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What's a comfortable salary?

chickpea

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When I went to Detroit a couple years ago, everyone my age already owned their own house. My friend bought a really nice 3 bedroom for like $20,000 or something ridiculous. My mom's childhood home that my grandparents lived in for 30 years had been bought by a 21 year old waitress.

I'd move there if it didnt entail me actually living in Detroit. :wink:
 

Qre:us

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Why, he's not saying he wants to retire early.

That's not the only reason to start saving since you are young.

Moreover, property appreciating in value? Depends on where you live, in the last 20 years properties have taken some strong hits.

Yes, it definitely depends on where you live. Where I live, with suburbs branching out further and further from the city's core, property is a very hot investment right now.
 

DiscoBiscuit

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That's not the only reason to start saving since you are young.

True.

What happens if you become disabled and can't work? What happens if you're fired?

The only certainty is uncertainty. People are living longer (and will continue to do so) and as such spend more years unable to work because of old age.

Many people say they just wont retire, but age frequently forces our hand on the issue.

How about if you have a family? Wouldn't you want to pass on a legacy to them?

How would they survive if you were unable to work? How are the kids going to afford college tuition?

As long as you aren't in an over valued real estate market, I would definitely recommend investing in rental properties.
 

Qre:us

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Then, there's also the benefit of compound interest, which is only realized if you're saving your money for a long time (squirreling it away into investments, even low/med risks). Which is not a luxury one can optimally benefit from, if they start saving later, rather than earlier, in the game.
 

Qre:us

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Does anyone here have experience in working in Management?

You're not going to hit these positions, as a fresh graduate, or even with a few years working in the field. You gotta climb. Climb that ladder.

If this is your ultimate game plan:

Market Research Analyst -> Senior Manager -> Director and above, especially in the corporate world of marketing, will take a lot of unpaid overtime, some parts viciousness/ruthlessness, and need to keep fighting to climb. You are going to go against a lot of other hungry dogs who are wanting the same bone. You will call them your colleagues, your co-workers.

One of my friends is in marketing, and she has just hit her 30s, and she's already exhausted. Their salaries are pretty good, and there's a lot of incentives, bonuses, more frequent raises than in the non-profit sector, but she's done. She wants out. Even if it means a substantial pay cut. For her sanity.
 

cascadeco

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You're not going to hit these positions, as a fresh graduate, or even with a few years working in the field. You gotta climb. Climb that ladder.

If this is your ultimate game plan:

Market Research Analyst -> Senior Manager -> Director and above, especially in the corporate world of marketing, will take a lot of unpaid overtime, some parts viciousness/ruthlessness, and need to keep fighting to climb. You are going to go against a lot of other hungry dogs who are wanting the same bone. You will call them your colleagues, your co-workers.

One of my friends is in marketing, and she has just hit her 30s, and she's already exhausted. Their salaries are pretty good, and there's a lot of incentives, bonuses, more frequent raises than in the non-profit sector, but she's done. She wants out. Even if it means a substantial pay cut. For her sanity.

Very true.

Though, I was never able to convince myself to really climb the ladder in the first place...couldn't sell myself on the benefits, nor responsibilities and time sink. It never suited my concerns/values. [Though, this is not to say there aren't people who thrive in that, and who find some sort of fulfillment in it - especially if the company is aligned with their interests/passions]
 

maybetmp

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It would depend primarily on the local cost of living (calculated by a variety of factors. Do you have kids, what are your transportation costs, etc.) and your desired standard of living, I would think. There's a lot of subjective factors involved, among many complex and likely hidden objective factors. Have you considered calculating it for your own wants?
 

ptgatsby

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As much as you want, or as little as you want. A single man can be homeless and dumpster diving, or doing coke and renting a penthouse. Comfort is very subjective, most presume a norm that just isn't justified (eg: references to 80k, or specific needs down to makes)

For a single person, I'd say the general thresholds are around 30-(50)-70k based on the US median city and you can scale that by your local COL. Below the 30 point you have failed hurdles that would make it uncomfortable (although I'd still question that, since it could result in community living and such which tends to be net positive, seen in places like Mexico). Over 70k results in nicer stuff, but it scales down very quickly at that point.

Having said that, it doesn't give you apples to apples. Living in the downtown core of San Fran is not the same as driving to work in Boston, or New Jersey to NY. The way money is spent is really different, with really different returns on QOL (comfort). It's less about what you spend on and more about what you get. Paying affordable rent but driving an hour to work because of traffic is not equivalent to transferring the cost to rent and walking to work. Some places can't pay enough to justify the prices (see China + smog, or Eastern Europe and crime, or many places + political security). There is no comfortable wage in these places (until you reach top 10% of local population).

I live in Vancouver (Canada), so I'm skewed towards best cities in the world. I pay ~1700 in rent for 800 sq ft... and that's on the low end of the area (~$3/sq ft average). But I don't own a car (walk to work, rent sometimes, car share the rest). It's one of the most expensive cities in the world to work/live in.

But the QOL transfer far outweighs price. I could cut my rent by 30-40% but I'd be driving to work everyday. It takes me ~50 min a day (my wife ~15 min), walking. Moving would move it up to a net of about 2h driving for both (back when we were doing it, it was about 2h20 min, since we ended up waiting for each other). It was about 3h using transit. Not only did we lose the stress of traffic and gain the exercise, we also saved about 20h/month. 20h! I consider the whole time saved since I should be doing at least that much cardio.

The "comfortable" wage in Vancouver is very high, but even with a lower wage ("uncomfortable", your QOL is better than most cities in the world.

My wife and I also spend about ~1400 on food. Probably more these days. There is no real reason to. We enjoy it, sure, and we eat well... but is it equivalent of the family making dinner together and eating together? Cost is not the same kind of enjoyment. Us, a couple, enjoy the date. The family is probably less stressed eating at home than packing up and going out. Singles could go out with friends, co-workers or romantic restaurants instead, for instance. But what is uncomfortable for one is beneficial for another.

So very different definitions of "comfortable".

---

I guess what I'm trying to say is... no one needs 80k+ to be comfortable. 80k is "comfortable" for single parents with more than one kid. Yes, seriously. It's not good that it is but it's well above the median. You can be secure there, although always at higher risk.

What you probably want to know are the minimum hurdles. Kids in households that are sub-40k will have a harder life (depending on your social systems, but certainly true in the states). Resource starvation is a real social problem.

You generally don't gain comfort or happiness from having a comfortable salary (again, minimum hurdle), but rather from social connections and meaningful efforts. So you can be pretty comfortable with surprisingly low wages because spending money may not be required for your particular needs... or require high wages to ever be comfortable (if you ever could be) because of social needs.

I think this is a pretty good calculator. Seems pretty accurate for my area and family, at least.

Edit: It assumes you have a kid, so it might not be that great for a lot of folks here. Sorry.

I can't believe how much is taken up by medical insurance for you (US) guys. The total tax burden and relative housing seems kind of low but it is just my gut feeling.

The car costs - eventually you'll need a new car, so you could be "saving" for it now anyway. It's probably still fair and seems about right. (The better way to say it is that your current car is depreciating in value all the time, so it "costs" you regardless.)

Save. Save! Start as young as you can. And don't just save it in a piggy bank. Look into investing. Owning your own property is a good investment too, if you buy right. You don't need to live in it. Rent it out.

Saving is important but very different than investing.

Saving is for risk absorption (eg: variance in income or expenses). Most people should save between 3-12 months (depending on sources of income, variances in expenses, etc.) This is money that could be withdrawn quickly and without variance. Insurance is complementary to savings (lowering variance). The more insurance you carry, the lower your savings need to be. It is better to not insure the contents of your house if you have sufficient savings to replace the contents of your house, and so on.

Investments is about deferring consumption for increased consumption in the future. It's sub-optimal in more cases than you'd think. A normally overlooked cost comes from anything that would pay dividends, such as a degree. A typical example would be to spend more on your kids (money comes from somewhere!), vs leaving a legacy to them at the end. There is an entire other group that involves experiences now vs later. The marginal difference between them is actually very small for the amount deferred. Travel, for instance, because age makes it harder and less enjoyable, and has to be discounted for expected lifespan. Many are unable to travel; discount your future value by 20-25% (some 5-10% chance of it being 0, and the sliding scale for the rest) and suddenly it seems much less appealing.

Hence, it's not a good idea to mix "saving for travelling" and "investing for travelling" (retirement). The same applies for a great deal (majority?) of things.

But, seriously, save. And except for big investments, that appreciate in value (like property), avoid having a debt.

FWIW, property (land) only increases at inflation (on average) and property (buildings) depreciate in value. Using debt to finance them is only superior because of the amount of leverage available and relative stability, hence not having the debt called on you. That causes the property to rise at inflation and the debt to decrease at inflation, along with the income stream increasing at inflation for the life of the property (building).

Almost like buying bank stocks. Where the banking system is stable, anyway.

Debt is not inherently negative, but is situationally bad simply because needing debt means you do not have the equivalent in cash. For most people means that you bought something you couldn't afford (property included). It doesn't mean that it is sub-optimal to use debt. I'd mortgage myself as much as I could right this moment if someone was willing to do it. I just don't count as security for a loan, sadly.
 

Qre:us

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[MENTION=88]ptgatsby[/MENTION] - Thanks so much. It was incredibly helpful. The more you know....
 

DiscoBiscuit

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FWIW, property (land) only increases at inflation (on average) and property (buildings) depreciate in value. Using debt to finance them is only superior because of the amount of leverage available and relative stability, hence not having the debt called on you. That causes the property to rise at inflation and the debt to decrease at inflation, along with the income stream increasing at inflation for the life of the property (building).

Except when a market is undergoing a correction after a crash and prices are moving back to normal.

Or when choosing a neighborhood that is increasing in popularity (and price) at a rate that outstrips the local average, and you can reasonably surmise that it will continue to do so for at least the length of the investment.

It's pretty simple actually.

Debt is not inherently negative, but is situationally bad simply because needing debt means you do not have the equivalent in cash. For most people means that you bought something you couldn't afford (property included). It doesn't mean that it is sub-optimal to use debt. I'd mortgage myself as much as I could right this moment if someone was willing to do it. I just don't count as security for a loan, sadly.

It's only situationally bad if you don't know what you're doing.

General Electric (the largest company in the world) even has to rely on debt (on a daily basis) to cover their operating expenses.

Debt is only bad if you don't know how much you can afford. To a certain extent, and especially when money is as cheap as it is right now, it makes even more sense to say finance a home purchase and lock in those low rates, while using the rest of the money you would have had to use to buy it cash to invest (either in stocks or reinvest in ones own business) and get a better return on that money.
 

pinkgraffiti

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I'd say around 45-50k euros gross is a good salary for 2 people to live on (where I live now, western Germany).

Optogypsy, I gather you're talking about net salary, since you're not considering taxes?



Why, he's not saying he wants to retire early.

Moreover, property appreciating in value? Depends on where you live, in the last 20 years properties have taken some strong hits.

you mean a year??
please tell me this is a joke. i spend about 1000 euro/month living with my partner (all expenses comprised and for 2 people) in paris and we live fine. our salaries combined are 2000/2200 euro/month (net). we save the rest.
 

FDG

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you mean a year??
please tell me this is a joke. i spend about 1000 euro/month living with my partner (all expenses comprised and for 2 people) in paris and we live fine. our salaries combined are 2000/2200 euro/month (net). we save the rest.

I mean a year. I said "good salary", implying that you do have some savings. And 2200 net a month summed up over a year makes a salary of roughly 42k euros in Germany (I think taxes are lower in France): I said that's a good salary for TWO people to live on, doesn't mean that they BOTH have to earn 45k a year.
It's not a joke, really, if you want to live comfortably (meaning: not a student life) you need to have this kind of money coming in. In a fairly expensive city, you may have to spend 700 euros a month to rent an apartment, 300 euros a month for groceries, and another 200 on everything else. Consider then a vacation per year, around 1000 thousand, so 80 euros per month, and you're up to 1300 euros per month fairly quickly.
1000 euro-month is an extremely low number for Paris, considering that rents are fairly expensive. Kudos to you.
 

FDG

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True.

What happens if you become disabled and can't work? What happens if you're fired?

The only certainty is uncertainty. People are living longer (and will continue to do so) and as such spend more years unable to work because of old age.

Many people say they just wont retire, but age frequently forces our hand on the issue.

How about if you have a family? Wouldn't you want to pass on a legacy to them?

How would they survive if you were unable to work? How are the kids going to afford college tuition?

As long as you aren't in an over valued real estate market, I would definitely recommend investing in rental properties.

Yes, yes, these are all good motives, but I don't think they imply you should start saving loads of money when you're 23. I PERSONALLY think it's not an happiness-maximizing strategy, considering that later in life you will have a family and have to work hard for your children and have very little time to enjoy your money.
Some people may disagree with me and that's fine, it's my own personal idea - if someone wants to start a family when he's 24, then he should indeed save money as soon as possible.
 

FDG

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General Electric (the largest company in the world) even has to rely on debt (on a daily basis) to cover their operating expenses.

Allright, if you're a company with an enormous amount of capital and cash flow which allows you to land relatively low interest rates you can manage with this strategy. I wouldn't recommend it for private investors who have to work, unless they're on the verge of making it big.
 

DiscoBiscuit

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Allright, if you're a company with an enormous amount of capital and cash flow which allows you to land relatively low interest rates you can manage with this strategy. I wouldn't recommend it for private investors who have to work, unless they're on the verge of making it big.

That's all a part of knowing your personal financial standing and knowing how much debt makes sense for you to take on.
 

DiscoBiscuit

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Yes, yes, these are all good motives, but I don't think they imply you should start saving loads of money when you're 23. I PERSONALLY think it's not an happiness-maximizing strategy, considering that later in life you will have a family and have to work hard for your children and have very little time to enjoy your money.
Some people may disagree with me and that's fine, it's my own personal idea - if someone wants to start a family when he's 24, then he should indeed save money as soon as possible.

The earlier you start, the less you have to save as a percentage of income.

And compound interest. If you don't fuck it up and start young, there's no reason your Roth IRA can't be worth 7 million by the time you retire.

To build an empire it helps to start young.
 

DiscoBiscuit

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If wealth accumulation is not your goal at all, then you can pretty much ignore anything I've said.
 

Qre:us

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It also depends highly on what one's lifestyle is like, and what their definition of being comfortable is. One should be very realistic about what their spending habits will truly be like. I'd recommend keep a spreadsheet to see trends in one's spending in broad areas. Are you eating out everyday? How much are you spending on the weekends? Shopping? What is your most expensive leisure activity? Hobby? How often do you partake in it? Do you like to collect something, that can be expensive?

Meaning, account for indulgence habits. We can all assume that we'll have self-control and know exactly how we're going to spend our money, but you'll be surprised to realize that most people are unaware of how much money adds up for little things that they didn't even account for. Because it is an indulgence habit.

From my personal experience, I've found that it's counter-productive to set a budget without realistically acknowledging, and, accounting for one's vices/indulgences, etc, as an unspecified "savings" - for those moments when your spending habits catch up with you or your call to answer your indulgence is too strong to make the responsible, mature decision to resist.

I know that my Archille's heel is that I love to travel. I travel, on average, 3 times a year. And one of those 3 is a big trip, usually. Like going away for a month. And, I like to do stuff. I'm not a fan of just lazing on the beach. I like to explore the place, try different experiences, which can get very, very expensive. Did a trip last year to New Zealand and AUS lasting a little over a month. We moved to a new city after every 2 days, and did some excursion every day. We planned the hell out of it, to minimize costs (yay, ESTJ friend!) but, taking over 15 flights, hotels/hostels, food, transport within the cities/towns, big excursions, enjoying the nightlife, it adds up. Total cost, little over 8.5K.

For the priorities in my life, what I call comfort, is to be able to do this, without needing to worry about the money first. Whether I'll be able to afford it. Whether I'll have a debt because of it (fyi, I would never travel by creating a debt for myself). Whether after such an expense, I'll be able to afford my everyday living expenses. Rent, gas, food, bills, etc. etc.

So, I save. Not for any imminent trip, or a particular thing in near future, but because I know, am aware, of this "vice" (hobby) of mine. And I don't want to feel restricted. So I have my "fun bank", and I put away a bit to be able to partake in what I love, what gives me joy, which, ultimately brings me a sense of comfort.

In this regards, it made sense to me to start saving young. Because, young is when I'll be able to do these kinds of exploring, as once I'm bogged down with family, etc., of course, I won't be able to partake (as much) in this lifestyle. My indulgence savings helped greatly in this regard.
 
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