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Scraping By On Six Figures? Tech Workers Feel Poor in Silicon Valley's Wealth Bubble (theguardian.com)
Big tech companies pay some of the country's best salaries. But workers claim the high cost of living in the Bay Area has them feeling financially strained, reports The Guardian. One Twitter employee cited in the story, who earns a base salary of $160,000 a year, said his earnings are "pretty bad", adding that he pays $3000 rent for a two-bedroom house in San Francisco. From the article: Silicon Valley's latest tech boom has caused rents to soar over the last five years. The city's rents, by one measure, are now the highest in the world. The prohibitive costs have displaced teachers, city workers, firefighters and other members of the middle class, not to mention low-income residents. Now techies, many of whom are among the highest 1 percent of earners, are complaining that they, too, are being priced out. The Twitter employee said he hit a low point in early 2014 when the company changed its payroll schedule, leaving him with a hole in his budget. "I had to borrow money to make it through the month." He was one of several tech workers, earning between $100,000 and $700,000 a year, who vented to the Guardian about their financial situation.
I live in Oakland, and make exactly 100k. Last year the rent on my 1 bedroom apartment was $2,800 a month and I split that with my partner. I still managed to travel, eat out, and save $25k. Just learn to budget and stop spending money on useless shit. I have no sympathy for the person making $700k that was complaining. Fuck that guy.
Serious question, how are people working in retail or supermarkets or places like that manage to live there?
They don't. Generally, anyone working a blue-collar job in San Francisco is commuting from far out of town.
Now techies, many of whom are among the highest 1 percent of earners, are complaining that they, too, are being priced out. The Twitter employee said he hit a low point in early 2014 when the company changed its payroll schedule, leaving him with a hole in his budget. "I had to borrow money to make it through the month." He was one of several tech workers, earning between $100,000 and $700,000 a year, who vented to the Guardian about their financial situation.
In 2013 to be in the top 1% of US earners you had to earn over $1.15 million per year. That's quite a bit more than $100,000 and even $700,000 a year. See here:
http://www.mlive.com/news/inde...
I'd guess the top 1% is even higher now.
They don't. Generally, anyone working a blue-collar job in San Francisco is commuting from far out of town.
Or living in a vehicle. Seriously, regular families with regular jobs living in RV's. 50% of students are some area schools are homeless. One mayor wants to make it legal for families to park overnight in supermarket parking lots.
Sometimes moving takes you to a higher salary but also a higher cost of living.
I'm making $73k per year myself, but I also have a 1700 sqft house in a nice suburb that I pay $710 per month for (total purchase price was $115k back in 2013). While I could potentially make more if I moved I'd not necessarily have any more disposable income. As it is right now even after all of my bills are paid I've still got around $2000 per month in "open" income to do with as I wish.
Plus there's the fact that my friends and family are here, so truthfully I'm not sure I'd be willing to move for anything short of an obscene amount of money anyways.
"People who think they know everything are very annoying to those of us who do."-Mark Twain
Take-home would be closer to $6.5-7k in California. That makes $2,300 the traditional limit of affordable rent and $3.5k the "new normal" limit on affordability. I am in a similar boat; California can feel punitive, although I pay less rent for a smaller place.
From a tax perspective what sucks is you are considered "rich" by both the state and the IRS, but it is what it is. I wonder if the people who vote republican without a 6-figure income understand how disproportionately lower taxes will hurt them.
Assuming $400,000 (20%) down on 2 Million, with taxes and insurance you're looking at ~$10K a month. Monthly take-home on $150,000 a month is roughly $7,800. So you're $1200 in the hold just on your mortgage.
You are definitely not only paying 25% tax when you're earning 160k in CA.
To take home 10k a month in CA, you need to earn around 220k a year before taxes.
In California, it would be closer to $65-70k in taxes: $8k FICA, $16k State income, $40-45k federal income.
If single, $4-6k per year healthcare, $4k for parking, $5k for car and insurance... things add up. Hopefully you are putting $18k in your 401k as well. Student loans can easily be $10k per year. You could end up with just under $2k per month for all other expenses, which can get tight without being extravagant. Throw in an unforeseen expense, and it can turn to ruin quickly... just as it does for anyone else living paycheck to paycheck.
LOL, only in Silicon Valley bizarro-world (or NYC, or DC). In sane parts of the country, the normal recommendation is three years' salary.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
If you wait until you're sure you can afford to have kids, you'd never have them. Though I will agree that, if you have one kid are are struggling financially, you need to think twice before having a second. And the same goes exponentially more after 2 kids. On the positive side, there are ways to "afford" to have kids by cutting back on other expenses that might have seemed "totally necessary" before you had children. On the negative side, kids have a way of causing budget-breaking expenses like illnesses and injuries. My second son fell on his head more times than I can count and had multiple febrile seizures where he stopped breathing. All of those ER trips are expensive and are really hard to factor into a budget.
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Buy some shingles and a ladder. It's not rocket science. Where I live you can hire 3 latinos to help you with it for 10 bucks an hour each plus a couple of six packs (at the end of the day). Anyone can put down shingles, my 60 year old sister did it on her house.
The "traditional limit" assumes all expenses scale across all income levels and that technology sits at a standstill forever.
Even in the Bay area, I can feed an individual human pretty decently for under $100/month (I can actually feed a human passably for $25/mo, but that's a grueling exercise in finances). This is because it still costs $5.83 for 50 pounds of bread flour at Sam's Club no matter what city you're in; the same goes for beans, various meats (although beef is cheap in Wisconsin--still expensive as all hell; pork is cheap everywhere), and a lot of other things. Vegetables are universally-expensive--even frozen--although I don't put much stock in vegetables; I put more vegetables in stock.
Food in home basically doesn't scale, while food out of home scales linearly: a 16-inch pizza will cost you $12 in Baltimore and $30 in Seattle. Chain fast food might hold about the same price--McDonalds doesn't charge $4 for a hamburger anywhere--and everything else tries to play up to the area's income spread. Likewise, you can get the same clothing (and you can order it online for the same price--size yourself in Sears if you want), electronics, and cars, at the same price, anywhere in the country; people like to use cars as a metric because the most commonly bought car in rich areas costs $38k, and the most commonly bought cars in poor areas costs $12k, and then they can say an "affordable" car in San Francisco is $28k and so people "can't afford a new car" and thus complain about rich people and salaries again.
With all that in mind, food has fallen from 40% of the median-income household spending in 1900 to 33% in 1950, and then to 12.5% today as agricultural technology advanced rapidly up to the 1980s (and continued more-moderately since). Clothing has fallen from 12% of expenses in 1950 to 3.5% today. We spend 6% to buy more and better healthcare than we got on the 4% we paid in 1950; and we spend an utter assload (about 40%) on entertainment, luxury, and other discretionary spending, versus about 25% in the 50s.
While that suggests that spending more than the traditionally-prescribed amount on housing is viable, your financial management plans may suggest it's less-sustainable than you'd like--you still have a smaller proportion of your income to pull from if you get into a pinch. That would be sound finances, but every single person in America has ignored that as the median new single-family home size increased from 978sqft in 1950 to 2,300sqft in 2010, and the percent of income spent on housing (shelter plus utilities, maintenance, etc.) increased from 28% to 33%. People can buy more stuff, so they spend a bigger proportion of their income to buy much larger houses in which to keep all this stuff; if they had just stayed with 978sqft homes and the 400sqft 1-bedroom apartments of the 1920s, they'd only spend 14% on housing today, as a national average--New York would still rape you for renting a 395sqft studio.
So yeah. Maybe grow up a little and get your head out of the 50s. Technical progress happens.
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This is living very frugallly.
I would say 2 kids and a homemaker wife are quite the luxury
Rents go up, new housing developments get started, rents go down and eventually stabilize.
You've left out an important piece in the middle of the saga, and frequently the one with the loudest explosions. I like to call it "Gentrification II: The Wrath of NIMBY".
I live down the street from a cute little 1,700 square foot ranch house with a yard in Lafayette, just east of Oakland and Berkeley. It went for $1.7 million. In my native San Diego, no slouch when it comes to overpricing, it wouldn't command even a third of the price. Should the cities in the Bay Area do the sane thing and allow for concentrated vertical development near BART and other transit lines, the value of that place would plummet. Do you think the idiot who bought that house is going to let a real estate developer undercut the value of his investment without a fight?
Instead, like his aging hippie brethren in SF, he will make all sorts of arguments about preserving the "character" (translation: affluent whiteness) of the neighborhood, and fret loudly about the quality of life issues that increased density would bring.
For many in the valley who are on work visas the spouse is not allowed to work legally and since software engineers are educated folks with respect for the law the spouse doesn't work illegally. And once you have a kid, the second kid is kind of necessary as an only child grows up to be self centered and spoilt unless you want software engineers to not have kids at all.
Even if the wife did work all her income would be taxed at the highest bracket so the effective taxation on the wifes income would be 50%(FICA+28% Fed+9% California). So a 60000 USD job would fetch 30000 take home so around 2500 a month. 2 kids would cost 2000 in childcare so a net 500 which would get blown in the additional eating out which happens when both parents are working and too tired to cook.
So a nonworking wife and 2 kids are not a luxury.
**Life is too short to be serious**
Last year my taxable income was $190000. You can buy shares in my employer. I wouldn't.
So, 16 years ago I paid a year's pay at the time (85k) in cash for a solid, but unattractive, house in a working class, decent suburb.
Three years ago, after I got a lot of pay rises, because good real engineers are well paid, I paid 300k cash to have it knocked down and a new one built. That is now worth 600k.
So which of you dummies in the IT game can't figure out how to do that?
Meanwhile, I bought a weekender. For cash. But that was mainly to annoy you lot.