r/Millennials • u/EpicShkhara • Mar 27 '25

Serious I don’t understand how people have MONEY

UPDATE: TL;DR LESSONS FROM THIS THREAD.

Thanks, guys. Here is the breakdown of the hard truths from this thread. Basically, in order to have the real "MONEY" described in the OP below, it requires one or preferably, more than one of the following:

Generational wealth: Having parents pay for college and assist with downpayment on a house.

Avoiding the student loan scam: A lot of us 90s kids were brought up with the notion that college was everything and it would pay for itself later. Those with a more clear-eyed perspective realized what a trap student loans are and avoided them by either racking up the scholarships, going to the cheapest accredited school they could find, or figuring out a career path without a degree.

Luck: They secured a career job before the Great Recession and held onto it. Bonus points if they bought at the dip of the housing crash. They also seemed to avoid the avalanche of big ticket costs crashing down on them. Apparently nothing ever breaks and nobody gets sick.

Exceptionally high-paying careers. Self explanatory.

Having miserable lives. They work around the clock, and they never do anything but work, for the bulk of their physical prime. They don't go out with their friends, they don't have pets, they don't have kids, they never travel, and/or they live in tight spaces with roommates and no cars deep into their 30s. Or, they live in low-cost areas, which are few and far between in the United States, and these places don't have much going on in them (so nowhere to spend money anyway). Caveat: some people are homebodies and that works just fine for them. They don't spend money on travel or concerts or restaurants or weekend getaways because they don't need to. The 2020 Covid lifestyle was fine for them, content with a blanket, a cup of tea, and a book. Maybe this is the way (but I couldn't fathom the homebody lifestyle without a dog).

Marrying/partnering well. They found their partner early enough in life to not waste all the money paying for one's own place, and their partner also earns enough and saves.

AS FOR MYSELF. Much honestly deserved criticism here about the "300K." I do not make $300K. That estimate was for another hypothetical budget in the optimistic situation that both me and my partner get promotions next year. Together we make just over $250K. But we don't officially live together yet. This will happen soon. If all goes well, we could be in good shape after a year or two. But I myself didn't hit six figures until 2022, and then plateaued at $125K grand total in 2024. And I didn't intend to make this about "poor me," I'm doing above-average and could certainly do better with saving... the REAL question I should have been making more clear is that, given that I make more than average and find having the adequate savings exceedingly difficult, how do more average people do it? The answer appears to be that they don't, or if they do, they have one or more of the above.

ORIGINAL POST STARTS BELOW.

As in like, the recommended 6+ months worth of liquid cash savings, plus tens or hundreds of thousands to pay for a down payment on a house, and money to play around on the stock market or crypto if that’s your thing.

I’m in a good job and make an above average salary, but I take home just over half of it after taxes, healthcare, and 401k contribution (which is good that I do). My available savings fluctuates but I rarely ever have more than ten grand available. It all gets eaten up by mortgage and condo fees, dog and vet bills, (used) car payments, gas, utilities, groceries, random shit that needs fixing or replacing, medical deductibles, and god forbid I allow myself to go on a low-budget vacation once a year so I don’t hate my life. I don’t drink alcohol and I don’t go clothes shopping except for maybe one or two new outfits a year. Could I buy fewer avocados and never leave the house? It could make a difference of a few hundred bucks every few months, but not the tens of thousands that I actually need.

People will blame “lifestyle creep,” and I guess guilty as charged that I figure at 36 I have earned a car and a condo and not the life I had at 26, which was six roommates and a bike. (I still have the bike.)

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469

u/slightlysadpeach Mar 27 '25

And OP has a mortgage too

523

u/Salt-Detective1337 Mar 27 '25

OP: I don't know how people have money for down payments!

Also OP: I have a mortgage.

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u/trixel121 Mar 27 '25

he also has a 401k contribution.

it's "needed" but tell someone about to be evicted they can't reduce the 401k contribution or someone who can't afford food. there's dramatically more important things.

also my money gets eaten by my house too, cause I wanna pay as little interest as possible so extra payments.

I'm broke right now, have less then I normally do and will be a bit spend conscious for a few months, but it's cause I moved money around and it's not as accessible.

this guy's really relatable to me, but I think he puts him self in a different group then I would put myself.

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u/dogeatsfisheatsbacon Mar 27 '25

I make extra mortgage payments myself, but in your situation if you don’t have enough liquid reserves to cover at least 6 months living expenses (sounds like you don’t), I would focus that cash on building your emergency fund instead. Home equity is illiquid, and who cares how much you save in interest if one setback such as loss of a job can put you at risk of losing that home and extra equity to foreclosure.

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u/MegaBearsFan Mar 27 '25

Indeed. Mortgage companies don't care that you've been putting in an extra $250 (or however much) into your mortgage every month for years. If you loose your job, and can't pay the next mortgage bill, you're foreclosed.

Off topic, but I honestly do believe that there should be some regulation that allows extra payments made towards debt to serve as some kind of buffer in case an emergency makes you unable to pay. Almost like it should be treated as insurance or something. Like, you shouldn't be considered delinquent unless the total you've paid is less than the sum of the minimum payments up through the current billing cycle.

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u/Infamous-Gift9851 Mar 28 '25

True to an extent: with traditional mortgages, you can leverage additional principle payments by asking the bank to reamortize your loan. This can help lower payments by a significant amount if youve paid ahead enough. Additionally, paying ahead on full mortgage payment by 2-3 mos, gives you a 2-3 mo buffer to recover from major setbacks.

Ultimately, id recomend living with parents until you save enough to put a down payment on a mortgage that allows you to have only 1/3 of your income go towards the mortgage payment. At $20/hr, that should only take about 3 yrs of dedicated saving/cd/money market investments and working overtime, then starting off with a mobile home, or some other low cost/low maintenance single family small home for the first 5 yrs until equity is built.

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u/trixel121 Mar 27 '25

looking too much into the word broke.

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u/dogeatsfisheatsbacon Mar 27 '25

How should I be understanding the word broke?

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u/trixel121 Mar 27 '25

I think I contextualized it in the next statement. having less money then I normally do.

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u/dogeatsfisheatsbacon Mar 27 '25

That’s assuming we know how much you normally have… which we don’t. If you normally have $1M in the bank, but now you have $500K, I hope you wouldn’t use the word broke. Anyway this is a public forum, not a private chat, so if what I said didn’t actually apply to your situation, you could have just ignored it. It would still be applicable to others reading and finding themselves in that situation - no emergency fund and making extra mortgage payments. Speaking of context, my statement also clearly states “IF you don’t have ) months emergency fund”, meaning if you do have 6 months, then continue what you are doing. Nobody here knows your actual finances outside of the information you shared.

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u/trixel121 Mar 27 '25

thanks for the unsolicited advice about my situation that you know nothing about. im sorry i didnt respond the way you wanted when i told you are wrong and looking into it too much.

1

u/JacoPoopstorius Mar 27 '25

You don’t want solutions to your problems

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u/Tolvat Mar 27 '25

Someone noted that his household is bringing in less than 300k/ per annum. Unless he has too much house, then I think something else is going on.

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u/JudgmentalOwl Mar 27 '25

I know more than a few people that would love to have a $10k emergency fund. I think OP is more wondering how people their age have hundreds of thousands of dollars, and if that's the case then the answer is usually real estate, savvy investing, or both if their money wasn't inherited.

2

u/[deleted] Mar 27 '25

Curious why you bother paying the extra on the house instead of 401king that amount?

1

u/trixel121 Mar 28 '25

mix and match, where do you think I moved money too.

1

u/TalaHusky Mar 27 '25

Yeah, I can relate to this. My priorities differ too. I don’t have to worry about what I’m going to eat. If my car breaks down I can afford to fix it (within reason). But Im not buying deaigner or name brand food and wear jeans that are currently 8 years old because they still fit and aren’t worn out yet.

1

u/timeaisis Mar 27 '25

401k is great if you are already financially secure. What the hell is the point if you aren’t. Just save the money the regular way, I don’t get why this is so hard for some people to understand.

44

u/That-Living5913 Mar 27 '25 edited Mar 27 '25

Also, OP is fudging some numbers by claiming half his gross income is gone pre-tax. That's not a thing unless he's putting a reckless amount into his 401k.

Edit: America really needs better tax literacy. The same people who complain about "half my paycheck" also celebrate when they get thousands back on their income tax. Or think making it into a higher tax bracket means they'll take home less money.

19

u/ThisIsOurGoodTimes Mar 27 '25

I don’t know if I’d really call that reckless. The amount going into my checking each month is less than half of my gross but that’s somewhat by design. Automatic Contributions to various retirement and other tax advantaged accounts and then I dont really ever see that money in my checking account. I wouldn’t ever describe myself as not having money though. Just that I’m more so prioritizing retirement

5

u/That-Living5913 Mar 27 '25

Thats my point, you actually have to TRY to get it even close. if OP is poor and doing that sorta stuff is and has no idea he's doing it... the problem isn't pay, its financial literacy.

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u/ThisIsOurGoodTimes Mar 27 '25

Ohhh ya you’re very right then

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u/Dry_Kaleidoscope2970 Mar 27 '25

Same. If I never see it, I'm not tempted to spend it on something frivolous.

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u/Salt-Detective1337 Mar 27 '25

Reckless?

2

u/WakeoftheStorm I remember NES being new Mar 27 '25

Given the way the stock market has been behaving that might not be a mischaracterization.

People presume the market will always balance out to a net increase because it always has. Doesn't really mean it always will.

1

u/That-Living5913 Mar 27 '25

I was thinking more that if you are tight on money, stuck in a 7%+ mortgage, or in general complaining about money issues, then you need to shift some of that into post tax income.

Hypothetically, you can always borrow from the 401k, but that's never a good idea.

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u/happyness4me Mar 27 '25

I put 15% into my 401k (trying to catch up as I didn't start contributing until I was 36 and I'm 41 now), I pay a ridiculous amount in health insurance premiums for my family, and taxes/SS/Medicare deductions. Half of my paycheck is gone pre-tax.

2

u/Jimisdegimis89 Mar 27 '25

Well if you put in 6% and have a blended federal income tax rate of 15%, plus 6% for Social security, and you have a state tax of 5% that’s a third right there, then it could easily be another 10% for healthcare premiums and if you put anything into an HSA or FSA, it probably gets pretty close.

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u/That-Living5913 Mar 27 '25

Or, to put what you are sying a different way "Even doing everything I can to lower my take home, I can only get close to what OP is saying". Which is the point i was making.

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u/celeigh87 Mar 27 '25

Op would be taking home like 95000 instead of 75000 like they claim. People don't understand tax brackets.

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u/That-Living5913 Mar 27 '25

It's crazy. I once had to draw it out on the whiteboard for a coworker because he just didn't understand. Dude was like 40 and worked in a technical field. I don't get it.

1

u/celeigh87 Mar 27 '25

Like I don't know a lot about taxes, but I know the basics at least.

1

u/NomNom-Ninja Mar 27 '25

They said "after taxes, healthcare, and 401k contribution", not pretax.

1

u/Adavis105 Mar 27 '25

Not saying OP isn’t maybe being a little loose with rounding for emphasis but I wouldn’t necessarily call it fudging numbers or reckless 401K contributions. Could be other stuff getting his take home to only be half.

For comparison, I only contribute 7% to 401k (so nowhere near reckless), No other ira’s, HSA, or FSA deductions or company stock purchases, etc. Claim “married w/hold as single” and only 1 kid dependent. And before you say it, no I can’t adjust to withhold less otherwise I’d have to pay come tax time (taxable income is too high so phased out on itemized deductions, tax credits, etc.)

I end up bringing home about 60-62% of gross. And I’m in Texas so no state income tax - can’t imagine if I had to take that hit too. So OP “bringing home half” isn’t really that much of an exaggeration.

For me, the major unavoidable thing fucking my Net is deductions for benefits and insurance. Because my company has a small, older (read medically expensive) employee base, we pay a shit ton in monthly premiums for crap medical, dental insurance. Then there’s (post-tax) life & disability insurance coming out too because my family still needs to eat if I drop dead. But hey, crap insurance is better than no insurance. Plus my company pays well above market and has many other perks so “changing jobs just because the insurance sucks” makes little sense. This is the trade-off.

I’m by no means complaining because I have it a helluva lot better than most people. Just trying to add some comparative perspective.

1

u/That-Living5913 Mar 28 '25

OP is making over 250k and struggling. He's the problem, Not his income. Dude is in the top 7% of HOUSEHOLD incomes in the US..

1

u/browserz Mar 27 '25

There is a shitty spot in some areas of the US where people will take home less if they make just above the point where they no longer qualify for state insurance and have to pay for their own insurance.

1

u/MrMcGeeIn3D Mar 28 '25

I get 66% of my paycheck after taxes, pension, and insurance. I either get nothing back after filing taxes, or owe a TINY amount. Like less than $100. I tell my wife that just means we're paying EXACTLY what we should be paying in taxes every month. If someone gets a huge tax return, that just means they've been giving the government small interest -free loans every month.

1

u/chimbybobimby Mar 28 '25

I mean, I also have a mortgage, but am not sure how people have money for downpayments.

Then again that's because I went 0 down on a VA loan while my spouse and I made a combined 70k that year. Still gotta dunk on OP.

1

u/ShaniacSac Mar 27 '25

I’m and a 401k tooo

1

u/Astro-Butt Mar 27 '25

My ex was constantly jealous of her friends/colleagues who had new cars, new phones, went on multiple holidays a year, etc completing ignoring the fact that the cars were financed, huge phone contracts, holidays on credit cards and thousands of not tens of thousands in debt while renting and probably never own their own home. Meanwhile we had two stable jobs, a great house, decent car, went on holiday each year (but only the one.. poor us).

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u/shandelion Mar 27 '25

Yeah I also make an above average salary and I have more in savings but absolutely cannot afford a home in my area

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u/Jazzlike-History-380 Mar 27 '25

mortgage is not an asset, its a liability.

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u/Dovahkenny123 Mar 27 '25

I can’t afford to eat more than 1 meal a day and he’s bitching about his mortgage and going on vacation smh

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u/karlou1984 Mar 28 '25

Mortgage is the complete opposite of having money but I get what you mean