[GuiA]

I was shocked to discover that many people making salaries amongst the highest percentile in the world are indeed a few months without paychecks away from being in an unpleasant financial situation.

I’m not too sure what the overarching reasons for that are, but my guess is that lifestyle inflation is very real, financial education isn’t very common, and many people focus on the wrong abstractions (ie decision making starting with “I make $200k a year, I can afford this!” rather than “what’s my burn rate?”)

[Groxx]

That, and rent that's well over 50% of your monthly income, to have a 1 bedroom apartment miles from anything.

[mercutio2]

No programmer working at A-list Bay Area companies should be earning so little that a 1 bedroom anywhere needs to be 50% of their gross income.

1 bedrooms in Mountain View are going for 3-4K/month. No programmers at Microsoft, Apple, Amazon, Google, or Facebook are making less than $100k. Starting salaries (not counting bonuses and RSUs) are between $120k and $150k.

NIMBY-ism shovels money towards landlords, no doubt, but Bay Area programmers are still very rich.

[Groxx]

Gross pay is almost totally irrelevant, as are RSUs prior to IPO, but to use those numbers:

Your top number, 150k, at 30% taxes (roughly expected in this area) gives you 105k. That's 8.75k/month, which is pretty darn close to half of your listed Mountain View price... and Mountain View isn't even the most expensive.

[mercutio2]

You said “well over 50% of monthly income”, which, in the US, is generally taken to mean gross income, particularly when relating income to housing costs, because of the FHA’s ancient “spend no more than 30% of gross income on housing, or you’re considered cost burdened” rule of thumb.

If you had said “nearly 50% of post-tax salary”, I wouldn’t have quibbled. My point is that no Bay Area programmer living in a conveniently located 1 bedroom is likely to be what the FHA would consider cost burdened, unless they’re working for well below market rate at a startup (and thus are, in my opinion, being exploited by their employer).

Every company I mentioned is public, and RSUs are extremely relevant for total compensation analysis at these companies.

[Groxx]

You can't pay rent with pre-tax money, so I don't see how that can in any way be assumed to be related to "% of monthly income" that comes out of net pay.

Maybe it's common in financial circles? But most people I know balance their books based on their take-home, not gross.

[mercutio2]

If I tell you “I make $100,000/year”, do you interpret that statement as “my after tax income is $100k”? Most Americans don’t.

Americans generally talk about income in terms of gross. This is very disorienting for people from cultures where “income” as a solitary noun generally refers to post-tax income, but arguing with culture isn’t likely to be very fruitful.

It is absolutely true that this is rarely useful for making budgeting decisions, because you have to come up with some inaccurate assessment of after tax net, which is especially tricky with simultaneously progressive and regressive income tax regimes like the US system for high earners.

The cultural variation around internalizing taxes is even more obvious for transactional taxes, where most of Europe lists prices inclusive of VAT but the US lists prices before sales tax; the US affection for communicating costs while ignoring tax and then expressing distress when they finally appear is widespread.

It doesn’t sound like we really disagree on much at the object level, here, we’re disagreeing on semantics (and, I suspect, on tone).

[otalp]

4k a month is ~50k a year with utilities, which is 50% of post-tax salary if you're earning 120k pre tax.

[hatergonnahate]

When you have 1.5 - 2M mortgage which is super common among my friends in CA, a few months without paychecks is totally unacceptable.

[ryandrake]

Yea, people who don’t live here have no idea how expensive it is. Based on how much I make, my rural east coast parents, bless them, probably wonder why I live in a home 1/2 the size of theirs with a 50 mile commute, and not a castle with a 7 car garage. Bay Area prices and taxes...that’s why!

[umichguy]

Though to be honest, even if I could afford something massive, I'd rather not - just don't see the appeal in it anymore. Maybe when I was a kid growing up in HS and in college, I used to think that way. But having traveled and lived in a bunch of different countries around the world, I just lost that "aspiration," if you could call it that.

I will be more than happy with a nice and simple 1 or 2 bed apartment. Plus, big houses = lot's of caring/ maintenance = boring!