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Originally Posted by Acturater
As with most things in life the relationship is likely not linear. Disposable income likely increases at an increasing rate as you approach (and pass) 7fig income. That said 10% seems low by todays standards - prob a rule of thumb from the days when a single working parent could, on avg, afford a cushy life. Nowadays 20% is prob more like it. The unfortunate effect of wealth being concentrated to the Bezoses of the world financed by the rest of society. They’ve conditioned us to feel lucky at the mere possibility of becoming bitcoin / Tesla millionaires while they extract trillions in stolen social, environmental, economic capital.
Thanks for listening to my TeD talk.  |
You're right about the rule not applying when your income gets above a certain level (as long as your other expenses remain in check.) There's a lot of spending creep that happens when you make more money. I'm sure we all know of someone who makes 500k+ annually yet is always on the brink of bankruptcy because they wanna flex like a billionaire.
With that said...the ten percent rule really holds true for 80% of households. There really are wayyyyy to many people out there with cars that should not have one. I know people who justify owning a car to get to work but the job just barely covers their car related expenses. Sometimes you just need to take a bus, change jobs, or move. Too many people finding way to justify poor financial decisions. Car ownership has become a "right" vs a cost/benefit weighted decision.
Earning a 100k or even 200k is nothing in today's crazy housing market. Granted this is a regional phenomenon but if you're buying a detached home in many popular north american cities, you're spending close to a million. With a 20% downpayment you still have a 800k mortgage which is like $5k a month. Take your $200k annual...after taxes... $100k or $8300 a month take home (Canadian income taxes are brutal). After that monster mortgage...you're down to $3300.. still have to eat, pay property taxes, electrical, Netflix, insurance etc. Probably leaves you with $1000 a month. Still haven't saved for retirement or kids education. That's the reason you're seeing a 8 year old Mazda 6 parked in front of some of these really nice homes.
I commend everyone here who does have their shit together and has their housing and retirement dealt with. Most younger people (I'm in my 30s) generally don't and a BMW purchase is a "yolo" move. Granted some of us have figured out a low cost of living strategy to make BMW ownership palatable but for most...makes no sense.