Wednesday, September 17, 2014

If I Were A Rich Man...

Last week the venerable Wall Street Journal released a short educational video entitled, “Do You Make $400,000 a Year But Feel Broke?” 

The Captain was thinking that very thing just the other day!

Veronica Dagher narrates the piece, which has been derided across the internet. But that’s only because I’m pretty sure they didn’t watch to the end.

They missed the point.

And if you want to know the point, you’ll have to read to the end of this blog.

Dagher lays out what she apparently considers typical expenses for a person earning $400,000 per year, noting that this fictitious family lives in Chicago in a $1.2 million home and has two kids.

Apparently when you pull down $400K per year, a $1.2 million home is doable and expected!

I wouldn’t know.

So here’s what Dagher says this family will spend each year:

            $87,000  mortgage payment
              24,000  property taxes
              25,000  home improvements
              15,000  utilities
              30,000  groceries
                9,000  auto insurance
         $190,000  “Core Expenses”

            $25,000  two vacations
              15,000  car payments
              10,000  dining / entertainment
              12,000  club dues
            $62,000  “Discretionary Spending”

            $10,000  kids’ sports
              10,000  “529 contributions” (savings for college)
                6,000  gifts / holidays
                5,000  school fundraisers
            $31,000  “Misc.”

This brings us to $283,000 in annual expenses. Dagher then throws in income taxes and “a modest contribution for a 401K”, and …"Voila!"

You’re Broke!

The Captain has given the WSJ presentation a great deal of consideration. And after some time – and not a little rum – we have come to the only obvious conclusion.

Don’t have kids and it’ll save you $31,000+ per year!


But seriously…

No, come to think of it, I am serious!

Now, some of the naysayers suggest that Dagher is trying to be humorous with this piece. Sarcastic. Even mean-spirited. But in actuality, she is being very serious.

The purpose of the video is to answer the question, “Have I saved enough money for retirement?” Dagher’s answer is “probably not” – which is true for most of us – and that  NOW is the time to make the necessary adjustments to your lifestyle so you can save more for retirement.

Supposin’ pillagin’ is out of the question after retirement…

So go cogitate on these things whilst the Captain tries to imagine what a $1.2 million home in Chicago looks like!

Nope, that’s Michael Jordan’s place in Highland Park, IL, about 25 miles down the road from Chicago. Feeling the need to downsize to a 40,000 square foot home in Jupiter, FL, he originally wanted $29 million for this 56,000 square foot bungalow. But the market has been tough and he has had to lower his asking price to a mere $16 million… and it’s still not selling!

Can you believe it!