For reference, https://smartasset.com/taxes/income-taxes suggests that a married couple with income of $160,000 per year will pay about $44,619 federal and state income and payroll taxes, leaving an after tax income of $115,381 per year. If the family’s rent is $3,000 per month, that is $36,000 per year, leaving $79,381 per year left for other spending and saving.
The Guardian: "Scraping by on six figures? Tech workers feel poor in Silicon Valley's wealth bubble"
Does his wife not work at all? Dual income seems to be the norm no matter where you live. Some of those people are outright delusional. I don’t care if you live in SV or Manhattan. If you can’t figure out how to get by on an income of over a million a year, your problem is a total inability to budget, not your salary.
You must be reading a different article–this guy makes “only” $160,000, which is WAY more than most of our kids are making. Still, he seems to have a hard time paying all his bills.
^You should read the whole article. They interviewed multiple families and individuals.
OK, you’re right that it does talk about folks who are complaining about how tough it is to buy a place with their incomes of over $1mm/year. It is hard for me to understand and REALLY tough to relate to. My niece and her fiancé are trying to buy a place in SF but having a tough time figuring out where to buy and what they can afford. He is an MD and she is a podiatrist.
The problem is that the cost of living is way high in Silicon Valley. Housing is ridiculously expensive-- a teeny house is a million bucks, and apartment rentals are similarly ridiculous. Childcare is a fortune too.
We recently left a gorgeous but expensive community on the CA coast where a 700 sq.ft. apartment with formica, cabinets and other decor accents from the 1970’s goes for something north of $2500/month. Coin laundry, utilities not included. Same-size condos in dubious areas start around $450k, and the ones you might consider living in are $600k and up - still for only 2 bedrooms, mind you, and with an add’l $600/month or so in HOAs.
We loved it there, but we got priced out. We live somewhere much cheaper now, where we were able to buy a nice condo for something a bit less than the median home price for this area. On a lark, I compared the square footage and amenities to homes in our previous location, and we’d have paid SIX TIMES the price of our condo to get something comparable in our previous location.
I’m not talking super-fancy either. 3 beds, 2 baths, 1700 sq. ft. Would have been around 1.7 million in the previous place.
Unreal!
This is what 1,075,000 gets you in Palo Alto…tough to fit you, your spouse, and 2 kids in a 790 sq. foot condo…
https://www.zillow.com/homes/for_sale/19496119_zpid/0-1500000_price/0-5681_mp/globalrelevanceex_sort/37.493656,-122.068577,37.392936,-122.198525_rect/12_zm/0_mmm/
Hawaii is pretty insane as well for real estate, but our incomes are not nearly the Silicon Valley levels, so it ends up that there are quite a few multi-generation families because that’s the only way they can afford to live somewhere decent and not be on the street. In many neighborhoods around here, 3 bedrooms, 2 bath, 1000 square foot teardowns that are 60+ years old on a 5000-7000 square foot lot will fetch $900,000-$1,000,000, then you have to tear it down and build something you can live in. Here are the income figures for Honolulu as of 2014.
http://dbedt.hawaii.gov/hhfdc/files/2014/02/2014-HUD-Income-Limits-Honolulu.pdf
Yes, housing is very expensive. However, the quoted person with a $160,000 yearly pay should have about $79,381 per year left over after paying income and payroll taxes and the $3,000 per month rental housing.
Time to start looking at a tech job not in Silicon Valley. They do exist.
I think it’s that he wants something better than a two-bedroom rental for his family of four, but the $3000 for the 2 BR is way below market and he can’t afford anything better. Plus, people who live in below-market rentals have a tendency to find themselves given the boot, and then what would he do?
Well, hopefully these folks being interviewed are doing more than grumbling. They can save like crazy and then find another job somewhere that will allow them to enjoy the wealth they saved in a lower cost of living area. Folks who are barely making it because their income is very low and don’t have a high demand skill set have fewer options.
I think they are just saying “gee, with this income, I thought I’d be living so much better.”
The $160 family may be paying for childcare or private school, or the parent’s student loans. Who knows.
I was amazed at the cost of daycare in SV… a friend is paying over $2000 a month for her 2 year old’s daycare center, she’ll get 10% off for kiddo nr. 2…
However, if they are paying for day care, then that implies that the other spouse also works, presumably for more (after income and payroll taxes) than what the day care costs ($160,000 is the base pay of the person complaining).
My son lives and works in Silicon Valley. He makes a six-figure salary but has to live frugally (no car, very small apartment in an old building, almost no recreational travel). And he’s a single man. Knowing what I know about the cost of living there, I would think that raising a family on $160,000 would be extraordinarily difficult.
Yes, but when the job ends – as tech jobs often do – there wouldn’t be other, equally good opportunities literally around the corner. A year and a half ago, my son lost his job unexpectedly. He was able to find another one, in the same community, for a higher salary, within a month. Outside of Silicon Valley, this would not be likely to happen. He would probably have had to job hunt for much longer, and he would probably have had to relocate.
When I have visited my son, I have found myself staring at the people who work in retail stores or restaurants. They have jobs that pay much less than tech jobs. Where could they possibly live?
I have trouble understanding an article entirely made of anecdotes. Are anecdotes chosen to represent the median?
There are tech areas away from Silicon Valley. Austin, for example.
I don’t know. For all the bragging about the big salaries in tech, living in SV doesn’t sound like a great lifestyle to me. If it means living so frugally, what exactly is the point of that big salary?
Thank you San Francisco Bay Area for making Boston seem inexpensive!