I thought $100k a year was the “made it” number, man life sure gave a smack in the face on that one, this was average salary in area ($50k) + another $50k in business income
It feels like a lot on paper, feels like nothing in reality, rather easy to “paycheck to paycheck” that even in a low cost of living location.
Easy to call into the trap of “I made it” & let expenses run rampant.
Hence, business income is crucial, if only for the lower tax threshold with expenses (write offs), not even considering earnings multiples.
I’ve always liked to assume I’m broke & use all that spare money to make more money to ensure “brokeness” never happens again.
Good stuff. Where were you 10 years ago when I was in my mid-30s with 6 kids and they tried to put the golden handcuffs on me? I did give them the middle finger and start my own gig for awhile, but didn’t *commit*. After a decade of 14+ hour days (and, you know, 6 kids), was too burned out. Long story short: even without the golden handcuffs, a lot harder to do this stuff if you don’t do it in your 20s.
Complacency and lack of discipline. I got to the point where I could pull down low/mid-six figures working 10-15 hours a week. Which was enough to live on. But wasn’t building anything of my own and was just trading hours for dollars. So, here I am, still doing the same (trading hours for dollars, but back to full time). But, plan to be able to build enough to drop 20% hours by Jan24 and 40% hours by Jan25. At that point, I can do 60% in my sleep or switch completely out. I keep my necessary expenses low, so no golden handcuffs for me (discretionary spending with a bunch of kids is kinda bonkers tho - plan is to get the oldest 3-4 to start their own businesses this year too).
Yeaht that be true but few reach your level of income man outside of the top 3 careers that btb mentions. Like CPAs struggle to reach that kind of money you make for sure...
I find it helpful to think of dollars as “freedom tokens.” The more freedom tokens saved the more freedom I have. That way I think carefully before spending freedom tokens on a shiny new toy.
Lifestyle inflation creeps up in stealth mode. Critical to keep reassassing my burn rate and true “needs”. No I don’t mean go FIRE (that is a miserable life) but staying modest and reasonable with expenses. I have calculated a reasonable burn rate that provides a good life , then I track monthly expenses to stay below my burn target. Bonus is when I’m tracking below annual burn then can splurge on something guilt-free because even after the spend I’m under my target burn. Also chart net worth monthly which informs my burn target.
Yes. You cannot get rich on W-2 income as your cumulative wealth growth flattens with larger base numbers. Must start a biz. And I’ve found minding lifestyle creep and keeping burn comfortably below income critical at every point on the wealth curve. Nothing loosens your wallet like making some real money. Pro athletes an extreme example.
Real wealth is built on good exit. Focusing on building a business, making it successful and then selling it at a right time is key to being set or made it. There is no other way. States like California and NY sucks every penny out of you in form of taxes and inflation.
This is spot on. BTB went conservative on this one too. He didn’t include the creep that happens as you reach those different income levels. You’re a SVP? You should move here and vacation in x location. Director? Can’t live or vacation where the SVPs are, plus gotta join the right clubs. MD? Same thing plus right school for kids plus summer and winter vacation homes in the “right” spot.
We worked at a firm that took a bad M&A and tanked their stock price (think 80% down) before we got there.
People with multiple years of 6-figures in deferred comp in company options saw it go to $0. We don't even include any of our deferred comp or even our ESPP shares as actual wealth until we sell it and move it into our personal account.
PS - you can raise kids for cheap. But when you are bringing home good money you don't want to - museums, aquarium, movies, meals, lessons etc add up quick. You probably know it, but you are being conservative with your expense numbers in the 30s for guys with families.
This is common pay scale for Investment Banking. No it isn't perfect and the "cope" for bankers/lawyers is always a partner or some big boy banker at Qatalyst or random boutique who pulls in $5M
Yeah I do. Not in Finance but I just turned 26 and at the $250K-$270K mark. I'm in Tech so these numbers are definitely possible even without working like crazy or having amazing credentials from college.
Will say the downside is tech compensation increases are likely to plateau out a lot faster. So got a get that wifi money before it's too late.
I work in a "functional role" in tech essentially a Strategy role at a big tech company. Literally just study any type of STEM degree (doesn't have to be a hard one) and you have a good shot at these roles.
If no STEM degree then go hard on the bootcamps or lean into quantitative problem solving experience and play that up. I actually write a sub stack on this (lol) so if you're really curious go read stuff there.
Yes I'm a business degree , no MBA. I've looked at some of the boot camps a few years back but at the time I couldn't do them as there were scheduling conflicts. Excellent I'll check out your sub stack as I am looking for a new role as it is. Thanks
That's what I've been thinking. I find it hard to believe you don't need krazy credentials to get positions that pay that much. I have not come across any job postings in my area that pay anywhere close to those numbers without either significant years of experience or advanced education.
Think it’s covered in efficiency but law school and med school both have worse overall net numbers. Also ppl who graduate undergrad only but w student loans def worse off. Bull’s summary is best case outcome. Only solution aside WiFi$ is to be born rich, which is what I was able to accomplish.
The reality is, if you had a middle class or upper middle class upbringing you have to make quite a bit more than 100k to have that same lifestyle for your kids.
Wanted to give a little update. 18 and at about 1k/m although next month will be more I expect. Thanks BTB. I really do want to sponsor the next Troll Tuesday giveaway. Also need some suggestion on how to have more energy or work more efficiently
Yeah the main problem here is this assumes $10M buys the same in 30 years as it does today. If you look over the last 10 years alone cost of living has practically gone up 50-100% depending on where you live.
Assume you hit $10M 30 years from now. What is inflation, we can say 3-4% to be safe.
$10M/(1.035^30) = $3.5M equivalent in today's dollars!
“...excel doesn’t lie.” This was the same epiphany I had a while back regarding inflation. For years early in my career I chased $3M as “my number”, because living in a low COL area, no debt, kids out of the house, and a reasonable 5% RoR - figured you can eat and travel and utilities and insurance would come in under $150k, so boom. I’m good with $3M - can live off interest and never tap principal for 30-40 years!
Then I modeled things with just a little bit of inflation, like 3-4% (let alone 7-8%). WTF kind of moment. Point is even if you live in a low tax flyover state - everyone reading BTB is hoping for financial independence, whether on Degen Island or your own perfect patch of dirt. Inflation is insidious and needs to be accounted for or else you *will* end up in a tent fr fr.
100%. Revealing numbers. We all know they are screwing us. There are other forms of inflation as well such as forced private school. $3500/month for two children over 14 years = 1 million
On point 2, if you go past two kids, even the wife will balk at the cost. Then you get her to homeschool them. lol. Honestly, the kids staying at home playing X-Box all day is better than than going to public school.
But pay roughly the same per kid as we were sending them to a small private school. Between homeschool materials, supplementing with a learning pod/tutor, and field trips to add to the experience, it adds up.
(also as Mrs. F'er reminds us everytime we bring up the cost after living in a high-tax area with 'good' schools..."what were you doing when you were in public school at age X?"...very quickly remember why we choose the homeschool)
This is actually the truth. Assuming $20k/year/kid * 3 kids is $60k/yr post-tax, ~$80k/yr pre-tax. 4 kids it’s a total no-brainer. Government schools are disasters, not an option.
This article gives me a sense of urgency/anxiety, even though I'm a high income earner and haven't been a complete idiot in my 20s. Momentum happening on the Wifi $ though at least.
Also reminds me of the FatFIRE sub on Reddit, you go read those posts and almost all of them are individuals who built and exited a business and now have questions around managing that 8-figure wealth, mitigating their taxes, etc
$100k a year seems a lot once you graduate from school/university and get your first job but, then, the realization hits you that it is not enough. I have just been working for 3 years, started to crunch those number, and found that it would not let me reach where I want to reach in life.
The irony is that not everyone is realizing this! Some of my collogues believe they still can make it in their current jobs by getting a promotion while the reward to risk (high stress + time loss working to make some guy's business more successful) is not attractive/worth it at all!
BTW, one thing I thought was missing from the excel file, is the need to buy (or lease) a car which is an increasing expense as your family size increases with time. Good luck with that!
Is there a way to track where we are with car price correction ? Looking for a 5-7 year old Honda/ Toyota compact SUVs. Employer is calling back to work 3 days a week and need a car soon. Was expecting steeper car price correction but I guess good severance packages are holding the tide for now
At least if you earn decently with WiFi money you can geoarb and cut some big city costs.
Is there a reason to be in VHCOL cities vs high to medium cost cities other than the paycheck, once you've invested a few mil? Never lived there, only visited, so as an outsider wondering what keeps people in VHCOL places? Is it just they save so little it isnt feasible to move?
I thought $100k a year was the “made it” number, man life sure gave a smack in the face on that one, this was average salary in area ($50k) + another $50k in business income
It feels like a lot on paper, feels like nothing in reality, rather easy to “paycheck to paycheck” that even in a low cost of living location.
Easy to call into the trap of “I made it” & let expenses run rampant.
Hence, business income is crucial, if only for the lower tax threshold with expenses (write offs), not even considering earnings multiples.
I’ve always liked to assume I’m broke & use all that spare money to make more money to ensure “brokeness” never happens again.
(Yes I read all this in 3-5 minutes lol)
Ha!
Good stuff. Where were you 10 years ago when I was in my mid-30s with 6 kids and they tried to put the golden handcuffs on me? I did give them the middle finger and start my own gig for awhile, but didn’t *commit*. After a decade of 14+ hour days (and, you know, 6 kids), was too burned out. Long story short: even without the golden handcuffs, a lot harder to do this stuff if you don’t do it in your 20s.
Give yourself credit.
Can't do much with 6 children even at age 25!
if you don't mind me asking, why didn't you commit?
Complacency and lack of discipline. I got to the point where I could pull down low/mid-six figures working 10-15 hours a week. Which was enough to live on. But wasn’t building anything of my own and was just trading hours for dollars. So, here I am, still doing the same (trading hours for dollars, but back to full time). But, plan to be able to build enough to drop 20% hours by Jan24 and 40% hours by Jan25. At that point, I can do 60% in my sleep or switch completely out. I keep my necessary expenses low, so no golden handcuffs for me (discretionary spending with a bunch of kids is kinda bonkers tho - plan is to get the oldest 3-4 to start their own businesses this year too).
Man you are in a great spot imo..... Wish I could pull that kind of money with that amount of hours!
It’s just income though. BTB has the goods for building wealth.
Yeaht that be true but few reach your level of income man outside of the top 3 careers that btb mentions. Like CPAs struggle to reach that kind of money you make for sure...
I find it helpful to think of dollars as “freedom tokens.” The more freedom tokens saved the more freedom I have. That way I think carefully before spending freedom tokens on a shiny new toy.
Lifestyle inflation creeps up in stealth mode. Critical to keep reassassing my burn rate and true “needs”. No I don’t mean go FIRE (that is a miserable life) but staying modest and reasonable with expenses. I have calculated a reasonable burn rate that provides a good life , then I track monthly expenses to stay below my burn target. Bonus is when I’m tracking below annual burn then can splurge on something guilt-free because even after the spend I’m under my target burn. Also chart net worth monthly which informs my burn target.
If you look at it closely the key is that the wage increases in *PERCENTAGE* terms begin to weaken. This is where you get stuck
Yes. You cannot get rich on W-2 income as your cumulative wealth growth flattens with larger base numbers. Must start a biz. And I’ve found minding lifestyle creep and keeping burn comfortably below income critical at every point on the wealth curve. Nothing loosens your wallet like making some real money. Pro athletes an extreme example.
Real wealth is built on good exit. Focusing on building a business, making it successful and then selling it at a right time is key to being set or made it. There is no other way. States like California and NY sucks every penny out of you in form of taxes and inflation.
Yep its the way to make it
This is spot on. BTB went conservative on this one too. He didn’t include the creep that happens as you reach those different income levels. You’re a SVP? You should move here and vacation in x location. Director? Can’t live or vacation where the SVPs are, plus gotta join the right clubs. MD? Same thing plus right school for kids plus summer and winter vacation homes in the “right” spot.
Yep
We worked at a firm that took a bad M&A and tanked their stock price (think 80% down) before we got there.
People with multiple years of 6-figures in deferred comp in company options saw it go to $0. We don't even include any of our deferred comp or even our ESPP shares as actual wealth until we sell it and move it into our personal account.
PS - you can raise kids for cheap. But when you are bringing home good money you don't want to - museums, aquarium, movies, meals, lessons etc add up quick. You probably know it, but you are being conservative with your expense numbers in the 30s for guys with families.
Anyone here in the comment section actually making what bull is projecting?
This is common pay scale for Investment Banking. No it isn't perfect and the "cope" for bankers/lawyers is always a partner or some big boy banker at Qatalyst or random boutique who pulls in $5M
Yeah I do. Not in Finance but I just turned 26 and at the $250K-$270K mark. I'm in Tech so these numbers are definitely possible even without working like crazy or having amazing credentials from college.
Will say the downside is tech compensation increases are likely to plateau out a lot faster. So got a get that wifi money before it's too late.
They plateau on purpose for all industries. This is to keep you cuffed you make too much to leave too little to get away
What positions in tech? Everything I come across requires lots of experience or advanced degrees.
I work in a "functional role" in tech essentially a Strategy role at a big tech company. Literally just study any type of STEM degree (doesn't have to be a hard one) and you have a good shot at these roles.
If no STEM degree then go hard on the bootcamps or lean into quantitative problem solving experience and play that up. I actually write a sub stack on this (lol) so if you're really curious go read stuff there.
Yes I'm a business degree , no MBA. I've looked at some of the boot camps a few years back but at the time I couldn't do them as there were scheduling conflicts. Excellent I'll check out your sub stack as I am looking for a new role as it is. Thanks
26 at 300k/yr as a Data Scientist (Tech).
So yes.
the steps are even written in the substack for other DSs to emulate.
300k in 3 yrs.
That's what I've been thinking. I find it hard to believe you don't need krazy credentials to get positions that pay that much. I have not come across any job postings in my area that pay anywhere close to those numbers without either significant years of experience or advanced education.
not in a straight line like the excel sheet but on track... wrong Q though... read again
Think it’s covered in efficiency but law school and med school both have worse overall net numbers. Also ppl who graduate undergrad only but w student loans def worse off. Bull’s summary is best case outcome. Only solution aside WiFi$ is to be born rich, which is what I was able to accomplish.
Yeah was covered in efficiency
Never seen anyone cover this topic so straight forward or even be realistic about the facts.
I’ve gotten used to disbelief when I run a quick calculation on even a median house with median expenses - it’s doesn’t equal median income.
Again you were very early with the Wi-Fi money idea when you first developed it
Yeah we're early with the jungle idea too (we hope lol!)
The reality is, if you had a middle class or upper middle class upbringing you have to make quite a bit more than 100k to have that same lifestyle for your kids.
Correct.
Just got a new job and thought with a high savings rate I'd be fine with investing, I've realized with excel its still not enough
Wanted to give a little update. 18 and at about 1k/m although next month will be more I expect. Thanks BTB. I really do want to sponsor the next Troll Tuesday giveaway. Also need some suggestion on how to have more energy or work more efficiently
Sure thing just email us
Emailed you. Let me know if you need anything at all. Would be happy to help and thanks for you’re work as always 👍
Three things:
1. In the NE McDonalds now pays $20/hr. So two McDonald's workers who get together and work a little OT now make 100k. It's not what it used to be...
2. If you make 300k+ the expectation on the female side is that kids go to private school. That's at least another 30k-40k/yr with two children.
3. The Key number is 10k/month to invest. 10k/month over 30 year is 10mil+ at 8% standard market returns.
https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
Yeah the main problem here is this assumes $10M buys the same in 30 years as it does today. If you look over the last 10 years alone cost of living has practically gone up 50-100% depending on where you live.
Assume you hit $10M 30 years from now. What is inflation, we can say 3-4% to be safe.
$10M/(1.035^30) = $3.5M equivalent in today's dollars!
“...excel doesn’t lie.” This was the same epiphany I had a while back regarding inflation. For years early in my career I chased $3M as “my number”, because living in a low COL area, no debt, kids out of the house, and a reasonable 5% RoR - figured you can eat and travel and utilities and insurance would come in under $150k, so boom. I’m good with $3M - can live off interest and never tap principal for 30-40 years!
Then I modeled things with just a little bit of inflation, like 3-4% (let alone 7-8%). WTF kind of moment. Point is even if you live in a low tax flyover state - everyone reading BTB is hoping for financial independence, whether on Degen Island or your own perfect patch of dirt. Inflation is insidious and needs to be accounted for or else you *will* end up in a tent fr fr.
100%. Revealing numbers. We all know they are screwing us. There are other forms of inflation as well such as forced private school. $3500/month for two children over 14 years = 1 million
On point 2, if you go past two kids, even the wife will balk at the cost. Then you get her to homeschool them. lol. Honestly, the kids staying at home playing X-Box all day is better than than going to public school.
We are pro-homeschool.
But pay roughly the same per kid as we were sending them to a small private school. Between homeschool materials, supplementing with a learning pod/tutor, and field trips to add to the experience, it adds up.
(also as Mrs. F'er reminds us everytime we bring up the cost after living in a high-tax area with 'good' schools..."what were you doing when you were in public school at age X?"...very quickly remember why we choose the homeschool)
This is actually the truth. Assuming $20k/year/kid * 3 kids is $60k/yr post-tax, ~$80k/yr pre-tax. 4 kids it’s a total no-brainer. Government schools are disasters, not an option.
Don’t disagree. It’s an expense either way, via tuition or loss of second income.
This article gives me a sense of urgency/anxiety, even though I'm a high income earner and haven't been a complete idiot in my 20s. Momentum happening on the Wifi $ though at least.
Also reminds me of the FatFIRE sub on Reddit, you go read those posts and almost all of them are individuals who built and exited a business and now have questions around managing that 8-figure wealth, mitigating their taxes, etc
$100k a year seems a lot once you graduate from school/university and get your first job but, then, the realization hits you that it is not enough. I have just been working for 3 years, started to crunch those number, and found that it would not let me reach where I want to reach in life.
The irony is that not everyone is realizing this! Some of my collogues believe they still can make it in their current jobs by getting a promotion while the reward to risk (high stress + time loss working to make some guy's business more successful) is not attractive/worth it at all!
BTW, one thing I thought was missing from the excel file, is the need to buy (or lease) a car which is an increasing expense as your family size increases with time. Good luck with that!
Is there a way to track where we are with car price correction ? Looking for a 5-7 year old Honda/ Toyota compact SUVs. Employer is calling back to work 3 days a week and need a car soon. Was expecting steeper car price correction but I guess good severance packages are holding the tide for now
At least if you earn decently with WiFi money you can geoarb and cut some big city costs.
Is there a reason to be in VHCOL cities vs high to medium cost cities other than the paycheck, once you've invested a few mil? Never lived there, only visited, so as an outsider wondering what keeps people in VHCOL places? Is it just they save so little it isnt feasible to move?
The main reason is quality of life. If you live in Tier one cities you get used to everything being at your disposal
Great concerts, great sports, great restaurants etc. That's the allure of it