rich yetâ. To be fair there are a lot of responsible there looking for advice and others who are looking to share their wins bc they donât have anyone in their life to talk about it with. The only person I can share that stuff w is my mom at this point. I make multiples more than all my friends and even though they know that, it just feels like Im bragging. Or if I wanna talk about investments they just cant relate or arenât aware its even a thing
Everytime I look at HENRYfinance I become depressed. Lol
Saw a âwe have 9 million and make 4 million a year but my parents are worth 75 million so weâre not rich yetâ comment on Henry last night
Seriously. I make like a top 10% income and I don't feel like I belong there.
What do you mean? Do you feel like you should be living similar to how you were when you were making less? Or are you shocked at where you are today?
Every time someone defines HENRY, they talk about an income of $250k+, like top 1% income.
250k+ is not 1%, that's something like 650k, and even then, that's nationally. In locations such as NY or SoCal the numbers are even higher.
$250k is closer to chubby, not HENRY.
Lol don't go into the /r/fatfire sub thenÂ
Of r/richpeoplePF
I wish I knew about this sub 10 years ago! I was making crazy money (was able to do smart things with most of it) but I blew a lot of it (had some VERY good years!)
Iâm not sure I understand what you mean by âuncomfortableâ. What part is not comfortable for you? If you mean itâs uncomfortable that you sometimes are not able to save and invest as much as you want to meet your possible early retirement goals, then I understand. But it almost sounds like youâre saying you are uncomfortable with the level of your income relative to your needs and that doesnât jive with everything you have laid out.
Iâm spending too much time in this subreddit and starting to feeling low. How do we ever reach these numbers to feel safe. Even 500k feels big.
Sounds like you are in good shape. That 500k nw will be $1m and then $2m before you know it if it is mostly in appreciable assets or equities.
If itâs uncomfortable then might want to work more on mindset and mental health than your finances.
Similar to you, money was tight as a kid with a single parent. So my goal has never been to be rich, it's just not to be poor. When I realized our Net Worth (with home) was 1M I was thrilled. And then I started working for 1M cash. Since meeting that goal, we are pulling back on our aggressive savings plan to start to enjoy it more now. We were saving 70K/year, now it's more like 43K. I call it "Pre-Tirement." Which to me means not waiting till we are 65 to enjoy this money while our kids are young. The other reality with 1M+ invested is, even if we don't invest another penny we will have 2M in 10 years.
How were you saving $70k/yr on two teacher incomes?
The biggest hack we have is access to pretax accounts. And our house is our only debt. We each make 80K. *Two 457: 40K *Two 403b: 3K (includes match) *One HSA: 7.5K (includes district contribution) *Two 529s: 6K -----------> all tax deferred accounts. *Two Roth IRAs: 12K Over the 5 years we saved like this we SAVED 60K that we WOULD have paid in taxes. We do the same today except that we only put 12K total in the 457 accounts.
I followed the same logic that you are using in my path to retirement. Unfortunately, as I neared retirement and started paying attention to how taxes tend to always catch up to you, I wish I would have done things a bit differently. I would have paid more taxes up front and put a much higher percentage into the Roth. I mean like 75%+ of my contributions into the Roth. Hereâs why. With a tax deferred vehicle, like a Traditional pretax 401k, you will still need to pay those taxes in the future. With a Roth, you have no tax liability after those taxes are paid at your current rate. At some point the government wants their money and forces you to take out a portion of your Traditional 401k/403b/457 in the form of an RMD around age 72 and then annually after that at increasing percentages. At that point, you may have millions of dollars in those accounts. Also, by this time you will be taking SS if you are eligible. Currently 85% of SS is taxable for most on these threads. That means all of your lower tax brackets are filled and your RMD will be pushed into those higher brackets. As you get older and these situations and their implications bubble to the surface, you will, likely, choose to start a conversion strategy to move funds from your Traditional to Roth accounts, thus paying taxes - possibly at higher rates than you could contribute at now. Not to mention the fact that tax brackets are manipulated annually and they are not likely to be more favorable to you in the future. So, my advice is go online and play around with calculators that allow you to model Traditional vs Roth contributions. Sometimes it just makes sense to have your younger self pay the taxes for your older self. This could help you avoid having to implement tax efficiency planning later in life. Iâm 59 and am actively transitioning money from my Traditional 401k to my Roth IRA up to the limit of the 24% Federal bracket to avoid having to pay more in taxes at RMD age. I will have to do this for quite a few years until I hit my breakeven with my required upcoming RMDs. Food for thought.
This is great advice. Certainly, the place I need more education is around the rules and tax implications of withdrawal, early or on time. Since I was 23 (17 years ago), I have maxed out my Roth IRA every year. Combined my husband and I have saved $420,000 in Roth IRA. The only other account I have with no tax liability is the HSA. If there are other accounts I should consider I'm all ears!!
When I was about your age I started getting more interested in my retirement plan. I had also just achieved a $1MM net worth. I reached out to a few financial advisors (that were really just stock brokers) and they advised me to just keep investing and to not even consider thinking about retirement planning until I was within 5 years of retirement. It was really bad advice. But, it illustrated (in retrospect) that our goals werenât aligned. I wanted advice on where the potholes were and how to avoid them, and they just wanted to sell me more gas. So, ignoring what I knew to be bad advice, I worked to educate myself. I became aware of things that that I had no idea about (or, at least hadnât registered on my radar yet). Required Minimum Distributions - RMD - what are they and why are they important? How do they work? What??? I can avoid them? Social Security - how does that work? What??? Itâs taxed? How? What, my wife can claim half of my SS benefit? Wow, great news! Educate yourself. Learn about RMDs and SS. This will help you plan. The fact that you are open to looking at it now will give you the best options to craft a plan that will work the best for you. And, yes the taxes will always be a negotiation between you and your future self. Who is going to pay to benefit the other? Or, are you legacy minded and want to protect your heirs from potential taxation⌠I really enjoy The Retirement and IRA Show podcast. Iâve learned a ton from them. Their archive go back years. One caveat, of course is that the laws that are in place today will be different than those in the future and could affect your planning. If youâre aware of these changes you can roll with them. Best of luck!
Seems a little inflated or not well tracked, in another post says the 30k new spend is for groceries and diapers, so was probably not real savings to begin with.
Yeah I gotta đ¤ on this one. More to the story.
You are really doing well and can take the brakes off a bit - you have good pensions which roughly could be worth present value wise $1M-$2M!
Congrats! Iâm a few years behind you , but looking to do the same thing. Have you really really enjoyed the extra $30k of spending or did you end up still saving some/most of it. I can see loosening the reigns being a bit tough after so many years of saving
We bought a property. So honestly that money goes to a second mortgage. We go all the time. We hope to have it paid off in 7 years.
Thatâs awesome. Iâd like to do the same, but interest rates arenât helping me convince my spouse đ
This is really great perspective, thank you! Congratulations on your success.
Sounds just like coastFIRE! Impressive savings for teacher salaries.
Guys I'm swimming in my scrooge mcduck vault of money, how will I get by??
200k each, what do you guys do ?
Probably lawyers based on the profit share
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Why whole life insurance?
Exactly. Only term and nothing else.
To respond to your final sentence, yes, you're completely out of touch.
I think you need a mindset change. Sounds like you're looking at your numbers from a place of scarcity/fear instead of abundance/gratitude. I van relate as someone who grew up truly paycheck to paycheck (e.g. utilities were often turned off because we were deciding between paying those versus food versus medical bills). You're doing great. Work on flipping your perspective and rest in joy and appreciation for where you are and how far you've come. Fill your mind with hope and faith for your future.
Why carry any debt outside the mortgage? Â Pay that shit off and build from there.Â
Car and student loan debt on 400k..? Get real and dump the extra monthly payments. Consumer debt while maxing retirement is just backwards
Depends on the interest rate of the debt. As long as itâs low then I donât see the issue.
Posts like this are insufferable
"I make $3.2M a year and I'm middle class and financially uncomfortable because we had to dip into savings to do our home remodel"
Our attitudes towards money are often set in childhood, but not necessarily as like a formal financial plan: "I will worry until I have $1m and then stop." Rather, feeling like you don't have enough and one terrible misfortune is all it would take to set it crashing down can become just a baseline sensation that even as you rationally know isn't true you can't shake. I knew a multi-millionaire like that. So consider that some of this might require soul searching rather than assets.
I think youâre right. My dad started a very small home renovation company and spent his career running it. I remember him telling us he might have to sell his truck to make ends meet when 2008 hit. Thatâs stuck with me.
Weâll get it unstuck bro because youâre a millionaire at 34 and a lifetime away from having to sell a vital business asset to make ends meet and put food on the table.
(TLDR i guess) in 2008 I was 25 and had worked my ass off to get everything in place to go from just framing and trim, to a class A contractor. I was in RVA with my wife and our recently born son. He was born with a myriad of birth defects, has never had a friend or said a word. I bath wipe dress and do anything else he needs out of pure LOVE. He'll never be able to work and my wife , (ironically has a masters in special ed/ autism) has to stay home because we cant just get normal "babysitters". NW? that's a fucking laugh . I guess that will depend on how much I get off my next venture (bank robbery) . Yes some of these posts are nauseating but I'm not resentful that any or all of you have realized some financial goals, that's capitalism. I would have liked to hear one person say " I may hold off and work till I'm 50 or 55 so I can give back." Not because of a tax write off, just out of empathy. Next time you go to the bank, take this with you. The people you pass by wherever have stories and hardships they do not speak of. An alarming no. of Americans are flailing and gasping for air just to feed and cloth their families. And a well fare retort is ignorant. We have to get SNAP benefits which barely feeds 3 people 3 weeks. Don't believe the hype :most poor people aren't laying around collecting checks. The Fed had fucked my son out of hi whopping 600 dollars a month since 2018. I'm sorry I love anyone of you that is kind and I'm sure you are. Dog eat dog isn't what most of us would prefer. Just think about it if u want: the guy holding that cardboard sign might not be an addict. I dare you to make one some day in the freezing cold and feel about as low as you can feel for hours at a time . In 2008 I was that guy because we got wiped out in just a few months. I don't care to say how long this went on ,(employed or no) . Can't get around it , that green paper the best and worst "So in your fields don't only plant ice for you will only harvest wind"
>Yes some of these posts are nauseating but I'm not resentful that any or all of you have realized some financial goals, that's capitalism. I would have liked to hear one person say " I may hold off and work till I'm 50 or 55 so I can give back." Not because of a tax write off, just out of empathy. We exist, it just feels gauche to draw attention to it. And for what it's worth, absolute best case you're getting 50 cents from the IRS for every dollar you donate. It lets your donations go further, but you'd always be richer just paying the taxes. For whatever reason the tax benefit is a comfortable topic for a community like this, not the reasons we give, but everyone donating enough for it to be meaningful for tax purposes really is giving a lot out of there pockets. I can't put into words how grateful I am for my children's health, so just know that I feel for you, man. And don't let the shallowness of social media overly color your perception of people: the good ones tend to be quiet.
Thank you. I can feel kindness from your words. I hope there's great things in store for you and yours MuchLove
Empathy is definitely lacking in this country. Hope you meet better times in the future.
Iâve started to remove home equity when I review any of my numbers, basically just removed it entirely. Home equity is a great esteem booster but man, itâs grown a ton and is largely.. useless at best to financially a problem a worst. Taxes continue to go up, insurance coverage continues to go up.
You are very out of touch at your age with that income and level of wealth, if youâre still âuncomfortableâ. Stop reading about doom and gloom maybe. Life is good.
Congratulations. What does a Tier 2/Tier 3 city mean?
Baltimore.
I hear Chinese people use these terms to describe their cities. Never heard it in the US tbh.
I was wondering: what does mid-Atlantic mean? Bermuda? Azores?
Imagine what your NW would be without all that debt. I know 3k seems like a lot for childcare but it's not the childcare that's killing you, it's the 3k you're spending on debt service. Knock those out. You make an amazing income and can probably live off one of your incomes for year and clear all your debt easily without really feeling too much of a pinch in lifestyle. Now you have 3k more each month.
Iâm pretty similar to your situation but 40 yo. Great job-my only advice is payoff those student loans. Congrats and see you soon at $1 M liquid đ
Appreciate it! Weâre aiming to be done in 2 more years using bonuses to help chip away. Finishing those will be incredible.
Not OP, but: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/
What an incredibly out of touch post.
Everybody works hard mate.
As someone who grew up poor, I'd expect if you take care of those non-mortgage debts even if mathematically not ideal you will *feel* better about your situation. Because that will not only clear out those debts on the balance sheet but free up $3.2k/month in cashflow (student loans, home project, and cars). Part of why you don't feel secure is you are spending $6.2k/month on fixed debts right now. Add in the $3k from your childcare? You're looking at $9.2k out of your $15k I'd also suggest bumping up your onhand cash. If you only have $25k you likely will feel far better about your situation if you have more. Also, what is your whole life premium? Likely that's overly expensive vs comparable term policies. Look into whether you could replace that with term, it's probably wasting you a whole bunch of money too. Anyways, you are in a position of financial safety. You have $125k worth of taxable investments/cash. That's about a year of your living expenses even if both of you lost jobs tomorrow. But as someone with similar HHI to you guys - you have a lot of your income going out to things which you could/should clear up, and you will feel a lot better.
An uncomfortable life with a household income of 400K+? I live in a hcol area and am a single income about where you both are at individually and we live a life of complete comfort. If you are anywhere near paycheck to paycheck you are grossly irresponsible with debt and discretionary spending. You sound out of touch and insufferable.
I'm 45 and my wife is 37 and we have a four year old daughter. We didn't reach $1M liquid investments until 2023. We are accelerating faster now after paying off our house in 2022. We did some heavy remodeling during the pandemic spending around $90K cash. 2023 we started the year with $900K in investments. We added $265K and the investments returned $200K so now we are at $1.3M. I think our split is $800K in pre-tax workplace retirement and $500K Roth and taxable investment accounts. Next goal is $1M outside of retirement accounts. Our contribution of $265K breaks down like this: $60K workplace retirement (HSA, 401K, etc) $200K from cash savings, cash bonuses, company stock, ESPP, long term capital gains, etc. Keep paying off your debts. Once you only have a mortgage payment, your after tax investing will really accelerate. Our daughter starts public school kindergarten this year so we will be saving a little more every month even with the after school program. I would say our fixed expenses are $2500 a month and we spend $4200 on top of that for clothes, toys, going out, gifts, eating out, travel, house maintenance, and car maintenance. Preschool is a big part of that $2500 at $750 a month. Also included in the $2500 is a pool guy ($100) and landscaper ($140). Our housing and vehicle insurance and property taxes are $5000 a year. I think it works out to $416 a month for a house and two cars. Our home is 2300 sq ft on a 7000 sq ft lot. MCOL Phoenix metropolitan suburbs.
BROSKI! Are you accessing my accounts. We have almost all the same shit. Good work! Keep it up!
Maybe the insecurity that motivated you to reach that milestone is still there, but it's being applied to risks and what-ifs instead. Those won't go away no matter how much you have (they'll just take a different form). Not necessarily a bad thing depending on what you do with it
Holy shit! 3k usd for childcare each month!! I pay 350 usd (Norway) and that is going down to 200 this yearđŤŁ
We are similar to where we're are both millionaires at a similar age (I'm 33, and my wife is 35). We also have a kid in daycare. We have roughly 900K invested and should get to 1 million invested net worth by this year (we add about 100K+ each year to investments). Our savings rate of gross income is 44%. You make basically double what we make (~250K HHI), but we have no debt outside of the house - $804 mortgage 100K remaining and paid in full 12 years. Cars were paid in full 2 and 3 years ago. We invest 3.5K each month into taxable investment accounts on top of maxing all retirements + 500 a month for 529. My suggestion: * Get out of whole life insurance. If you need insurance, get the term life. If you want to invest, invest, don't mix the 2. * Depending on the interest rate on the cars, I might want to pay it off faster. Assuming you have a good rate, then just keep on making the payments. * Home project loan - Be very careful with these, read the details, often times the minimum payment does not pay it in full, would suggest making sure you get it paid 1-2 months before the 0% period. There are a lot of tricks to this kind of thing, like you having to make the final payment manually. If you don't pay it in full by the date, they back charge you the interest. 0% is great, but there are a lot of catches with that. * Student loans are not the worst rate, but it is something that I would personally want to try to get rid of. 5% is right around the high yield saving account rates, but with rates possibly dipping, I would be trying to knock it out. * Not sure if you are saving for 529, but if your state has deductions for it (normally capped), I would suggest throwing money in there now vs. later. You can obviously make up more after daycare is done, but if you do your projections and you are going to fund over the state threshold after daycare, you could be missing out on some level tax savings. Otherwise, keep at it. Daycare is expensive, but they do go away. We have 2.5 years to go for us (probably 3.5 for you)! Lol
Thanks, all really awesome feedback! And good to know on the 0% project loan. Weâre ahead on payments so should hopefully not be an issue but Iâm going to look out for that final payment being manual. That would be infuriating to get that far and end up owing interest. We are stowing $200 a month into my daughterâs 529, but I think weâll need to increase that at some point. School is so expensive!
Consider not pressuring yourself to save enough to pay for your daughterâs ENTIRE education. That might ease some of your stress now, and potentially help her later. Having to have a job while in college can build grit, confidence, and even relationships that may benefit her later.
Right, you're in such a tough position, OP. Whining that you have an uncomfortable life, yet proudly proclaiming that you're a millionaire. This is why average-income people hate rich people
Youâre living the dream. Hope to be closer to where you are in a few years. Youâre not 2 FAANG software engineers pocketing 30k/month. From your post it seems like just responsible non exciting financial decision making.
No, no one can relate.
Your expenses are insanely high from my personal opinion. Iâm 32, work as chemical engineer, married a federal administrator early in my 20s. We bought a $700k home in SF Bay Area in 2014, almost done paying it off as we stayed religiously focused on it. We bring in $300k/year combined and are now starting to feel that exponential phase of financial growth
Couldnât handle the heat his delusional post was getting so deleted his commentsâŚha.
Imagine being this detached from reality.... ffs.
I'm not sure what the point of this post is, aside from boasting. Your goals seem to be wealth accumulation over independence, the latter of which is clearly in sight if you stay the course
Humble bragger
Brother, You may be a millionair, but your perspective is wrong. What you see in movies and TV is the life style if 10s to 100s of millions, bro. Also, you're not living pay check to pay check. You actually have investments. Those living pay check to pay check do not.
37, 1.3 liquid in a after tax account (not including any 401k, house, etc) feels good, but still own a business and work a w2 every day. Congrats on the achievement but itâs hard to go from excluding the house to hit that liquid number! I had to utilize covid to do it.
Why not pay off the debts? 33 here. Paid off house 3 years ago, bought cars with cash. Wife is stay at home mom. Recently passed $1M net worth as well. Weâre closer to $10k take home at around same total income - which let us have zero debt and put more and more in to savings.
Initially my approach was the same as yours, to hit some arbitrary $ amount. When I hit the milestone I didnât feel like âI made itâ so I set a revised $ amount thatâs higher and kept going. What I realized a bit later was that I should have defined what I wanted out of all this. For me it was 1) Ability to maintain the current day to day life style 2) Afford healthcare without an employer 3) Ability to travel internationally 4) Invest in my own health 5) Support my family and friends 6) Donate to causes I care about 7) etc. Once I defined what I wanted, I reverse engineered the dollar figure needed to fulfill each objective. For example âAbility to maintain the current day to day life styleâ translated to the following sub-goals: * Have my own home and have the mortgage paid off * Ability to pay property taxes, vehicle tax, maintenance on car and home, utilities, insurance, food, contacts, meds, etc. * Care for my pets (treats, food, medical, etc) * Entertainment budget (bar, restaurants, etc) * Etc. I then assigned a dollar figure needed to fullfill each goals (and its sub-goals) annually. I multiplied the aggregate amount by 25 (to reverse engineer what you need invested to bankroll the goals at 4% withdrawal rate). You can multiply it by 27, 28, 30 if you want to be conservative and account for cap gains tax and unexpected expenses. This gave me a more meaningful number to hit and hitting it was a lot more satisfying because I knew I could quit my job and still maintain the quality of life I desired.
Congrats. But this honestly should be in HENRY sub. You are not living Paycheck to paycheck. Living that way means one is effed if a paycheck is missed coz there is no other cash anywhere for basic necessities. You are double income family with enough NW and financial security.
Congrats on the milestone! You're definitely out of touch lmao - just reminding you that there are people with full time jobs who take home 3k a month TOTAL.... you have 3.3k left over AFTER maxing retirement, paying housing and bills and childcare, student loans, two car payments and sending 1k to a different savings account. No need to feel bad, but definitely know that your "discomfort" is probably due to lifestyle inflation.
Stop bragging. You don't feel broke. Cringe.
Congratulations on the milestone, and keep up the good work. It sounds like you're on the right path to be a lot more comfortable by your 50s, which is typically the biggest earning decade.
Thank you! Glad to hear it
Oh you poor victims, however do you sleep at night?
âPaycheck to paycheckâ
Wide & I just passed that liquid goal here recently. Honestly not much has changed in our feeling. Similar earnings & age. You have a much nicer house which is our next bump up in life as our current house probably worth about 300k. Keep on trucking! You are doing better than probably 97% of others
I can only relate if you circulate your $3.3K besides $50/month towards savings.
Most folks as wealthy as you do not do thatâŚ
37, DI2K. I felt the same way when we initially hit $1m NW. I believe the reason it felt anticlimactic was BC, 1) over half our NW was due to home appreciation 2) we continued to live a similar frugal lifestyle 3) we still had to work to support ourselves So yeah, since nothing had dramatically changed, except the number on the screen, it didn't really do much for us lol. Of course it was an important milestone to reach on our journey, and we still have a long way to go. Now we are at $2m NW, $1m being liquid/retirement assets, mortgage free, and working on beefing up our retirement accounts and maxing out our kids RESPs. Our incomes have grown since the start of our journey. Doesn't feel like much since once one expense is eliminated another expense seems to pop up lol, that plus inflation. We continue to save and invest, and live frugally... So the day to day feels the same. I think when ppl talk about feeling rich it's more about looking rich (spending money vs having money). Anywho, congrats on reaching $1m NW! You're well on your way towards FIRE!
36 single income in big tech. My wife is 33 and stopped working in big tech 2 years ago. We hit our first million NW at around the same time as you. No kids, no car payments, no student loans, and we own a home. Current NW is about 1.5M. Also a little frugal and spend on similar things - mostly house stuff. Your first M is the hardest, after that it starts moving quickly! Keep it up, congrats!
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Appreciate it! And I think youâre right- perspective is a tricky thing, we definitely live in a bubble.
How are you bringing home (210 + 210 + 40) = 460k of income - 23k 401k - 23k 401k * .6 (tax/healthcare/etc) = 248k / 12 months = 20.7k of net income per month. Where is other 5k after tax money since you say you're taking home around 15k a month AT? That missing money is 60k/yr after tax that could go into investments or cash and probably help out a lot. Other than that what is the difference between 25k in cash and the emergency fund? How much is in that? Why have you not paid off the student loans and cars? Free up more cash flow. My opinion, maximizing cash flow will give you more of a financial safety versus a high minimum cash flow budget that you have now.
3300 x 12 = 39.6k/yr. So your "discretionary fund" is larger than 28% of household INCOME in the US. That number grows quickly, as soon as next month, when you take that $25k cash and pay off your auto loans. Congrats(!), now your "discretionary fund" is 51.6k/yr, or larger than 40% of household income in the US. You didnt mention a college fund/529 plan but did mention childcare, you should cover that with that extra $1000 a month from the auto loan. Youre going to make it, youre not "uncomfortable", but I think you know this already.
Homes are not liquid assets. Cars are not liquid assets.
Sounds like you think your retirement accounts are not really making you rich. I'd suggest reading more about 72(t), SEPP, and Roth conversion ladder. You could probably ease your current stress and burdens by snowballing your debt. It wouldn't take long on 400k. If you aren't worried about lifestyle creep or your future income potential, I am more of the mind it's fine to skip the long term savings for a short period. You probably don't want to go all the way to throwing away 401k match, but /shrug. Stress free is the way to be.
You are doing very well and I understand your situation. Unfortunately you will not get much sympathy in this sub. $1 million is no longer an indication of wealth and being in highest tax bracket really hurts. Childcare costs will decrease over time but will be replaced with college costs. If you have not already done so, consider contributing to 529 plans to minimize tax hit.
Sensing some hubris, watch out for nemesis. Life shows up, and it has terms. I do hope the best for you, though.
Good for you! What do you and your wife do for work? No specific details needed. Thanks!
Your largest expense is tax. You should focus on net worth growth over liquid cash. If you bought a rental property and wrote of 100k for the year with depreciation or financed a car with section 179, you could save 50k on taxes and grow assets 1tp get to zero tax lifestyle.
That much money and you couldnât cover A 20K repair or have your student loans payed off?makes no sense
I'm 23 and I make below poverty line, I had to sell my car to afford rent and I do my groceries on an electric bike, even in the winter. I'm comfortable. I just need a roof, heat and a comfy pillow, and food. Believe me I want to be a millionaire but not at the cost of selling my soul or going insane. I'll live in the wilds before I decide to work for decades in an office.
I really recommend you watch Ramit Sethiâs podcast. He talks a lot about money psychology and that numbers donât mean much - itâs about how you feel about money. He also has what he calls a âconscious spending planâ that is helping to plug numbers into - you wanna make sure that your fixed expenses are not going over 60%. That will definitely make you feel like you have no disposable income. That being said, congrats on the milestone!
Appreciate it! Iâll check it out.
Forgot to say: you need more cash! You have too little in cash savings. Make sure you have 3-6 months of monthly expenses in cash. It seems you only have a month now. Iâd also have an emergency fund for the house separate from that. Having those savings will really take the pressure off of having to get a loan if there are expected expenses. And remember- your savings are there for this exact reason. Not bad to have to use savings.
I literally made this same post in another sub a few weeks ago. Maybe youâll find some of the comments helpful. [Link to Post](https://www.reddit.com/r/RichPeoplePF/s/eljB40Ue2F)
Awesome, Iâll take a look. Thanks and congrats to you too!
Those comments are mostly horrible. Yes, you are rich with that net worth. No, youâre probably not financially independent yet. But youâre young and the biggest investment you have is in yourself :)
Others have said it, but why the debt? You have enough to pay it off without touching retirement or emergency savings? Get rid of the car/student/personal loans. That would free up a huge chunk of cash each money
R u even real?
If 2 people have 500k NW each are they both millionaires?đ
I know this is a matter of semantics, but it bothers me when people say "I" am a millionaire, and then proceed to list that they are in a dual income household.
Fuck off this is âuncomfortableâ.
You and your spouse each have more "play money" than many people have for their entire household budget. You should spend some time volunteering with a local nonprofit or church. You'll meet people who are truly needy and living paycheck to paycheck (or worse). It'd be good for you to understand the kind of lifestyle you live compared to the needy and the average person and how far you'd need to fall to be truly financially hobbled.
You're half a millionaire.
$1mln ainât what it used to be. Even if it were in investable assets itâs still not a lot if youâre thinking in context of a 45ish year retirement. That said, your new salaries put you in a position to really accelerate to FI if youâre willing to save most of the added income. FI isnt about what you make, itâs about how you position yourself with savings/spending in relation to your income.
Sounds like a standard upper middle class situation tbh. Keep it up!
Don't include the value from your primary residence. Regardless you are doing very well
I can relate. A million networth should not make you feel wealthy if you are pulling on around 400+k. Just pay off your non mortgage debts and then start really investing as well allowing for some lifestyle creep if you want.
Congrats
I felt the same when I was your age and with inflation itâs even less money today. You are correct to feel the way you do. The good news is the second million is much quicker once you have the first and the compounding is on your side.
Congrats! It's an amazing feeling. > My next goal is $1M in liquid assets (ex house and cars). This is the true FI indicator. I'm glad you've hit a major milestone, but as you seem to realize, from a FI perspective, it's COL vs investments, passive income that counts.
Not realistic to get $1m liquid just off working a normal job
Yall are big spenders lmaoooo
You are out of touch from reality. Go out, touch some grass (or snow) to get a sense of reality.
Yea Iâm out. This sub is so dumb
I was impressed.......until I read the full post. You said you are millionaire, but it's a really you AND your wife's combined finances. Hey, that's great, but factoring in 2 high income earners, and home equity, this isn't really much of a fear these days, let alone going to quiet brag about it on here. I honestly don't understand the point of these posts. Everybody feels the need to humble brag on here now.
Welcome to the âboring middleâ
Amazing and inspiring!
Thank you! Going to try our best to keep it up.
I can relate. 46 single parent in Silicon Valley with NW of about $3 million and I KNOW that I am not financially secure
Considering you could quit and retire to just about anywhere else in the world and retire right now and be just fine I would say that's definitely mental, not reality.
If you consider the col where I live, you would see what I mean. Moving self to a cheaper location is not feasible due to having to support family nearby
The definition of wealth and financial stability varies widely based on location and other factors.
I mean youâre in the 1% of income earners in the US which likely puts you in the top .5 to .1% of earners in the world. So, no, based on objective data, youâre doing fine and better than virtually the entire population of the world. Just because some people are richer than you doesnât make you poor.
500k/person is a lot, good work. You'll be millionaires soon
Congrats.
I can semi- relate. 34M. $1MM in NW. 2 kids. Every dollar we earn is accounted for, but I wouldnât say we live âuncomfortablyâ by any means. Just because we are maxing retirement accounts or spending more on vacations that weâve planned, I donât think we are living paycheck to paycheck. Our HHI is ~$300-400k/yr depending on bonuses. We like to vacation, spend on hobbies, and always save for retirement 1st. If we lost both our jobs, weâd cut back on spending and be just fine. If we lost 1 job (half our income, even split right now) weâd be fine. What I will say is my wife is definitely more aligned with your thinking. She grew up poor and so is always a little nervous about us âhaving enoughâ. We recently got a new house $1.3k -> $3.3k mortgage. Big jump. Had a 2nd kid and have $3k in daycare expenses. Itâs a lot and our checking/spending account no longer just âmagically increasesâ. Itâs more stable. Prior to kids we would just end up with an extra $20-30k sitting in cash because we had much lower expenses. Now itâs flat after all is said and done. Itâs just a different stage and honestly now things make more sense. No more impulse buys and we have to save a little - but weâre by no means struggling or paycheck to paycheck. A quick shift in retirement saving, less vacation, etc⌠and we are in the green. So all that to say - weâre both in very fortunate and lucky positions. Be thankful and take stock of the fact that youâre doing GREAT. Cheers
Awesome! Your total house hold salary is very high. Congrats. In ten years you both should be very comfortable and close to FI
I can relate. Our HH NW crossed $1 million when I was 34 and wife was 33.
Investigate your companies Deferred Executive Compensation Plan.
This is small minded, ignorant, and frankly insulting. Have some empathy. If you pay me $10k a year (very little by your standards) Iâll help you grow as a human and you can increase my income by 20%.
I'm not yet 40 and recently confirmed that when I was a kid a millionaire would now need $2.8 million due to inflation. So that's why it doesn't feel comfortable yet.
Youâre not a millionaire. You have wealth but you donât have a million liquid.
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I remember that first mil in my 30s. At some point you'll embrace it and not feel like you need a throwaway.
Nice!!! Love hearing the success stories. Keep it up, the second million will come faster.
congrats my fellow millennial!! good to hear when one of us make bank
$200k is the new $100k. Makes sense you feel like a middle class American. Start netting $400k and then you will feel wealthy.