I'd like to object to the implications of the NY Times article cited in a recommended diary
http://www.dailykos.com/...
The implications are that it is just IMPOSSIBLE for people to live a 'tolerable' life on ONLY a half million dollars a year is laughable - though living in the close-in upscale burbs I can see how some find it so difficult to do so.
But there's far more that should be part of this discussion - below
Now first of all I would like to note that ANYONE who'd been making even only a half million a year (and many of these people have been making TENS or HUNDREDS of millions) SHOULD have some nice savings. If you were making a hundred million a year those savings SHOULD be the size of a small third world nation's economy (and are probably stashed offshore in one). If they don't then they are profligate spenders - accomplishing almost the impossible.
A friend in securities law noted that 'the people I work for make money faster than they can spend it' - that there's 'no way' you could spend at the rate these people make money. If they've saved - as any rational person would - they should have enough to last out a few years of 'reduced earnings'. Most SHOULD have enough put away to last out the lifespan of any other person in this country.
So.... you can always 'dip' into your savings if ONLY $500,000 a year isn't enough.
But Lee Iacocca ran Chrysler for $1 a year during the time they were 'on the government dole'. It worked out well for him - he recouped more than enough when Chrysler stock rebounded. Any TARP recipients SHOULD be willing to do the same. How about it? If they are THAT good, they should be willing to put their own financial future DIRECTLY on the line. After all, they collected MILLIONS while driving their employers into the ground........ It's time for accountability - unless of course they KNOW they can't succeed in turning things around ansd are out for all they can get while the getting is still good....
What have we been hearing?
These companies say that they need to pay 'competitive' salaries to 'hold onto' good employees.
- Bonuses and high salaries are reserved (under most circumstances) for SUCCESSFUL employees in PROFITABLE companies. If a company doesn't make money - NO BONUSES - and often salaries are cut. Instead of firing thousands of low level employees that do the normal work required, these companies might try firing HIGH PRICED executives responsible for the massive LOSSES they've incurred. You could keep a few thousand worker drones with the money paid to a few hundred executives.
- As far as the 'risk' of losing 'key' employees.... be real.
a) There aren't very many 'other' positions for all these people to go TO. And if you think overseas banks are scrambling to hire Americans after this mess..... most foreigners see only arrogance and incompetence, NOT qualities they wish to bring into their ortganizations.
b) Other SUCCESSFUL companies not needing to take TARP funds are NOT all that likely to hire people from copmanies that fared so poorly - why should they hire people that were part of the problem?
- In spite of the odds against finding another position - when thousands are looking, ANY really 'good' employee that can find a job elsewhere is likely to do so. ANY employee that can bail out of an institution having problems is likely to do so (unless they figure the government is bailing them out and the company won't fail so they are better off staying to collect their bpnuses and maybe make some money on their stock options if the company stock price recovers). ONLY the ones that CAN'T leave - the ones than have made a mess of things - are staying put. THEY DON'T HAVE ANYWHERE ELSE TO GO.
We're seeing some ridiculous 'comparisons'
The NY Times had examples of people unwilling to live with a salary limit - ALL were in NON-FINANCIAL industries - many were entrepreneurs. This is a COMPLETELY different situation where their earnings are directly related to their own personal success. By the same criteria execs in finance have been abject FAILURES and should be unemployed at the momnent - having in effect bankrupted their employers
But then NYC in particular is rather dependent on the excesive salaries and bonuses paid in the financial industries for THEIR budget balancing. NYC collects income tax - a LOT of it - from banking and Wall Street. The co-op market in Manhattan at the high end has been financials and foreigners for a while now...... OF COURSE NYC wants the gravy train to continue. They've killed off every other industry they had. No more garment. No more printing. Publishing is dying. Advertising has been in the tank for a while......
Back to the poor HALF MILLION a YEAR executives.....
But WHAT IF
- These people have NO savings to fall back on?
- They can't afford to work for $1 a day and the prospect of stock appreciation (only if they are SUCCESSFUL at revivingh their employer)
- They can't find another employer willing to pay them 7 or 8 or 9 figures........
How hard is it to live on a half million a year?
Its not.
Even if you're in a house worth a couple million, the mortgage payment for $2,000,000 at 6.5% is $15,558 a month - $186,696 a year
Local property taxes here in EXPENSIVE suburbia would be about $60,000
So.... basic housing costs are maybe $250,000 a year. (as for the second house - or third - tough luck... sell them and pay off your primary if need be). But if you were making MILLIONS a year would you still even HAVE a mortgage? Heck, even if you did you should be able to pay it off out of savings - you DID have savings, right? NO WAY could you make THAT much and not save SOME..... Might be an issue sneaking it back from ofdfshore though......
Private school for your kids is what, $50,000 a year? You CAN do without THAT - really. Most people do.
The nanny, housekeeper, dogwalker and chauffer add up. But then if you stop paying the gym memberships and walk the dog yourself, if your wife stops shopping and lunching and starts spending time at home she can PARENT and COOK and CLEAN. Food costs go WAY down if you're not eating out every other night and eating take-out on the remaining nights..... why DID you bother with the Viking stove on the Kitchen re-do? All it's use for is boiling water?
You can cut back on clothes shopping and your wife can make use of liberal return policies to return some of those thousand dollar hand-bags to raise some cash.
Turn in the leased BMW 7 series and Mercedes - you DON'T NEED a car in Manhattan ... USE MASS TRANSIT If you're in the burbs, any basic transportation will do for shopping - you SHOULD be walking to the train station and taking mass transit to get to work. But there's a reason peopel drive mini-vans - good for grocery shopping, trips to Home Depot and travel to soccer games. Better mileage than the big SUV's too. BTW- I wonder how many black cars are still chaufferring in even mod level execs into Manhattan and back every day? - sill seeing lots on the parkways....
You can cut back on the ski weekends in Colorado and weekends in the Carribean. MOST people get by with one vacation a year - if any.
If you're REALLY desperate sell off than damn Rolex and some of your wife's jewelry - how about the 2 caret engagement ring your wife has.....
But I'm being facetious with all this
You CAN live damn well on $500,000 a year.... which nets out to a fair amount lower - maybe $300,000 after all withholding. But even that is still not bad at all - even with the still high cost of living - and it is NOT cheap around NYC, I will concede that.
In REALITY, a $1.5 million dollar home in the burbs cost far less a few years back...... and you probably flipped somethign to get to that and made money in the process. If you bought for the first time within the last 3 yeaers you're a fool. We're paying $3,000 a month on our mortgage though local taxes ARE close to $30,000. Second house? no.... though if we did it's be a cabin up in the Adirondacks or Catskills - they're pretty cheap.
Car payments are under $1000 a month for the minivan - which will be owned outright after this year. Other car's paid for a long time back. Insurance isn't all that bad.
You can max out 529 contributions - so you SHOULD have enough saved for your kids' college by the time they get out of high school... and they're in public school.
No Saks or Nieman shopping trips here but it's not like we're naked. Better dressed than when I was a kid.
You can manage a couple nice vacations a year - nothing obscenely expensive but you can get to see the country if you want. Do Disneyland or Disneyworld a couple times when your kids are interested. You can even pull off a few Broadway plays and dinner out now and then.
AND you can even save some money while doing all this.
Frankly - you can do all this on LESS than a half million a year - even here. We've done it for years. Most people do.