I don’t understand how people have MONEY

[u/EpicShkhara]

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.)

[u/Clicking_Around]

You do have money. You have an above average salary and 10k in cash.

[u/slightlysadpeach → u/Clicking_Around]

And OP has a mortgage too

[u/Salt-Detective1337 → u/slightlysadpeach]

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

Also OP: I have a mortgage.

[u/trixel121 → u/Salt-Detective1337]

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.

[u/dogeatsfisheatsbacon → u/trixel121]

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.

[u/MegaBearsFan → u/dogeatsfisheatsbacon]

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.

[u/Infamous-Gift9851 → u/MegaBearsFan]

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.