Tuesday, December 9, 2008

How much income is enough?

I came across an interesting article on MSN that discussed household income in major metro areas. It takes a lot more money to be "rich" depending on where you live. Not exactly rocket science, is it? One of the reasons DH and I were fine with moving down to Charlotte was because it is so much cheaper to live here. The primary expense being a house. A 2800 square foot house 5 miles from downtown would go for an absurd amount of money in Boston. Even with the falling house prices.

Overall the top 5% of earners in the country make $311,000. Obviously that is a lot of money but would you consider that to be rich? I think of wealth more than income when defining whether a household is "rich" or not. Americans are notorious for spending up to their income level. So it becomes difficult to build true wealth.

In Boston you would be considered rich if you are a family of 4 and make at least $633K. It takes even more in NYC, San Fransisco and DC. How ya feeling now about your earnings?

The article suggests that by forgoing kids and moving to smaller metro areas we will feel even richer. But if DH and I ever move back to Boston we will feel significantly poorer. I'm not sure I'm ready to face that! Especially with a baby on the way.

Assuming our wireless is working tonight I will upload photos of the nursery for my next blog post.


Almostima said...

That is a great question. The way I see it, income is an external factor -- only some of which you can control. Your lifestyle, however, is an internal factor of which you have much greater control.
Example: when a friend of mine first accepted a big-firm job, before she ever set foot into that office, she had committed to a lease at an expensive SF neighborhood, and a new Mercedes. Together, these two expenses accounted for virtually her entire take home income. For others its $4,000 TVs, $2,000 couches, Jimmy Choo's, etc. I knew lots of others who were basically incapable of saving money even though their starting salary was $125K. I don't know that these folks are any happier for the purchases they have made.

I've made some other choices. I still use the $100 TV I bought when I was in school, drive the same Ford sedan I bought almost 9 years ago, and generally don't treat my income as if it's burning a hole in my pocket. As a result, I believe that I feel wealthier than some of my colleagues who have put on the golden handcuffs.
Am I at a place where I feel like I never have to work again? Of couse not. Do I own my dream home? Not yet, but I feel closer than others.
Would I trade money for time? I think so. To me, time with my family is as much a unit of wealth as a financial bonus.

Natalie said...

okay, so now i want to kill myself or move to el paso which kind of feels like one in the same.

Helen said...

Nat, we could probably get a great place together in El Paso. I'm sure the singles scene isn't as swinging as Malden, and they probably pay teachers crap, but....