You Try to Live on $500,000 in This Town

[jeffrey]

Private school: $32,000 a year per student.

Mortgage: $96,000 a year.

Co-op maintenance fee: $96,000 a year.

Nanny: $45,000 a year.

We are already at $269,000, and we haven’t even gotten to taxes yet.

Five hundred thousand dollars — the amount President Obama wants to set as the top pay for banking executives whose firms accept government bailout money — seems like a lot, and it is a lot. To many people in many places, it is a princely sum to live on. But in the neighborhoods of New York City and its suburban enclaves where successful bankers live, half a million a year can go very fast.

“As hard as it is to believe, bankers who are living on the Upper East Side making $2 or $3 million a year have set up a life for themselves in which they are also at zero at the end of the year with credit cards and mortgage bills that are inescapable,” said Holly Peterson, the author of an Upper East Side novel of manners, “The Manny,” and the daughter of Peter G. Peterson, a founder of the equity firm the Blackstone Group. “Five hundred thousand dollars means taking their kids out of private school and selling their home in a fire sale...

http://www.nytimes.com/2009/02/08/fa...8halfmill.html

[SnoopyCool]

I relish my life of frugality. When DH lost his job, we were still able to make it without huge life changes.

[Broken Arrow]

So... they may have to cut back on their lifestyle? Gee, yeah, having a hard time drumming up sympathy here. Wouldn't mind working for them though.

[disneysteve]

I think there will be a lot of unemployed nannies.

[GREENBACK]

With all the hardship they are responsible for, I don't care if they have to rent an apartment in Queen's. Good luck boys

[PrincessPerky]

As a homeschooling mom on a shoestring budget I am just not feeling sympathy...sorry.

Though I would feel bad for the nannies if that is the splurge they choose to forego.

[MonkeyMama]

Having lived in an insane HCOLA, I do sympathize. You just don't understand it until you live it.

& as I always have to point out, about 50% of that income goes to income/payroll taxes anyway. So does $250k cut it in Manhattan? That would be a pretty middle class income. Rent or buy a modest home and not a lot left after that. Get decent childcare, pay your taxes, and yeah, what else is left?

Not that no one could make it on $500k. Not saying that. But California and New York have some of the most astronomical taxes and housing costs. You don't know how many people I knew who moved here for the wages and didn't last 5 mintues with the cost of living.

Anyway, $500k in a place like Manhattan is VERY middle class. Not upper class; not by a mile. You'd have the same struggles as most of us on this board.

[disneysteve]

MonkeyMama, what you say is true, but I know numerous people who work in Manhattan, including on Wall Street, and most of them live nowhere near Manhattan. Some live in central or even southern NJ. Some live in Connecticut. Some live in more rural parts of NY state. Why? Because housing costs in NYC are insane. So they live where the cost of living is more reasonable and commute into the city.

[My English Castle]

yeah but... that $500K cap is on a single earner. I'm with Disney Steve, the childcare only costs if you have to hire it out. And the rest of the article went on to whine about the 16K in vacation costs, the 35K spent on dresses for charity balls and the (gasp!) $125/hr spent on tutors.

If you've got a two-parent household, and only one is working, the other should be able to cut some of these costs. Or forgo the bailout money.

[EEinNJ]

I've read you can live in Detroit pretty cheap!
I live in central NJ, in one of the most affluent counties in the nation. If 500,000 is middle class, then I am practically in poverty.
Where is it written that people on public assistance (CEO's of banks and auto companies) are entitled to expensive houses, chauffeurs, jets, nanny's, and private schools?

The fact is these incompetent, greedy bunglers have robbed the system, and now we're being blackmailed to let them continue. In most other countries people like Ken Lewis, Bob Narducci, and Henry Paulson would be forced out in disgrace, if not simply shot.

[GREENBACK]

I'm sure many of these guys have worked to get in the position they are in but they truly don't show that they have any grasp on what reality is to common people. The jets and vacations and million dollar office renovations and all the other perks demonstrate a complete detachment from reality. A lot of these things were approved before the bailout but they are still pretty eye opening.

[jIM_Ohio]

I think capping the earnings of CEOs is a good thing- even though I do agree with MM that cutting an income from $3M to $500k is a 6X drop in income. That is the same thing as me dropping from 105k to 17.5k. I cannot even comprehend earning that little.

If you are a CEO you cannot exactly choose where to live (you probably need to live near a company headquarters). And those headquarters will be by population centers, not in rural areas.

You or I could change companies at a low or mid level contributor to choose where to live. CEOs will not get that choice.

[Broken Arrow]

Just real quickly, I do understand about having certain financial restrictions due to the position you are in. My father is a trauma surgeon, and my parents have to maintain a certain modicum of standards in order to network.

That said, the article DID state Nannies for $45k, and chauffeurs for $75k to $125k per year. Seriously, can they learn to do without nannies and chauffeurs? Even amongst the upper crust, surely they can find ways to pare down their expenses.

[srblanco7]

No sympathy. They are partly responsible for the mess we're in. I'm not going to shed a tear that they can't have a nanny when millions have lost their jobs as a result of their actions.

[disneysteve]

Originally Posted by Broken Arrow

Just real quickly, I do understand about having certain financial restrictions due to the position you are in. My father is a trauma surgeon, and my parents have to maintain a certain modicum of standards in order to network.

This is true, and it is something that many folks simply don't understand. If you are in a certain industry or hold a certain position, certain things are expected of you. You are expected to dress a certain way. You are expected to drive a certain level of vehicle. You are expected to donate to certain charities and attend certain charity events. You can't show up for work in an off-the-rack suit from Sears, driving a 10-year-old Chevy and carrying a brown-bagged lunch. Not saying it is right, but it is reality for many people.

[MonkeyMama]

Well let me put it this way, would *I* take a $500k job in Manhattan? Hell no. Because I know it sounds a lot better than it is. Understanding the tax ramifications of a $500k job (in NY of all places - highest taxed state) AND what it's like to live in a HCOLA, I would say a high stress $500k job would NOT be worth it.

Plenty of people commute on the lower end of the wage scale. CEOs (top tier wages) should be able to live in the city they work in. If they can't, who can? Why would you want a to be a top level executive job just to spend all your time commuting? I don't think the average person understands the responsibility that comes with some of these exec jobs. Certainly some have abused their power and have made a bad name for highly paid execs. But, if you don't pay them for the job, no one will take them. IT's already happening. So then you just get more currupt people in there who don't know what the hell they are doing. From my perspective it is just a vicious cycle. We seriously lack qualified ethical CFOS (in my field) due to business politics of the last decade. Cutting the pay of the few who will take the jobs, helps no one really.

I agree the article is a little absurd. I am sure many execs will be fine on $500k. But I think the lack of sympathy largely comes from a lack of understanding the situation these execs are in. All I Want to point out.

[GREENBACK]

Originally Posted by disneysteve

This is true, and it is something that many folks simply don't understand. If you are in a certain industry or hold a certain position, certain things are expected of you. You are expected to dress a certain way. You are expected to drive a certain level of vehicle. You are expected to donate to certain charities and attend certain charity events. You can't show up for work in an off-the-rack suit from Sears, driving a 10-year-old Chevy and carrying a brown-bagged lunch. Not saying it is right, but it is reality for many people.

DS
I certainly get what you're saying there but that culture needs a slight adjustment. They are called "fat cats" for a reason and I think moving forward it's time for the cats to shed a few pounds.

They don't hesitate to make cuts on the lower end of the scale so they can maintain their lavish lifestyles. I want to see cuts at the top where the real money is.

[arthurb999]

Originally Posted by MonkeyMama

Well let me put it this way, would *I* take a $500k job in Manhattan? Hell no. Because I know it sounds a lot better than it is. Understanding the tax ramifications of a $500k job (in NY of all places - highest taxed state) AND what it's like to live in a HCOLA, I would say a high stress $500k job would NOT be worth it.

Plenty of people commute on the lower end of the wage scale. CEOs (top tier wages) should be able to live in the city they work in. If they can't, who can? Why would you want a to be a top level executive job just to spend all your time commuting? I don't think the average person understands the responsibility that comes with some of these exec jobs. Certainly some have abused their power and have made a bad name for highly paid execs. But, if you don't pay them for the job, no one will take them. IT's already happening. So then you just get more currupt people in there who don't know what the hell they are doing. From my perspective it is just a vicious cycle. We seriously lack qualified ethical CFOS (in my field) due to business politics of the last decade. Cutting the pay of the few who will take the jobs, helps no one really.

I agree the article is a little absurd. I am sure many execs will be fine on $500k. But I think the lack of sympathy largely comes from a lack of understanding the situation these execs are in. All I Want to point out.

I agree 100% but there has to be a penalty for failing so badly and having the govt bail you out of failure.

[disneysteve]

Originally Posted by arthurb999

I agree 100% but there has to be a penalty for failing so badly and having the govt bail you out of failure.

With this I'd agree. The Wall Street firms that gave out millions in bonuses at year-end even though thier firms lost tens of millions of dollars is ridiculous. Shouldn't a bonus be something you get to reward you for a job well done? If performance is in the toilet, there shouldn't be any bonuses.