How much income do you need to be considered RICH?

Hi, where is your savings guide posting? i am interesting in reading about it.
thank you

Seems about right for NYC.

for the last one, subtract $60-80K for tuition for 2. with 2 kids, you're closer to $2M for apartment.

now even San Fran starting to look cheapish.

This thread again?

Where was it before ?

When you say $500,000=rich, is that per adult? So a couple would hit "rich" at $1MM according to this?

Wrong.

According to both Census Bureau and Labor Dept. figures, in NYC (which is already skewed higher than the rest of the country), if you make a HHI of more than $92K, you're in the top 20%. If you make more than $162K, you're in the top FIVE percent. Making more than 95% of everyone else is not "middle" anything. It is strictly UPPER class, regardless of how you "feel" on that income.

You may not be "rich" making $162K, but you're not "middle class" by any stretch of the imagination, given that the median HHI in NYC is less than $60K.

You can have $50,000/year income and still be rich. Very, VERY rich.

"Rich" is such a vulgar term. I prefer "criminal classes"

In NYC middle class includes everything up to around $750,000 per year. Perhaps less, if you are in a stable job like CFO or trust-fund owner.

In NYC middle class includes everything up to around $750,000 per year. Perhaps less, if you are in a stable job like CFO or trust-fund owner.

May i have what u smoking ?

You didn't mention what you do with youre 122K in annual 'savings' to make a stable, conservative return. It isn't only those with high income the government is penalizing these days, but those foolish enough to have saved all their lives.

Depends on who is doing the considering.

So, I'm making about $100K, netting about $55K after everything.

What kind of 1BR should I buy? (please include accepted price, monthlies, and down payment amount).

Matt, in New York county the thresholds are a bit higher than for NYC as a whole, but I get your drift. 200k puts you in the top 17% of households in MANHATTAN, and about 3X that in the top 1%. For MANHATTAN. But of course, you could also - as I always say - parse Bel Aire, Beverly Hills, Pacific Palisades and Malibu out of LA county and ignore the rest.

New York County, New York Percent in Group
Estimate
Total: 728,520 100%
Less than $10,000 75,192 10%
$10,000 to $14,999 39,312 5%
$15,000 to $19,999 34,083 5%
$20,000 to $24,999 31,151 4%
$25,000 to $29,999 26,727 4%
$30,000 to $34,999 26,501 4%
$35,000 to $39,999 23,784 3%
$40,000 to $44,999 24,516 3%
$45,000 to $49,999 17,541 2%
$50,000 to $59,999 38,773 5%
$60,000 to $74,999 55,939 8%
$75,000 to $99,999 68,209 9%
$100,000 to $124,999 54,418 7%
$125,000 to $149,999 34,615 5%
$150,000 to $199,999 56,994 8%
$200,000 or more 120,765 17%

Sadly, $5800 per year does not a mortgage + taxes make in Manhattan or any "prime" boro, or even a decent NYC suburb, for a family of 4. There are some other problems with the assumptions too, including that the 35% tax rate is no longer realistic if someone is actually a W-2 wage earner.

Part of the problem with looking at cash flows to say you are "rich" is you need to answer the question as to for how long you have those cash flows. A "rich" person might want a rather modest $1.5 million house at the beach -- that wipes out 10 years of your savings. A "rich" person that did not have rich parents might start out a quarter million in the hole from student debt. Buying a BMW every 4 years takes out half a year's savings. And, if you are going to be "rich" in these parts, your bratty ass rich kid is going to cost you way, way more than $20K each per year in tuition, nanny, baby nurse, tumbling class, tutoring, psychotherapy, camp, diet doc, etc., etc. Given the escalating costs of tuition, the present value of, say, 18 years of private school from grade school through grad school is probably $1MM -- all after tax dollars.

Still, whatever wage you think gets you to a $125K per year savings rate, banking $125K per year for 20 years gets you $2.5MM. Put whatever post-tax incremental rate of return you want on that over the 20 years, but what kind of coin do you think you and your spouse will need to retire "rich" in 2033? I don't think that is going to cut it.

It is expensive to be rich.

here goes matt again, lol. it all depends on the zip codes u compare urself too obviously. why narrow it down to nyc? why not compare urself to the world per capita income? then we are all rich, right?

anyways, funny thread MIBNYC, i say funny because the post tax incomes are way off. $350k pre tak will prob get u a little over $200k at best, post tax, esp if u r w2. run the numbers again with correct tax assumptions and u will find urself adjusting all brackets upward based upon ur analysis

Income is not the right metric, it's assets. And to be rich you need ten million dollars.
seriously, you might make a few hundred thousand a year for a few years and then not, were you wealthy?

It would help if your parents named you Richard and they were to lazy for ard.
Whaa-Laa...no income and your Rich. Even if your Rich Little, you're still rich.

No one wants to answer my question??? :(

Apparently not.

http://streeteasy.com/nyc/talk/discussion/29271-how-much-do-you-need-to-earn-to-feel-rich

EU98 - I suggest a 1 bedroom in Great Neck or Hoboken. $250K max.

No problem; the answers to your questions, UE9, are:

If you're talking Manhattan, with the exception of (possibly) Inwwod &/or Washington Heights - you can essentially forget it. Bargains still abound in gorgeous Art Deco buildings in areas of The Bronx most definitely worth considering; specifically, the area of Pelham Parkway & Bronx Park East. I don't think you can get that psf anywhere else in the city.

My advice? With the above being said - & if you somehow can do so - look into buying an apartment for cash, well under $100,000 with a comfortable maintainance of around $500.00 . This will allow you breathing room, & not be stretched to the limit each month, with ample funds from your salary for a comfortable lifestyle without needless financial anxiety.

That's my take on it. I'm sure not everyone will agree, but best of luck to you nonetheless.

UE98, max mortgage 2 x hhi, or 200k. Deposit should be at least 20% of purchase price and should leave at least 1 yr of exps liquid (401ks are not included as liquidity). Your savings amount will determine what you can afford, which will dictate which neighborhoods you can afford.

REMom,
Sorry, could you please explain this further?
"max mortgage 2 x hhi"

(again, working with $100K annually, about $55K after all expenses not related to housing).

It means your mortgage shouldn't be more than twice your annual income.

Hence, if you make $100K, you can afford a $200K mortgage.

ReMom & NYCMatt: you are something else - you give advice when you have no idea about the subject. Check here please:

http://cgi.money.cnn.com/tools/houseafford/houseafford.html

So let me get this straight: I make a mil a year and according to your idiotic logic, I am only qualified for a two million mortgage. What are you smoking????

John, we are talking specifically about NEW YORK CITY.

CNN's rudimentary calculator is for a nationwide audience, most of whom will not be buying co-op apartments.

And *obviously* the 2x income multiplier doesn't apply to the outlying 1%. DUH. Use some common sense. We're talking about the 95% group who live paycheck to paycheck and make less than $200K.

UE98 does not have to buy coop - he can buy a condo or a 1 family house - NY has plenty of both. According to the CNN calculator, UE98 can swing a $500K mortgage assuming a $100K down payment and a 4% interest rate. Plenty of 1 bed condos in the $600K range in Upper Manhattan, Brooklyn, Queens, Bronx or Long Island. Common Sense.

"According to the CNN calculator, UE98 can swing a $500K mortgage assuming a $100K down payment and a 4% interest rate. Plenty of 1 bed condos in the $600K range in Upper Manhattan, Brooklyn, Queens, Bronx or Long Island. Common Sense."

Yeah.

It's that same kind of "common sense" that got us into this Mortgage Meltdown Hell in the first place.

NO ONE can afford a $600K home on a $100K income. Period. CNN's calculator is full of shit.

But of course. CNN is full of shit and Matt from Washington Heights is always right. I mean, it is Matt, same as Jesus, we have to believe what he says. Period.

Very strong argument.

And using CNN's own calculator, conservatively speaking, the total monthly carrying charges on a $600K home with a $500K mortgage would be -- at the very least -- $2700. And that's BEFORE common charges and taxes!

Someone making $100K in NYC, after ALL taxes, FICA, unemployment, yadda yadda yadda, is bringing home $4500/month. That's $1125 a week.

You'd need THREE paychecks to pay for the apartment before you buy even a scrap of food or a minute's worth of electricity. That is not "affordable" by any stretch of the imagination.

...And by the way, there was no "mortgage meltdown" in 2008. Read first and get your facts straight before you post.

I guess we all just dreamed up the whole global financial crisis.

What color is the sky in your wold, John?

Matt - your calculations - as mine - are based on assumptions. You sound very arrogant and very strong in your opinion when you do not have all the facts. You do not know how much down payment UE98 can do, you do not know his status (single, married, kids, etc), you do not know if he has family to assist him, you do not know many things, yet you assume most of them and you want everyone to agree with you.

Example from personal experience: I bought my first apartment 12 years ago on a $110K salary and I got a $475,000 mortgage. I had zero debt, excellent credit and I was single.

Good for you.

You must have also been eating only dog food.

Financial crisis it was, mortgage meltdown it was not. Your knowledge is very limited and I do not blame you - it seems that most of the news you get come from AMNY and Metro. I do not expect you to know what happened in 2008 - the problem is that you judge people and give advice based on that limited knowledge.

..And it is spelled world, not wold.

The color? Bright blue!

"You must have also been eating only dog food" Irrelevant you idiot! The point was if you can swing the mortgage or not and the answer is yes, you can.

FYI, I sold that apartment 5 years later @ 90% profit! You shortsighted idiot.

Mortgage meltdown it was, in fact. I've been covering Wall Street and the world financial markets for 25 years. I know a meltdown when I see it.

I also know what people can afford and what they cannot, because as a co-op board member, I review their applications all the time. I see their pay stubs. I see how much they gross, how much is taken out, and what they net. And despite your protestations to the contrary, "zero debt" and "excellent credit" do not enable anyone on a $100K income to magically "afford" a half-million dollar mortgage.

And just because you over-extended yourself and lucked out by the skin of your teeth doesn't give you the right to call people nasty names.

I appear to have struck a nerve.

So you are a reporter and because you covered the news, you think you know. Again, I do not expect you to know what happened. It is out of your league, anyway.

I bought a condo, not a coop and my mortgage example was for a condo or a 1 family house. My advice to UE98 was for a condo or a 1 family house. Learn to read first - you must be a lousy reporter if you cannot do the basics.

Matt, if it walks like a duck and talks like a duck, it is a duck. Do not get offended. You are not the only idiot I know.

"I appear to have struck a nerve" actually, you are an entertainment on my day off - you amuse me. And it seems that I have struck a nerve, not you. You are slowly giving yourself out with personal info. So let's see: your name is Matt, you are a reporter for the WSJ, you are a coop president and live in Washington Heights...all public info...

I hate brokers

John75, I think there a lot of people on these boards who already know who Matt is and a few who have even met him, so I am not so sure you should trumpet your Sherlock Holmes-ishness just yet.

Jason, I am not trumpeting anything.....It's one thing to meet someone and another to reveal who you are in a public forum, especially when you do not know who is reading the posts. Let's say you are Matt's boss and it is a slow day, and you happen upon streeteasy and start reading out of curiosity and all of the sudden, you see someone named Matt, who has logged 6616 posts by the way and says he is a financial reporter for 25 years at WSJ, coop president, Washington Heights resident and you connect the dots....I do not think it would be a happy day for Matt next time he goes to the office....

Matt & John75: I think you frightened UE98 away!

I know I'm dating myself here (well, no one else'll go out with me! - bada-bum bum) - but you two remind me of Dr. Martin Abend & Sidney Offit, two aging debaters who were on channel 5, 9 or 11 - I can't remember which. Thanks for the memories...& please: Don't stop now! LOL!

lol

LOL - I think it was Channel 9 :-)

Matt does not work for the Wall Street Journal.

As for UE98, I think that he would have told us if his family was helping or if he had the capability for a relatively extraordinary downpayment relative to his otherwise affordable payment. Probably would also have told us if there was another member of the household with income, or with just expense.

Lastly, criticizing because of a typo?

UE98

Sheepshead Bay looks like your new neighborhood !!

Glad you remembered them - so it was Channel 9...thanks.

I used to get HYSTERICAL watching & listening to them: Abend, who struck me as a Mayor Beame lookalike (& perhaps wannabe...but WHY?!?) & Offit, with that William Kunstler-like hair & clownish Orville Reddenbacher bowtie.

I take it's safe to assume that neither of you actually look or sound like those two (& could only pray that you don't, & have my deepest sympathies if you do.)

Imagine if they were around today - with Twitter & Facebook Followers?!? OY!!!

Greensdale: no need to take everything so seriously. It's not meant to be taken seriously.

It was a heated discussion but amusing nevertheless - at least Walpurgis enjoyed it :-)

Bet she loved the typo criticism.

Statler and Hilton

John75, Matthew can be very, well, Matthew. Which is to say, among other things, wrong.

But didn't you very recently present a picture of your own out of control finances, such that you can't comfortably afford a moderately appealing family starter apartment on $1 million HHI?

Thanks, yes, of course I enjoyed it - Around the Wold in [not quite ]80 Comments!

i thought i was "rich" until i saw the actual % taxes taken out of my paycheck.

i get 56% taken out in taxes

its just unreal

for anyone who was "hoping" to be "rich" someday who is currently "middle class"....might as well just give up and not work so hard. there is no point

Since the top MARGINAL rate in NYC is 51%, I feel to see how 56% could possibly be taken out of even the richest person's paycheck in NYC.

Actually Dr. Martin Abend was on Channel 5 when it was "a Metromedia Station" and their 10 o'clock news was otherwise known as "body bags on parade".

www.youtube.com/watch?v=cESACuuh6kM

bobF - you hit the nail on the head there.

There is another prolific poster on here who seems to think nobody knows who he is. To that poster, I would say that he might want to heed John75's advice. So the poster in question knows to whom I am speaking, I will recommend two books: the end of racism and the shape of the river. I beg of you to tone it down and suggest that you not say anything on here that you would not say to anyone in real life.

@ Novice ... just say who da phuk u talking about

I would never do that, but the poster does need to be aware that his principals could recognize him. He may be aware of that already, and he may be perfectly comfortable with his posts, but I cannot imagine they are in line with his institution's HR policies. You just never know who you are talking to on the Internet.

As a person of color, I must concur.

Which color?

Don't be racist.

I'm not.

I'm always struck by people asking, or debating, how much one can "afford". To answer that question truthfully involves making a series of specific assumptions, as the definition of "afford" can vary greatly. Some of us believe you can only "afford" a place if the payments are such that you can still max out your 401k, keep 6 months or so of living expenses in the bank, maintain a specific lifestyle (again, based upon one's unique circumstances), keep up the payments if events result in a minor decrease in salary, and be able to bank your bonus rather than use it for living expenses. I happen to be in that (probably overly conservative) camp.

That said- and also based upon the fact that actual home price is only part of the equation since co-op fees vary greatly- UE98 should take an honest look at what he/she spends every month, what their take home pay is, and how much they want to contribute to their retirement account. The resultant math will tell him/her how much they can "afford" to pay monthly, which in turn (along with what he/she can use as a down payment along with projected maintenance fees/tax, etc) let's them back into a max home price. This decision is too important to make relying on a "rule of thumb" (such as X salary).

For what it's worth, I bought a few years ago at a little more than 2x salary (not counting bonus). While my co-op fees are on the high end, I'm glad I stuck to that price point. I don't think I could have done everything referenced above had I paid more.

Well-put, Seaver69.

It's considerations like yours that factor into decisions like mine (as a co-op board member) in deciding whether an applicant can truly afford an apartment he's trying to purchase.

walpurgis-
No DEFINITELY not scared away. Rather, quietly amused at the "ping-pong-ing" that has been transpiring (complete with some true gems by NYCMatt; my favorite here is: "... [the] group who live paycheck to paycheck and make less than $200K." Yes, all those people who make $150K living check to check, scrounging for McDonald's food money... can we say: out of touch, much? Otherwise, NYCMatt, if that sentence referred to 2 different subsets of people, which, from the syntax, was not clear, then I withdraw my [playful] sarcasm). Still, the funniest is NYCMatt's $5000 windows. (You're making quite a name for yourself, aren't you?:)

But otherwise, some interesting comments. seaver69, well said and I agree with you. However, if you notice, I provided the EXACT info which you say is required: in your second paragraph, you say "UE98 should take an honest look at what he/she spends every month, what their take home pay is, and how much they want to contribute to their retirement account." Now, indeed, my original post was short, but nonetheless quite explicit: 100K income, $55K after all expenses. What does that mean? ALL EXPENSES. Meaning EXACTLY that: what I spend, what take home is, after retirement account, after EVERYTHING. $55K is the number to work with. From this, I was looking for what kind of 1BR to buy.

Which brings me to John75. Yes, I did not specify condo or co-op (this was on purpose). I DID, however, specify a 1BR apartment -- not a house. John75, I feel you'd have a lot more helpful things say on this if you weren't taking up so much time dealing with NYCMatt's comments.

Now, what does all this come down to?
Well, at the beginning of this thread, $100K was in the second "tier," let's call it, where it was "Not rich, but middle class." This was of course said originally by MIBNYC. For the next few posts following, this was agreed upon by several people. Even in the Bubble of NYCMatt, his initial "wrong" comment referred to that area between the second and third "tiers" ($200K by MIBNYC), saying that, while the term "rich" is up for debate, this kind of income is "not "middle class" by any stretch of the imagination." pencap75 said "Seems about right for NYC." ab_11218 only had issue with the last one. So really, at that point, everyone was MORE OR LESS on the same page of 100K-200K as being not in such bad shape. Certainly, able to live comfortably, modestly. We are still talking about NYC.

Then, I come in and give a PERSONAL example. What happens? The possibility of a modest NYC dwelling (once attainable as a "second tier" earner and "not "middle class" by any stretch") becomes a crap 1BR apartment in Great Neck, Hoboken, Pelham Parkway, etc. No spending above $500 maintenance. Purchase price of "well under $100K" or "$250K max." Certainly, a 1BR in Manhattan was out of the question. However, looking at the original post and the responses that shortly followed, it wouldn't have appeared that way.
So: Conclusion? There is obviously a BIG disparity going on here. It's just interesting to see how perceptions change when they go from general "rules" to specific situations, and advice given in such situations.

Now, I must admit, I did leave out (intentionally) one big part of the puzzle (I also did leave out things like marital status, children, etc, which John75 rightly brought up. Suffice it to say it's just me here): Liquidity/savings. Who knows? Maybe I have a billion dollars in the bank. This of course changes things entirely. No mortgage. BUT, that's not what my question was really about. It was about month to month living. $55K, or roughly $4600 a month, AFTER EVERYTHING, for living (I asked how much to put down, and thus mortgage).

Again, I'd still like more input on this, as people's input seems to vary widely, particularly on how the framework is presented. The divide that has been presented here (between initial post and "real-life" example) really shows people's different views on how one's money should, can more importantly CAN, be spent. I am interested in the CAN... Interested in what kind of 1BR CAN be bought and lived in on the above stated inflow of money (100K gross, $55K to work with) annually.

how long have you been planning this little fake social experiment and your vendetta against NYCMatt and his $5k windows?

greensdale, LOL.

Personal preference/comfort level will ultimately make decision for you, but since you ask, I support conservative approaches offered by both walpurgis and nycmatt.

But I guess that is more the "should" than "can." It is impossible to answer the "can" without info on total assets. Assuming you can pay all cash, look at places where taxes and cc amount to 4500 per month and you have a wide range. This is an odd question; GD, what is the backstory?

No backstory, his post was long and odd and seemed super contrived. Also, Matt's $5k windows are old news at this point.

You have $4,583 to spend every month.
1) Subtract from $4,583 your monthly expenditures not counting housing costs. Include things like vacation, holiday presents, etc (I recommend, for instance, figuring out how much you spend on Christmas presents each year and dividing by 12). Also, include condo fees, co-op fees, etc (these will change based upon what you're considering buying). The resultant sum is how much you can spend monthly on your mortgage.
2)Open up Microsoft Excel
3)Go to a cell and enter: =pmt( mortgage rate/12, 360, -200000). Note: don't actually type "mortgage rate", type in the numerical percent divided by 12.
4)200000 represents an initial guess at the size of your mortgage. Change the 200000 number until the result equals what you have every month after expenses. That's how much of a mortgage you can afford to make monthly payments on. As an example: with a 3.87% mortgage rate, a $200k mortgage gives you monthly payments of $940.

I have a friend that currently nets about 40k a month but is hesitant to buy a 2.5 mil condo carrying cost about $2500. He's putting down 800k. I personally don't see a problem. What you guys think ?

If he is in a position that could go away and be difficult to replicate, I think your "friend" is correct. If your friend's net goes from $40k to $20k or less, then he will probably lost a lot of sleep.

NYCNovice, understood. I prefer a conservative approach as well.

greensdale, thanks for your *opinion,* with no contribution to the topic whatsoever (and YOU'VE brought up NYCMatt's windows more times than I have at this point, btw).

seaver69, thanks for the very specific thought process. I like it. But actually, that $4,583 number, like I indicated before, is AFTER expenditures not counting housing costs. $4,583 is what to spend per month on housing only. Knowing this, what type of place, area, etc., would you look at?

MIBNYC, I think the example with your friend is a perfect example of what's going on here -- how different people can look at the same number and have entirely different views of it.

>greensdale, thanks for your *opinion,* with no contribution to the topic whatsoever (and YOU'VE brought up NYCMatt's windows more times than I have at this point, btw).

You are one step ahead of me, so clever.

People ask what they can afford mostly because they lack the disciple or are lazy. They have two numbers, their salary and the price of the house. They want someone/something else to do the work to figure out the details on affordability.

@ icNADA ... People nowadays are hesistant to purchase homes mainly because of job security i believe. What happens on your 9th year paying on a mortgage if you get canned ? Sell?

Yes, I believe there are so many factors, endless factors, even. This is why I tried to narrow it and simplify it to as basic as possible. The hope is, at least to me, to have at least somewhat of a consensus, or if not, just a baseline, to work from. The disparity shown above, namely, $100K as being comfortable for a NYC purchase, to it hardly having the ability to get something in Great Neck, NY, is interesting, and, IMO, something that deserves to be looked at.

A good many people forget to factor their Governmenf Cheese Credits in their calculations.

It's astounding that this crucial component is overlooked time & again. Unbelievable!

LOL walpurgis. Far too few people remember their whaling tax credit as well. I mean, really, how does one get by without one's harpoon??

I asked my former 350 pound boss the same thing.

I guess it's now obvious why it's "former"...

UE98 - I think the disparity you are perceiving is that between 100K being an excellent income anywhere but its being generally insufficient to buy real estate in New York without a ton of cash already in the bank. The salary will limit the size of the mortgage for which you can qualify, which will limit your price point if you need a mortgage. There will be more coops than condos in assumed price range, and then you have coop board financial requirements that may be more or less stringent than your chosen lender's requirements. I spent my early professional years in SF and found it maddening that a salary that could buy a nice house in most of the country would get me maybe 600 square feet in SF. Where potential buyers in market are from all over the world, even the highest wage earners are often better off renting. Constant theme on here is that what is an excellent salary by most measures begins to look anemic when measured by its ability to purchase Manhattan real estate.

"I have a friend that currently nets about 40k a month but is hesitant to buy a 2.5 mil condo carrying cost about $2500. He's putting down 800k. I personally don't see a problem. What you guys think ?"

MIB, how stable is his job and what kind of prospects does he have if he suddenly loses his job?

You could lop a zero off all the numbers in your scenario (except carrying costs, which might be divided by 4) and your friend would be just about the same as me. The big difference is that when you have a Washington Heights income and get laid off, you can find a similar job fairly easily, whereas that might not be the case if you're making more than half a million dollars a year.

@ SubZero ... His job is pretty stable and he loves being liquid. I guess he's being a lil paranoid

@MIB - The carrying costs in particular seem really cheap relative to his income. It's not easy to put myself in the shoes of a person who could spend two million dollars on a home, but it looks like he could swing it easily enough.

@inonada's "purchasing power" comment made me recall this thread.