The American Dream: Tales of a High-Income Earner Who Has No Money

[max225]

but honestly 220-250k ain’t that much depending on where you live.

That’s the peak fuck you tax bracket. Take home after retirement and taxes is about 30-35% in that income bracket. Coupled with the average mortgage note of 5k (1.2-1.6M home)+ 2k in prop taxes (on the coasts) you barely break even on a single income.

Agree on all points. It's not a ton of money for where he lives, but it's definitely enough for him to not be swimming in debt and he consistently overextends himself.

Seems like a conscious choice. He can easily save more but chooses not to. .gov bails people like that out constantly. I’m assuming he has somewhere between 100-150k in debt based on the DTI quote. So he can just sell an expensive car/get rid of some recurring expenses and stop retirement contributions to pay down debt. And he can also move to a cheaper place but likely doesn’t want to because he is “rich” so it is what it is.

[HerrBerlin]

Agree on all points. It's not a ton of money for where he lives, but it's definitely enough for him to not be swimming in debt and he consistently overextends himself.

Seems like a conscious choice. He can easily save more but chooses not to. .gov bails people like that out constantly. I’m assuming he has somewhere between 100-150k in debt based on the DTI quote. So he can just sell an expensive car/get rid of some recurring expenses and stop retirement contributions to pay down debt. And he can also move to a cheaper place but likely doesn’t want to because he is “rich” so it is what it is.

Yup, it is absolutely his choice to live this way.

I've made this recommendation many times in the past few years to him, but it falls on deaf ears. He could easily sell his current house and use the equity to pay stuff off and buy a smaller house, but him and my brother really need all 3000+ sqft to live comfortably I guess. I'll post more on equity and how he's used it in the past later.

[HerrBerlin]

Did we grow up in the same family? I have vivid memories of my family going out to eat and my mom calling different CC companies to see which card had enough room on it for dinner while driving to whatever restaurant.

Unfortunately I don't see my dad ever getting it under control.

HOLY SHIT

I wish I was joking.

[Huckleberry]

This sounds like how my mom used to be. I remember when I was a kid, she explained to me that a credit card was a way to buy something for $200 and then only pay $20 for it at the end of the month. I remember when I was 19, I went to go buy a car and she came along because she was adamant that I couldn't get a loan without her being a cosigner. The dealer ran our credit and I had a higher score than her.

She was just fortunate enough to always find jobs that give her money faster than she can spend it. She finally came to her senses and has her finances under control, which is great for her because she revealed to me not too long ago that she didn't even start saving for retirement until her mid-forties.

Did we grow up in the same family? I have vivid memories of my family going out to eat and my mom calling different CC companies to see which card had enough room on it for dinner while driving to whatever restaurant.

Unfortunately I don't see my dad ever getting it under control.

My mom's card strategy was having a card for each department store and for specific activities, like dining. So, the Sears card was used at Sears, Macy's at Macy's, and so on. I remember her standing at the register fanning through her cards like a damn magician.

[HerrBerlin]

Yup, it is absolutely his choice to live this way.

I've made this recommendation many times in the past few years to him, but it falls on deaf ears. He could easily sell his current house and use the equity to pay stuff off and buy a smaller house, but him and my brother really need all 3000+ sqft to live comfortably I guess. I'll post more on equity and how he's used it in the past later.

All I think of when I think of a house bigger than what we've got (~1400 sq-ft) is about all that space that needs to be cleaned.

I have zero interest in anything bigger. Only thing I want is something newer without #oldhouseissues.

People like him don't clean. They hire people to do it for them.

[HerrBerlin]

Did we grow up in the same family? I have vivid memories of my family going out to eat and my mom calling different CC companies to see which card had enough room on it for dinner while driving to whatever restaurant.

Unfortunately I don't see my dad ever getting it under control.

My mom's card strategy was having a card for each department store and for specific activities, like dining. So, the Sears card was used at Sears, Macy's at Macy's, and so on. I remember her standing at the register fanning through her cards like a damn magician.

Your mom and my dad are cut from the same cloth.

[wap]

This sounds like how my mom used to be. I remember when I was a kid, she explained to me that a credit card was a way to buy something for $200 and then only pay $20 for it at the end of the month. I remember when I was 19, I went to go buy a car and she came along because she was adamant that I couldn't get a loan without her being a cosigner. The dealer ran our credit and I had a higher score than her.

She was just fortunate enough to always find jobs that give her money faster than she can spend it. She finally came to her senses and has her finances under control, which is great for her because she revealed to me not too long ago that she didn't even start saving for retirement until her mid-forties.

Did we grow up in the same family? I have vivid memories of my family going out to eat and my mom calling different CC companies to see which card had enough room on it for dinner while driving to whatever restaurant.

Unfortunately I don't see my dad ever getting it under control.

WOW

[max225]

All I think of when I think of a house bigger than what we've got (~1400 sq-ft) is about all that space that needs to be cleaned.

I have zero interest in anything bigger. Only thing I want is something newer without #oldhouseissues.

People like him don't clean. They hire people to do it for them.

Yep.
Need a landscaper, need an interior decorator, need a handy man, a mechanic etc. which is why he has no money.

Meanwhile I have no time for shit. Too much DIY

[ChrisoftheNorth]

Yup, it is absolutely his choice to live this way.

I've made this recommendation many times in the past few years to him, but it falls on deaf ears. He could easily sell his current house and use the equity to pay stuff off and buy a smaller house, but him and my brother really need all 3000+ sqft to live comfortably I guess. I'll post more on equity and how he's used it in the past later.

All I think of when I think of a house bigger than what we've got (~1400 sq-ft) is about all that space that needs to be cleaned.

I have zero interest in anything bigger. Only thing I want is something newer without #oldhouseissues.

You and I think alike here. Unfortunately, I think we're the only people in the country that feel this way. Bigger is always better. Mansion or

[Irish]

All I think of when I think of a house bigger than what we've got (~1400 sq-ft) is about all that space that needs to be cleaned.

I have zero interest in anything bigger. Only thing I want is something newer without #oldhouseissues.

You and I think alike here. Unfortunately, I think we're the only people in the country that feel this way. Bigger is always better. Mansion or

I really would like to downsize house and upsize land. A two bedroom two bath on 2 acres would be ideal....I am not even sure if that exists.

[HerrBerlin]

All I think of when I think of a house bigger than what we've got (~1400 sq-ft) is about all that space that needs to be cleaned.

I have zero interest in anything bigger. Only thing I want is something newer without #oldhouseissues.

You and I think alike here. Unfortunately, I think we're the only people in the country that feel this way. Bigger is always better. Mansion or

I'm with both of you. Currently live in 545 sqft and that only started to feel too small when both of us started working from home full time. Now my ideal place would be a 2/2 1200ish sqft with a garage.

I went to a few open houses recently for townhomes in the 1500ish sqft size and was blown away by how much space there was. Would take a long time to furnish and fill the space, but I don't like having things just for the sake of filling space.

[ChrisoftheNorth]

You and I think alike here. Unfortunately, I think we're the only people in the country that feel this way. Bigger is always better. Mansion or

I really would like to downsize house and upsize land. A two bedroom two bath on 2 acres would be ideal....I am not even sure if that exists.

1,500 sqft 2 bed 2 bath on 1.8 wooded acres...it's incredible.

[ChrisoftheNorth]

You and I think alike here. Unfortunately, I think we're the only people in the country that feel this way. Bigger is always better. Mansion or

I'm with both of you. Currently live in 545 sqft and that only started to feel too small when both of us started working from home full time. Now my ideal place would be a 2/2 1200ish sqft with a garage.

I went to a few open houses recently for townhomes in the 1500ish sqft size and was blown away by how much space there was. Would take a long time to furnish and fill the space, but I don't like having things just for the sake of filling space.

Man, our last house was 2800 sq ft, and we filled it with stuff just so we didn't have empty rooms. We downsized by nearly half, and we had to get rid of a lot of stuff. Downsizing is 5/7.

[troyguitar]

I'm with both of you. Currently live in 545 sqft and that only started to feel too small when both of us started working from home full time. Now my ideal place would be a 2/2 1200ish sqft with a garage.

I went to a few open houses recently for townhomes in the 1500ish sqft size and was blown away by how much space there was. Would take a long time to furnish and fill the space, but I don't like having things just for the sake of filling space.

Man, our last house was 2800 sq ft, and we filled it with stuff just so we didn't have empty rooms. We downsized by nearly half, and we had to get rid of a lot of stuff. Downsizing is 5/7.

I'm still struggling with living in a tiny house with 2 people and hobbies. No idea how to lay this thing out yet. Apparently the garage is not going to hold the car.

[max225]

Man, our last house was 2800 sq ft, and we filled it with stuff just so we didn't have empty rooms. We downsized by nearly half, and we had to get rid of a lot of stuff. Downsizing is 5/7.

I'm still struggling with living in a tiny house with 2 people and hobbies. No idea how to lay this thing out yet. Apparently the garage is not going to hold the car.

get a shed for the shit outside

[HerrBerlin]

So on the topic of my dad, I'm strongly convinced there is one single thing that has allowed him to sustain his ways for so long without declaring bankruptcy: the rapidly appreciating housing market in the Los Angeles area.

How he pulled cash together for his first house, I have no idea, but I do know equity has helped get him to where he is today. House bought for $290k in 1993 was sold 10 years later for $580k. Equity from that went to (most likely, this is speculation given I was still quite young to know enough), paying off existing credit card debt, 20% down on their next home, and a ~$75k landscape and pool job for the new house. The thing that confuses me here is that my dad also pulled $60k from one of his retirement accounts to facilitate this move. I only remember this because he showed the family the check and me being a kid was AMAZED at seeing a check like that. I recommended we go use it to buy a (he always has talked about wanting one), but to the house it went.

So the next house, purchased in 2003 for ~$550k and sold 12 years later for ~$900k. This was right around the times my parents split, so they used the equity to pay off all existing debt (see a pattern?) and rented separate places for a year, as this was the start of their separation. There was at least $100k leftover from the sale and I know it wasn't used for any big purchases, as they later used the leftover money to buy a house together in 2016 with 10% down. This is also the sale where my dad reached out to me and asked to borrow $5k otherwise they wouldn't have been able to close. I said no and he got the money from his sister

My mom moved out again a year-ish later, and my dad was back into the swing up racking up those credit cards to get to where he is now. Thanks again to the rapidly appreciating market, he was able to close on a refinance last week at 3.5% for a jumbo loan after being rejected from at least 5 or 6 different companies due to his DTI. Here's him telling me back in Feb that he didn't think he'd be able to refinance just to show I'm not making this up:



There was a week of worry for him while waiting for the appraisal to get back, because if it didn't put him in the 80/20 LTV zone, he wouldn't have been able to close due to having no cash. Fortunately it appraised high enough. He is so excited this closed because he'll have an extra couple hundred bucks a month, which he called to tell me would really make a difference for him because it would enable him to make it past the 10th of the month without having to use credit.

So here we are. I have zero doubts that in the next ten years or so, this house will also be sold to pay off all existing debt and the start of the next cycle will begin.

[ChrisoftheNorth]

Man, our last house was 2800 sq ft, and we filled it with stuff just so we didn't have empty rooms. We downsized by nearly half, and we had to get rid of a lot of stuff. Downsizing is 5/7.

I'm still struggling with living in a tiny house with 2 people and hobbies. No idea how to lay this thing out yet. Apparently the garage is not going to hold the car.

Making rooms multi-purpose and versatile is key.

Our living room replaced 2 rooms in the last house...the formal living room and the "theater room". We installed a projector and motorized roll-up screen so when we want the formal living room thing, it feels like that. Movie time, drop the screen, fire up the projector, and it feels like a theater.

Our 2nd bedroom is the most versatile...office, guest room, and workout room.

I took the closet doors off the closet and put my desk in the closet so the "office" doesn't take up any room space. We bought ikea stackable beds to make the room more usable when not being used as a bedroom, which leaves plenty of space for some free weights and a rowing machine (a great full-body workout tool that stands on its end and stores in the corner).

https://www.ikea.com/us/en/p/utaker-sta ... A7EALw_wcB

It's all about being creative with what little space you have. Once figured out, I find it immensely gratifying to use every sq inch of space vs before with rooms I barely went in.

[Desertbreh]

If I ever wanted to commit seppuku, coming to this thread would show me that things could be worse.

[D Griff]

Gross.

Man, I take pride in keeping my krebitz kardz at or near zero. I churn some rewards with them and use them periodically to keep them active but they're there for emergency use only.

I use to churn heavily to the point that I haven't paid for an international flight in ~7 years or so. Kind of backed off the past two years.

Now all my expenses get run through cards to get the points/cashback but they get paid off every month. Credit card debt sounds like my nightmare.

is my strategy as well, the points game is real, we make four figures every year on it. That said, some people just can't handle having a card, points be damned, not worth it if you wind up paying 15-20% interest for the rest of your life.

[ChrisoftheNorth]

So on the topic of my dad, I'm strongly convinced there is one single thing that has allowed him to sustain his ways for so long without declaring bankruptcy: the rapidly appreciating housing market in the Los Angeles area.

How he pulled cash together for his first house, I have no idea, but I do know equity has helped get him to where he is today. House bought for $290k in 1993 was sold 10 years later for $580k. Equity from that went to (most likely, this is speculation given I was still quite young to know enough), paying off existing credit card debt, 20% down on their next home, and a ~$75k landscape and pool job for the new house. The thing that confuses me here is that my dad also pulled $60k from one of his retirement accounts to facilitate this move. I only remember this because he showed the family the check and me being a kid was AMAZED at seeing a check like that. I recommended we go use it to buy a (he always has talked about wanting one), but to the house it went.

So the next house, purchased in 2003 for ~$550k and sold 12 years later for ~$900k. This was right around the times my parents split, so they used the equity to pay off all existing debt (see a pattern?) and rented separate places for a year, as this was the start of their separation. There was at least $100k leftover from the sale and I know it wasn't used for any big purchases, as they later used the leftover money to buy a house together in 2016 with 10% down. This is also the sale where my dad reached out to me and asked to borrow $5k otherwise they wouldn't have been able to close. I said no and he got the money from his sister

My mom moved out again a year-ish later, and my dad was back into the swing up racking up those credit cards to get to where he is now. Thanks again to the rapidly appreciating market, he was able to close on a refinance last week at 3.5% for a jumbo loan after being rejected from at least 5 or 6 different companies due to his DTI. Here's him telling me back in Feb that he didn't think he'd be able to refinance just to show I'm not making this up:



There was a week of worry for him while waiting for the appraisal to get back, because if it didn't put him in the 80/20 LTV zone, he wouldn't have been able to close due to having no cash. Fortunately it appraised high enough. He is so excited this closed because he'll have an extra couple hundred bucks a month, which he called to tell me would really make a difference for him because it would enable him to make it past the 10th of the month without having to use credit.

So here we are. I have zero doubts that in the next ten years or so, this house will also be sold to pay off all existing debt and the start of the next cycle will begin.

Wow, this is incredible.

The housing market in the areas he lives just doesn't go down, so using that as a means to enable the irresponsible lifestyle might work out for...ever?

I'm truly fascinated by all of this.

[ChrisoftheNorth]

If I ever wanted to commit seppuku, coming to this thread would show me that things could be worse.

Really? It seems like he's living a pretty OK life overall.

This is where I really question the true value of financial "responsibility".

[ChrisoftheNorth]

I use to churn heavily to the point that I haven't paid for an international flight in ~7 years or so. Kind of backed off the past two years.

Now all my expenses get run through cards to get the points/cashback but they get paid off every month. Credit card debt sounds like my nightmare.

is my strategy as well, the points game is real, we make four figures every year on it. That said, some people just can't handle having a card, points be damned, not worth it if you wind up paying 15-20% interest for the rest of your life.

Same here. I have a friend that refuses to get a credit card because he's worried about over extending himself. I tell him to think of it as a debit card, but that just doesn't sink in. "I have $10k to spend" or whatever. I remind him to ignore the credit limits to which he says "but then how do you know how much you have left?" "ONLY SPEND LIKE YOU'RE PAYING CASH"

Worse is he needs to build his credit up, but he doesn't want to incur debt to do so. I told him a simple credit card with some monthly spending on it that you pay off each month would really help. Then he went on about how that doesn't help your credit if you don't carry a balance

The lack of education and amount of misunderstanding out there regarding responsible credit use and money management is but moreso

[HerrBerlin]

If I ever wanted to commit seppuku, coming to this thread would show me that things could be worse.

Really? It seems like he's living a pretty OK life overall.

This is where I really question the true value of financial "responsibility".

All things considered he's lived pretty damn well the past 30 years, even if his financial situation is basically a house of cards.

I couldn't live that way, but it works for him.

[HerrBerlin]

is my strategy as well, the points game is real, we make four figures every year on it. That said, some people just can't handle having a card, points be damned, not worth it if you wind up paying 15-20% interest for the rest of your life.

Same here. I have a friend that refuses to get a credit card because he's worried about over extending himself. I tell him to think of it as a debit card, but that just doesn't sink in. "I have $10k to spend" or whatever. I remind him to ignore the credit limits to which he says "but then how do you know how much you have left?" "ONLY SPEND LIKE YOU'RE PAYING CASH"

Worse is he needs to build his credit up, but he doesn't want to incur debt to do so. I told him a simple credit card with some monthly spending on it that you pay off each month would really help. Then he went on about how that doesn't help your credit if you don't carry a balance

The lack of education and amount of misunderstanding out there regarding responsible credit use and money management is but moreso

It blows my mind how many people actually believe this. There are people out there intentionally paying interest because they think it will help them.

[Irish]

We made pretty decent money on our first two house sales but on the 3rd we got hammered (2008 housing bubble popped in SoFla). It took us 10 years to fully recover. He is either really savvy or he got extremely lucky.