What do you consider a "comfortable" yearly salary?

[Maxpowers]

I think my post may have been a bit wordy and not clear. What I was trying to say is since my family currently spends about $42k annually that I would expect to pay $84k annually if we lived the same lifestlye in New York since it probably would cost twice as much.

Using the example above, with Mortgage and Taxes of approx. 19k I'd definitely think it's doable to keep the rest of our expenses under 65k.

Oh I see...live on $84k a year (or rather a salary of about $140k a year post taxes etc...). Yes, this is perfectly doable. It would not necessarily meet the OP's comfortable (buying whatever you want whenever without worry) standards though.

 

[SouthFayetteFan]

It would not necessarily meet the OP's comfortable (buying whatever you want whenever without worry) standards though.

That's one of the points I'm trying to make kind of. Our annual spending of $42k is buying whatever we want whenever we want (or at least it feels that way). We feel that our live is comfortable and even luxurious at times. We just don't really want or need much so for us a comfortable salary is actually much less than I currently make (wife is a SAHM).

We also benefit tremendously from the terribly complex US tax code. Even if we made $100k annually (which we don't but it's certainly a goal to get there in the next 5 years or so) based on our tax situation we would owe less than $900 in federal income taxes. I find that crazy but it's the way the laws work.

 

[jbish]

Comfortable in my area (DC Metro) would be about $200K. That would allow for a mortgage, car payment(s), maximum amount for both workers to contribute to retirement, pay for most college tuition, eat out when I want, and vacation moderately once a year. It would basically allow me to live moderately without worrying about where every penny went and scrimping.

Now, if I wanted to amass more savings, I could then go into penny pinching/frugality mode. I know some people enjoy that, but I find it stressful so if I *had* to do that, I would be "comfortable."

I completely concur with this - we are also in the DC area and $200K would give be "comfortable". We are short of that, of course - but we make more as a household than the national average. It's not enough to be comfortable by any stretch - not around here, anyway.

You guys tossing around $175,000 for a comfortable salary? I mean c'mon folks. That's way more than comfortable. If you're burning through $175,000 and still can't do whatever you want, whenever you want, something is very wrong.

We have 3 kids. When they were all in daycare (albeit a pricey private daycare, but we definitely got what we paid for), it was $50K per year. Add that to a mortgage and two cars, that's the bulk of our take home pay. So, I don't think we're doing anything wrong - we just live in a very high COL area.

 

[Maxpowers]

based on our tax situation we would owe less than $900 in federal income taxes. I find that crazy but it's the way the laws work.

I would like to speak with your accountant

Paying less than 1% taxes would be fantastic.

 

[SouthFayetteFan]

I would like to speak with your accountant

Paying less than 1% taxes would be fantastic.

Haha - you're talking to him. I'm not an accountant but I do work in the banking industry and I do our own taxes by hand.

The biggest thing is we fully fund our 401k, HSA, transportation FSA and IRA. That "zaps" almost half of our income right there. There's other things that happen after that but in the end basically whatever tax liability we have, the child tax credit (2 kids) and retirement savings credits wipe it out to 0 (and can even generate a refund).

Of course that doesn't take into account that we are paying medicare, social security, state & local income taxes. But from a federal income tax standpoint we basically pay nothing. I've run the numbers and if our income increased to $100k we'd end up owing about $850 federal.

 

[Christine]

Haha - you're talking to him. I'm not an accountant but I do work in the banking industry and I do our own taxes by hand.

The biggest thing is we fully fund our 401k, HSA, transportation FSA and IRA. That "zaps" almost half of our income right there. There's other things that happen after that but in the end basically whatever tax liability we have, the child tax credit (2 kids) and retirement savings credits wipe it out to 0 (and can even generate a refund).

Of course that doesn't take into account that we are paying medicare, social security, state & local income taxes. But from a federal income tax standpoint we basically pay nothing. I've run the numbers and if our income increased to $100k we'd end up owing about $850 federal.

That makes sense, at your income level. Based on my level, I've never been able to receive any of the credits. That's the "punishment" that people in high COL areas face. There is no inflation index on income for COL so you lose in many ways.

 

[tvguy]

Are there no townhouses in CA due to earthquakes? We don't use the word "detached" here so much, but we would call that a Single Family Home as opposed to a duplex, condo, townhouse, etc. The funny thing for me is when people of cheaper areas of the country talk about buying a duplex and renting out the other side. Here if you buy a duplex (in the 250K range and we are in the suburbs!) you are only buying that one side.

We have townhomes here, and you can buy them, but those usually are just rental units. I think 60% in my county are rentals.
Depending on zoning, there are places where you can buy just half a duplex, but it is more common for both sides to be rentals, or for the owner to occupy one side.
With Condos, I get that there is a homeowners association with funds for repairs and upkeep. How do you put a new common roof on a duplex if the owner of the other side doesn't have the money? You can't just replace half a roof!

 

[SouthFayetteFan]

That makes sense, at your income level. Based on my level, I've never been able to receive any of the credits. That's the "punishment" that people in high COL areas face. There is no inflation index on income for COL so you lose in many ways.

That has always been my criticism of the way our tax code works. It does not adjust at all to the fact that $75k in one city may be plenty of money while $150k in another is barely enough. The family of 4 making $75k pays an effective tax rate of probably <5% (and maybe even pays nothing and gets money back - this happened to us one year!!) and the family of 4 making $150k pays an effective rate of probably >20% (depending on their situation). A simple flat tax with a lot less loopholes would fix that but that will probably never get anywhere.

The same COL problem happens with savings too. Our ability to sock away $18k annually in a 401(k) will leave us with more than enough to retire by the time we reach 60. But somebody living in a higher COL area (who wants to stay there after retirement) will have to save additional money outside of retirement accounts to make that possible (and they won't be able to get the tax benefits on that additional money saved making it even harder to reach their goals).

I guess that's what makes this whole thread difficult because where we all live makes an apples to apples comparison impossible.

 

[Mickeyluver37]

Haha - you're talking to him. I'm not an accountant but I do work in the banking industry and I do our own taxes by hand.

The biggest thing is we fully fund our 401k, HSA, transportation FSA and IRA. That "zaps" almost half of our income right there. There's other things that happen after that but in the end basically whatever tax liability we have, the child tax credit (2 kids) and retirement savings credits wipe it out to 0 (and can even generate a refund).

Of course that doesn't take into account that we are paying medicare, social security, state & local income taxes. But from a federal income tax standpoint we basically pay nothing. I've run the numbers and if our income increased to $100k we'd end up owing about $850 federal.

Oh, but somewhere just north of that 100K number, and you will get slammed with taxes. We paid very little, if any, some years when DH was in the military and we were a family of 4. Now it's well into the 5 figures in Federal Income tax alone, and many of the tax benefits of having all these kids are phased out! The savers credit you are referring to has an income limit of $60,000. Not a lot of people can max out their 401k at 18K (would be 36K if your wife was also working), as well as maxing out an HSA, FSA, and IRA, pay their mortgage, and support their kids, all on an income under $60,000.

We have townhomes here, and you can buy them, but those usually are just rental units. I think 60% in my county are rentals.
Depending on zoning, there are places where you can buy just half a duplex, but it is more common for both sides to be rentals, or for the owner to occupy one side.
With Condos, I get that there is a homeowners association with funds for repairs and upkeep. How do you put a new common roof on a duplex if the owner of the other side doesn't have the money? You can't just replace half a roof!

Our previous home was actually a duplex, and yes, you can do just that. Our siding and shutters were not the same colors as our attached neighbors either. We both bought them that way.

 

[stitchfan75]

Tarrant County, Texas

We make combined about $90,000/year. To us this is comfortable. I don't know why a Nissan Sentra would be a $400 payment unless the debit/income ratio is outrageously high for the applicant. My payment on a 2015 Chevy Traverse LS is $450/month and that's a hefty car. We have kids, they are able to do outside activities...one is a JO diver so her expenses are slightly higher than our soon to be HS cheerleader. Our expenses include student loan payments, insurance, mortgage, ect. I think the difference comes from where you live and how you spend money. I have a friend who "eating out" means hitting Cheesecake Factory like some people go to Denny's, we never go there unless it's a special occasion. Her family makes combined 200,000+ per year and she still talks about not having enough money.

 

[Minnesota!]

Just wanted to add...YOUR comfy might not be MY comfy. I have a tiny house - we bought it recently and it was listed as 1200 square feet...including the basement. it has one tiny bathroom, and 3 tiny bedrooms. It is more than enough room for us. I don't need (or want!) anything bigger.

We have a new car, but prior to last month, we were tooling around in a 2004 Toyota. It would still be our mode of transport, but the engine was going to cost us more than the thing was worth We went with a 2012 Murano to replace. We have 1 car and carpool to/from work.

I don't need or want the things that a lot of people "must have".... we are good with thrift store clothes, library for books, movies, etc. We make a good, comfortable salary, but I have no desire to piss it away on more expensive things "just because we can".

Our luxuries are eating out (Chili's!), and vacations. Having those two things available to me are what makes MY life comfy. We did it on $55K a year, and we do it now as more than double that. Those priorties did not change..

 

[SouthFayetteFan]

The savers credit you are referring to has an income limit of $60,000. Not a lot of people can max out their 401k at 18K (would be 36K if your wife was also working), as well as maxing out an HSA, FSA, and IRA, pay their mortgage, and support their kids, all on an income under $60,000.

Just a point of clarification for anybody reading this who isn't aware of the tax credit - that $60k income limit is based on your AGI so it's not your actual wages. A simple way to look at it would be your wages minus payroll deductions for health insurance premiums/HSA/FSA/401k and then also subtracts IRA contributions and Student Loan interest if you have it (there are other less common things that factor in too).

Just as an example, if you were a family making $120k with both spouses working you could possibly qualify:

Income: 120,000
401(k) both spouses: -36,000 (18k each)
Health/HSA/FSA: -11,000 (health/dental premium plus max HSA contribution)
IRA both spouses: -11,000 (5,500k each)
Student Loan Interest: -2,500
NET AGI: 59,500 and you can qualify!

This is obviously an extreme example and nobody's situation would actually look exactly like that but it can be done. I approach each year strategically trying to reduce our taxable income to as little as possible and keep as much money as possible in my pocket and more importantly AWAY from the government.

 

[rndmr2]

I am in Western NY (I guess you could call it a suburb of Rochester) and DH and I make about $70K combined (50/20) and are fairly comfortable. He is currently out of work so we have to be careful with our spending but are ok on just my salary. No credit card debt to speak of, $1K/month mortgage (1300 SF Raised Ranch in a really great neighborhood), car payment, no student loans, usually a yearly Vacation. no kids.

 

[superme80]

I would say we would need a minimum of $100,000 to be anywhere remotely comfortable in my area of California.

 

[DisneyPrince1982]

Do most of you guys take loans for your cars or do you just buy them straight up?

 

[BlovesC]

No credit card debt to speak of, $1K/month mortgage (1300 SF Raised Ranch in a really great neighborhood), car payment, no student loans, usually a yearly Vacation. no kids.

Now that is the definition of comfortable!

 

[mnrose]

Again, it's very hard to say what "the" comfortable salary would be. We have assets. The assets generate income for us. We have no debt. We pay our credit card bills in full, own more than one home (all with no mortgage), three vehicles (no loans on those). Our only "expenses" are property taxes, insurance, utilities, food, etc. I would say we live as comfortably now as we did when I worked, and made a very hefty 6 figure salary (in the mid 6 figure range). Our income now is about 10% of what it was when I worked. Seriously. Yet, we live as "comfortably" because our expenses have been trimmed to the minimum. We eat out 1-2 times per week, take 1-2 nice vacations per year, drive newish (but not "new") cars, etc. We don't worry about how we would pay an unexpected expense.

But, if I told you what our "income" was you would say it was impossible to live "comfortably" on that amount of money. Once you consider our circumstances, though (no mortgage, no debt of any kind) it becomes very possible. Even easy.

 

[Christine]

Do most of you guys take loans for your cars or do you just buy them straight up?

I usually need a loan, but I am getting close to not needing a loan.

After driving around a few cars with 170,000 miles on them, we've had to get new cars. I got a car in 2012 (Hyundai) that was $19,000. I put some money down and financed the rest. My husband just bought a Subaru Outback last year, most expensive car we've ever purchased, and I'm still not happy about spending that much. We put 50% down and financed the rest. I'm not comfortable draining my "emergency" fund when interest rates are below 1%.

 

[eliza61]

Do most of you guys take loans for your cars or do you just buy them straight up?

Actually depends. I have done both. Last year I purchased a 2013 Infiniti G37X. I got 0.0% financing for 24 months from the dealer. in general I will keep large sums of money in the bank making interest (I don't keep 20-30K in a regular savings account) and use other peoples money for free. Same with my late dh's car.

BMW just had a commercial in my area with 0.9% on many of their cars

prior to that I have a 2004 Honda accord. I paid cash for that one, brought it at an Enterprise car rental annual sale.

I generally keep cares 8-10 years so the next car I buy I'll probably be retired and won't need a car as much as I do now (my job is about 49 miles each way from home) so I maybe get a smaller less expensive car.

 

[Maxpowers]

Do most of you guys take loans for your cars or do you just buy them straight up?

As others have said it depends on the deals that are going on. My most recent car I bought outright, but if the numbers worked out better financing (aka 0% for X months) then I would have financed it. They were offering a much better deal to outright buy it than they were to finance it (which is surprising to me since they make money of the financing)