I don't think you should be buying a Porsche, any Porsche if you're making $100K/year.

 

Why not? Single guy, renting an apartment, no kids, no debt, has a few bucks in the bank...what else is he spending his cash on?

But yeah, if you have 3 kids, a wife, and a mortgage, you can't be buying any Porsches on $100k.

 

I think it's interesting most of you are saying that it's not a big difference. $27k after taxes ($2500 a month) makes a huge difference.

 

My income has gone up several times what I made right out of school. So, I am probably an extreme example, but I don't have a huge difference in overall lifestyle. I had a Vette out of school and I have a Vette now. I had a decent daily driver right out of school and I have a decent daily driver now. The big differences are a house, a wife who doesn't work, two dogs, and being able to save quite a bit of money.

It's not how much money you make, it's what you do with the money you have. If you get a big pay increase, pretend you are living close to your original salary and bank the rest. There is no guarantee how long the van will keep delivering the bread.

 

[QUOTE=Chris Stack,May 23 2008, 03:18 PM] Why not?

 

hmm...

- i'd put 15K in a 401K/403b or something similar (if available)...85K left
- i'd put 5K in an IRA (or Roth)...80K left
- i'd sock away 1K/month for emergency reserve cash until i have at least 6 months of take home salary...68K left
- i'd put away another $500 into a regular investment account...62K left

so, i'll be able to spend $2k more on clothes/food in a span of 1 year but feel very secure about my finances. after about 3 years i can stop socking away the $1K/month and do something else with it, like save up to buy a house or something.

 

I wouldn't buy a Porsche the first year I made $100k, but again, it's about income over time. Dude's been making $100k for 10 years, has no bills, banks 20%+ of his income in 401(k), etc etc, what difference does it make if he blows some coin on a Porsche? It's all in how you spend it. To make arbitary guidelines based only on income is silly, because, like I said, what goes out is FAR more important than what comes in.

 

Agree w/Chris Stack - its not what you make, its what you keep. Focus on income and change your lifestyle. Focus on wealth and change your life.

 

Just my opinion. You're entitle to yours.

 

Except for the wife & dogs, my sentiments are the same as yours. As I got some pay increases, I bought a house based on what the mortgage calculators told me I could afford. That put a huge crunch on my budget, but fortunately I got a few more salary increases that have put me into a more comfortable place. Now, I'm able to max my 401k and Roth, plus invest in other things here & there, and still have money to spend on other things.

To the original question, I'd say that the difference in lifestyle between 60k and 100k is pretty noticeable... unless you're smart. A smart person would be saving & investing that extra 40k/year and living the same lifestyle that they were living when they only made 60k. That way, they'd be taking advantage of compounded interest/gains and in 4 or 5 years they'd have 200-400k of extra cash/savings/investments instead of 50k worth of extra "stuff" (since the value of most "stuff" depreciates over time).